XML 27 R16.htm IDEA: XBRL DOCUMENT v3.19.1
Available-For-Sale And Held-To-Maturity Securities
 3 Months Ended
Mar. 31, 2019
Investments Debt And Equity Securities [Abstract]  
Available-For-Sale And Held-To-Maturity Securities

NOTE 6 – 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 March 31, 2019 and December 31, 2018 (in thousands):

 

 

 

March 31, 2019

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains (1)

 

 

Gross

Unrealized

Losses (1)

 

 

Estimated

Fair Value

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

 

$

5,367

 

 

$

23

 

 

$

(22

)

 

$

5,368

 

State and municipal securities

 

 

49,011

 

 

 

107

 

 

 

—

 

 

 

49,118

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

216,959

 

 

 

325

 

 

 

(1,867

)

 

 

215,417

 

Commercial

 

 

74,117

 

 

 

4

 

 

 

(2,744

)

 

 

71,377

 

Non-agency

 

 

1,176

 

 

 

—

 

 

 

(28

)

 

 

1,148

 

Corporate fixed income securities

 

 

950,997

 

 

 

2,007

 

 

 

(5,416

)

 

 

947,588

 

Asset-backed securities

 

 

1,726,984

 

 

 

561

 

 

 

(13,794

)

 

 

1,713,751

 

 

 

$

3,024,611

 

 

$

3,027

 

 

$

(23,871

)

 

$

3,003,767

 

Held-to-maturity securities (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

$

1,168,095

 

 

$

4,841

 

 

$

(16,346

)

 

$

1,156,590

 

Commercial

 

 

37,739

 

 

 

336

 

 

 

—

 

 

 

38,075

 

Asset-backed securities

 

 

2,897,728

 

 

 

3,302

 

 

 

(38,850

)

 

 

2,862,180

 

 

 

$

4,103,562

 

 

$

8,479

 

 

$

(55,196

)

 

$

4,056,845

 

 

 

 

 

December 31, 2018

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains (1)

 

 

Gross

Unrealized

Losses (1)

 

 

Estimated

Fair Value

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

 

$

5,237

 

 

$

13

 

 

$

(35

)

 

$

5,215

 

State and municipal securities

 

 

72,487

 

 

—

 

 

 

(4,261

)

 

 

68,226

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

234,292

 

 

 

88

 

 

 

(3,972

)

 

 

230,408

 

Commercial

 

 

74,411

 

 

 

4

 

 

 

(4,700

)

 

 

69,715

 

Non-agency

 

 

1,245

 

 

—

 

 

 

(26

)

 

 

1,219

 

Corporate fixed income securities

 

 

958,406

 

 

—

 

 

 

(26,802

)

 

 

931,604

 

Asset-backed securities

 

 

1,779,496

 

 

 

672

 

 

 

(16,108

)

 

 

1,764,060

 

 

 

$

3,125,574

 

 

$

777

 

 

$

(55,904

)

 

$

3,070,447

 

Held-to-maturity securities (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

$

1,198,442

 

 

$

1,307

 

 

$

(31,689

)

 

$

1,168,060

 

Commercial

 

 

51,524

 

 

 

185

 

 

—

 

 

 

51,709

 

Asset-backed securities

 

 

2,968,888

 

 

 

4,585

 

 

 

(70,335

)

 

 

2,903,138

 

 

 

$

4,218,854

 

 

$

6,077

 

 

$

(102,024

)

 

$

4,122,907

 

 

(1)

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

(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.

There were no sales of available-for-sale securities during the three months ended March 31, 2019 and 2018.

During the three months ended March 31, 2019, unrealized gains, net of deferred taxes, of $25.8 million were recorded in accumulated other comprehensive loss in the consolidated statements of financial condition. During the three months ended March 31, 2018, unrealized losses, net of deferred taxes, of $13.1 million were recorded in accumulated other comprehensive loss in the consolidated statements of financial condition.

The table below summarizes the amortized cost and fair values of our available-for-sale securities and held-to-maturity securities by contractual maturity. 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.

 

 

 

March 31, 2019

 

 

 

Available-for-sale securities

 

 

Held-to-maturity securities

 

 

 

Amortized

Cost

 

 

Estimated

Fair Value

 

 

Amortized

Cost

 

 

Estimated

Fair Value

 

Debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Within one year

 

$

2,520

 

 

$

2,508

 

 

$

—

 

 

$

—

 

After one year through three years

 

 

268,305

 

 

 

265,943

 

 

 

—

 

 

 

—

 

After three years through five years

 

 

382,387

 

 

 

381,155

 

 

 

—

 

 

 

—

 

After five years through ten years

 

 

556,764

 

 

 

557,014

 

 

 

475,640

 

 

 

474,910

 

After ten years

 

 

1,522,383

 

