NOTE 5 - INVESTMENT SECURITIES

An analysis of the investment securities available-for-sale portfolio is presented as follows:

			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
As of September 30, 2011
Investment securities available-for-sale:
U.S. Treasury securities	$	19,881	$	880	$	-		$	20,761
U.S. Government agency and U.S. Government sponsored enterprise debt securities		641,698		1,961		(708	)		642,951
U.S. Government agency and U.S. Government sponsored enterprise
mortgage-backed securities:
Commercial mortgage-backed securities		16,335		488		-			16,823
Residential mortgage-backed securities		1,058,168		36,728		(1,067	)		1,093,829
Municipal securities		74,557		3,042		(133	)		77,466
Other residential mortgage-backed securities:
Investment grade		-		-		-			-
Non-investment grade		-		-		-			-
Corporate debt securities:
Investment grade		1,471,569		6,140		(74,277	)		1,403,432
Non-investment grade (1)		26,175		-		(11,980	)		14,195
Other securities		9,918		218		(1	)		10,135
Total investment securities available-for-sale	$	3,318,301	$	49,457	$	(88,166	)	$	3,279,592
As of December 31, 2010
Investment securities available-for-sale:
U.S. Treasury securities	$	19,847	$	607	$	-		$	20,454
U.S. Government agency and U.S. Government sponsored enterprise debt securities		1,349,289		2,297		(18,121	)		1,333,465
U.S. Government agency and U.S. Government sponsored enterprise
mortgage-backed securities:
Commercial mortgage-backed securities		18,620		512		-			19,132
Residential mortgage-backed securities		295,140		11,574		-			306,714
Municipal securities		-		-		-			-
Other residential mortgage-backed securities:
Investment grade		-		-		-			-
Non-investment grade		14,996		-		(8,742	)		6,254
Corporate debt securities:
Investment grade		1,056,537		9,095		(8,765	)		1,056,867
Non-investment grade (1)		50,015		31		(11,316	)		38,730
Other securities		95,966		267		(1,908	)		94,325
Total investment securities available-for-sale	$	2,900,410	$	24,383	$	(48,852	)	$	2,875,941

_______________________

(1)

For the nine months ended September 30, 2011, the Company recorded $464 thousand, on a pre-tax basis, of the credit portion of OTTI through earnings and $5.1 million of the non-credit portion of OTTI for pooled trust preferred securities in other comprehensive income. The Company recorded $16.7 million, on a pre-tax basis, of the credit portion of OTTI through earnings and $15.4 million of the non-credit portion of OTTI for pooled trust preferred securities and other mortgage-backed securities in other comprehensive income for the year ended December 31, 2010.

The fair values of investment securities are generally determined by reference to the average of at least two quoted market prices obtained from independent external brokers or prices obtained from independent external pricing service providers who have experience in valuing these securities. The Company performs a monthly analysis on the broker quotes received from third parties to ensure that the prices represent a reasonable estimate of fair value. The procedures include, but are not limited to, initial and ongoing review of third party pricing methodologies, review of pricing trends, and monitoring of trading volumes. The Company assesses that prices received from independent brokers represent a reasonable estimate of fair value through the use of internal and external cash flow models developed that are based on spreads and, when available, market indices. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon available market data, the price received from third parties is adjusted accordingly.

Prices from third party pricing services are often unavailable for securities that are rarely traded or are traded only in privately negotiated transactions. As a result, certain securities are priced via independent broker quotations that utilize inputs that may be difficult to corroborate with observable market based data. Additionally, the majority of these independent broker quotations are non-binding.

As a result of the global financial crisis and continued illiquidity in the U.S. markets, the market for the pooled trust preferred securities has been inactive since mid-2007. It is the Company's view that current broker prices (which are typically non-binding) on these securities are based on forced liquidation or distressed sale values in very inactive markets that are not representative of the fair value of these securities. As such, the Company considered what weight, if any, to place on transactions that are not orderly when estimating fair value. For the pooled trust preferred securities the Company determined their fair values using the methodologies set forth in Note 3 to the Company's condensed consolidated financial statements presented elsewhere in this report.

The following table shows the Company's rollforward of the amount related to OTTI credit losses for the periods shown:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011			2010
	(In thousands)
Beginning balance	$	115,243	$	114,891	$	124,340		$	107,671
Addition of other-than-temporary impairment that was not previously recognized		-		-		-			-
Additional increases to the amount related to the credit loss for which an other-than-temporary impairment was previously recognized		-		888		464			8,108
Reduction for securities sold		-		-		(9,561	)		-
Ending balance	$	115,243	$	115,779	$	115,243		$	115,779

The following tables show 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 September 30, 2011 and December 31, 2010:

