Securities

6 Months Ended

Jun. 30, 2013

Marketable Securities [Abstract]

Securities [Text Block]

(2) Securities

Trading Securities

The fair value and net unrealized gain (loss) included in trading securities is as follows (in thousands):

	June 30, 2013					December 31, 2012					June 30, 2012
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. Government agency debentures	$	60,713	$	(552	)	$	16,545	$	(57	)	$	53,514	$	23
U.S. agency residential mortgage-backed securities	43,858		38			86,361		447			46,502		222
Municipal and other tax-exempt securities	53,819		(1,271		)	90,326		(226		)	44,632		9
Other trading securities	32,201		(717		)	20,870		(13		)	4,669		(14		)
Total	$	190,591	$	(2,502	)	$	214,102	$	151		$	149,317	$	240

Investment Securities

The amortized cost and fair values of investment securities are as follows (in thousands):

	June 30, 2013
	Amortized		Carrying		Fair		Gross Unrealized2
	Cost		Value1		Value		Gain		Loss
Municipal and other tax-exempt	$	375,317	$	375,317	$	371,690	$	2,189	$	(5,816	)
U.S. agency residential mortgage-backed securities – Other	61,152		64,172		66,796		2,624		—
Other debt securities	176,301		176,301		187,219		10,978		(60		)
Total	$	612,770	$	615,790	$	625,705	$	15,791	$	(5,876	)

¹  Carrying value includes $3.0 million of net unrealized gain which remains in Accumulated other comprehensive income (“AOCI”) related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio as discussed in greater detail following.

²  Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

	December 31, 2012
	Amortized		Carrying		Fair		Gross Unrealized2
	Cost		Value1		Value		Gain		Loss
Municipal and other tax-exempt	$	232,700	$	232,700	$	235,940	$	3,723	$	(483	)
U.S. agency residential mortgage-backed securities – Other	77,726		82,767		85,943		3,176		—
Other debt securities	184,067		184,067		206,575		22,528		(20		)
Total	$	494,493	$	499,534	$	528,458	$	29,427	$	(503	)

¹  Carrying value includes $5.0 million of net unrealized gain which remains in Accumulated other comprehensive income (“AOCI”) in the Consolidated Balance Sheets related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio as discussed in greater detail following.

²  Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

	June 30, 2012
	Amortized		Carrying		Fair		Gross Unrealized2
	Cost		Value1		Value		Gain		Loss
Municipal and other tax-exempt	$	126,168	$	126,168	$	130,308	$	4,165	$	(25	)
U.S. agency residential mortgage-backed securities – Other	94,126		102,347		105,535		3,188		—
Other debt securities	183,964		183,964		204,795		20,831		—
Total	$	404,258	$	412,479	$	440,638	$	28,184	$	(25	)

¹  Carrying value includes $8.2 million of net unrealized gain which remains in Accumulated other comprehensive income (“AOCI”) in the Consolidated Balance Sheets related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio as discussed in greater detail following.

²  Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

During the three months ended September 30, 2011, the Company transferred certain U.S. government agency residential mortgage-backed securities from the available for sale portfolio to the investment securities (held-to-maturity) portfolio as the Company has the positive intent and ability to hold these securities to maturity. No gains or losses were recognized in the Consolidated Statement of Earnings at the time of the transfer. Transfers of debt securities into the investment securities portfolio (held-to-maturity) are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income and in the carrying value of the investment securities portfolio.  Such amounts are amortized over the estimated remaining life of the security as an adjustment to yield, offsetting the related amortization of the premium or accretion of the discount on the transferred securities. At the time of transfer, the fair value totaled $131 million, amortized cost totaled $118 million and the pretax unrealized gain totaled $13 million.

