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Investment Securities
 3 Months Ended
Mar. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
Investment Securities
Investment securities are generally classified as available for sale or held to maturity at the time of purchase. 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”). A portion of the portfolio is also comprised of asset-backed securities backed by student loans made under the Federal Family Education Loan Program ("FFELP"). The amortized cost and fair values of securities available for sale and held to maturity were as follows.
 
March 31, 2018
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
 
 
 
($ in Thousands)
 
Investment securities available for sale
 
 
 
 
 
 
 
 
U. S. Treasury securities
$
1,002

 
$
—

 
$
(7
)
 
$
995

 
Residential mortgage-related securities
 
 
 
 
 
 
 
 
FNMA / FHLMC
427,480

 
7,331

 
(4,738
)
 
430,073

 
GNMA
2,364,339

 
21

 
(54,054
)
 
2,310,306

 
Private-label
1,051

 
—

 
(7
)
 
1,044

 
GNMA commercial mortgage-related securities
1,497,573

 
—

 
(49,204
)
 
1,448,369

 
FFELP asset backed securities
288,519

 
1,835

 
(54
)
 
290,300

 
Other debt securities
3,200

 
—

 
(12
)
 
3,188

 
Other equity securities
1,599


—


—


1,599

 
Total investment securities available for sale
$
4,584,763

 
$
9,186

 
$
(108,076
)
 
$
4,485,875

 
Investment securities held to maturity
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)
$
1,424,925

 
$
4,110

 
$
(16,579
)
 
$
1,412,456

 
Residential mortgage-related securities
 
 
 
 
 
 
 
 
FNMA / FHLMC
76,069

 
227

 
(1,665
)
 
74,631

 
GNMA
410,275

 
2,210

 
(11,624
)
 
400,861

 
GNMA commercial mortgage-related securities
531,934

 
9,008

 
(21,694
)
 
519,248

 
Total investment securities held to maturity
$
2,443,203

 
$
15,555

 
$
(51,561
)
 
$
2,407,197

 
December 31, 2017
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
 
 
 
($ in Thousands)
 
Investment securities available for sale
 
 
 
 
 
 
 
 
U. S. Treasury securities
$
1,003

 
$
—

 
$
(7
)
 
$
996

 
Residential mortgage-related securities
 
 
 
 
 
 
 
 
FNMA / FHLMC
457,680

 
9,722

 
(2,634
)
 
464,768

 
GNMA
1,944,453

 
275

 
(31,378
)
 
1,913,350

 
Private-label
1,067

 
—

 
(8
)
 
1,059

 
GNMA commercial mortgage-related securities
1,547,173

 
5

 
(33,901
)
 
1,513,277

 
FFELP asset backed securities
144,322


867


(13
)

145,176

 
Other debt securities
3,200

 
—

 
(12
)
 
3,188

 
Other equity securities
1,519


127


(14
)

1,632

 
Total investment securities available for sale
$
4,100,417

 
$
10,996

 
$
(67,967
)
 
$
4,043,446

 
Investment securities held to maturity
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)

$
1,281,320

 
$
13,899

 
$
(3,177
)
 
$
1,292,042

 
Residential mortgage-related securities
 
 
 
 
 
 
 
 
FNMA / FHLMC
40,995

 
398

 
(489
)
 
40,904

 
GNMA
414,440

 
2,700

 
(6,400
)
 
410,740

 
GNMA commercial mortgage-related securities
546,098


9,546


(15,756
)

539,888

 
Total investment securities held to maturity
$
2,282,853

 
$
26,543

 
$
(25,822
)
 
$
2,283,574


The expected maturities of investment securities available for sale and held to maturity at March 31, 2018, are shown below. Expected maturities may 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
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
($ in Thousands)
Due in one year or less
$
2,002

 
$
1,995

 
$
44,019

 
$
44,261

Due after one year through five years
2,200

 
2,188

 
221,411

 
219,411

Due after five years through ten years
—

 
—

 
346,521

 
341,147

Due after ten years
—

 
—

 
812,974

 
807,638

Total debt securities
4,202

 
4,183

 
1,424,925

 
1,412,456

Residential mortgage-related securities
 
 
 
 
 
 
 
FNMA / FHLMC
427,480

 
430,073

 
76,069

 
74,631

GNMA
2,364,339

 
2,310,306

 
410,275

 
400,861

Private-label
1,051

 
1,044

 
—

 
—

GNMA commercial mortgage-related securities
1,497,573

 
1,448,369

 
531,934

 
519,248

FFELP asset backed securities
288,519

 
290,300

 
—

 
—

Equity securities
1,599

 
1,599

 
—

 
—

Total investment securities
$
4,584,763

 
$
4,485,875

 
$
2,443,203

 
$
2,407,197

Ratio of Fair Value to Amortized Cost
 
 
97.8
%
 
 
 
98.5
%

Investment securities with a carrying value of approximately $3.0 billion and $3.1 billion at March 31, 2018, and December 31, 2017, respectively, were pledged to secure certain deposits or for other purposes as required or permitted by law.
On the acquisition date, the Corporation sold Bank Mutual's entire securities portfolio.
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 March 31, 2018.
 
