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Available-For-Sale And Held-To-Maturity Securities
 9 Months Ended
Sep. 30, 2014
Available-For-Sale And Held-To-Maturity Securities [Abstract]  
Available-For-Sale And Held-To-Maturity Securities

NOTE 7 – Available-for-Sale and Held-to-Maturity Securities

The following tables provide a summary of the amortized cost and fair values of the available-for-sale securities and held-to-maturity securities at September 30, 2014 and December 31, 2013 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

Amortized cost

 

Gross unrealized gains (1)

 

Gross unrealized losses (1)

 

Estimated fair value

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

$
1,716 

 

$
1 

 

$
(4)

 

$
1,713 

State and municipal securities

 
76,660 

 

 
81 

 

 
(2,628)

 

 
74,113 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

Agency

 
205,163 

 

 
2,637 

 

 
(1,589)

 

 
206,211 

Commercial

 
127,774 

 

 
717 

 

 
(606)

 

 
127,885 

Non-agency

 
29,247 

 

 
191 

 

 

 -

 

 
29,438 

Corporate fixed income securities

 
358,773 

 

 
2,797 

 

 
(1,356)

 

 
360,214 

Asset-backed securities

 
734,087 

 

 
1,350 

 

 
(7,264)

 

 
728,173 

 

$
1,533,420 

 

$
7,774 

 

$
(13,447)

 

$
1,527,747 

Held-to-maturity securities (2)

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

Agency

$
906,177 

 

$
20,764 

 

$
(18)

 

$
926,923 

Commercial

 
59,447 

 

 
1,376 

 

 

 -

 

 
60,823 

Non-agency

 
1,226 

 

 
1 

 

 
(13)

 

 
1,214 

Asset-backed securities

 
177,254 

 

 
3,802 

 

 
(2,319)

 

 
178,737 

Corporate fixed income securities

 
55,260 

 

 
5 

 

 
(1,407)

 

 
53,858 

 

$
1,199,364 

 

$
25,948 

 

$
(3,757)

 

$
1,221,555 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

Amortized cost

 

Gross unrealized gains (1)

 

Gross unrealized losses (1)

 

Estimated fair value

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

$
1,074 

 

$

 -

 

$
(2)

 

$
1,072 

State and municipal securities

 
96,475 

 

 
739 

 

 
(6,537)

 

 
90,677 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 -

Agency

 
184,533 

 

 
2,859 

 

 
(3,405)

 

 
183,987 

Commercial

 
209,949 

 

 
3,084 

 

 
(1,787)

 

 
211,246 

Non-agency

 
4,547 

 

 
72 

 

 

 -

 

 
4,619 

Corporate fixed income securities

 
496,385 

 

 
4,769 

 

 
(2,838)

 

 
498,316 

Asset-backed securities

 
769,553 

 

 
2,499 

 

 
(5,716)

 

 
766,336 

 

$
1,762,516 

 

$
14,022 

 

$
(20,285)

 

$
1,756,253 

Held-to-maturity securities (2)

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

Agency

$
968,759 

 

$
1,156 

 

$
(7,915)

 

$
962,000 

Commercial

 
59,404 

 

 

 -

 

 
(186)

 

 
59,218 

Asset-backed securities

 
228,623 

 

 
6,157 

 

 
(2,774)

 

 
232,006 

Corporate fixed income securities

 
55,329 

 

 
11 

 

 
(2,605)

 

 
52,735 

Municipal auction rate securities

 

 -

 

 

 -

 

 

 -

 

 

 -

 

$
1,312,115 

 

$
7,324 

 

$
(13,480)

 

$
1,305,959 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Unrealized gains/(losses) related to available-for-sale securities are reported in accumulated other comprehensive income.

(2)

Held-to-maturity securities are carried in the consolidated statements of financial condition at amortized cost, and the changes in the value of these securities, other than impairment charges, are not reported on the consolidated financial statements.

 

For the three and nine months ended September 30, 2014, we received proceeds of $162.9 million and $229.7 million, respectively, from the sale of available-for-sale securities, which resulted in realized gains of $1.2 million and $3.2 million, respectively. For the three and nine months ended September 30, 2013, we received proceeds of $4.5 million and $194.1 million, respectively, from the sale of available-for-sale securities, which resulted in realized gains of $0.2 million and $1.7 million, respectively.

