XML 77 R15.htm IDEA: XBRL DOCUMENT v3.2.0.727
AVAILABLE-FOR-SALE INVESTMENT SECURITIES
 6 Months Ended
Jun. 30, 2015
AVAILABLE-FOR-SALE INVESTMENT SECURITIES  
AVAILABLE-FOR-SALE INVESTMENT SECURITIES
NOTE 7 — AVAILABLE-FOR-SALE INVESTMENT SECURITIES

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and fair value by major categories of available-for-sale investment securities:
($ in thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
June 30, 2015
 

 

 

 

Available-for-sale investment securities:
 

 

 

 

U.S. Treasury securities
$
1,194,790

$
5,493

$
(172
)
$
1,200,111

U.S. government agency and U.S. government sponsored enterprise debt securities
425,495

584

(1,216
)
424,863

U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 

 

 

 

Commercial mortgage-backed securities
187,831

502

(945
)
187,388

Residential mortgage-backed securities
682,740

9,043

(3,071
)
688,712

Municipal securities
205,703

3,580

(2,861
)
206,422

Other residential mortgage-backed securities:
 

Investment grade (1)
61,737

466

(295
)
61,908

Corporate debt securities:
 

Investment grade (1)
157,200

336

(558
)
156,978

Non-investment grade (1)
11,525

—

(1,500
)
10,025

Other securities
45,914

157

(332
)
45,739

Total available-for-sale investment securities
$
2,972,935

$
20,161

$
(10,950
)
$
2,982,146

December 31, 2014
 

 

 

 

Available-for-sale investment securities:
 

 

 

 

U.S. Treasury securities
$
873,101

$
1,971

$
(1,637
)
$
873,435

U.S. government agency and U.S. government sponsored enterprise debt securities
311,927

490

(1,393
)
311,024

U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 

 

 

 

Commercial mortgage-backed securities
140,957

1,056

(593
)
141,420

Residential mortgage-backed securities
785,412

9,754

(4,078
)
791,088

Municipal securities
245,408

6,202

(1,162
)
250,448

Other residential mortgage-backed securities:
 

Investment grade (1)
52,694

1,359

(135
)
53,918

Other commercial mortgage-backed securities:
 

Investment grade (1)
34,000

53

—

34,053

Corporate debt securities:
 

Investment grade (1)
116,236

—

(1,054
)
115,182

Non-investment grade (1)
17,881

—

(3,200
)
14,681

Other securities
41,589

243

(716
)
41,116

Total available-for-sale investment securities
$
2,619,205

$
21,128

$
(13,968
)
$
2,626,365

(1)
Available-for-sale investment securities rated BBB- or higher by S&P or Baa3 or higher by Moody’s are considered investment grade. Conversely, available-for-sale investment securities rated lower than BBB- by S&P or lower than Baa3 by Moody’s are considered non-investment grade.

Realized Gains and Losses

The following table presents the proceeds, gross realized gains, and gross realized losses related to the sales of available-for-sale investment securities for the three and six months ended June 30, 2015 and 2014:
Three Months Ended
June 30,
Six Months Ended
June 30,
($ in thousands)
2015
2014
2015
 
2014
Proceeds from sales
$
292,561

$
21,611

$
473,062

$
351,842

Gross realized gains
$
5,554

$
671

$
9,958

$
4,216

Gross realized losses
$
—

$
—

$
—

$
127

(1) 
Related tax expense
$
2,333

$
282

$
4,182

$
1,717

(1)
The gross $127 thousand of losses resulted from the available-for-sale investment securities acquired from MetroCorp which were sold immediately after the acquisition closed.

Declines in the fair value of securities below their cost that are deemed to be an other-than-temporary impairment (“OTTI”) are recognized in earnings to the extent the impairment is related to credit losses. The following table presents a rollforward of the amounts related to the OTTI credit losses recognized in earnings for the three and six months ended June 30, 2015 and 2014:
Three Months Ended
June 30,
Six Months Ended
June 30,
($ in thousands)
2015
2014
2015
 
2014
Beginning balance
$
106,688

$
115,511

$
112,338

$
115,511

Addition of OTTI previously not recognized
—

—

—

—

Additional increases to the amount related to the credit loss
      for which an OTTI was previously recognized
—

—

—

—

Reduction for securities sold
—

—

(5,650
)
—

Ending balance
$
106,688

$
115,511

$
106,688

$
115,511


The Company believes that it is not more likely than not that the Company will be required to sell the securities above before recovery of their amortized cost basis. No OTTI credit losses were recognized for the three and six months ended June 30, 2015 and 2014. There were no sales of any investment securities with previously recognized OTTI credit losses for the three months ended June 30, 2015 or the three months ended June 30, 2014. For the six months ended June 30, 2015, the Company realized a gain of $960 thousand from the sale of a non-investment grade corporate debt security with previously recognized OTTI credit losses of $5.7 million. There were no sale transactions of any investment securities with previously recognized OTTI credit losses for the six months ended June 30, 2014.