 

 

1,509,205

 

 

 

2,422,088

 

 

 

2,387,270

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After one year through three years

 

 

195

 

 

 

198

 

 

 

48,669

 

 

 

49,005

 

After three years through five years

 

 

1,106

 

 

 

1,119

 

 

 

—

 

 

 

—

 

After five years through ten years

 

 

5,492

 

 

 

5,607

 

 

 

160,488

 

 

 

159,315

 

After ten years

 

 

285,459

 

 

 

281,018

 

 

 

996,677

 

 

 

986,345

 

 

 

$

3,024,611

 

 

$

3,003,767

 

 

$

4,103,562

 

 

$

4,056,845

 

 

The maturities of our available-for-sale (fair value) and held-to-maturity (amortized cost) securities at March 31, 2019, 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

 

$

1,910

 

 

$

3,458

 

 

$

—

 

 

$

—

 

 

$

5,368

 

State and municipal securities

 

 

—

 

 

 

—

 

 

 

18,171

 

 

 

30,947

 

 

 

49,118

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

—

 

 

 

1,317

 

 

 

5,607

 

 

 

208,493

 

 

 

215,417

 

Commercial

 

 

—

 

 

 

—

 

 

 

—

 

 

 

71,377

 

 

 

71,377

 

Non-agency

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,148

 

 

 

1,148

 

Corporate fixed income securities

 

 

598

 

 

 

643,640

 

 

 

303,350

 

 

 

—

 

 

 

947,588

 

Asset-backed securities

 

 

—

 

 

 

—

 

 

 

235,493

 

 

 

1,478,258

 

 

 

1,713,751

 

 

 

$

2,508

 

 

$

648,415

 

 

$

562,621

 

 

$

1,790,223

 

 

$

3,003,767

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

$

—

 

 

$

10,930

 

 

$

160,488

 

 

$

996,677

 

 

$

1,168,095

 

Commercial

 

 

—

 

 

 

37,739

 

 

 

—

 

 

 

—

 

 

 

37,739

 

Asset-backed securities

 

 

—

 

 

 

—

 

 

 

475,640

 

 

 

2,422,088

 

 

 

2,897,728

 

 

 

$

—

 

 

$

48,669

 

 

$

636,128

 

 

$

3,418,765

 

 

$

4,103,562

 

 

(1)

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

At March 31, 2019 and December 31, 2018, securities of $1.6 billion and $1.9 billion, respectively, were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits. At March 31, 2019 and December 31, 2018, securities of $1.5 billion and $1.6 billion, respectively, were pledged with the Federal Reserve discount window.

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 March 31, 2019 (in thousands):

 

 

 

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

 

$

(22

)

 

$

3,173

 

 

$

—

 

 

$

—

 

 

$

(22

)

 

$

3,173

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

(1

)

 

 

150

 

 

 

(1,866

)

 

 

83,461

 

 

 

(1,867

)

 

 

83,611

 

Commercial

 

 

—

 

 

 

—

 

 

 

(2,744

)

 

 

70,628

 

 

 

(2,744

)

 

 

70,628

 

Non-agency

 

 

(28

)

 

 

1,146

 

 

 

—

 

 

 

—

 

 

 

(28

)

 

 

1,146

 

Corporate fixed income securities

 

 

(106

)

 

 

104,241

 

 

 

(5,310

)

 

 

505,628

 

 

 

(5,416

)

 

 

609,869

 

Asset-backed securities

 

 

(13,794

)

 

 

1,273,856

 

 

 

—

 

 

 

—

 

 

 

(13,794

)

 

 

1,273,856

 

 

 

$

(13,951

)

 

$

1,382,566

 

 

$

(9,920

)

 

$

659,717

 

 

$

(23,871

)

 

$

2,042,283

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

$

(39

)

 

$

118,702

 

 

$

(16,307

)

 

$

642,543

 

 

$

(16,346

)

 

$

761,245

 

Asset-backed securities

 

 

(31,877

)

 

 

2,111,245

 

 

 

(6,973

)

 

 

229,646

 

 

 

(38,850

)

 

 

2,340,891

 

 

 

$

(31,916

)

 

$

2,229,947

 

 

$

(23,280

)

 

$

872,189

 

 

$

(55,196

)

 

$

3,102,136

 

 

At March 31, 2019, the amortized cost of 186 securities classified as available for sale exceeded their fair value by $23.9 million, of which $9.9 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 March 31, 2019, was $2.0 billion, which was 68.0% of our available-for-sale portfolio.

At March 31, 2019, the carrying value of 163 securities held to maturity exceeded their fair value by $55.2 million, of which $23.3 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 months ended March 31, 2019 and 2018.

We believe the gross unrealized losses of $79.1 million related to our investment portfolio, as of March 31, 2019, 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.