During the three months ended September 30, 2014, unrealized losses, net of deferred tax benefits, of $3.9 million were recorded in accumulated other comprehensive income in the consolidated statements of financial condition. During the nine months ended September 30, 2014, unrealized gains, net of deferred taxes, of $1.7 million were recorded in accumulated other comprehensive income in the consolidated statements of financial condition. During the three and nine months ended September 30, 2013, unrealized losses, net of deferred tax benefits, of $8.2 million and $48.2 million, respectively, were recorded in accumulated other comprehensive income in the consolidated statements of financial condition.

The table below summarizes the amortized cost and fair values of debt securities, by contractual maturity (in thousands). Expected maturities may differ significantly from contractual maturities, as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

Available-for-sale securities

 

Held-to-maturity securities

 

Amortized cost

 

Estimated fair value

 

Amortized cost

 

Estimated fair value

Debt securities

 

 

 

 

 

 

 

 

 

 

 

Within one year

$
118,969 

 

$
120,197 

 

$

 -

 

$

 -

After one year through three years

 
66,062 

 

 
66,405 

 

 
15,031 

 

 
15,034 

After three years through five years

 
142,771 

 

 
143,348 

 

 
40,229 

 

 
38,824 

After five years through ten years

 
348,396 

 

 
347,259 

 

 

 -

 

 

 -

After ten years

 
495,038 

 

 
487,004 

 

 
177,254 

 

 
178,736 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

Within one year

 

 -

 

 

 -

 

 

 -

 

 

 -

After three years through five years

 
180 

 

 
184 

 

 

 -

 

 

 -

After five years through ten years

 
79,408 

 

 
80,976 

 

 
59,447 

 

 
60,824 

After ten years

 
282,596 

 

 
282,374 

 

 
907,403 

 

 
928,137 

 

$
1,533,420 

 

$
1,527,747 

 

$
1,199,364 

 

$
1,221,555 

 

 

The maturities of our available-for-sale (fair value) and held-to-maturity (amortized cost) securities at September 30, 2014, are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Within 1 year

 

1 - 5 years

 

5 - 10 years

 

After 10 years

 

Total

 

Available-for-sale: 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

$
327 

 

$
1,386 

 

$

 -

 

$

 -

 

$
1,713 

 

State and municipal securities

 

 -

 

 

 -

 

 
1,639 

 

 
72,474 

 

 
74,113 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 -

 

 

 -

 

 
40,501 

 

 
165,710 

 

 
206,211 

 

Commercial

 

 -

 

 

 -

 

 
40,474 

 

 
87,411 

 

 
127,885 

 

Non-agency

 

 -

 

 
184 

 

 

 -

 

 
29,254 

 

 
29,438 

 

Corporate fixed income securities

 
119,870 

 

 
198,729 

 

 
41,615 

 

 

 -

 

 
360,214 

 

Asset-backed securities

 

 -

 

 
9,638 

 

 
304,006 

 

 
414,529 

 

 
728,173 

 

 

$
120,197 

 

$
209,937 

 

$
428,235 

 

$
769,378 

 

$

1,527,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

$

 -

 

$

 -

 

$

 -

 

$
906,177 

 

$
906,177 

 

Commercial

 

 -

 

 

 -

 

 
59,447 

 

 

 -

 

 
59,447 

 

Non-agency

 

 -

 

 

 -

 

 

 -

 

 
1,226 

 

 
1,226 

 

Asset-backed securities

 

 -

 

 

 -

 

 

 -

 

 
177,254 

 

 
177,254 

 

Corporate fixed income securities

 

 -

 

 
55,260 

 

 

 -

 

 

 -

 

 
55,260 

 

 

$

 -

 

$
55,260 

 

$
59,447 

 

$

1,084,657

 

$

1,199,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Due to the immaterial amount of income recognized on tax-exempt securities, yields were not calculated on a tax equivalent basis. 

At September 30, 2014 and December 31, 2013, securities of $1.2 billion and $505.5 million, respectively, were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits.

The following table is a summary of the amount of gross unrealized losses and the estimated fair value by length of time that the available-for-sale and held to maturity securities have been in an unrealized loss position at September 30, 2014 and December 31, 2013 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

Less than 12 months

 

12 months or more

 

Total

 

Gross unrealized losses

 

Estimated fair value

 

Gross unrealized losses

 

Estimated fair value

 

Gross unrealized losses

 

Estimated fair value

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$
(4)

 

$
1,214 

 

$

 -

 

$

 -

 

$
(4)

 

$
1,214 

State and municipal securities

 
(1)

 

 
426 

 

 
(2,627)

 

 
67,458 

 

 
(2,628)

 

 
67,884 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 
(306)

 

 
73,769 

 

 
(1,283)

 

 
47,285 

 

 
(1,589)

 

 
121,054 

Commercial

 
(404)

