Investment securities

3 Months Ended

Mar. 31, 2012

Investment securities [Abstract]

Investment securities

3. Investment securities

The amortized cost and estimated fair value of investment securities were as follows:

	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	(in thousands)
March 31, 2012
Investment securities available for sale:
U.S. Treasury and federal agencies	$	52,010		1,130		—	$	53,140
Obligations of states and political subdivisions		37,431		630		21		38,040
Mortgage-backed securities:
Government issued or guaranteed		4,101,717		171,479		241		4,272,955
Privately issued residential		1,318,040		5,358		212,703		1,110,695
Privately issued commercial		15,193		—		1,758		13,435
Collateralized debt obligations		43,708		15,907		1,431		58,184
Other debt securities		206,661		3,397		41,133		168,925
Equity securities		118,039		9,672		5,063		122,648
		5,892,799		207,573		262,350		5,838,022
Investment securities held to maturity:
Obligations of states and political subdivisions		185,859		7,776		32		193,603
Mortgage-backed securities:
Government issued or guaranteed		541,140		25,089		—		566,229
Privately issued		261,851		—		103,649		158,202
Other debt securities		11,444		—		—		11,444
		1,000,294		32,865		103,681		929,478
Other securities		356,980		—		—		356,980
Total	$	7,250,073		240,438		366,031	$	7,124,480

	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	(in thousands)
December 31, 2011
Investment securities available for sale:
U.S. Treasury and federal agencies	$	69,468		1,255		—	$	70,723
Obligations of states and political subdivisions		39,518		771		20		40,269
Mortgage-backed securities:
Government issued or guaranteed		4,344,116		177,392		275		4,521,233
Privately issued residential		1,369,371		6,373		239,488		1,136,256
Privately issued commercial		17,679		—		2,650		15,029
Collateralized debt obligations		43,834		11,154		2,488		52,500
Other debt securities		216,700		4,588		44,443		176,845
Equity securities		211,737		8,468		4,500		215,705
		6,312,423		210,001		293,864		6,228,560
Investment securities held to maturity:
Obligations of states and political subdivisions		188,680		9,141		28		197,793
Mortgage-backed securities:
Government issued or guaranteed		608,533		24,881		—		633,414
Privately issued		268,642		—		99,140		169,502
Other debt securities		11,853		—		—		11,853
		1,077,708		34,022		99,168		1,012,562
Other securities		366,886		—		—		366,886
Total	$	7,757,017		244,023		393,032	$	7,608,008

Gross realized gains on investment securities were $39.4 million for the quarter ended March 31, 2011. Similar gross realized gains for the quarter ended March 31, 2012 were not significant. Gross realized losses on investment securities for the quarters ended March 31, 2012 and 2011 were not significant. During the three-month period ended March 31, 2011, the Company sold residential mortgage-backed securities guaranteed by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) having an aggregate amortized cost of approximately $484 million, which resulted in a gain of $39 million (pre-tax). The Company recognized $11 million and $16 million of pre-tax other-than-temporary impairment losses during the quarters ended March 31, 2012 and 2011, respectively, related to privately issued mortgage-backed securities. The impairment charges were recognized in light of deterioration of real estate values and a rise in delinquencies and charge-offs of underlying mortgage loans collateralizing those securities. The other-than-temporary losses represent management’s estimate of credit losses inherent in the debt securities considering projected cash flows using assumptions for delinquency rates, loss severities, and other estimates of future collateral performance.

