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SECURITIES
12 Months Ended
Dec. 31, 2013
Investments Debt And Equity Securities [Abstract]  
SECURITIES
5. SECURITIES

The amortized cost and fair value of investment securities were as follows (dollars in thousands):

 

     December 31, 2013  
     Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair Value  
     (Dollars in thousands)  

Available for Sale

          

States and political subdivisions

   $ 28,578       $ 797       $ —        $ 29,375   

Collateralized mortgage obligations

     483         7         (1     489   

Mortgage-backed securities

     108,316         6,843         (22     115,137   

Other securities

     12,589         14         (126     12,477   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 149,966       $ 7,661       $ (149   $ 157,478   
  

 

 

    

 

 

    

 

 

   

 

 

 

Held to Maturity

          

U.S. Treasury securities and obligations of U.S. Government agencies

   $ 62,931       $ 46       $ (935   $ 62,042   

States and political subdivisions

     426,335         3,176         (2,207     427,304   

Corporate debt securities

     513         5         —          518   

Collateralized mortgage obligations

     50,034         1,017         (58     50,993   

Mortgage-backed securities

     7,514,257         84,166         (165,979     7,432,444   

Qualified School Construction Bonds (QSCB)

     12,900         1,141         —          14,041   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 8,066,970       $ 89,551       $ (169,179   $ 7,987,342   
  

 

 

    

 

 

    

 

 

   

 

 

 
     December 31, 2012  
     Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair Value  
     (Dollars in thousands)  

Available for Sale

          

States and political subdivisions

   $ 34,743       $ 1,691       $ —        $ 36,434   

Collateralized mortgage obligations

     616         —           (12     604   

Mortgage-backed securities

     168,701         11,742         (27     180,416   

Other securities

     8,786         430         —          9,216   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 212,846       $ 13,863       $ (39   $ 226,670   
  

 

 

    

 

 

    

 

 

   

 

 

 

Held to Maturity

          

U.S. Treasury securities and obligations of U.S. Government agencies

   $ 7,061       $ 160       $ —        $ 7,221   

States and political subdivisions

     391,510         7,074         (354     398,230   

Corporate debt securities

     1,500         28         —          1,528   

Collateralized mortgage obligations

     125,912         2,304         (50     128,166   

Mortgage-backed securities

     6,676,512         196,206         (4,517     6,868,201   

Qualified School Construction Bonds (QSCB)

     12,900         2,449         —          15,349   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 7,215,395       $ 208,221       $ (4,921   $ 7,418,695   
  

 

 

    

 

 

    

 

 

   

 

 

 

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held to maturity are evaluated for OTTI under Financial Accounting Standards Board (“FASB”): ASC Topic 320, “Investments—Debt and Equity Securities.”

 

In determining OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the other-than-temporary impairment recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss.

As of December 31, 2013, the Company does not intend to sell any debt securities and management believes that the Company more likely than not will not be required to sell any debt securities before their anticipated recovery, at which time the Company will receive full value for the securities. Furthermore, as of December 31, 2013, management does not have the intent to sell any of its securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of December 31, 2013, management believes any impairment in the Company’s securities is temporary and no impairment loss has been realized in the Company’s consolidated statements of income.

Securities with unrealized losses segregated by length of time such securities have been in a continuous loss position were as follows:

 

    December 31, 2013  
  Less than 12 Months     More than 12 Months     Total  
    Estimated     Unrealized     Estimated     Unrealized     Estimated     Unrealized  
  Fair Value     Losses     Fair Value     Losses     Fair Value     Losses  
    (Dollars in thousands)  

Available for Sale

           

Collateralized mortgage obligations

  $ 5      $ —        $ 50      $ (1   $ 55      $ (1

Mortgage-backed securities

    651        (1     3,313        (21     3,964        (22

Other securities

    6,911        (126     —          —          6,911        (126
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 7,567      $ (127   $ 3,363      $ (22   $ 10,930      $ (149
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Held to Maturity

           

U.S. Treasury securities and obligations of U.S. government agencies

  $ 48,389      $ (935   $ —        $ —        $ 48,389      $ (935

States and political subdivisions

    113,063        (1,581     28,639        (626     141,702        (2,207

Collateralized mortgage obligations

    2,109        (32     433        (26     2,542        (58

Mortgage-backed securities

    3,702,569        (106,816     998,380        (59,163     4,700,949        (165,979
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 3,866,130      $ (109,364   $ 1,027,452      $ (59,815   $ 4,893,582      $ (169,179
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    December 31, 2012  
    Less than 12 Months     More than 12 Months     Total  
    Estimated     Unrealized     Estimated     Unrealized     Estimated     Unrealized  
  Fair Value     Losses     Fair Value     Losses     Fair Value     Losses  
    (Dollars in thousands)  

Available for Sale

           

Collateralized mortgage obligations

  $ —        $ —        $ 603      $ (12   $ 603      $ (12

Mortgage-backed securities

    224        —          3,964        (27     4,188        (27
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 224      $ —        $ 4,567      $ (39   $ 4,791      $ (39
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Held to Maturity

           

States and political subdivisions

  $ 37,322      $ (335   $ 1,140      $ (19   $ 38,462      $ (354

Collateralized mortgage obligations

    2,366        (50     —          —          2,366        (50

Mortgage-backed securities

    1,081,414        (4,516     234        (1     1,081,648        (4,517
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,121,102      $ (4,901   $ 1,374      $ (20   $ 1,122,476      $ (4,921
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At December 31, 2013, there were 450 securities in an unrealized loss position for more than 12 months.

The amortized cost and fair value of investment securities at December 31, 2013, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations at any time with or without call or prepayment penalties.

 

     Held to Maturity      Available for Sale  
     Amortized
Cost
     Fair Value      Amortized
Cost
     Fair Value  
     (Dollars in thousands)  

Due in one year or less

   $ 28,834       $ 28,878       $ 12,684       $ 12,574   

Due after one year through five years

     158,033         158,289         4,991         5,138   

Due after five years through ten years

     228,346         227,983         20,446         21,028   

Due after ten years

     87,466         88,755         3,046         3,112   
  

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     502,679         503,905         41,167         41,852   

Mortgage-backed securities and collateralized mortgage obligations

     7,564,291         7,483,437         108,799         115,626   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 8,066,970       $ 7,987,342       $ 149,966       $ 157,478   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company recorded no gain or loss on sale of securities for the twelve months ended December 31, 2013 and 2012. The Company recorded a loss on sale of securities of $581 thousand for the twelve months ended December 31, 2011. The Company sold two non-agency collateralized mortgage obligations (“CMO’s”) with a total book value of $3.2 million due to a downgrade of the CMO’s to less than investment grade in the second quarter of 2011. At December 31, 2013, the Company had eight non-agency CMO’s with a remaining book value of $1.7 million and a fair value of $1.7 million.

At December 31, 2013 and 2012, the Company did not own securities of any one issuer (other than the U.S. government and its agencies) for which aggregate adjusted cost exceeded 10% of the consolidated shareholders’ equity at such respective dates.

Securities with an amortized cost of $4.46 billion and $4.13 billion and a fair value of $4.47 billion and $4.27 billion at December 31, 2013 and 2012, respectively, were pledged to collateralize public deposits and for other purposes required or permitted by law.