3. Securities

The following tables reflect the amortized cost, estimated fair value, and gross unrealized gains and losses of AFS and HTM securities at December 31, 2011 and September 30, 2011. The majority of the MBS and investment portfolios are composed of securities issued by U.S. government-sponsored enterprises ("GSEs").


	December 31, 2011
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(Dollars in thousands)
AFS:
GSE debentures	$	879,175	$	3,264	$	111	$	882,328
Municipal bonds		2,450		117		--		2,567
Trust preferred securities		3,547		--		545		3,002
MBS		643,019		39,814		--		682,833
		1,528,191		43,195		656		1,570,730
HTM:
GSE debentures		349,922		1,498		--		351,420
Municipal bonds		56,643		2,130		--		58,773
MBS		1,722,852		61,092		193		1,783,751
		2,129,417		64,720		193		2,193,944
	$	3,657,608	$	107,915	$	849	$	3,764,674


	September 30, 2011
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(Dollars in thousands)
AFS:
GSE debentures	$	746,545	$	1,996	$	233	$	748,308
Municipal bonds		2,628		126		--		2,754
Trust preferred securities		3,681		--		740		2,941
MBS		690,675		41,764		3		732,436
		1,443,529		43,886		976		1,486,439
HTM:
GSE debentures		633,483		3,171		--		636,654
Municipal bonds		56,994		2,190		4		59,180
MBS		1,679,640		59,071		153		1,738,558
		2,370,117		64,432		157		2,434,392
	$	3,813,646	$	108,318	$	1,133	$	3,920,831

The following tables summarize the estimated fair value and gross unrealized losses of those securities on which an unrealized loss at December 31, 2011 and September 30, 2011 was reported and the continuous unrealized loss position for at least 12 months or less than 12 months as of December 31, 2011 and September 30, 2011.


	December 31, 2011
	Less Than						Equal to or Greater
	12 Months						Than 12 Months
			Estimated		Unrealized				Estimated		Unrealized
	Count		Fair Value		Losses		Count		Fair Value		Losses
	(Dollars in thousands)
AFS:
GSE debentures		3	$	56,712	$	111		--	$	--	$	--
Trust preferred securities		--		--		--		1		3,002		545
MBS		--		--		--		--		--		--
		3	$	56,712	$	111		1	$	3,002	$	545

HTM:
GSE debentures		--	$	--	$	--		--	$	--	$	--
Municipal bonds		--		--		--		--		--		--
MBS		1		24,356		193		--		--		--
		1	$	24,356	$	193		--	$	--	$	--

	September 30, 2011
	Less Than						Equal to or Greater
	12 Months						Than 12 Months
			Estimated		Unrealized				Estimated		Unrealized
	Count		Fair Value		Losses		Count		Fair Value		Losses
	(Dollars in thousands)
AFS:
GSE debentures		7	$	230,848	$	233		--	$	--	$	--
Trust preferred securities		--		--		--		1		2,941		740
MBS		5		1,189		3		--		--		--
		12	$	232,037	$	236		1	$	2,941	$	740

HTM:
GSE debentures		--	$	--	$	--		--	$	--	$	--
Municipal bonds		2		615		4		--		--		--
MBS		1		25,142		153		--		--		--
		3	$	25,757	$	157		--	$	--	$	--

On a quarterly basis, management conducts a formal review of securities for the presence of an other-than-temporary impairment. Management assesses whether an other-than-temporary impairment is present when the fair value of a security is less than its amortized cost basis at the balance sheet date. For such securities, other-than-temporary impairment is considered to have occurred if the Company intends to sell the security, if it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis, or if the present value of expected cash flows is not sufficient to recover the entire amortized cost.

The unrealized losses at December 31, 2011 and September 30, 2011 are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the fair value of securities will decrease; as market yields fall, the fair value of securities will increase. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. Additionally, the impairment is also considered temporary because scheduled coupon payments have been made, it is anticipated that the entire principal balance will be collected as scheduled, and management neither intends to sell the securities, nor is it more likely than not that the Company will be required to sell the securities before the recovery of the remaining amortized cost amount, which could be at maturity.

The amortized cost and estimated fair value of securities by remaining contractual maturity without consideration for call features or pre-refunding dates as of December 31, 2011 are shown below. Actual maturities of MBS may differ from contractual maturities because borrowers have the right to prepay obligations, generally without penalties. As of December 31, 2011, the amortized cost of the securities in our portfolio which are callable or have pre-refunding dates within one year totaled $788.2 million. Maturities of MBS depend on the repayment characteristics and experience of the underlying financial instruments. Issuers of certain investment securities have the right to call and prepay obligations with or without prepayment penalties.


	AFS				HTM
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in thousands)
One year or less	$	271,316	$	271,821	$	2,429	$	2,445
One year through five years		585,866		588,643		381,204		383,871
Five years through ten years		170,854		182,375		452,046		470,494
Ten years and thereafter		500,155		527,891		1,293,738		1,337,134
	$	1,528,191	$	1,570,730	$	2,129,417	$	2,193,944

The following table presents the carrying value of the MBS in our portfolio by issuer at December 31, 2011 and September 30, 2011.


	December 31, 2011		September 30, 2011
	(Dollars in thousands)
Federal National Mortgage Association ("FNMA")	$	1,346,180	$	1,384,396
Federal Home Loan Mortgage Corporation ("FHLMC")		859,644		823,728
Government National Mortgage Association		198,505		202,340
Private Issuer		1,356		1,612
	$	2,405,685	$	2,412,076

The following table presents the taxable and non-taxable components of interest income on investment securities for the three months ended December 31, 2011 and 2010.


	For the Three Months Ended
	December 31,
	2011		2010
	(Dollars in thousands)
Taxable	$	4,196	$	4,271
Non-taxable		441		504
	$	4,637	$	4,775

The following table summarizes the amortized cost and estimated fair value of securities pledged as collateral as of the dates indicated.


	December 31, 2011				September 30, 2011
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in thousands)
Repurchase agreements	$	408,804	$	429,311	$	571,016	$	597,286
Retail deposits		--		--		44,429		44,991
Public unit deposits		126,161		133,683		116,472		124,785
Federal Reserve Bank		61,486		63,752		26,666		27,939
	$	596,451	$	626,746	$	758,583	$	795,001