Investment Securities

9 Months Ended

Sep. 30, 2013

Investment Securities [Abstract]

Investment Securities

Note 3 – Investment Securities

The following tables summarize FHN’s available-for-sale (“AFS”) securities on September 30, 2013 and 2012:
	September 30, 2013
			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 mortgage-backed securities ("MBS")		838,077		40,944		(3,570)		875,451
Government agency issued collateralized mortgage obligations ("CMO")		2,043,803		17,420		(36,102)		2,025,121
Other U.S. government agencies		2,381		147		-		2,528
States and municipalities		15,155		-		-		15,155
Equity and other (a)		228,709		-		(17)		228,692
Total securities available for sale (b)	$	3,168,118	$	58,514	$	(39,689)	$	3,186,943

• Includes restricted investments in FHLB-Cincinnati stock of $128.0million and FRB stock of $66.0million. The remainder is money market, venture capital, and cost method investments.
• Includes $2.9billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

	September 30, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Securities available-for-sale:
U.S. treasuries	$	54,995	$	1	$	-	$	54,996
Government agency issued MBS		1,191,811		79,639		-		1,271,450
Government agency issued CMO		1,530,075		25,562		(896)		1,554,741
Other U.S. government agencies		3,911		291		-		4,202
States and municipalities		17,970		-		-		17,970
Equity and other (a)		220,247		23		-		220,270
Total securities available for sale (b)	$	3,019,009	$	105,516	$	(896)	$	3,123,629
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 $2.8 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 September 30, 2013, are provided below:
		Available-for-Sale
		Amortized		Fair
(Dollars in thousands)		Cost		Value
Within 1 year		$	39,993	$	39,996
After 1 year; within 5 years			3,881		4,028
After 5 years; within 10 years			-		-
After 10 years			13,655		13,655
	Subtotal		57,529		57,679
Government agency issued MBS and CMO			2,881,880		2,900,572
Equity and other			228,709		228,692
Total		$	3,168,118	$	3,186,943

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 nine months ended September 30:
	Three Months Ended				Nine Months Ended
(Dollars in thousands)	2013		2012		2013		2012
Gross gains on sales of securities	$	728	$	-	$	770	$	5,433
Gross losses on sales of securities		(824)		-		(1,193)		-
Net gain/(loss) on sales of securities (a)		(96)		-		(423)		5,433
Net other than temporary impairment ("OTTI") recorded		-		-		-		(40)
Total securities gain/(loss), net	$	(96)	$	-	$	(423)	$	5,393

• Proceeds for the three and nine months ended September 30, 2013, were $44.9 million and $63.8 million, respectively. There were no proceeds from sales for the three months ended September 30, 2012; proceeds from sales for the nine months ended September 30, 2012 were $47.5 million.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses on September 30, 2013 and 2012:
	On September 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	$	1,241,836	$	(36,025)	$	12,018	$	(77)	$	1,253,854	$	(36,102)
Government agency issued MBS		154,299		(3,570)		-		-		154,299		(3,570)
Total debt securities		1,396,135		(39,595)		12,018		(77)		1,408,153		(39,672)
Equity		43		(17)		-		-		43		(17)
Total temporarily impaired securities	$	1,396,178	$	(39,612)	$	12,018	$	(77)	$	1,408,196	$	(39,689)

	On September 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	$	205,205	$	(896)	$	-	$	-	$	205,205	$	(896)
Total temporarily impaired securities	$	205,205	$	(896)	$	-	$	-	$	205,205	$	(896)

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.