The amortized cost and fair values of investment securities at June 30, 2013, by contractual maturity, are as shown in the following table (dollars in thousands):

	Less than One Year		One to Five Years		Six to Ten Years		Over Ten Years		Total		Weighted Average Maturity²
Municipal and other tax-exempt:
Carrying value	$	24,239	$	239,869	$	101,753	$	9,456	$	375,317	4.15
Fair value	24,504		238,125		99,465		9,596		371,690
Nominal yield¹	4.22		1.68		2.21		2.73		2.01
Other debt securities:
Carrying value	9,681		30,987		35,164		100,469		176,301		9.06
Fair value	9,713		31,420		36,257		109,829		187,219
Nominal yield	4.24		5.30		5.57		6.29		5.86
Total fixed maturity securities:
Carrying value	$	33,920	$	270,856	$	136,917	$	109,925	$	551,618	5.72
Fair value	34,217		269,545		135,722		119,425		558,909
Nominal yield	4.22		2.09		3.07		5.99		3.24
Residential mortgage-backed securities:
Carrying value									$	64,172	³
Fair value									66,796
Nominal yield4									2.72
Total investment securities:
Carrying value									$	615,790
Fair value									625,705
Nominal yield									3.19

¹  Calculated on a taxable equivalent basis using a 39% effective tax rate.

²  Expected maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without penalty.

³  The average expected lives of residential mortgage-backed securities were 4.1 years based upon current prepayment assumptions.

⁴  The nominal yield on residential mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments. See Quarterly Financial Summary - Unaudited for current yields on the investment securities portfolio.

Available for Sale Securities

The amortized cost and fair value of available for sale securities are as follows (in thousands):

	June 30, 2013
	Amortized		Fair		Gross Unrealized1
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,061	$	1,060	$	—	$	(1	)	$	—
Municipal and other tax-exempt	95,974		95,103		1,653		(1,870		)	(654		)
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,648,337		4,687,141		78,285		(39,481		)	—
FHLMC	2,695,506		2,715,896		32,994		(12,604		)	—
GNMA	916,646		925,081		11,163		(2,728		)	—
Other	42,563		44,677		2,114		—			—
Total U.S. government agencies	8,303,052		8,372,795		124,556		(54,813		)	—
Private issue:
Alt-A loans	113,804		115,036		2,905		—			(1,673		)
Jumbo-A loans	178,581		182,139		4,129		(274		)	(297		)
Total private issue	292,385		297,175		7,034		(274		)	(1,970		)
Total residential mortgage-backed securities	8,595,437		8,669,970		131,590		(55,087		)	(1,970		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,885,585		1,846,943		343		(38,985		)	—
Other debt securities	35,622		35,894		479		(207		)	—
Perpetual preferred stock	22,172		25,583		3,439		(28		)	—
Equity securities and mutual funds	19,990		23,521		3,736		(205		)	—
Total	$	10,655,841	$	10,698,074	$	141,240	$	(96,383	)	$	(2,624	)

¹ Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet.

² Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.

	December 31, 2012
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	1,002	$	2	$	—		$	—
Municipal and other tax-exempt	84,892		87,142		2,414		(164		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	5,308,463		5,453,549		146,247		(1,161		)	—
FHLMC	2,978,608		3,045,564		66,956		—			—
GNMA	1,215,554		1,237,041		21,487		—			—
Other	148,025		153,667		5,642		—			—
Total U.S. government agencies	9,650,650		9,889,821		240,332		(1,161		)	—
Private issue:
Alt-A loans	124,314		123,174		1,440		—			(2,580		)
Jumbo-A loans	198,588		201,989		5,138		(134		)	(1,603		)
Total private issue	322,902		325,163		6,578		(134		)	(4,183		)
Total residential mortgage-backed securities	9,973,552		10,214,984		246,910		(1,295		)	(4,183		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	890,746		895,075		5,006		(677		)	—
Other debt securities	35,680		36,389		709		—			—
Perpetual preferred stock	22,171		25,072		2,901		—			—
Equity securities and mutual funds	24,593		27,557		3,242		(278		)	—
Total	$	11,032,634	$	11,287,221	$	261,184	$	(2,414	)	$	(4,183	)

¹ Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet.

² Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.

