Investment Securities

6 Months Ended

Jun. 30, 2013

Investment Securities [Abstract]

Investment Securities

Note 3 – Investment Securities

The following tables summarize FHN’s available for sale (“AFS”) securities on June 30, 2013 and 2012:
	June 30, 2013
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Securities available for sale:
U.S. treasuries	$	39,991	$	6	$	-	$	39,997
Government agency issued mortgage-backed securities ("MBS")		960,543		36,205		(4,294)		992,454
Government agency issued collateralized mortgage obligations ("CMO")		1,970,151		12,409		(28,522)		1,954,038
Other U.S. government agencies		2,687		167		-		2,854
States and municipalities		16,434		11		-		16,445
Equity and other (a)		223,241		42		-		223,283
Total securities available for sale (b)	$	3,213,047	$	48,840	$	(32,816)	$	3,229,071

• Includes restricted investments in FHLB-Cincinnati stock of $128.0million and FRB stock of $66.2million. The remainder is money market, venture capital, and cost method investments.
• Includes $3.0billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

	June 30, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Securities available for sale:
U.S. treasuries	$	39,993	$	3	$	-	$	39,996
Government agency issued MBS		1,306,114		77,610		-		1,383,724
Government agency issued CMO		1,563,120		27,623		(1,367)		1,589,376
Other U.S. government agencies		12,815		338		-		13,153
States and municipalities		17,970		-		-		17,970
Equity and other (a)		220,634		13		-		220,647
Total securities available for sale (b)	$	3,160,646	$	105,587	$	(1,367)	$	3,264,866
Certain previously reported amounts have been reclassified to agree with current presentation.

• Includes restricted investments in FHLB-Cincinnati stock of $125.5 million and FRB stock of $66.0million. The remainder is money market, venture capital, and cost method investments.
• Includes $3.0 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

National banks chartered by the federal government are, by law, members of the Federal Reserve System. Each member bank is required to own stock in its regional Federal Reserve Bank (“FRB”). Given this requirement, FRB stock may not be sold, traded, or pledged as collateral for loans. Membership in the Federal Home Loan Bank (“FHLB”) network requires ownership of capital stock. Member banks are entitled to borrow funds from the FHLB and are required to pledge mortgage loans as collateral. Investments in the FHLB are non-transferable and, generally, membership is maintained primarily to provide a source of liquidity as needed.

The amortized cost and fair value by contractual maturity for the available for sale securities portfolio on June 30, 2013, are provided below:
		Available for Sale
		Amortized		Fair
(Dollars in thousands)		Cost		Value
Within 1 year		$	39,991	$	39,997
After 1 year; within 5 years			4,187		4,354
After 5 years; within 10 years			667		667
After 10 years			14,267		14,278
	Subtotal		59,112		59,296
Government agency issued MBS and CMO			2,930,694		2,946,492
Equity and other			223,241		223,283
Total		$	3,213,047	$	3,229,071

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The table below provides information on gross gains and gross losses from investment securities for the three and six months ended June 30:
	Three Months Ended				Six Months Ended
(Dollars in thousands)	2013		2012		2013		2012
Gross gains on sales of securities	$	12	$	5,105	$	42	$	5,433
Gross losses on sales of securities		(363)		-		(369)		-
Net gain/(loss) on sales of securities (a)	$	(351)	$	5,105	$	(327)	$	5,433
Net other than temporary impairment ("OTTI") recorded		-		(40)		-		(40)
Total securities gain/(loss), net	$	(351)	$	5,065	$	(327)	$	5,393

• Proceeds for the three and six months ended June 30, 2013, were $18.9 million. Proceeds from sales for the three and six months ended June 30, 2012 were $8.4 million and $47.5 million, respectively.

The following tables provide information on investments within the available for sale portfolio that had unrealized losses on June 30, 2013 and 2012:
	On June 30, 2013
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Government agency issued CMO	$	1,233,820	$	(28,365)	$	15,967	$	(157)	$	1,249,787	$	(28,522)
Government agency issued MBS		192,747		(4,294)		-		-		192,747		(4,294)
Total temporarily impaired securities	$	1,426,567	$	(32,659)	$	15,967	$	(157)	$	1,442,534	$	(32,816)

	On June 30, 2012
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Government agency issued CMO	$	235,282	$	(1,367)	$	-	$	-	$	235,282	$	(1,367)
Total temporarily impaired securities	$	235,282	$	(1,367)	$	-	$	-	$	235,282	$	(1,367)

FHN has reviewed investment securities that were in unrealized loss positions in accordance with its accounting policy for OTTI and does not consider them other-than-temporarily impaired. For debt securities with unrealized losses, FHN does not intend to sell them and it is more-likely-than-not that FHN will not be required to sell them prior to recovery. The decline in value is primarily attributable to interest rates and not credit losses. For equity securities, FHN has both the ability and intent to hold these securities for the time necessary to recover the amortized cost.