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Investment Securities
 12 Months Ended
Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
NOTE 3 INVESTMENT SECURITIES:
Investment securities are generally classified as available for sale or held to maturity at the time of purchase. See Note 1 for the Corporation’s accounting policy for investment securities. The majority of the Corporation's investment securities are mortgage-related securities issued by the Government National Mortgage Association (“GNMA”) or government-sponsored enterprises ("GSE") such as the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”). The amortized cost and fair values of securities available for sale and held to maturity were as follows.
 
December 31, 2015
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
 
 
 
($ in Thousands)
 
Investment securities available for sale:
 
 
 
 
 
 
 
 
U. S. Treasury securities
$
999

 
$
—

 
$
(2
)
 
$
997

 
Residential mortgage-related securities:
 
 
 
 
 
 
 
 
FNMA / FHLMC
1,388,995

 
33,791

 
(8,160
)
 
1,414,626

 
GNMA
1,605,956

 
507

 
(16,460
)
 
1,590,003

 
Private-label
1,722

 
1

 
(14
)
 
1,709

 
GNMA commercial mortgage-related securities
1,982,477

 
1,334

 
(28,501
)
 
1,955,310

 
Other securities (debt and equity)
4,718

 
51

 
—

 
4,769

 
Total investment securities available for sale
$
4,984,867

 
$
35,684

 
$
(53,137
)
 
$
4,967,414

 
Investment securities held to maturity:
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)
$
1,043,767

 
$
16,803

 
$
(339
)
 
$
1,060,231

 
Residential mortgage-related securities:
 
 
 
 
 
 
 
 
FNMA / FHLMC
41,469

 
513

 
(645
)
 
41,337

 
GNMA
82,994

 
189

 
(309
)
 
82,874

 
Total investment securities held to maturity
$
1,168,230

 
$
17,505

 
$
(1,293
)
 
$
1,184,442


 
December 31, 2014
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
 
 
 
($ in Thousands)
 
Investment securities available for sale:
 
 
 
 
 
 
 
 
U. S. Treasury securities
$
999

 
$
—

 
$
(1
)
 
$
998

 
Municipal securities
560,839

 
21,869

 
(29
)
 
582,679

 
Residential mortgage-related securities:
 
 
 
 
 
 
 
 
FNMA / FHLMC
3,534,240

 
59,640

 
(30,423
)
 
3,563,457

 
GNMA
165,863

 
1,596

 
(127
)
 
167,332

 
Private-label
2,297

 
7

 
(10
)
 
2,294

 
GNMA commercial mortgage-related securities
1,097,913

 
1,922

 
(25,942
)
 
1,073,893

 
Other securities (debt and equity)
6,108

 
51

 
—

 
6,159

 
Total investment securities available for sale
$
5,368,259

 
$
85,085

 
$
(56,532
)
 
$
5,396,812

 
Investment securities held to maturity:
 
 
 
 
 
 
 
 
Municipal securities
$
404,455

 
$
9,444

 
$
(832
)
 
$
413,067

 
Total investment securities held to maturity
$
404,455

 
$
9,444

 
$
(832
)
 
$
413,067

During the fourth quarter of 2015, the Corporation reclassified approximately $400 million of municipal securities and $125 million of mortgage-related securities from available for sale to held to maturity. The reclassification of these investment securities was accounted for at fair value. Management elected to transfer these investment securities as the Corporation has the positive intent and ability to hold these investment securities to maturity.



The amortized cost and fair values of investment securities available for sale and held to maturity at December 31, 2015, are shown below. 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.
 
Available for Sale
 
Held to Maturity
($ in Thousands)
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Due in one year or less
$
1,500

 
$
1,515

 
$
42,841

 
$
26,761

Due after one year through five years
4,199

 
4,197

 
244,257

 
255,899

Due after five years through ten years
—

 
—

 
253,429

 
261,934

Due after ten years
—

 
—

 
503,240

 
515,637

Total debt securities
5,699

 
5,712

 
1,043,767

 
1,060,231

Residential mortgage-related securities:
 
 
 
 
 
 
 
FNMA / FHLMC
1,388,995

 
1,414,626

 
41,469

 
41,337

GNMA
1,605,956

 
1,590,003

 
82,994

 
82,874

Private-label
1,722

 
1,709

 
—

 
—

GNMA commercial mortgage-related securities
1,982,477

 
1,955,310

 
—

 
—

Equity securities
18

 
54

 
—

 
—

Total investment securities
$
4,984,867

 
$
4,967,414

 
$
1,168,230

 
$
1,184,442

Ratio of Fair Value to Amortized Cost
 
 
99.6
%
 
 
 
101.4
%


During 2015, the Corporation restructured its investment securities portfolio and sold approximately $1.6 billion of FNMA and FHLMC mortgage-related securities and reinvested into GNMA mortgage-related securities, generating an $8 million net gain on sale. This restructuring lowered risk weighted assets and related capital requirements.
Total proceeds and gross realized gains and losses from sales of investment securities for each of the three years ended December 31 were as follows. There were no other-than-temporary impairment write-downs on investment securities for 2015, 2014, or 2013.
 