	June 30, 2012
	Amortized		Fair		Gross Unrealized1
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,001	$	1,003	$	2	$	—		$	—
Municipal and other tax-exempt	86,808		88,458		2,430		(187		)	(593		)
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	5,270,918		5,426,832		156,699		(785		)	—
FHLMC	3,527,123		3,607,060		81,679		(1,742		)	—
GNMA	645,103		674,006		28,973		(70		)	—
Other	188,831		195,634		6,803		—			—
Total U.S. government agencies	9,631,975		9,903,532		274,154		(2,597		)	—
Private issue:
Alt-A loans	134,266		118,414		—		—			(15,852		)
Jumbo-A loans	219,917		199,347		618		(943		)	(20,245		)
Total private issue	354,183		317,761		618		(943		)	(36,097		)
Total residential mortgage-backed securities	9,986,158		10,221,293		274,772		(3,540		)	(36,097		)
Other debt securities	35,739		36,286		559		(12		)	—
Perpetual preferred stock	22,171		23,431		1,812		(552		)	—
Equity securities and mutual funds	21,285		24,944		3,989		(330		)	—
Total	$	10,153,162	$	10,395,415	$	283,564	$	(4,621	)	$	(36,690	)

¹  Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet

²  Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.

The amortized cost and fair values of available for sale securities at June 30, 2013, by contractual maturity, are as shown in the following table (dollars in thousands):

	Less than One Year		One to Five Years		Six to Ten Years		Over Ten Years			Total		Weighted Average Maturity5
U.S. Treasuries:
Amortized cost	$	1,061	$	—	$	—	$	—		$	1,061	1.68
Fair value	1,060		—		—		—			1,060
Nominal yield	0.24		—		—		—			0.24
Municipal and other tax-exempt:
Amortized cost	1,684		33,591		6,382		54,317			95,974		14.84
Fair value	1,705		34,777		6,621		52,000			95,103
Nominal yield¹	—		0.95		0.69		2.55		6	1.82
Commercial mortgage-backed securities:
Amortized cost	—		414,587		1,150,171		320,827			1,885,585		10.74
Fair value	—		409,069		1,121,016		316,858			1,846,943
Nominal yield	—		1.08		1.34		1.35			1.28
Other debt securities:
Amortized cost	—		30,222		—		5,400			35,622		5.98
Fair value	—		30,701		—		5,193			35,894
Nominal yield	—		1.80		—		1.41		6	1.74
Total fixed maturity securities:
Amortized cost	$	2,745	$	478,400	$	1,156,553	$	380,544		$	2,018,242	10.84
Fair value	2,765		474,547		1,127,637		374,051			1,979,000
Nominal yield	0.09		1.12		1.33		1.52			1.32
Residential mortgage-backed securities:
Amortized cost										8,595,437		2
Fair value										8,669,970
Nominal yield4										1.97
Equity securities and mutual funds:
Amortized cost										42,162		³
Fair value										49,104
Nominal yield										1.30
Total available-for-sale securities:
Amortized cost										$	10,655,841
Fair value										10,698,074
Nominal yield										1.85

¹  Calculated on a taxable equivalent basis using a 39% effective tax rate.

²  The average expected lives of mortgage-backed securities were 3.5 based upon current prepayment assumptions.

³  Primarily common stock and preferred stock of corporate issuers with no stated maturity.

⁴  The nominal yield on mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments. See Quarterly Financial Summary –– Unaudited following for current yields on available for sale securities portfolio.

⁵  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.

⁶  Nominal yield on municipal and other tax-exempt securities and other debt securities with contractual maturity dates over ten years are based on variable rates which generally are reset within 35 days.

Sales of available for sale securities resulted in gains and losses as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013			2012		2013			2012
Proceeds	$	1,083,001		$	459,610	$	1,837,970		$	1,451,551
Gross realized gains	9,992			20,481		15,784			32,166
Gross realized losses	(6,239		)	—		(7,176		)	(7,354		)
Related federal and state income tax expense	1,460			7,967		3,349			9,652

A summary of investment and available for sale securities that have been pledged as collateral for repurchase agreements, public trust funds on deposit and for other purposes, as required by law was as follows (in thousands):

	June 30, 2013		December 31, 2012		June 30, 2012
Investment:
Carrying value	$	97,286	$	117,346	$	156,852
Fair value	100,644		121,647		162,391
Available for sale:
Amortized cost	5,078,098		4,070,250		3,552,776
Fair value	5,103,507		4,186,390		3,686,838

The secured parties do not have the right to sell or re-pledge these securities. At December 31, 2012, municipal trading securities with a fair value of $13 million were pledged as collateral on a line of credit for the trading activities of BOSC, Inc. Under the terms of the credit agreement, the creditor has the right to sell or repledge the collateral. There were no securities pledged under this line of credit at June 30, 2013 or June 30, 2012.

