Investment Securities

3 Months Ended

Mar. 31, 2020

Investments Debt And Equity Securities [Abstract]

NOTE 6 — INVESTMENT SECURITIES

Investment securities include debt and equity securities. See Note 1 — Business and Summary of Significant Accounting Policies in the Company’s 2019 Form 10-K for information on accounting for investment securities. The following table presents carrying value of investment securities.

Carrying Value of Investment Securities (dollars in millions)

	March 31,		December 31,
	2020		2019
Available-for-sale Securities
Debt securities	$	5,854.7	$	6,011.8
Securities carried at fair value with changes in net income
Equity securities		-		47.2
Non-marketable securities⁽¹⁾		273.9		217.8
Total investment securities	$	6,128.6	$	6,276.8

⁽¹⁾

Non-marketable investments include restricted stock of the FRB and FHLB carried at cost of $240.1 million and $187.9 million at March 31, 2020 and December 31, 2019, respectively. The remaining non-marketable investments without readily determinable fair values measured under the measurement exception totaled $33.8 million and $29.9 million at March 31, 2020 and December 31, 2019, respectively.

Realized gains on AFS securities totaled $12.5 million and $1.1 million for the quarters ended March 31, 2020 and 2019, respectively, and exclude losses from impairment.

The Company had $3.5 billion and $1.7 billion of interest-bearing cash at banks at March 31, 2020 and December 31, 2019, respectively, which are cash and cash equivalents and are classified separately on the balance sheet.

The following table presents interest and dividends on investments and interest-bearing cash.

Interest and Dividend Income (dollars in millions)

	Quarters Ended March 31,
	2020		2019
Interest income - debt securities⁽¹⁾	$	39.2	$	48.0
Interest income - interest-bearing cash		5.6		14.5
Dividends - equity securities		1.2		2.7
Total interest and dividends	$	46.0	$	65.2

⁽¹⁾	Includes interest income on securities purchased under agreement to resell.

The following table presents amortized cost and fair value of securities AFS.

Amortized Cost and Fair Value (dollars in millions)

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2020
Debt securities AFS
Mortgage-backed securities
U.S. government/sponsored agency – Residential	$	4,259.0	$	135.2	$	(2.2	)		$	4,392.0
U.S. government/sponsored agency – Commercial		1,119.5		37.7		(0.6	)			1,156.6
U.S. government/sponsored agency obligations		228.5		0.8		—				229.3
U.S. Treasury securities		9.3		—		—				9.3
Agency asset-backed securities		1.8		—		—				1.8
Corporate bonds – foreign⁽¹⁾		65.9		—		(0.2	)			65.7
Total debt securities AFS	$	5,684.0	$	173.7	$	(3.0	)		$	5,854.7

December 31, 2019
Debt securities AFS
Mortgage-backed securities
U.S. government/sponsored agency – Residential	$	4,766.4	$	24.1	$	(16.7	)		$	4,773.8
U.S. government/sponsored agency – Commercial		554.5		12.1		(1.8	)			564.8
U.S. government/sponsored agency obligations		449.4		—		(5.4	)			444.0
U.S. Treasury securities		11.2		0.1		—				11.3
Supranational securities		149.8		—		—				149.8
State & municipal bonds		1.0		—		—				1.0
Corporate bonds - foreign		65.9		1.2		—				67.1
Total debt securities AFS	$	5,998.2	$	37.5	$	(23.9	)		$	6,011.8

⁽¹⁾	There was an immaterial amount of ACL under CECL as of March 31, 2020.

The following table presents the debt securities AFS by contractual maturity dates.

Maturities - Debt Securities AFS (dollars in millions)

	March 31, 2020
	Amortized Cost		Fair Value		Weighted Average Yield
Mortgage-backed securities — U.S. government/sponsored agency – Residential
After 5 through 10 years	$	9.7	$	10.2		2.67	%
Due after 10 years		4,249.3		4,381.8		2.60	%
Total		4,259.0		4,392.0		2.60	%
Mortgage-backed securities — U.S. government/sponsored agency – Commercial
After 1 through 5 years		17.0		17.4		2.95	%
After 5 through 10 years		362.3		388.6		2.81	%
Due after 10 years		740.2		750.6		2.30	%
Total		1,119.5		1,156.6		2.48	%
U.S. government/sponsored agency obligations
After 5 through 10 years		118.2		118.8		2.69	%
Due after 10 years		110.3		110.5		2.78	%
Total		228.5		229.3		2.73	%
U.S. Treasury securities
Due in 1 year or less		4.3		4.3		2.48	%
After 1 through 5 years		5.0		5.0		0.53	%
Total		9.3		9.3		1.44	%
Agency asset-backed securities
Due after 10 years		1.8		1.8		2.24	%
Total		1.8		1.8		2.24	%
Corporate bonds — foreign
Due in 1 year or less		65.9		65.7		6.09	%
Total		65.9		65.7		6.09	%
Total debt securities AFS	$	5,684.0	$	5,854.7		2.62	%

At March 31, 2020 and December 31, 2019, certain securities AFS were in unrealized loss positions. The following table summarizes by investment category the gross unrealized losses, respective fair value and length of time that those securities have been in a continuous unrealized loss position.

Gross Unrealized Loss (dollars in millions)

	March 31, 2020
	Less than 12 months					12 months or greater
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
Debt securities AFS
Mortgage-backed securities
U.S. government/sponsored agency - Residential	$	195.8	$	(1.4	)	$	37.2	$	(0.8	)
U.S. government/sponsored agency - Commercial		175.4		(0.6	)		—		—
Corporate bonds - foreign⁽¹⁾		65.7		(0.2	)		—		—
Total debt securities AFS	$	436.9	$	(2.2	)	$	37.2	$	(0.8	)

	December 31, 2019
	Less than 12 months					12 months or greater
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
Debt securities AFS
Mortgage-backed securities
U.S. government/sponsored agency - Residential	$	1,396.5	$	(4.6	)	$	861.3	$	(12.1	)
U.S. government/sponsored agency - Commercial		282.7		(1.7	)		17.6		(0.1	)
U.S. government/sponsored agency obligations		398.9		(5.4	)		—		—
Total debt securities AFS	$	2,078.1	$	(11.7	)	$	878.9	$	(12.2	)

⁽¹⁾	There was an immaterial amount of credit-related unrealized loss recorded in earnings for the quarter ended March 31, 2020.

Securities Carried at Fair Value with Changes Recorded in Net Income

As of March 31, 2020, equity securities were carried at a fair value of $0.0 million with an amortized cost of $0.4 million and unrealized losses were $0.4 million. As of December 31, 2019, the fair value and amortized cost of equity securities were $47.2 million and $48.2 million, respectively, and unrealized losses were $1.0 million.

Impairment of Investment Securities

There were no impairment losses recognized for the quarter ended March 31, 2020. There were no Other Than Temporary Impairment losses recognized for the quarter ended March 31, 2019.

There were no adjustments related to impairment for securities without readily determinable fair values measured under the measurement exception. There were immaterial unrealized losses on non-marketable investments.

Pledged Securities

Securities with a carrying value of $3,167.0 million were pledged as of March 31, 2020 to secure public funds, securities sold under agreements to repurchase, FHLB financing availability, and derivative contracts and for other purposes as required or permitted by law. Securities with a carrying value of $50.4 million were pledged as of December 31, 2019 to secure FHLB financing availability.