	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(In thousands)
As of September 30, 2011
Investment securities available-for-sale:
U.S. Treasury securities	$	-	$	-		$	-	$	-		$	-	$	-
U.S. Government agency and U.S. Government sponsored enterprise debt securities		177,715		(708	)		-		-			177,715		(708	)
U.S. Government agency and U.S. Government
sponsored enterprise mortgage-backed securities:
Commercial mortage-backed securities		-		-			-		-			-		-
Residential mortage-backed securities		195,248		(1,067	)		-		-			195,248		(1,067	)
Municipal securities		9,715		(133	)		-		-			9,715		(133	)
Other residential mortgage-backed securities:
Investment grade		-		-			-		-			-		-
Non-investment grade		-		-			-		-			-		-
Corporate debt securities:
Investment grade		944,337		(61,314	)		247,020		(12,963	)		1,191,357		(74,277	)
Non-investment grade		5,580		(387	)		8,616		(11,593	)		14,196		(11,980	)
Other securities		4,490		(1	)		-		-			4,490		(1	)
Total investment securities available-for-sale	$	1,337,085	$	(63,610	)	$	255,636	$	(24,556	)	$	1,592,721	$	(88,166	)

	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(In thousands)
As of December 31, 2010
Investment securities available-for-sale:
U.S. Treasury securities	$	-	$	-		$	-	$	-		$	-	$	-
U.S. Government agency and U.S. Government sponsored enterprise debt securities		935,654		(18,121	)		-		-			935,654		(18,121	)
U.S. Government agency and U.S. Government
sponsored enterprise mortgage-backed securities:
Commercial mortage-backed securities		-		-			-		-			-		-
Residential mortage-backed securities		-		-			-		-			-		-
Municipal securities		-		-			-		-			-		-
Other residential mortgage-backed securities:
Investment grade		-		-			-		-			-		-
Non-investment grade		-		-			6,254		(8,742	)		6,254		(8,742	)
Corporate debt securities:
Investment grade		656,434		(8,765	)		-		-			656,434		(8,765	)
Non-investment grade		24,105		(623	)		9,926		(10,693	)		34,031		(11,316	)
Other securities		76,692		(1,908	)		-		-			76,692		(1,908	)
Total investment securities available-for-sale	$	1,692,885	$	(29,417	)	$	16,180	$	(19,435	)	$	1,709,065	$	(48,852	)

Unrealized Losses

The majority of the unrealized losses related to securities that have been in a continuous loss position for less than twelve months is related to investment grade corporate debt securities. As of September 30, 2011, the Company had $1.40 billion in investment grade corporate debt securities available-for-sale, representing 43% of the total investment securities available-for-sale portfolio.

As of September 30, 2011, there were 17 individual securities that have been in a continuous unrealized loss position for twelve months or more. These securities are comprised of 5 trust preferred securities with a total fair value of $8.6 million and 12 investment grade corporate debt securities with a fair value of $247.0 million. As of September 30, 2011, there were also 157 securities, not including the 17 securities above, which have been in a continuous unrealized loss position for less than twelve months. The securities in an unrealized loss position for less than twelve months include 128 investment grade corporate debt securities, 14 residential mortgage-backed securities, 9 government agency securities, 4 municipal securities, 1 non-investment grade corporate debt security and 1 other security. The unrealized losses on these securities are primarily attributed to the sovereign debt crisis in Europe. The issuers of these securities have not, to our 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. The Company does not intend to sell these securities and it is not more likely than not that the company will be required to sell these securities before recovery of their current amortized cost basis. As such, the Company does not deem these securities, other than those previously stated, to be other-than-temporarily impaired as of September 30, 2011.

Corporate Debt Securities

The unrealized losses related to securities that have been in a continuous loss position of twelve months or longer are related to 5 trust preferred debt securities and 12 investment grade corporate debt securities. As of September 30, 2011, these 5 trust preferred securities had an estimated fair value of $8.6 million, representing less than 1% of the total investment securities available-for-sale portfolio. As of September 30, 2011, these non-investment grade trust preferred debt securities had gross unrealized losses amounting to $11.6 million, or 57% of the total amortized cost basis of these securities, comprised of $6.5 million in unrealized losses on securities that are not other-than-temporarily impaired and $5.1 million in noncredit-related impairment losses on securities that are other-than-temporarily impaired as of September 30, 2011 pursuant to the provisions of ASC 320-10-65. We recorded an impairment loss of $464 thousand on our portfolio of pooled trust preferred securities during the first nine months of 2011 for additional increases to the amount related to the credit loss for which an other-than-temporary impairment was previously recognized.

The scheduled maturities of investment securities at September 30, 2011 are presented as follows:

	Amortized		Estimated
	Cost		Fair Value
	(In thousands)
Due within one year	$	801,503	$	795,333
Due after one year through five years		360,252		351,417
Due after five years through ten years		1,030,845		978,194
Due after ten years		1,125,701		1,154,648
Total investment securities available-for-sale	$	3,318,301	$	3,279,592