|
Note 2. Investment Securities
The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities as of June 30, 2011 and December 31, 2010 were as follows:
|
|
|
|
|
Gross |
|
Gross |
|
|
|
|
|
|
Amortized |
|
Unrealized |
|
Unrealized |
|
Fair |
|
|
(dollars in thousands) |
|
Cost |
|
Gains |
|
Losses |
|
Value |
|
|
June 30, 2011 |
|
|
|
|
|
|
|
|
|
|
Available-for-Sale: |
|
|
|
|
|
|
|
|
|
|
Debt Securities Issued by the U.S. Treasury and Government Agencies |
|
$ |
1,016,715 |
|
$ |
7,855 |
|
$ |
(817) |
|
$ |
1,023,753 |
|
|
Debt Securities Issued by States and Political Subdivisions |
|
127,790 |
|
3,174 |
|
(280) |
|
130,684 |
|
|
Debt Securities Issued by Corporations |
|
43,063 |
|
135 |
|
(1) |
|
43,197 |
|
|
Mortgage-Backed Securities Issued by |
|
|
|
|
|
|
|
|
|
|
Government Agencies |
|
2,783,398 |
|
55,866 |
|
(4,213) |
|
2,835,051 |
|
|
U.S. Government-Sponsored Enterprises |
|
76,385 |
|
3,531 |
|
- |
|
79,916 |
|
|
Total Mortgage-Backed Securities |
|
2,859,783 |
|
59,397 |
|
(4,213) |
|
2,914,967 |
|
|
Total |
|
$ |
4,047,351 |
|
$ |
70,561 |
|
$ |
(5,311) |
|
$ |
4,112,601 |
|
|
Held-to-Maturity: |
|
|
|
|
|
|
|
|
|
|
Debt Securities Issued by the U.S. Treasury and Government Agencies |
|
$ |
179,489 |
|
$ |
3,579 |
|
$ |
- |
|
$ |
183,068 |
|
|
Mortgage-Backed Securities Issued by |
|
|
|
|
|
|
|
|
|
|
Government Agencies |
|
2,270,256 |
|
47,694 |
|
(1) |
|
2,317,949 |
|
|
U.S. Government-Sponsored Enterprises |
|
62,279 |
|
3,325 |
|
- |
|
65,604 |
|
|
Total Mortgage-Backed Securities |
|
2,332,535 |
|
51,019 |
|
(1) |
|
2,383,553 |
|
|
Total |
|
$ |
2,512,024 |
|
$ |
54,598 |
|
$ |
(1) |
|
$ |
2,566,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
Available-for-Sale: |
|
|
|
|
|
|
|
|
|
|
Debt Securities Issued by the U.S. Treasury and Government Agencies |
|
$ |
536,770 |
|
$ |
19,131 |
|
$ |
(45) |
|
$ |
555,856 |
|
|
Debt Securities Issued by States and Political Subdivisions |
|
113,715 |
|
1,477 |
|
(1,583) |
|
113,609 |
|
|
Debt Securities Issued by U.S. Government-Sponsored Enterprises |
|
500 |
|
5 |
|
- |
|
505 |
|
|
Mortgage-Backed Securities Issued by |
|
|
|
|
|
|
|
|
|
|
Government Agencies |
|
5,696,907 |
|
84,008 |
|
(30,887) |
|
5,750,028 |
|
|
U.S. Government-Sponsored Enterprises |
|
109,259 |
|
4,617 |
|
- |
|
113,876 |
|
|
Total Mortgage-Backed Securities |
|
5,806,166 |
|
88,625 |
|
(30,887) |
|
5,863,904 |
|
|
Total |
|
$ |
6,457,151 |
|
$ |
109,238 |
|
$ |
(32,515) |
|
$ |
6,533,874 |
|
|
Held-to-Maturity: |
|
|
|
|
|
|
|
|
|
|
Mortgage-Backed Securities Issued by |
|
|
|
|
|
|
|
|
|
|
Government Agencies |
|
$ |
47,368 |
|
$ |
2,959 |
|
$ |
- |
|
$ |
50,327 |
|
|
U.S. Government-Sponsored Enterprises |
|
79,881 |
|
3,820 |
|
- |
|
83,701 |
|
|
Total |
|
$ |
127,249 |
|
$ |
6,779 |
|
$ |
- |
|
$ |
134,028 |
|
During the three months ended March 31, 2011, the Company reclassified at fair value approximately $2.2 billion in available-for-sale investment securities to the held-to-maturity category. The related unrealized after-tax gains of approximately $8.2 million remained in accumulated other comprehensive income to be amortized over the estimated remaining life of the securities as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount on the transferred securities. No gains or losses were recognized at the time of reclassification. Management considers the held-to-maturity classification of these investment securities to be appropriate as the Company has the positive intent and ability to hold these securities to maturity.
