Investment Securities

9 Months Ended

Sep. 30, 2014

Investment Securities [Abstract]

Investment Securities

Note 3 – Investment Securities

The following tables summarize FHN’s investment securities on September 30, 2014 and 2013:
	September 30, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Securities available-for-sale ("AFS"):
U.S. treasuries	$	100	$	-	$	-	$	100
Government agency issued mortgage-backed securities ("MBS")		685,426		33,820		(2,381)		716,865
Government agency issued collateralized mortgage obligations ("CMO")		2,648,047		15,637		(39,999)		2,623,685
Other U.S. government agencies		1,859		70		-		1,929
States and municipalities		10,205		-		-		10,205
Equity and other (a)		182,119		-		(232)		181,887
Total securities available-for-sale (b)	$	3,527,756	$	49,527	$	(42,612)	$	3,534,671
Securities held-to-maturity ("HTM"):
States and municipalities	$	4,286	$	1,094	$	-	$	5,380
Total securities held-to-maturity	$	4,286	$	1,094	$	-	$	5,380

• Includes restricted investments in FHLB-Cincinnati stock of $87.9 million and FRB stock of $66.0 million. The remainder is money market and cost method investments.
• Includes $3.2 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

	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 MBS		838,077		40,944		(3,570)		875,451
Government agency issued 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 $128.0 million and FRB stock of $66.0million. The remainder is money market, venture capital, and cost method investments.
• Includes $2.9 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

The amortized cost and fair value by contractual maturity for the available-for-sale and held-to-maturity securities portfolios on September 30, 2014, are provided below:
		Held-to-Maturity				Available-for-Sale
		Amortized		Fair		Amortized		Fair
(Dollars in thousands)		Cost		Value		Cost		Value
Within 1 year		$	-	$	-	$	-	$	-
After 1 year; within 5 years			-		-		3,459		3,529
After 5 years; within 10 years			-		-		-		-
After 10 years			4,286		5,380		8,705		8,705
	Subtotal		4,286		5,380		12,164		12,234
Government agency issued MBS and CMO			-		-		3,333,473		3,340,550
Equity and other			-		-		182,119		181,887
Total		$	4,286	$	5,380	$	3,527,756	$	3,534,671

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
		September 30				September 30
(Dollars in thousands)	2014		2013		2014		2013
Gross gains on sales of securities	$	133	$	728	$	5,867	$	770
Gross losses on sales of securities		-		(824)		-		(1,193)
Net gain/(loss) on sales of securities (a)		133		(96)		5,867		(423)
Venture capital investments (b)		(995)		-		(2,995)		-
Total securities gain/(loss), net	$	(862)	$	(96)	$	2,872	$	(423)

• Proceeds from sales for the three months ended September 30, 2014 were $3.3 million. Proceeds for the nine months ended September 30, 2014 were $9.2 million, inclusive of $1.4 million of equity securities. Proceeds from the three and nine months ended September 30, 2013, were $44.9 million and $63.8 million, respectively.
• Includes losses on sales, write-offs and /or unrealized fair value adjustments related to venture capital investments.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of September 30, 2014 and 2013:
	As of September 30, 2014
	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	$	724,834	$	(5,113)	$	949,556	$	(34,886)	$	1,674,390	$	(39,999)
Government agency issued MBS		32,621		(244)		103,858		(2,137)		136,479		(2,381)
Total debt securities		757,455		(5,357)		1,053,414		(37,023)		1,810,869		(42,380)
Equity		849		(198)		10		(34)		859		(232)
Total temporarily impaired securities	$	758,304	$	(5,555)	$	1,053,424	$	(37,057)	$	1,811,728	$	(42,612)

	As of 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)

FHN has reviewed investment securities that were in unrealized loss positions in accordance with its accounting policy for other than temporary impairment “(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.