Temporarily Impaired Securities as of June 30, 2013

(in thousands):

	Number of Securities	Less Than 12 Months								12 Months or Longer								Total
		Fair Value				Unrealized Loss				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
Investment:
Municipal and other tax-exempt	149	$	271,897			$	5,816			$	—			$	—			$	271,897			$	5,816
U.S. Agency residential mortgage-backed securities – Other	—	—				—				—				—				—				—
Other debt securities	14	841				60				—				—				841				60
Total investment	163	$	272,738			$	5,876			$	—			$	—			$	272,738			$	5,876
Available for sale:
U.S. Treasury	1	$	1,060			$	1			$	—			$	—			$	1,060			$	1
Municipal and other tax-exempt1	86	$	66,168			$	2,524			$	—			$	—			$	66,168			$	2,524
Residential mortgage-backed securities:
U. S. agencies:
FNMA	72	2,196,603				39,481				—				—				2,196,603				39,481
FHLMC	38	1,202,545				12,604				—				—				1,202,545				12,604
GNMA	13	197,149				2,728				—				—				197,149				2,728
Total U.S. agencies	123	3,596,297				54,813				—				—				3,596,297				54,813
Private issue1:
Alt-A loans	10	51,681				1,236				3,379				437				55,060				1,673
Jumbo-A loans	2	17,615				296				12,298				275				29,913				571
Total private issue	12	69,296				1,532				15,677				712				84,973				2,244
Total residential mortgage-backed securities	135	3,665,593				56,345				15,677				712				3,681,270				57,057
Commercial mortgage-backed securities guaranteed by U.S. government agencies	113	1,730,306				38,985				—				—				1,730,306				38,985
Other debt securities	4	5,193				207				—				—				5,193				207
Perpetual preferred stocks	1	4,973				28				—				—				4,973				28
Equity securities and mutual   funds	7	3,558				205				—				—				3,558				205
Total available for sale	347	$	5,476,851	$	—	$	98,295	$	—	$	15,677	$	—	$	712	$	—	$	5,492,528	$	—	$	99,007

¹Includes the following securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income:

Municipal and other tax-exempt	21	$	11,731	$	654	$	—	$	—	$	11,731	$	654
Alt-A loans	10	51,681		1,236		3,379		437		55,060		1,673
Jumbo-A loans	2	17,615		296		—		—		17,615		296

Temporarily Impaired Securities as of December 31, 2012

(In thousands)

	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax- exempt	53	$	92,768	$	483	$	—	$	—	$	92,768	$	483
U.S. Agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	14	881		20		—		—		881		20
Total investment	67	$	93,649	$	503	$	—	$	—	$	93,649	$	503
Available for sale:
Municipal and other tax-exempt	38	$	6,150	$	11	$	26,108	$	153	$	32,258	$	164
Residential mortgage-backed securities:
U. S. agencies:
FNMA	12	161,828		1,161		—		—		161,828		1,161
FHLMC	—	—		—		—		—		—		—
GNMA	—	—		—		—		—		—		—
Total U.S. agencies	12	161,828		1,161		—		—		161,828		1,161
Private issue1:
Alt-A loans	12	—		—		87,907		2,580		87,907		2,580
Jumbo-A loans	11	—		—		43,252		1,737		43,252		1,737
Total private issue	23	—		—		131,159		4,317		131,159		4,317
Total residential mortgage-backed securities	35	161,828		1,161		131,159		4,317		292,987		5,478
Commercial mortgage-backed securities guaranteed by U.S. government agencies	8	275,065		677		—		—		275,065		677
Other debt securities	3	4,899		—		—		—		4,899		—
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	22	202		1		2,161		277		2,363		278
Total available for sale	106	$	448,144	$	1,850	$	159,428	$	4,747	$	607,572	$	6,597