The table below presents an analysis of the contractual maturities of the Company’s investment securities as of June 30, 2011. Mortgage-backed securities are disclosed separately in the table below as these investment securities may prepay prior to their scheduled contractual maturity dates.
|
|
|
Amortized |
|
|
|
|
(dollars in thousands) |
|
Cost |
|
Fair Value |
|
|
Available-for-Sale: |
|
|
|
|
|
|
Due in One Year or Less |
|
$ |
256,617 |
|
$ |
257,384 |
|
|
Due After One Year Through Five Years |
|
746,982 |
|
754,351 |
|
|
Due After Five Years Through Ten Years |
|
80,904 |
|
82,104 |
|
|
Due After Ten Years |
|
103,065 |
|
103,795 |
|
|
|
|
1,187,568 |
|
1,197,634 |
|
|
Mortgage-Backed Securities Issued by |
|
|
|
|
|
|
Government Agencies |
|
2,783,398 |
|
2,835,051 |
|
|
U.S. Government-Sponsored Enterprises |
|
76,385 |
|
79,916 |
|
|
Total Mortgage-Backed Securities |
|
2,859,783 |
|
2,914,967 |
|
|
Total |
|
$ |
4,047,351 |
|
$ |
4,112,601 |
|
|
|
|
|
|
|
|
|
Held-to-Maturity: |
|
|
|
|
|
|
Due After One Year Through Five Years |
|
$ |
179,489 |
|
$ |
183,068 |
|
|
Mortgage-Backed Securities Issued by |
|
|
|
|
|
|
Government Agencies |
|
2,270,256 |
|
2,317,949 |
|
|
U.S. Government-Sponsored Enterprises |
|
62,279 |
|
65,604 |
|
|
Total Mortgage-Backed Securities |
|
2,332,535 |
|
2,383,553 |
|
|
Total |
|
$ |
2,512,024 |
|
$ |
2,566,621 |
|
Investment securities with carrying values of $3.2 billion as of June 30, 2011 and December 31, 2010 were pledged to secure deposits of governmental entities and securities sold under agreements to repurchase. As of June 30, 2011 and December 31, 2010, the Company did not have any investment securities pledged where the secured party had the right to sell or repledge the collateral.
There were no sales of investment securities for the three months ended June 30, 2011. Gross gains on the sales of investment securities were $15.0 million for the three months ended June 30, 2010 and $10.3 million and $35.0 million for the six months ended June 30, 2011 and 2010, respectively. Gross losses on the sales of investment securities were $4.2 million for the six months ended June 30, 2011 and were not material for the three and six months ended June 30, 2010. The Company’s sales of available-for-sale investment securities during the six months ended June 30, 2011 were primarily due to management’s ongoing evaluation of the investment securities portfolio in response to established asset/liability management objectives.
The Company’s investment securities in an unrealized loss position, segregated by continuous length of impairment, were as follows:
|
|
|
|
Less Than 12 Months |
|
|
12 Months or Longer |
|
|
Total |
|
|
|
|
|
|
Gross |
|
|
|
Gross |
|
|
|
Gross |
|
|
|
|
|
|
|
Unrealized |
|
|
|
Unrealized |
|
|
|
Unrealized |
|
|
|
(dollars in thousands) |
|
Fair Value |
|
Losses |
|
Fair Value |
|
Losses |
|
Fair Value |
|
Losses |
|
|
|
June 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Securities Issued by
the U.S. Treasury and Government Agencies |
|
$ |
69,999 |
|
$ |
(813) |
|
$ |
1,065 |
|
$ |
(4 |
) |
$ |
71,064 |
|
$ |
(817) |
|
|
|
Debt Securities Issued by
States and Political Subdivisions |
|
28,745 |
|
(280) |
|
- |
|
- |
|
28,745 |
|
(280) |
|
|
|
Debt Securities Issued by Corporations |
|
5,049 |
|
(1) |
|
- |
|
- |
|
5,049 |
|
(1) |
|
|
|
Mortgage-Backed Securities Issued by
Government Agencies |
|
479,590 |
|
(4,193) |
|
1,527 |
|
(21 |
) |
481,117 |
|
(4,214) |
|
|
|
Total |
|
$ |
583,383 |
|
$ |
(5,287) |
|
$ |
2,592 |
|
$ |
(25 |
) |
$ |
585,975 |
|
$ |
(5,312) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Securities Issued by
the U.S. Treasury and Government Agencies |
|
$ |
1,366 |
|
$ |
(36) |
|
$ |
1,204 |
|
$ |
(9 |
) |
$ |
2,570 |
|
$ |
(45) |
|
|
|
Debt Securities Issued by
States and Political Subdivisions |
|
67,754 |
|
(1,583) |
|
- |
|
- |
|
67,754 |
|
(1,583) |
|
|
|
Mortgage-Backed Securities Issued by
Government Agencies |
|
1,662,897 |
|
(30,887) |
|
- |
|
- |
|
1,662,897 |
|
(30,887) |
|
|
|
Total |
|
$ |
1,732,017 |
|
$ |
(32,506) |
|
$ |
1,204 |
|
$ |
(9 |
) |
$ |
1,733,221 |
|
$ |
(32,515) |
|
The Company does not believe that the investment securities that were in an unrealized loss position as of June 30, 2011, which was comprised of 62 securities, represent an other-than-temporary impairment. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Company does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost bases, which may be at maturity.
As of June 30, 2011, the gross unrealized losses reported for mortgage-backed securities related to investment securities issued by the Government National Mortgage Association.
As of June 30, 2011, the carrying value of the Company’s Federal Home Loan Bank stock and Federal Reserve Bank stock was $61.3 million and $18.6 million, respectively. These securities do not have a readily determinable fair value as their ownership is restricted and there is no market for these securities. These securities can only be redeemed or sold at their par value and only to the respective issuing government supported institution or to another member institution. The Company records these non-marketable equity securities as a component of other assets and periodically evaluates these securities for impairment. Management considers these non-marketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than by recognizing temporary declines in value. |