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Available-For-Sale And Held-To-Maturity Securities
 12 Months Ended
Dec. 31, 2014
Available-For-Sale And Held-To-Maturity Securities [Abstract]  
Available-For-Sale And Held-To-Maturity Securities

NOTE 8 – 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 December 31, 2014 and 2013 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

Amortized Cost

 

Gross Unrealized Gains (1)

 

Gross Unrealized Losses (1)

 

Estimated Fair Value

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

$
1,613 

 

$
1 

 

$
(4)

 

$
1,610 

State and municipal securities

 
76,518 

 

 
20 

 

 
(2,137)

 

 
74,401 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

Agency

 
206,982 

 

 
3,137 

 

 
(913)

 

 
209,206 

Commercial

 
107,100 

 

 
633 

 

 
(89)

 

 
107,644 

Non-agency

 
3,186 

 

 
5 

 

 
(54)

 

 
3,137 

Corporate fixed income securities

 
336,210 

 

 
2,016 

 

 
(820)

 

 
337,406 

Asset-backed securities

 
788,908 

 

 
1,321 

 

 
(10,155)

 

 
780,074 

 

$
1,520,517 

 

$
7,133 

 

$
(14,172)

 

$
1,513,478 

Held-to-maturity securities (2)

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

Agency

$
884,451 

 

$
32,926 

 

$
(42)

 

$
917,335 

Commercial

 
59,462 

 

 
2,257 

 

 

 -

 

 
61,719 

Non-agency

 
1,081 

 

 

 -

 

 
(17)

 

 
1,064 

Asset-backed securities

 
177,335 

 

 
3,151 

 

 
(2,645)

 

 
177,841 

Corporate fixed income securities

 
55,236 

 

 
4 

 

 
(1,223)

 

 
54,017 

 

$
1,177,565 

 

$
38,338 

 

$
(3,927)

 

$
1,211,976 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

During the year ended December 31, 2013, we transferred $1.1 billion of mortgage-backed securities from our available-for-sale portfolio to the held-to-maturity category, reflecting our company’s intent to hold those securities to maturity. During the year ended December 31, 2013, we transferred $387.5 million from our held-to-maturity portfolio to the available-for-sale category as certain CLO investments may become non-compliant under the provisions of the new Volcker Rule, which could require us to sell them before maturity.

For the years ended December 31, 2014, 2013, and 2012, we received proceeds of $300.3 million,  $197.5 million, and $250.2 million, respectively, from the sale of available-for-sale securities, which resulted in realized gains of $3.7 million,  $2.0 million, and $3.8 million, respectively.

During the years ended December 31, 2014 and 2013, unrealized gains, net of deferred taxes, of $1.8 million and $48.5 million, respectively, were recorded in accumulated other comprehensive income/(loss) in the consolidated statements of financial condition. During the year ended December 31, 2012, unrealized gains, net of deferred taxes, of $8.7 million were recorded in accumulated other comprehensive income/(loss) 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

Available-for-sale securities

 

Held-to-maturity securities

 

Amortized Cost

 

Estimated Fair Value

 

Amortized Cost

 

Estimated Fair Value

Debt securities

 

 

 

 

 

 

 

 

 

 

 

Within one year

$
132,004 

 

$
132,432 

 

$
15,025 

 

$
15,027 

After one year through three years

 
46,936 

 

 
47,253 

 

 

 -

 

 

 -

After three years through five years

 
121,655 

 

 
122,311 

 

 
40,211 

 

 
38,991 

After five years through ten years

 
299,752 

 

 
298,294 

 

 

 -

 

 

 -

After ten years

 
602,902 

 

 
593,201 

 

 
177,335 

 

 
177,840 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

Within one year

 

 -

 

 

 -

 

 

 -

 

 

 -

After one year through three years

 
120 

 

 
122 

 

 

 -

 

 

 -

After five years through ten years

 
78,994 

 

 
81,182 

 

 
59,462 

 

 
61,719 

After ten years

 
238,154 

 

 
238,683 

 

 
885,532 

 

 
918,399 

 

$
1,520,517 

 

$
1,513,478 

 

$
1,177,565 

 

$
1,211,976 

 

The maturities of our available-for-sale (fair value) and held-to-maturity (amortized cost) securities at December 31, 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

$
452 

 

$
1,158 

 

$

 -

 

$

 -

 

$
1,610 

 

State and municipal securities

 

 -

 

 

 -

 

