NOTE 4 — INVESTMENT SECURITIES

At the end of the 2011 first quarter, the Company utilized cash to purchase U.S. Treasury securities. The Company continued this activity as these investments matured during the second quarter, the company also purchased U.S. Government Agency securities. These investments mature in 91 days or less, and the carrying value approximates fair value. Certain U.S. Treasury and agency securities were purchased using $1.3 billion of restricted cash. The restricted cash utilized resided in a Cash Sweep account, for which investments in certain high-grade securities is a permitted use.

Total investment securities include debt and equity securities. Debt instruments primarily consisted of U.S. Treasuries, U.S. agency bonds and foreign government bonds while equity securities include common stock and warrants.

Investment Securities (dollars in millions)

	June 30,	December 31,
	2011	2010
Debt securities available-for-sale	$2,700.1	$ -
Equity securities available-for-sale	22.7	37.5
Debt securities held-to-maturity ⁽¹⁾	178.1	195.9
Non-marketable equity securities carried at cost ⁽²⁾	82.4	95.1
Total investment securities	$2,983.3	$ 328.5

(1)	Recorded at amortized cost less impairment on securities that have credit-related impairment.
(2)	Non-marketable equity securities are carried at cost and primarily consist of shares issued by customers during loan work out situations or as part of an original loan investment.

Debt securities are recorded on the Consolidated Balance Sheet as of the trade date and classified based on management's intention on the date of purchase.

Securities Available-for-Sale

The following table presents amortized cost and fair value of securities available-for-sale (AFS) at June 30, 2011. December 31, 2010 balances were not significant and are not presented.


	June 30, 2011
		Gross
	Amortized	Unrealized	Fair
	Cost	Gains	Value
Debt securities AFS
U.S. Treasury	$1,805.0	$ 0	$1,805.0
U.S. Government Agency Obligations	895.1	0	895.1
Total debt securities available for sale	2,700.1	0	2,700.1
Equity securities AFS	16.5	6.2	22.7
Total securities AFS	$2,716.6	$ 6.2	$2,722.8

The Company conducts and documents periodic reviews of all securities with unrealized losses to evaluate whether the impairment is other than temporary. Any credit-related impairment on debt securities that the Company does not plan to sell and is not likely to be required to sell is recognized in the Consolidated Statement of Income, with the non-credit-related impairment recognized in other comprehensive income. For other impaired debt securities, the entire impairment is recognized in the Consolidated Statement of Income.

The following table presents interest and dividends on investments:


(dollars in millions)	Quarter Ended June 30,		Six Months Ended June 30,
	2011	2010	2011	2010
Interest	$ 6.9	$ 6.3	$ 14.6	$ 11.9
Dividends	0.9	1.0	0.9	2.7
Total interest and dividends	$ 7.8	$ 7.3	$ 15.5	$ 14.6

Gross realized investment gains for the quarter and six months ended June 30, 2011 were $12.3 million and $35.3 million respectively, and exclude losses from other-than-temporary impairment. Realized investment gains in 2010 were $3.7 million and $7.0 million for the quarter and six months period, respectively.

Debt Securities Held-to-Maturity

The carrying value and fair value of securities held-to-maturity (HTM) at June 30, 2011 and December 31, 2010 were as follows:

(dollars in millions)


		Gross
	Carrying	unrecognized	Fair
	value	gains	value
June 30, 2011
U.S. Treasury and federal agency securities
U.S. Treasury Agency obligations	$105.2	$0.8	$106.0
Mortgage-backed securities
U.S. government and government-sponsored agency guaranteed	53.6	1.9	55.5
State and municipal	0.4	0	0.4
Foreign government	18.9	0	18.9
Total debt securities held-to-maturity	$178.1	$2.7	$180.8
December 31, 2010
U.S. Treasury and federal agency securities
U.S. Treasury Agency obligations	$ 119.8	$ 0.7	$ 120.5
Mortgage-backed securities
U.S. government and government-sponsored agency guaranteed	56.9	1.0	57.9
State and municipal	0.4	0	0.4
Foreign government	18.8	0	18.8
Total debt securities held-to-maturity	$ 195.9	$ 1.7	$ 197.6