The following table displays changes in credit losses associated with debt securities for which other-than-temporary impairment losses have been previously recognized in earnings for the three months ended March 31, 2012 and March 31, 2011:

	Three months ended March 31
	2012			2011
	(in thousands)
Beginning balance	$	285,399			327,912
Additions for credit losses not previously recognized		11,486			16,041
Reductions for increases in cash flows		—			(139	)
Reductions for realized losses		(29,412	)		(21,095	)
Ending balance	$	267,473			322,719

At March 31, 2012, the amortized cost and estimated fair value of debt securities by contractual maturity were as follows:

	Amortized cost		Estimated fair value
	(in thousands)
Debt securities available for sale:
Due in one year or less	$	35,769		35,852
Due after one year through five years		41,748		43,230
Due after five years through ten years		7,927		8,610
Due after ten years		254,366		230,597
		339,810		318,289
Mortgage-backed securities available for sale		5,434,950		5,397,085
	$	5,774,760		5,715,374
Debt securities held to maturity:
Due in one year or less	$	27,704		27,882
Due after one year through five years		30,801		32,541
Due after five years through ten years		125,439		131,161
Due after ten years		13,359		13,463
		197,303		205,047
Mortgage-backed securities held to maturity		802,991		724,431
	$	1,000,294		929,478

A summary of investment securities that as of March 31, 2012 and December 31, 2011 had been in a continuous unrealized loss position for less than twelve months and those that had been in a continuous unrealized loss position for twelve months or longer follows:

	Less than 12 months					12 months or more
	Fair value		Unrealized losses			Fair value		Unrealized losses
	(in thousands)
March 31, 2012
Investment securities available for sale:
Obligations of states and political subdivisions	$	863		(5	)		1,026		(16	)
Mortgage-backed securities:
Government issued or guaranteed		21,424		(157	)		6,098		(84	)
Privately issued residential		289,068		(10,826	)		744,430		(201,877	)
Privately issued commercial		—		—			13,435		(1,758	)
Collateralized debt obligations		—		—			5,597		(1,431	)
Other debt securities		73,498		(6,406	)		73,019		(34,727	)
Equity securities		5,225		(5,063	)		—		—
		390,078		(22,457	)		843,605		(239,893	)
Investment securities held to maturity:
Obligations of states and political subdivisions		4,850		(16	)		482		(16	)
Privately issued mortgage-backed securities		—		—			157,077		(103,649	)
		4,850		(16	)		157,559		(103,665	)
Total	$	394,928		(22,473	)		1,001,164		(343,558	)
December 31, 2011
Investment securities available for sale:
Obligations of states and political subdivisions	$	—		—			1,228		(20	)
Mortgage-backed securities:
Government issued or guaranteed		38,492		(190	)		6,017		(85	)
Privately issued residential		297,133		(14,188	)		751,077		(225,300	)
Privately issued commercial		—		—			15,029		(2,650	)
Collateralized debt obligations		2,871		(335	)		4,863		(2,153	)
Other debt securities		72,637		(9,883	)		73,635		(34,560	)
Equity securities		9,883		(4,500	)		—		—
		421,016		(29,096	)		851,849		(264,768	)
Investment securities held to maturity:
Obligations of states and political subdivisions		3,084		(4	)		1,430		(24	)
Privately issued mortgage-backed securities		1,883		(592	)		167,139		(98,548	)
		4,967		(596	)		168,569		(98,572	)
Total	$	425,983		(29,692	)		1,020,418		(363,340	)

The Company owned 313 individual investment securities with aggregate gross unrealized losses of $366 million at March 31, 2012. Approximately $318 million of the unrealized losses pertain to privately issued mortgage-backed securities with a cost basis of $1.5 billion. The Company also had $43 million of unrealized losses on trust preferred securities issued by financial institutions, securities backed by trust preferred securities issued by financial institutions and other entities, and other debt securities having a cost basis of $195 million. Based on a review of each of the remaining securities in the investment securities portfolio at March 31, 2012, with the exception of the aforementioned securities for which other-than-temporary impairment losses were recognized, the Company concluded that it expected to recover the amortized cost basis of its investment. As of March 31, 2012, the Company does not intend to sell nor is it anticipated that it would be required to sell any of its impaired investment securities. At March 31, 2012, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $357 million of cost method investment securities.