Investment Securities

9 Months Ended

Sep. 30, 2012

Investment Securities [Abstract]

Investment Securities

Note 3 – Investment Securities

The following tables summarize FHN’s available for sale (“AFS”) securities on September 30, 2012 and 2011:
	September 30, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Securities available for sale:
U.S. treasuries	$	54,995	$	1	$	-	$	54,996
Government agency issued mortgage-backed securities ("MBS")		1,191,811		79,639		-		1,271,450
Government agency issued collateralized mortgage obligations ("CMO")		1,530,075		25,562		(896)		1,554,741
Other U.S. government agencies		3,911		291		-		4,202
States and municipalities		17,970		-		-		17,970
Equity (a)		219,737		16		-		219,753
Other		510		7		-		517
Total securities available for sale (b)	$	3,019,009	$	105,516	$	(896)	$	3,123,629

• Includes restricted investments in FHLB-Cincinnati stock of $125.5million and FRB stock of $66.0million. The remainder is money market, venture capital, and cost method investments.
• Includes $2.8billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes. Of this amount, $.6 billion was pledged as collateral for securities sold under repurchase agreements.

	September 30, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Securities available for sale:
U.S. treasuries	$	40,054	$	135	$	-	$	40,189
Government agency issued MBS		1,433,636		81,324		-		1,514,960
Government agency issued CMO		1,462,668		47,507		-		1,510,175
Other U.S. government agencies		17,033		898		-		17,931
States and municipalities		19,365		-		-		19,365
Equity (a)		224,698		-		-		224,698
Other		511		17		-		528
Total securities available for sale (b)	$	3,197,965	$	129,881	$	-	$	3,327,846

• Includes restricted investments in FHLB-Cincinnati stock of $125.5million and FRB stock of $66.1million. The remainder is money market, venture capital, and cost method investments.
• Includes $3.0 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes. Of this amount, $1.1billion was pledged as collateral for securities sold under repurchase agreements.

National banks chartered by the federal government are, by law, members of the Federal Reserve System. Each member bank is required to own stock in its regional Federal Reserve Bank (“FRB”). Given this requirement, FRB stock may not be sold, traded, or pledged as collateral for loans. Membership in the Federal Home Loan Bank (“FHLB”) network requires ownership of capital stock. Member banks are entitled to borrow funds from the FHLB and are required to pledge mortgage loans as collateral. Investments in the FHLB are non-transferable and, generally, membership is maintained primarily to provide a source of liquidity as needed.

The amortized cost and fair value by contractual maturity for the available for sale securities portfolio on September 30, 2012 are provided below:
		Available for Sale
		Amortized		Fair
(Dollars in thousands)		Cost		Value
Within 1 year		$	54,995	$	54,996
After 1 year; within 5 years			5,411		5,702
After 5 years; within 10 years			-		-
After 10 years			16,470		16,470
	Subtotal		76,876		77,168
Government agency issued MBS and CMO			2,721,886		2,826,191
Equity and other securities			220,247		220,270
Total		$	3,019,009	$	3,123,629

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The table below provides information on gross realized gains and gross realized losses from investment securities for the three and nine months ended September 30:
	Three Months Ended				Nine Months Ended
(Dollars in thousands)	2012		2011		2012		2011
Gross gains on sales of securities (a)	$	-	$	35,162	$	5,433	$	44,584
Gross (losses) on sales of securities		-		-		-		(8,623)
Net gain/(loss) on sales of securities(b)	$	-	$	35,162	$	5,433	$	35,961
Net other than temporary impairment ("OTTI") recorded		-		-		(40)		-
Total securities gain/(loss), net	$	-	$	35,162	$	5,393	$	35,961

(a)Three and nine months ended September 30, 2011include gain of $35.1 million related to sale of Visa Class B shares.

(b)There were no proceeds from sales for the three months ended September 30, 2012. Proceeds from sales for the three months ended September 30, 2011were $35.2 million, and were $47.5 million and $493.6 million for the nine months ended September 30, 2012 and 2011, respectively.

There were no unrealized losses within the available for sale portfolio on September 30, 2011. The following table provides information on investments within the available for sale portfolio that had unrealized losses on September 30, 2012:
	On September 30, 2012
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Government agency issued CMO	$	205,205	$	(896)	$	-	$	-	$	205,205	$	(896)
Total temporarily impaired securities	$	205,205	$	(896)	$	-	$	-	$	205,205	$	(896)

FHN has reviewed investment securities that were in unrealized loss positions in accordance with its accounting policy for OTTI and does not consider them other-than-temporarily impaired. For debt securities with unrealized losses, FHN does not intend to sell them and it is more-likely-than-not that FHN will not be required to sell them prior to recovery. The decline in value is primarily attributable to interest rates and not credit losses. For equity securities, FHN has both the ability and intent to hold these securities for the time necessary to recover the amortized cost.