The following table presents the amortized cost and fair value of debt securities HTM by contractual maturity dates:


	June 30, 2011		December 31, 2010
(dollars in millions)	Amortized	Fair	Amortized	Fair
	Cost	Value	Cost	Value
Mortgage-backed securities (1)
After 10 years (2)	$53.6	$55.5	$ 56.9	$ 57.9
Total	53.6	55.5	56.9	57.9
U.S. Treasury and federal agencies
After 1 but within 5 years	105.2	106.0	119.8	120.5
Total	105.2	106.0	119.8	120.5
State and municipal
After 1 but within 5 years	0.3	0.3	0.2	0.2
After 5 but within 10 years	0.1	0.1	0.2	0.2
Total	0.4	0.4	0.4	0.4
Foreign government
Due within 1 year	18.9	18.9	18.8	18.8
Total	18.9	18.9	18.8	18.8
Total debt securities HTM	$178.1	$180.8	$ 195.9	$ 197.6

(1)	Includes mortgage-backed securities of U.S. federal agencies.
(2)	Investments with no stated maturities are included as contractual maturities of greater than 10 years. Actual maturities may differ due to call or prepayment rights.

Other-Than-Temporary Impairments

Recognition and Measurement of Other-Than-Temporary Impairments (OTTI)

OTTI credit-related impairments on equity securities recognized in earnings totaled $1.3 million for the quarter and $7.4 million for the six months ended June 30, 2011, respectively. The 2010 impairment charges for the comparable periods were not significant. Impairment amounts in accumulated other comprehensive income were not significant at June 30, 2011 and December 31, 2010.

Evaluating Investments for OTTI

The Company conducts and documents periodic reviews of all securities with unrealized losses to evaluate whether the impairment is other than temporary. The Company accounts for investment impairments in accordance with ASC 320-10-35-34, Investments—Debt and Equity Securities: Recognition of an Other-Than-Temporary Impairment. Under the guidance for debt securities, OTTI is recognized in earnings for debt securities that the Company has an intent to sell or that the Company believes it is more-likely-than-not that it will be required to sell prior to recovery of the amortized cost basis. For those securities that the Company does not intend to sell or expect to be required to sell, credit-related impairment is recognized in earnings, while the non-credit related impairment recorded in AOCI.

An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in AOCI for AFS securities, while such losses related to HTM securities are not recorded, as these investments are carried at their amortized cost.

Amortized cost is defined as the original purchase cost, plus or minus any accretion or amortization of a purchase discount or premium. Regardless of the classification of the securities as AFS or HTM, the Company has assessed each investment for impairment.

Factors considered in determining whether a loss is temporary include:

·the length of time and the extent to which fair value has been below cost;

·the severity of the impairment;

·the cause of the impairment and the financial condition and near-term prospects of the issuer;

·activity in the market of the issuer that may indicate adverse credit conditions; and

·the Company's ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery.

The Company's review for impairment generally includes:

·identification and evaluation of investments that have indications of possible impairment;

·analysis of individual investments that have fair values less than amortized cost, including consideration of the length of time the investment has been in an unrealized loss position and the expected recovery period;

·discussion of evidential matter, including an evaluation of factors or triggers that could cause individual investments to qualify as having other-than-temporary impairment and those that would not support other-than-temporary impairment; and

·documentation of the results of these analyses, as required under business policies.

For equity securities, management considers the various factors described above, including its intent and ability to hold the equity security for a period of time sufficient for recovery to cost. Where management lacks that intent or ability to hold the equity security, the security's decline in fair value is deemed to be other than temporary and is recorded in earnings. AFS equity securities deemed other-than-temporarily impaired are written down to fair value, with the full difference between fair value and cost recognized in earnings.