Investment Securities

3 Months Ended

Jun. 30, 2014

Investment Securities [Abstract]

Investment Securities

Note 3 – Investment Securities

The following tables summarize FHN’s investment securities on June 30, 2014 and 2013:
	June 30, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Securities available-for-sale ("AFS"):
U.S. treasuries	$	39,995	$	4	$	-	$	39,999
Government agency issued mortgage-backed securities ("MBS")		724,785		39,679		(1,622)		762,842
Government agency issued collateralized mortgage obligations ("CMO")		2,582,242		21,211		(34,065)		2,569,388
Other U.S. government agencies		1,973		88		-		2,061
States and municipalities		15,155		-		-		15,155
Equity and other (a)		187,106		17		(26)		187,097
Total securities available-for-sale (b)	$	3,551,256	$	60,999	$	(35,713)	$	3,576,542
Securities held-to-maturity ("HTM"):
States and municipalities	$	4,279	$	1,277	$	-	$	5,556
Total securities held-to-maturity	$	4,279	$	1,277	$	-	$	5,556

• Includes restricted investments in FHLB-Cincinnati stock of $87.9million and FRB stock of $66.0million. The remainder is money market, venture capital, and cost method investments.
• Includes $3.4billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

	June 30, 2013
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Securities available-for-sale:
U.S. treasuries	$	39,991	$	6	$	-	$	39,997
Government agency issued MBS (a)		959,851		36,205		(4,294)		991,762
Government agency issued CMO		1,970,151		12,409		(28,522)		1,954,038
Other U.S. government agencies		2,687		167		-		2,854
States and municipalities		16,434		11		-		16,445
Equity and other (b)		223,241		42		-		223,283
Total securities available-for-sale (a) (c)	$	3,212,355	$	48,840	$	(32,816)	$	3,228,379

• Balance has been re-presented due to purchase accounting adjustments made in third quarter 2013.
• Includes restricted investments in FHLB-Cincinnati stock of $128.0 million and FRB stock of $66.2million. 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.

The amortized cost and fair value by contractual maturity for the available-for-sale and held-to-maturity securities portfolios on June 30, 2014, are provided below:
		Held-to-Maturity				Available-for-Sale
		Amortized		Fair		Amortized		Fair
(Dollars in thousands)		Cost		Value		Cost		Value
Within 1 year		$	-	$	-	$	39,995	$	39,999
After 1 year; within 5 years			-		-		3,473		3,561
After 5 years; within 10 years			-		-		-		-
After 10 years			4,279		5,556		13,655		13,655
	Subtotal		4,279		5,556		57,123		57,215
Government agency issued MBS and CMO			-		-		3,307,027		3,332,230
Equity and other			-		-		187,106		187,097
Total		$	4,279	$	5,556	$	3,551,256	$	3,576,542

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 gains and gross losses from investment securities for the three and six months ended June 30:
	Three Months Ended				Six Months Ended
		June 30				June 30
(Dollars in thousands)	2014		2013		2014		2013
Gross gains on sales of securities	$	77	$	12	$	5,734	$	42
Gross losses on sales of securities		-		(363)		-		(369)
Net gain/(loss) on sales of securities (a)		77		(351)		5,734		(327)
Venture capital investments (b)		(2,000)		-		(2,000)		-
Total securities gain/(loss), net	$	(1,923)	$	(351)	$	3,734	$	(327)

• Proceedsfrom sales for the three months ended June 30, 2014 were not material. Proceeds for the six months ended June 30, 2014 were$5.7 million,inclusive of $1.4 million of equity securities. Proceeds from the three and six months ended June 30, 2013, were $18.9 million.
• Includes write-offs and /or unrealized fair value adjustments related to venture capital investments.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of June 30, 2014 and 2013:
	As of June 30, 2014
	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	$	437,212	$	(2,276)	$	1,004,964	$	(31,789)	$	1,442,176	$	(34,065)
Government agency issued MBS		34,041		(83)		108,491		(1,539)		142,532		(1,622)
Total debt securities		471,253		(2,359)		1,113,455		(33,328)		1,584,708		(35,687)
Equity		43		(26)		-		-		43		(26)
Total temporarily impaired securities	$	471,296	$	(2,385)	$	1,113,455	$	(33,328)	$	1,584,751	$	(35,713)

	As of June 30, 2013
	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	$	1,233,820	$	(28,365)	$	15,967	$	(157)	$	1,249,787	$	(28,522)
Government agency issued MBS		192,747		(4,294)		-		-		192,747		(4,294)
Total temporarily impaired securities	$	1,426,567	$	(32,659)	$	15,967	$	(157)	$	1,442,534	$	(32,816)

FHN has reviewed investment securities that were in unrealized loss positions in accordance with its accounting policy for other than temporary impairment “(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.