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Investment Securities
 3 Months Ended
Mar. 31, 2013
Investment Securities [Abstract]  
Investment Securities

NOTE 5: Investment Securities

 

The amortized cost and fair values of investment securities available for sale and held to maturity were as follows.

       GrossGross  
    Amortized unrealizedunrealized  
March 31, 2013:cost gains losses Fair value
     ($ in Thousands)
Investment securities available for sale:           
 U.S. Treasury securities$ 1,003 $ 1 $0 $ 1,004
 Obligations of state and political subdivisions           
  (municipal securities)  734,096   43,240   (49)   777,287
 Residential mortgage-related securities  3,704,596   88,289   (6,125)   3,786,760
 Commercial mortgage-related securities (Government agency)  298,864   3,226   (1,451)   300,639
 Other securities (debt and equity)  83,209   1,466   (48)   84,627
   Total investment securities available for sale$ 4,821,768 $ 136,222 $ (7,673) $ 4,950,317

Investment securities held to maturity:           
 Obligations of state and political subdivisions           
  (municipal securities)$ 54,123 $ 64 $ (699) $ 53,488
   Total investment securities held to maturity$ 54,123 $ 64 $ (699) $ 53,488
               

       GrossGross  
    Amortized unrealizedunrealized  
December 31, 2012:cost gains losses Fair value
     ($ in Thousands)
Investment securities available for sale:           
 U.S. Treasury securities$1,003 $1 $0 $1,004
 Obligations of state and political subdivisions           
  (municipal securities) 755,644  45,599  (55)  801,188
 Residential mortgage-related securities 3,714,289  93,742  (3,727)  3,804,304
 Commercial mortgage-related securities (Government agency) 226,420  2,809  (1,063)  228,166
 Other securities (debt and equity) 90,622  1,549  (75)  92,096
   Total investment securities available for sale$4,787,978 $143,700 $(4,920) $4,926,758

Investment securities held to maturity:           
 Obligations of state and political subdivisions           
  (municipal securities)$ 39,877 $ 98 $ (296) $ 39,679
   Total investment securities held to maturity$ 39,877 $ 98 $ (296) $ 39,679
               

The amortized cost and fair values of investment securities available for sale and held to maturity at March 31, 2013, 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$ 49,227 $ 49,808 $ -  $ -
Due after one year through five years  213,425   222,878   -    -
Due after five years through ten years  506,121   538,190   15,970   15,902
Due after ten years  49,518   51,993   38,153   37,586
 Total debt securities  818,291   862,869   54,123   53,488
Residential mortgage-related securities  3,704,596   3,786,760   -    -
Commercial mortgage-related securities (Government agency)  298,864   300,639   -    -
Equity securities  17   49   -    -
 Total investment securities $ 4,821,768 $ 4,950,317 $ 54,123 $ 53,488

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 March 31, 2013.

   Less than 12 months  12 months or more   Total
   Number of Unrealized Fair Number of Unrealized Fair Unrealized Fair
March 31, 2013:Securities  Losses   Value Securities  Losses   Value  Losses   Value
      ($ in Thousands)
Investment securities available for sale:                     
 Obligations of state and political                      
  subdivisions (municipal securities)14   (36)   5,920 1   (13)   348   (49)   6,268
 Residential mortgage-related securities36   (6,125)   1,063,268 0   ―    ―    (6,125)   1,063,268
 Commercial mortgage-related securities (Government agency)4   (1,451)   150,221 0   ―    ―    (1,451)   150,221
 Other debt securities1   (3)   297 1   (45)   142   (48)   439
  Total  $ (7,615) $ 1,219,706   $ (58) $ 490 $ (7,673) $ 1,220,196
                        
Investment securities held to maturity:                     
 Obligations of state and political                      
  subdivisions (municipal securities)90   (699)   43,377 0   ―    ―    (699)   43,377
  Total  $ (699) $ 43,377   $ ―  $ ―  $ (699) $ 43,377

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. 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. For certain debt securities in unrealized loss positions, the Corporation prepares cash flow analyses to compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.

 

Based on the Corporation's evaluation, management does not believe any unrealized loss at March 31, 2013, 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 residential mortgage-related securities relate to non-agency residential mortgage-related securities as well as residential mortgage-related securities issued by government agencies such as the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”). At March 31, 2013, the unrealized loss position of 12 months or more on other debt securities was attributable to a pooled trust preferred debt security. 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.

 

The following is a summary of the credit loss portion of other-than-temporary impairment recognized in earnings on debt securities for 2012. There was no change in the balance of credit-related other-than-temporary during the three months ended March 31, 2013.

 

  Non-agency      
  Mortgage-Related Trust Preferred  
  Securities  Debt Securities  Total
  ($ in Thousands)
Balance of credit-related other-than-temporary         
 impairment at December 31, 2011$ (17,558) $ (10,835) $ (28,393)
Reduction due to credit impaired securities sold  17,026   4,499   21,525
Balance of credit-related other-than-temporary       .
 impairment at December 31, 2012$ (532) $ (6,336) $ (6,868)
          

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, 2012.

      Less than 12 months     12 months or more   Total
   Number       Number            
   of Unrealized   of Unrealized   Unrealized   
December 31, 2012:Securities Losses  Fair Value  Securities Losses  Fair Value  Losses  Fair Value
      ($ in Thousands)
Investment securities available for sale:                     
 Obligations of state and political                     
  subdivisions (municipal securities)15 $ (42) $ 5,065 1 $ (13) $ 348 $ (55) $ 5,413
 Residential mortgage-related securities30   (3,727)   892,964 0   -   -   (3,727)   892,964
 Commercial mortgage-related securities (Government agency)2   (1,063)   102,474 0   -   -   (1,063)   102,474
 Other debt securities0   -   - 1   (75)   111   (75)   111
  Total  $ (4,832) $ 1,000,503   $ (88) $ 459 $ (4,920) $ 1,000,962
                        
Investment securities held to maturity:                     
 Obligations of state and political                     
  subdivisions (municipal securities)56 $ (296) $ 28,265 0 $ - $ - $ (296) $ 28,265
  Total  $ (296) $ 28,265   $ - $ - $ (296) $ 28,265

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, 2013 and December 31, 2012, the Corporation had FHLB stock of $82 million and $96 million, respectively. The Corporation had Federal Reserve Bank stock of $71 million at both March 31, 2013 and December 31, 2012.

 

The Corporation reviewed these securities for impairment, including but not limited to, consideration of operating performance, the severity and duration of market value declines, as well as its liquidity and funding position. After evaluating all of these considerations, the Corporation believes the cost of these investments will be recovered and no impairment has been recorded on these securities during 2012 or the first three months of 2013. The FHLB of Chicago initiated tender offers for certain of its shares during the first quarter of 2013, whereby the FHLB would repurchase its shares at par. The Corporation participated in the tender offers and reduced its equity holdings in the FHLB of Chicago by $14 million.