Less than 12 months
 
12 months or more
 
Total
March 31, 2018
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

 
$
(7
)
 
$
995

 
—

 
$
—

 
$
—

 
$
(7
)
 
$
995

Residential mortgage-related securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FNMA / FHLMC
12

 
(1,389
)
 
94,231

 
9

 
(3,349
)
 
135,316

 
(4,738
)
 
229,547

GNMA
65

 
(25,956
)
 
1,590,545

 
26

 
(28,098
)
 
718,971

 
(54,054
)
 
2,309,516

Private-label
—

 
—

 
—

 
1

 
(7
)
 
1,044

 
(7
)
 
1,044

GNMA commercial mortgage-related securities
28

 
(9,895
)
 
385,319

 
76

 
(39,309
)
 
1,063,082

 
(49,204
)
 
1,448,401

FFELP asset backed securities
6

 
(54
)

86,988


—


—


—


(54
)

86,988

Other debt securities
1

 
(12
)

188


—


—


—


(12
)

188

Total
113

 
$
(37,313
)

$
2,158,266


112


$
(70,763
)

$
1,918,413


$
(108,076
)

$
4,076,679

Investment securities held to maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)

821

 
$
(9,876
)
 
$
523,716

 
132

 
$
(6,703
)
 
$
122,632

 
$
(16,579
)
 
$
646,348

Residential mortgage-related securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FNMA / FHLMC
19

 
(939
)
 
54,122

 
10

 
(725
)
 
15,230

 
(1,665
)
 
69,352

GNMA
58

 
(7,239
)
 
279,707

 
18

 
(4,385
)
 
113,561

 
(11,624
)
 
393,268

GNMA commercial mortgage-related securities
2

 
(837
)
 
49,711

 
23

 
(20,857
)
 
469,538

 
(21,694
)
 
519,249

Total
900

 
$
(18,891
)
 
$
907,256

 
183

 
$
(32,670
)
 
$
720,961

 
$
(51,561
)
 
$
1,628,217


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, 2017.
 
Less than 12 months
 
12 months or more
 
Total
December 31, 2017
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

 
$
(7
)
 
$
996

 
—

 
$
—

 
$
—

 
$
(7
)
 
$
996

Residential mortgage-related securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FNMA / FHLMC
9

 
(572
)
 
69,939

 
9

 
(2,062
)
 
142,093

 
(2,634
)
 
212,032

GNMA
44

 
(8,927
)
 
1,028,221

 
25

 
(22,451
)
 
737,198

 
(31,378
)
 
1,765,419

Private-label
—

 
—

 
—

 
1

 
(8
)
 
1,059

 
(8
)
 
1,059

GNMA commercial mortgage-related securities
33

 
(5,554
)
 
480,514

 
70

 
(28,347
)
 
1,026,642

 
(33,901
)
 
1,507,156

FFELP asset backed securities
1

 
(13
)
 
12,158

 
—

—

—

 
—

 
(13
)
 
12,158

Other debt securities
1

 
(12
)
 
188

 
—

 
—

 
—

 
(12
)
 
188

Other equity securities
3

 
(14
)
 
1,487

 
—

 
—

 
—

 
(14
)
 
1,487

Total
92

 
$
(15,099
)
 
$
1,593,503

 
105

 
$
(52,868
)
 
$
1,906,992

 
$
(67,967
)
 
$
3,500,495

Investment securities held to maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)

157

 
$
(746
)
 
$
122,761

 
132

 
$
(2,431
)
 
$
127,043

 
$
(3,177
)
 
$
249,804

Residential mortgage-related securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FNMA / FHLMC
8

 
(73
)
 
13,143

 
10

 
(417
)
 
16,262

 
(490
)
 
29,405

GNMA
35

 
(3,373
)
 
268,388

 
18

 
(3,026
)
 
120,892

 
(6,399
)
 
389,280

GNMA commercial mortgage-related securities
2

 
(299
)
 
52,997

 
23

 
(15,457
)
 
486,891

 
(15,756
)
 
539,888

Total
202

 
$
(4,491
)
 
$
457,289

 
183

 
$
(21,331
)
 
$
751,088

 
$
(25,822
)
 
$
1,208,377


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.
Based on the Corporation’s evaluation, management does not believe any unrealized loss at March 31, 2018 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 unrealized losses at March 31, 2018 for mortgage-related securities is due to the increase in overall interest rates. The U.S. Treasury 3 year and 5 year rates increased by 41 bp and 36 bp, respectively, from December 31, 2017. The Corporation 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.
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 March 31, 2018, and December 31, 2017, the Corporation had FHLB stock of $157 million and $89 million, respectively. The Corporation had Federal Reserve Bank stock of $76 million at both March 31, 2018 and December 31, 2017.