¹  Includes the following securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income:

Alt-A loans	12	$	—	$	—	$	87,907	$	2,580	$	87,907	$	2,580
Jumbo-A loans	10	—		—		29,128		1,602		29,128		1,602

Temporarily Impaired Securities as of June 30, 2012

(In thousands)

	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax- exempt	6	$	9,321	$	25	$	—	$	—	$	9,321	$	25
U.S. Agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	—	—		—		—		—		—		—
Total investment	6	$	9,321	$	25	$	—	$	—	$	9,321	$	25
Available for sale:
Municipal and other tax-exempt1	66	$	21,950	$	640	$	27,864	$	140	$	49,814	$	780
Residential mortgage-backed securities:
U. S. agencies:
FNMA	13	528,649		785		—		—		528,649		785
FHLMC	10	438,190		1,742		—		—		438,190		1,742
GNMA	2	74,789		70		—		—		74,789		70
Total U.S. agencies	25	1,041,628		2,597		—		—		1,041,628		2,597
Private issue1:
Alt-A loans	16	—		—		118,414		15,852		118,414		15,852
Jumbo-A loans	27	—		—		174,234		21,188		174,234		21,188
Total private issue	43	—		—		292,648		37,040		292,648		37,040
Total residential mortgage-backed securities	68	1,041,628		2,597		292,648		37,040		1,334,276		39,637
Other debt securities	2	—		—		988		12		988		12
Perpetual preferred stocks	5	10,717		552		—		—		10,717		552
Equity securities and mutual funds	12	2,579		330		—		—		2,579		330
Total available for sale	153	$	1,076,874	$	4,119	$	321,500	$	37,192	$	1,398,374	$	41,311

¹  Includes the following securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income:

Municipal and other tax-exempt	21	12,804	593	—	—	12,804	593
Alt-A loans	16	—	—	118,414	15,852	118,414	15,852
Jumbo-A loans	27	—	—	162,754	20,245	162,754	20,245

On a quarterly basis, the Company performs separate evaluations of impaired debt and equity investments and available for sale securities to determine if the unrealized losses are temporary.

For debt securities, management determines whether it intends to sell or if it is more-likely-than-not that it will be required to sell impaired securities. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements and securities portfolio management. Based on this evaluation as of June 30, 2013, we do not intend to sell any impaired available for sale securities before fair value recovers to our current amortized cost and it is more-likely-than-not that we will not be required to sell impaired securities before fair value recovers, which may be maturity.

Impairment of debt securities rated investment grade by all nationally-recognized rating agencies are considered temporary unless specific contrary information is identified. None of the debt securities rated investment grade were considered to be other-than-temporarily impaired at June 30, 2013.

At June 30, 2013, the composition of the Company’s investment and available for sale securities portfolios by the lowest current credit rating assigned by any of the three nationally-recognized rating agencies is as follows (in thousands):