 
1,655 

 

 
72,746 

 

 
74,401 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 -

 

 

 -

 

 
40,223 

 

 
168,983 

 

 
209,206 

 

Commercial

 

 -

 

 

 -

 

 
40,959 

 

 
66,685 

 

 
107,644 

 

Non-agency

 

 -

 

 
122 

 

 

 -

 

 
3,015 

 

 
3,137 

 

Corporate fixed income securities

 
131,980 

 

 
163,407 

 

 
42,019 

 

 

 -

 

 
337,406 

 

Asset-backed securities

 

 -

 

 
4,999 

 

 
254,620 

 

 
520,455 

 

 
780,074 

 

 

$
132,432 

 

$
169,686 

 

$
379,476 

 

$
831,884 

 

$
1,513,478 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

$

 -

 

$

 -

 

$

 -

 

$
884,451 

 

$
884,451 

 

Commercial

 

 -

 

 

 -

 

 
59,462 

 

 

 -

 

 
59,462 

 

Non-agency

 

 -

 

 

 -

 

 

 -

 

 
1,081 

 

 
1,081 

 

Asset-backed securities

 

 -

 

 

 -

 

 

 -

 

 
177,335 

 

 
177,335 

 

Corporate fixed income securities

 
15,025 

 

 
40,211 

 

 

 -

 

 

 -

 

 
55,236 

 

 

$
15,025 

 

$
40,211 

 

$
59,462 

 

$
1,062,867 

 

$
1,177,565 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1Due to the immaterial amount of income recognized on tax-exempt securities, yields were not calculated on a tax equivalent basis.

 

At December 31, 2014 and 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 shows the gross unrealized losses and fair value of the Company’s investment securities with unrealized losses, aggregated by investment category and length of time the individual investment securities have been in continuous unrealized loss positions, at December 31, 2014 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 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)

 

$
987 

 

$

 -

 

$

 -

 

$
(4)

 

$
987 

State and municipal securities

 
(6)

 

 
2,957 

 

 
(2,131)

 

 
65,294 

 

 
(2,137)

 

 
68,251 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 
(238)

 

 
38,453 

 

 
(675)

 

 
46,533 

 

 
(913)

 

 
84,986 

Commercial

 
(7)

 

 
4,893 

 

 
(82)

 

 
10,043 

 

 
(89)

 

 
14,936 

Non-agency

 
(54)

 

 
2,888 

 

 

 -

 

 

 -

 

 
(54)

 

 
2,888 

Corporate fixed income securities

 
(80)

 

 
33,940 

 

 
(740)

 

 
65,003 

 

 
(820)

 

 
98,943 

Asset-backed securities

 
(4,447)

 

 
389,422 

 

 
(5,708)

 

 
221,361 

 

 
(10,155)

 

 
610,783 

 

$
(4,836)

 

$
473,540 

 

$
(9,336)

 

$
408,234 

 

$
(14,172)

 

$
881,774 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 
(91)

 

 
8,217 

 

 
(7,824)

 

 
846,119 

 

 
(7,915)

 

 
854,336 

Commercial

 

 -

 

 

 -

 

 
(186)

 

 
59,804 

 

 
(186)

 

 
59,804 

Asset-backed securities

 

 -

 

 

 -

 

 
(2,774)

 

 
95,580 

 

 
(2,774)

 

 
95,580 

Corporate fixed income securities

 

 -

 

 

 -

 

 
(2,605)

 

 
50,332 

 

 
(2,605)

 

 
50,332 

 

$
(91)

 

$
8,217 

 

$
(13,389)

 

$

1,051,835

 

$
(13,480)

 

$

1,060,052

 

At December 31, 2014, the amortized cost of 100 securities classified as available for sale exceeded their fair value by $14.2 million, of which $9.3 million related to investment securities that had been in a loss position for 12 months or longer. The total fair value of these investments at December 31, 2014, was $881.1 million, which was 58.3% of our available-for-sale investment portfolio.

 

At December 31, 2014, the carrying value of 22 securities held to maturity exceeded their fair value by $3.9 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 years ended December 31, 2014 and 2013. Based on the evaluation, we recognized a credit-related OTTI of $0.6 million in earnings for the year ended December 31, 2012.

We believe the gross unrealized losses related to all other securities of $14.2 million as of December 31, 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. No OTTI charge was recorded in 2014 related to these securities. Accordingly, we have concluded that the impairment on these securities is not other-than-temporary.