2015
 
2014
 
2013
 
($ in Thousands)
Gross gains
$
12,270

 
$
1,184

 
$
637

Gross losses
(4,137
)
 
(690
)
 
(73
)
Investment securities gains, net
$
8,133

 
$
494

 
$
564

Proceeds from sales of investment securities
$
1,601,947

 
$
102,011

 
$
136,152


Pledged securities with a carrying value of approximately $3.2 billion and $2.8 billion at December 31, 2015, and December 31, 2014, respectively, were pledged to secure certain deposits or for other purposes as required or permitted by law.
The following represents gross unrealized losses and the related fair value of investment securities available for sale and held to maturity, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position, at December 31, 2015.
 
Less than 12 months
 
12 months or more
 
Total
December 31, 2015
Number
of
Securities
 
Unrealized
Losses
 
Fair
Value
 
Number
of
Securities
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
($ in Thousands)
Investment securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
1

 
$
(2
)
 
$
997

 
—

 
$
—

 
$
—

 
$
(2
)
 
$
997

Residential mortgage-related securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FNMA / FHLMC
17

 
(1,548
)
 
220,852

 
14

 
(6,612
)
 
338,186

 
(8,160
)
 
559,038

GNMA
46

 
(16,460
)
 
1,434,484

 
—

 
—

 
—

 
(16,460
)
 
1,434,484

Private-label
1

 
(1
)
 
83

 
3

 
(13
)
 
1,565

 
(14
)
 
1,648

GNMA commercial mortgage-related securities
40

 
(9,610
)
 
1,132,844

 
21

 
(18,891
)
 
448,218

 
(28,501
)
 
1,581,062

Total
105

 
$
(27,621
)
 
$
2,789,260

 
38

 
$
(25,516
)
 
$
787,969

 
$
(53,137
)
 
$
3,577,229

Investment securities held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Municipal securities
53

 
$
(146
)
 
$
23,137

 
24

 
$
(193
)
 
$
9,254

 
$
(339
)
 
$
32,391

Residential mortgage-related securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FNMA / FHLMC
10

 
(177
)
 
12,754

 
3

 
(468
)
 
11,106

 
(645
)
 
23,860

GNMA
21

 
(201
)
 
45,499

 
3

 
(108
)
 
6,797

 
(309
)
 
52,296

Total
84

 
$
(524
)
 
$
81,390

 
30

 
$
(769
)
 
$
27,157

 
$
(1,293
)
 
$
108,547


The Corporation reviews the investment securities portfolio on a quarterly basis to monitor its exposure to other-than-temporary impairment. A determination as to whether a security’s decline in fair value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Corporation may consider in the other-than-temporary impairment analysis include, the length of time and extent to which the security has been in an unrealized loss position, changes in security ratings, financial condition and near-term prospects of the issuer, as well as security and industry specific economic conditions. In addition, with regards to its debt securities, the Corporation may also evaluate payment structure, whether there are defaulted payments or expected defaults, prepayment speeds, and the value of any underlying collateral.
Based on the Corporation’s evaluation, management does not believe any unrealized loss at December 31, 2015, represents an other-than-temporary impairment as these unrealized losses are primarily attributable to changes in interest rates and the current market conditions, and not credit deterioration. The unrealized losses reported for municipal securities relate to various state and local political subdivisions and school districts. The Corporation currently does not intend to sell nor does it believe that it will be required to sell the securities contained in the above unrealized losses table before recovery of their amortized cost basis.
For comparative purposes, the following represents gross unrealized losses and the related fair value of investment securities available for sale and held to maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2014.
 
Less than 12 months
 
12 months or more
 
Total
December 31, 2014
Number
of
Securities
 
Unrealized
Losses
 
Fair
Value
 
Number
of
Securities
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
($ in Thousands)
Investment securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
1

 
$
(1
)
 
$
998

 
—

 
$
—

 
$
—

 
$
(1
)
 
$
998

Municipal securities
6

 
(9
)
 
3,374

 
6

 
(20
)
 
2,133

 
(29
)
 
5,507

Residential mortgage-related securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FNMA / FHLMC
15

 
(1,395
)
 
330,839

 
52

 
(29,028
)
 
1,246,093

 
(30,423
)
 
1,576,932

GNMA
1

 
(9
)
 
2,874

 
4

 
(118
)
 
10,440

 
(127
)
 
13,314

Private-label
1

 
(9
)
 
1,772

 
2

 
(1
)
 
27

 
(10
)
 
1,799

GNMA commercial mortgage-related securities
9

 
(1,766
)
 
329,982

 
20

 
(24,176
)
 
460,425

 
(25,942
)
 
790,407

Total
33

 
$
(3,189
)
 
$
669,839

 
84

 
$
(53,343
)
 
$
1,719,118

 
$
(56,532
)
 
$
2,388,957

Investment securities held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Municipal securities
74

 
$
(216
)
 
$
31,924

 
85

 
$
(616
)
 
$
38,915

 
$
(832
)
 
$
70,839

Total
74

 
$
(216
)
 
$
31,924

 
85

 
$
(616
)
 
$
38,915

 
$
(832
)
 
$
70,839


Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stocks: The Corporation is required to maintain Federal Reserve stock and FHLB stock as a member of both the Federal Reserve System and the FHLB, and in amounts as required by these institutions. These equity securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other marketable equity securities and their fair value is equal to amortized cost. At December 31, 2015, and 2014, the Corporation had FHLB stock of $74 million and $118 million, respectively, reflecting the overall reduction in FHLB short-term and long-term funding. The Corporation had Federal Reserve Bank stock of $73 million and $71 million at December 31, 2015 and 2014, respectively.