 

 
41,123 

 

 
(202)

 

 
9,996 

 

 
(606)

 

 
51,119 

Non-agency

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Corporate fixed income securities

 
(134)

 

 
37,915 

 

 
(1,222)

 

 
64,541 

 

 
(1,356)

 

 
102,456 

Asset-backed securities

 
(2,950)

 

 
314,910 

 

 
(4,314)

 

 
182,303 

 

 
(7,264)

 

 
497,213 

 

$
(3,799)

 

$
469,357 

 

$
(9,648)

 

$
371,583 

 

$
(13,447)

 

$
840,940 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

$
(18)

 

$
3,221 

 

$

 -

 

$

 -

 

$
(18)

 

$
3,221 

Commercial

 
(13)

 

 
524 

 

 

 -

 

 

 -

 

 
(13)

 

 
524 

Asset-backed securities

 
(129)

 

 
12,587 

 

 
(2,190)

 

 
55,817 

 

 
(2,319)

 

 
68,404 

Corporate fixed income securities

 

 -

 

 

 -

 

 
(1,407)

 

 
48,855 

 

 
(1,407)

 

 
48,855 

 

$
(160)

 

$
16,332 

 

$
(3,597)

 

$
104,672 

 

$
(3,757)

 

$

121,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

Less than 12 months

 

12 months or more

 

Total

 

 

Gross unrealized losses

 

Estimated fair value

 

Gross unrealized losses

 

Estimated fair value

 

Gross unrealized losses

 

Estimated fair value

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$
(2)

 

$
721 

 

$

 -

 

$

 -

 

$
(2)

 

$
721 

 

State and municipal securities

 
(2,966)

 

 
32,272 

 

 
(3,571)

 

 
41,182 

 

 
(6,537)

 

 
73,454 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 
(3,260)

 

 
89,395 

 

 
(145)

 

 
1,335 

 

 
(3,405)

 

 
90,730 

 

Commercial

 
(1,787)

 

 
46,970 

 

 

 -

 

 

 -

 

 
(1,787)

 

 
46,970 

 

Corporate fixed income securities

 
(2,062)

 

 
80,700 

 

 
(776)

 

 
39,421 

 

 
(2,838)

 

 
120,121 

 

Asset-backed securities

 
(4,516)

 

 
436,770 

 

 
(1,200)

 

 
31,938 

 

 
(5,716)

 

 
468,708 

 

 

$
(14,593)

 

$
686,828 

 

$
(5,692)

 

$
113,876 

 

$
(20,285)

 

$
800,704 

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

$
(91)

 

$
8,127 

 

$
(7,824)

 

$
838,295 

 

$
(7,915)

 

$
846,422 

 

Commercial

 

 -

 

 

 -

 

 
(186)

 

 
59,219 

 

 
(186)

 

 
59,219 

 

Asset-backed securities

 

 -

 

 

 -

 

 
(2,774)

 

 
92,806 

 

 
(2,774)

 

 
92,806 

 

Corporate fixed income securities

 

 -

 

 

 -

 

 
(2,605)

 

 
47,727 

 

 
(2,605)

 

 
47,727 

 

 

$
(91)

 

$
8,127 

 

$
(13,389)

 

$

1,038,047

 

$
(13,480)

 

$

1,046,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2014, the amortized cost of 103 securities classified as available for sale exceeded their fair value by $13.4 million, of which $9.6 million related to investment securities that had been in a loss position for 12 months or longer. As of September 30, 2014, the carrying value of 20 securities held to maturity exceeded their fair value by $3.8  million, of which $3.6 million related  to securities held to maturity that have been in a loss position for 12 months or longer. As discussed in more detail below, we conduct periodic reviews of all securities with unrealized losses to assess whether the impairment is other-than-temporary.

Other-Than-Temporary Impairment

We evaluate all securities in an unrealized loss position quarterly to assess whether the impairment is other-than-temporary. Our other-than-temporary impairment (“OTTI”) assessment is a subjective process requiring the use of judgments and assumptions. There was no credit-related OTTI recognized during the three and nine months ended September 30, 2014.

We believe the gross unrealized losses of $13.4 million related to our available-for-sale portfolio as of September 30, 2014, are attributable to issuer-specific credit spreads and changes in market interest rates and asset spreads. We, therefore, do not expect to incur any credit losses related to these securities. In addition, we have no intent to sell these securities with unrealized losses, and it is not more likely than not that we will be required to sell these securities prior to recovery of the amortized cost. Accordingly, we have concluded that the impairment on these securities is not other-than-temporary.