Note 6 - Investment Securities

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

6.Investment Securities

Investment securities were $1.34 billion at September 30, 2014, compared to $1.59 billion at December 31, 2013. During the first quarter of 2013, due to the ongoing discussions regarding corporate income tax rates which could have a negative impact on the after-tax yields and fair values of the Company’s portfolio of municipal securities, the Company determined it may sell such securities in response to market conditions. As a result, the Company reclassified its municipal securities from securities held-to-maturity to securities available-for-sale. Concurrent with this reclassification, the Company also reclassified all other securities held-to-maturity, which together with the municipal securities had an amortized cost on the date of transfer of $722.5 million, to securities available-for-sale. At the reclassification date, a net unrealized gain was recorded in other comprehensive income for these securities totaling $40.5 million.

The following tables reflect the amortized cost, gross unrealized gains, gross unrealized losses, and fair value of investment securities as of September 30, 2014, and December 31, 2013:

	September 30, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
Securities Available-for-Sale
U.S. treasury securities	$	539,919	$	198	$	29	$	540,088
Mortgage-backed securities		703,312		1,085		21,073		683,324
Collateralized mortgage obligations		80		-		34		46
Corporate debt securities		94,941		751		1,355		94,337
Mutual funds		6,000		-		183		5,817
Preferred stock of government sponsored entities		7,196		2,056		-		9,252
Other equity securities		3,608		3,620		-		7,228
Total	$	1,355,056	$	7,710	$	22,674	$	1,340,092

	December 31, 2013
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
Securities Available-for-Sale
U.S. treasury securities	$	460,095	$	99	$	1	$	460,193
Mortgage-backed securities		1,010,294		7,049		64,529		952,814
Collateralized mortgage obligations		5,929		231		54		6,106
Asset-backed securities		123		-		-		123
Corporate debt securities		154,955		298		4,949		150,304
Mutual funds		6,000		-		275		5,725
Preferred stock of government sponsored entities		569		10,834		-		11,403
Total	$	1,637,965	$	18,511	$	69,808	$	1,586,668

The amortized cost and fair value of investment securities at September 30, 2014, by contractual maturities, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or repayment penalties.   

	Securities Available-For-Sale
	Amortized cost		Fair value
	(In thousands)
Due in one year or less	$	115,047	$	115,156
Due after one year through five years		446,739		447,662
Due after five years through ten years		85,693		84,983
Due after ten years (1)		707,577		692,291
Total	$	1,355,056	$	1,340,092
(1) Equity securities are reported in this category

Proceeds from sales of mortgage-backed securities were $458.4 million and from repayments, maturities and calls of mortgage-backed securities were $54.7 million during the first nine months of 2014 compared to proceeds from sales of $348.7 million and proceeds of $237.9 million from repayments, maturities, and calls during the same period a year ago. Proceeds from sales of other investment securities were $84.9 million during the first nine months of 2014 compared to $555.2 million during the same period a year ago. Proceeds from maturities and calls of other investment securities were $585.8 million during the first nine months of 2014 compared to $180.1 million during the same period a year ago. Gains of $17.1 million and losses of $9.5 million were realized on sales and calls of investment securities during the first nine months of 2014 compared to gains of $27.2 million and no losses realized during the same period a year ago.

At September 30, 2014, all of the Company’s mortgage-backed securities were rated as investment grade except for one non-agency issue. Total unrealized losses of $21.1 million from all mortgage-backed securities resulted from increases in interest rates subsequent to the date that these securities were purchased. Total unrealized losses of $1.4 million on corporate bonds relates to four issues of investments in bonds of financial institutions, all of which were investment grade at the date of acquisition and as of September 30, 2014. The unrealized losses were primarily caused by the widening of credit and liquidity spreads since the dates of acquisition. The contractual terms of those investments do not permit the issuers to settle the security at a price less than the amortized cost of the investment. The Company currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the investments. Therefore, it is expected that these mortgage-backed securities and corporate bonds would not be settled at a price less than the amortized cost of the investment. Because the Company does not intend to sell and would not be required to sell these investments until a recovery of fair value, which may be maturity, it does not consider its investments in these mortgaged-backed securities and corporate bonds to be other-than-temporarily impaired at September 30, 2014.

The temporarily impaired securities represent 66.3% of the fair value of investment securities as of September 30, 2014. Unrealized losses for securities with unrealized losses for less than twelve months represent 0.07%, and securities with unrealized losses for twelve months or more represent 3.5%, of the historical cost of these securities. Unrealized losses on these securities generally resulted from increases in interest rates or spreads subsequent to the date that these securities were purchased. During the third quarter of 2014, the Company wrote down the carrying value of its portfolio of agency preferred stock by $820,000..

At September 30, 2014, management believed the impairment was temporary and, accordingly, no impairment loss on debt securities has been recognized in our condensed consolidated statements of operations. The Company expects to recover the amortized cost basis of its debt securities, and has no intent to sell and will not be required to sell available-for-sale debt securities that have declined below their cost before their anticipated recovery.

The tables below show the fair value and unrealized losses of the temporarily impaired securities in our investment securities portfolio as of September 30, 2014, and December 31, 2013:

	September 30, 2014
	Temporarily impaired securities
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(Dollars in thousands)
Securities Available-for-Sale
U.S. treasury securities	$	174,959	$	29	$	-	$	-	$	174,959	$	29
Mortgage-backed securities		92,436		151		551,854		20,922		644,290		21,073
Collateralized mortgage obligations		-		-		46		34		46		34
Corporate debt securities		-		-		63,645		1,355		63,645		1,355
Mutual funds		-		-		5,817		183		5,817		183
Total	$	267,395	$	180	$	621,362	$	22,494	$	888,757	$	22,674

	December 31, 2013
	Temporarily impaired securities
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(Dollars in thousands)
Securities Available-for-Sale
U.S. treasury securities	$	75,064	$	1	$	-	$	-	$	75,064	$	1
Mortgage-backed securities		792,012		64,526		272		2		792,284		64,528
Mortgage-backed securities-Non-agency		94		1		-		-		94		1
Collateralized mortgage obligations		68		4		301		50		369		54
Corporate debt securities		9,970		30		100,081		4,919		110,051		4,949
Mutual funds		-		-		5,724		275		5,724		275
Total securities available-for-sale	$	877,208	$	64,562	$	106,378	$	5,246	$	983,586	$	69,808
Total investment securities	$	877,208	$	64,562	$	106,378	$	5,246	$	983,586	$	69,808

Investment securities having a carrying value of $703.6 million at September 30, 2014, and $926.5 million at December 31, 2013, were pledged to secure public deposits, other borrowings, treasury tax and loan, and securities sold under agreements to repurchase.