	U.S. Govt / GSE1				AAA - AA				A - BBB				Below Investment Grade				Not Rated				Total
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Investment:
Municipal and other tax-exempt	$	—	$	—	$	271,541	$	266,827	$	24,565	$	24,834	$	—	$	—	$	79,211	$	80,029	$	375,317	$	371,690
Mortgage-backed securities -- other	64,172		66,796		—		—		—		—		—		—		—		—		64,172		66,796
Other debt securities	—		—		167,463		178,378		600		600		—		—		8,238		8,241		176,301		187,219
Total investment securities	$	64,172	$	66,796	$	439,004	$	445,205	$	25,165	$	25,434	$	—	$	—	$	87,449	$	88,270	$	615,790	$	625,705
	U.S. Govt / GSE1				AAA - AA				A - BBB				Below Investment Grade				Not Rated				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for Sale:
U.S. Treasury	$	1,061	$	1,060	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,061	$	1,060
Municipal and other tax-exempt	—		—		60,895		61,295		22,695		22,077		12,384		11,731		—		—		95,974		95,103
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,648,337		4,687,141		—		—		—		—		—		—		—		—		4,648,337		4,687,141
FHLMC	2,695,506		2,715,896		—		—		—		—		—		—		—		—		2,695,506		2,715,896
GNMA	916,646		925,081		—		—		—		—		—		—		—		—		916,646		925,081
Other	42,563		44,677		—		—		—		—		—		—		—		—		42,563		44,677
Total U.S. government agencies	8,303,052		8,372,795		—		—		—		—		—		—		—		—		8,303,052		8,372,795
Private issue:
Alt-A loans	—		—		—		—		—		—		113,804		115,036		—		—		113,804		115,036
Jumbo-A loans	—		—		—		—		—		—		178,581		182,139		—		—		178,581		182,139
Total private issue	—		—		—		—		—		—		292,385		297,175		—		—		292,385		297,175
Total residential mortgage-backed securities	8,303,052		8,372,795		—		—		—		—		292,385		297,175		—		—		8,595,437		8,669,970
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,885,585		1,846,943		—		—		—		—		—		—		—		—		1,885,585		1,846,943
Other debt securities	—		—		5,400		5,193		30,222		30,701		—		—		—		—		35,622		35,894
Perpetual preferred stock	—		—		—		—		22,172		25,583		—		—		—		—		22,172		25,583
Equity securities and mutual funds	—		—		—		—		—		—		—		—		19,990		23,521		19,990		23,521
Total available for sale securities	$	10,189,698	$	10,220,798	$	66,295	$	66,488	$	75,089	$	78,361	$	304,769	$	308,906	$	19,990	$	23,521	$	10,655,841	$	10,698,074

¹  U.S. government and government sponsored enterprises are not rated by the nationally-recognized rating agencies as these securities are guaranteed by agencies of the U.S. government or government-sponsored enterprises.

At June 30, 2013, the entire portfolio of privately issued residential mortgage-backed securities was rated below investment grade. The gross unrealized loss on these securities totaled $2.2 million. Ratings by the nationally-recognized rating agencies are subjective in nature and accordingly ratings can vary significantly amongst the agencies. Limitations generally expressed by the rating agencies include statements that ratings do not predict the specific percentage default likelihood over any given period of time and that ratings do not opine on expected loss severity of an obligation should the issuer default. As such, the impairment of securities rated below investment grade was evaluated to determine if we expect not to recover the entire amortized cost basis of the security. This evaluation was based on projections of estimated cash flows based on individual loans underlying each security using current and anticipated increases in unemployment and default rates, decreases in housing prices and estimated liquidation costs at foreclosure.

The primary assumptions used in this evaluation were:

	June 30, 2013	December 31, 2012	6/30/2012
Unemployment rate	Increasing to 8% over the next 12 months and remain at 8% thereafter	Increasing to 8.5% over the next 12 months, dropping to 8% over the following 21 months and holding at 8% thereafter.	Increasing to 9.5% over the next 12 months, dropping to 8% over the following 21 months and holding at 8% thereafter.
Housing price appreciation/depreciation	Starting with current depreciated housing prices based on information derived from the FHFA1, appreciating 5% over the next 12 months, then flat for the following 12 months and then appreciating at 2% per year thereafter.	Starting with current depreciated housing prices based on information derived from the FHFA1, depreciating 2% over the next 12 months, then flat for the following 12 months and then appreciating at 2% per year thereafter.	Starting with current depreciated housing prices based on information derived from the FHFA1, depreciating 6% over the next 12 months and then appreciating at 2% per year thereafter.
Estimated liquidation costs	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.
Discount rates	Estimated cash flows were discounted at rates that range from 2.00% to 6.25% based on our current expected yields.	Estimated cash flows were discounted at rates that range from 2.00% to 6.25% based on our current expected yields.	Estimated cash flows were discounted at rates that range from 2.00% to 6.25% based on our current expected yields.

We also consider the current loan-to-value ratio and remaining credit enhancement as part of the assessment of the cash flows available to recover the amortized cost of the debt securities. Each factor is considered in the evaluation.

The Company calculates the current loan-to-value ratio for each mortgage-backed security using loan-level data. Current loan-to-value ratio is the current outstanding loan amount divided by an estimate of the current home value. The current home value is derived from FHFA data. FHFA provides historical information on home price depreciation at both the Metropolitan Statistical Area and state level.  This information is matched to each loan to estimate the home price depreciation. Data is accumulated from the loan level to determine the current loan-to-value ratio for the security as a whole.