Unrealized Losses

The following tables present the Company’s investment portfolio’s gross unrealized losses and related fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of June 30, 2015 and December 31, 2014:
 
Less Than 12 Months
12 Months or More
Total
($ in thousands)
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
June 30, 2015
 

 

 

 

 

 

Available-for-sale investment securities:
 

 

 

 

 

 

U.S. Treasury securities
$
61,141

$
(30
)
$
50,766

$
(142
)
$
111,907

$
(172
)
U.S. government agency and U.S. government sponsored enterprise debt securities
256,518

(1,106
)
24,887

(110
)
281,405

(1,216
)
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 

 

Commercial mortgage-backed securities
86,572

(504
)
21,982

(441
)
108,554

(945
)
Residential mortgage-backed securities
135,426

(1,115
)
96,853

(1,956
)
232,279

(3,071
)
Municipal securities
52,924

(1,906
)
15,262

(955
)
68,186

(2,861
)
Other residential mortgage-backed securities:
 

 

Investment grade
5,684

(16
)
6,589

(279
)
12,273

(295
)
Corporate debt securities:
 

 

Investment grade
10,050

(36
)
90,618

(522
)
100,668

(558
)
Non-investment grade
—

—

10,025

(1,500
)
10,025

(1,500
)
Other securities
18,047

(53
)
8,721

(279
)
26,768

(332
)
Total available-for-sale investment securities
$
626,362

$
(4,766
)
$
325,703

$
(6,184
)
$
952,065

$
(10,950
)


 
Less Than 12 Months
12 Months or More
Total
($ in thousands)
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
December 31, 2014
 

 

 

 

 

 

Available-for-sale investment securities:
 

 

 

 

 

 

U.S. Treasury securities
$
170,260

$
(266
)
$
163,800

$
(1,371
)
$
334,060

$
(1,637
)
U.S. government agency and U.S. government sponsored enterprise debt securities
69,438

(504
)
124,104

(889
)
193,542

(1,393
)
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 

 

Commercial mortgage-backed securities
45,405

(257
)
16,169

(336
)
61,574

(593
)
Residential mortgage-backed securities
81,927

(270
)
241,047

(3,808
)
322,974

(4,078
)
Municipal securities
6,391

(26
)
61,107

(1,136
)
67,498

(1,162
)
Other residential mortgage-backed securities:
 

 

Investment grade
—

—

7,217

(135
)
7,217

(135
)
Corporate debt securities:
 

 

Investment grade
25,084

(12
)
90,098

(1,042
)
115,182

(1,054
)
Non-investment grade
—

—

14,681

(3,200
)
14,681

(3,200
)
Other securities
15,885

(716
)
—

—

15,885

(716
)
Total available-for-sale investment securities
$
414,390

$
(2,051
)
$
718,223

$
(11,917
)
$
1,132,613

$
(13,968
)

At each reporting date, the Company examines all individual securities that are in an unrealized loss position for OTTI.  Specific investment related factors, such as the nature of the investments, the severity and duration of the loss, the probability of collecting all amounts due, the analysis of the issuers of the securities and whether there has been any cause for default on the securities and any change in the rating of the securities by various rating agencies, are examined to assess impairment. Additionally, the Company evaluates whether the creditworthiness of the issuer calls the realization of contractual cash flows into question. The Company takes into consideration the financial resources, intent and its overall ability to hold the securities and not be required to sell them until their fair values recover.

The majority of the total unrealized losses related to securities are related to non-investment grade corporate debt securities, residential agency mortgage-backed securities, and municipal securities. As of June 30, 2015, residential agency mortgage-backed securities, municipal securities and non-investment grade corporate debt securities represented 23%, 7% and less than 1%, respectively, of the total available-for-sale investment securities portfolio. As of December 31, 2014, residential agency mortgage-backed securities, municipal securities and non-investment grade corporate debt securities represented 30%, 10% and 1%, respectively, of the total available-for-sale investment securities portfolio. The unrealized losses on these securities were primarily attributed to yield curve movement, together with the widened liquidity spread and credit spread. The issuers of these securities have not, to the Company’s knowledge, established any cause for default on these securities. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated.

Management believes the impairments detailed in the tables of gross unrealized losses above are temporary and are not impaired due to reasons of credit quality. Accordingly, no impairment loss has been recorded in the Company’s consolidated statements of income for the three and six months ended June 30, 2015 and 2014.

Available-for-Sale Investment Securities Maturities

The following table presents the scheduled maturities of available-for-sale investment securities as of June 30, 2015:
($ in thousands)
Amortized Cost
Fair Value
Due within one year
$
432,277

$
430,898

Due after one year through five years
1,407,326

1,414,615

Due after five years through ten years
328,129

325,541

Due after ten years
805,203

811,092

Total available-for-sale investment securities
$
2,972,935

$
2,982,146


Actual maturities of mortgage-backed securities can differ from contractual maturities because borrowers have the right to prepay obligations. In addition, such factors as prepayments and interest rates may affect the yields on the carrying values of mortgage-backed securities.

Available-for-sale investment securities with a par value of $1.68 billion and $1.93 billion were pledged to secure public deposits, repurchase agreements, the Federal Reserve Bank’s discount window, or for other purposes required or permitted by law as of June 30, 2015 and December 31, 2014, respectively.