Remaining credit enhancement is the amount of credit enhancement available to absorb current projected losses within the pool of loans that support the security. The Company acquires the benefit of credit enhancement by investing in super-senior tranches for many of our residential mortgage-backed securities. Subordinated tranches held by other investors are specifically designed to absorb losses before the super-senior tranches which effectively increased the typical credit support for these types of bonds. Current projected losses consider depreciation of home prices based on FHFA data, estimated costs and additional losses to liquidate collateral and delinquency status of the individual loans underlying the security.

Credit loss impairment is recorded as a charge to earnings. Additional impairment based on the difference between the total unrealized loss and the estimated credit loss on these securities is charged against other comprehensive income, net of deferred taxes.

Based upon projected declines in expected cash flows from certain private-label residential mortgage-backed securities, the Company recognized $552 thousand of additional credit loss impairments in earnings during the three months ended June 30, 2013.

A distribution of the amortized cost (after recognition of the other-than-temporary impairment), fair value and credit loss impairments recognized on our privately issued residential mortgage-backed securities is as follows (in thousands, except for number of securities):

						Credit Losses Recognized
						Three months ended
						June 30, 2013			Life-to-date
	Number of Securities	Amortized Cost		Fair Value		Number of Securities	Amount		Number of Securities	Amount
Alt-A	16	$	113,804	$	115,036	1	$	552	16	$	48,986
Jumbo-A	33	178,581		182,139		—	—		31	23,452
Total	49	$	292,385	$	297,175	1	$	552	47	$	72,438

Impaired equity securities, including perpetual preferred stocks, are evaluated based on management's ability and intent to hold the securities until fair value recovers over periods not to exceed three years. The assessment of the ability and intent to hold these securities focuses on the liquidity needs, asset/liability management objectives and securities portfolio objectives. Factors considered when assessing recovery include forecasts of general economic conditions and specific performance of the issuer, analyst ratings and credit spreads for preferred stocks which have debt-like characteristics. The Company has evaluated the near-term prospects of the investments in relation to the severity and duration of the impairment and based on that evaluation has the ability and intent to hold these investments until a recovery in fair value. Accordingly, all impairment of equity securities was considered temporary at June 30, 2013.

The following is a tabular roll forward of the amount of credit-related OTTI recognized on available for sale debt securities in earnings (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Balance of credit-related OTTI recognized on available for sale debt, beginning of period	$	75,475	$	72,057	$	75,228	$	76,131
Additions for credit-related OTTI not previously recognized	552		135		552		248
Additions for increases in credit-related OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost	—		723		247		4,332
Sales	—		—		—		(7,796		)
Balance of credit-related OTTI recognized on available for sale debt securities, end of period	$	76,027	$	72,915	$	76,027	$	72,915

Fair Value Option Securities

Fair value option securities represent securities which the Company has elected to carry at fair value and separately identified on the Consolidated Balance Sheets with changes in the fair value recognized in earnings as they occur. Certain residential mortgage-backed securities issued by U.S. government agencies and derivative contracts are held as an economic hedge of the mortgage servicing rights. In addition, certain corporate debt securities are economically hedged by derivative contracts to manage interest rate risk. Derivative contracts that have not been designated as hedging instruments effectively modify these fixed rate securities into variable rate securities.

The fair value and net unrealized gain (loss) included in Fair value option securities is as follows (in thousands):

	June 30, 2013					December 31, 2012				June 30, 2012
	Fair Value		Net Unrealized Gain			Fair Value		Net Unrealized Gain		Fair Value		Net Unrealized Gain
U.S. agency residential mortgage-backed securities	$	203,816	$	(8,048	)	$	257,040	$	3,314	$	299,467	$	8,373
Corporate debt securities	—		—			26,486		1,409		25,710		621
Other securities	1,940		(8		)	770		47		—		—
Total	$	205,756	$	(8,056	)	$	284,296	$	4,770	$	325,177	$	8,994