Investment Securities

9 Months Ended

Sep. 30, 2011

Investment Securities

Investment Securities

Note 2.  Investment Securities

The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities as of September 30, 2011 and December 31, 2010 were as follows:

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
(dollars in thousands)	Cost	Gains	Losses	Value
September 30, 2011
Available-for-Sale:
Debt Securities Issued by the U.S. Treasury and Government Agencies	$        1,276,925	$             10,710	$            (1,039)	$          1,286,596
Debt Securities Issued by States and Political Subdivisions	152,762	6,807	(1)	159,568
Debt Securities Issued by Corporations	133,670	481	(1,611)	132,540
Mortgage-Backed Securities Issued by
Government Agencies	2,721,303	79,394	(1,065)	2,799,632
U.S. Government-Sponsored Enterprises	67,147	3,415	-	70,562
Total Mortgage-Backed Securities	2,788,450	82,809	(1,065)	2,870,194
Total	$        4,351,807	$           100,807	$            (3,716)	$          4,448,898
Held-to-Maturity:
Debt Securities Issued by the U.S. Treasury and Government Agencies	$           179,481	$               6,601	$                     -	$             186,082
Mortgage-Backed Securities Issued by
Government Agencies	2,285,502	79,905	(42)	2,365,365
U.S. Government-Sponsored Enterprises	55,439	3,195	-	58,634
Total Mortgage-Backed Securities	2,340,941	83,100	(42)	2,423,999
Total	$        2,520,422	$             89,701	$                 (42)	$          2,610,081
December 31, 2010
Available-for-Sale:
Debt Securities Issued by the U.S. Treasury and Government Agencies	$           536,770	$             19,131	$                 (45)	$             555,856
Debt Securities Issued by States and Political Subdivisions	113,715	1,477	(1,583)	113,609
Debt Securities Issued by U.S. Government-Sponsored Enterprises	500	5	-	505
Mortgage-Backed Securities Issued by
Government Agencies	5,696,907	84,008	(30,887)	5,750,028
U.S. Government-Sponsored Enterprises	109,259	4,617	-	113,876
Total Mortgage-Backed Securities	5,806,166	88,625	(30,887)	5,863,904
Total	$        6,457,151	$           109,238	$          (32,515)	$          6,533,874
Held-to-Maturity:
Mortgage-Backed Securities Issued by
Government Agencies	$             47,368	$                2,959	$                     -	$               50,327
U.S. Government-Sponsored Enterprises	79,881	3,820	-	83,701
Total	$           127,249	$               6,779	$                     -	$             134,028

During the three months ended March 31, 2011, the Company reclassified at fair value approximately $2.2 billion in available-for-sale investment securities to the held-to-maturity category.  The related unrealized after-tax gains of approximately $8.2 million remained in accumulated other comprehensive income to be amortized over the estimated remaining life of the securities as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount on the transferred securities.  No gains or losses were recognized at the time of reclassification.  Management considers the held-to-maturity classification of these investment securities to be appropriate as the Company has the positive intent and ability to hold these securities to maturity.

The table below presents an analysis of the contractual maturities of the Company’s investment securities as of September 30, 2011.  Mortgage-backed securities are disclosed separately in the table below as these investment securities may prepay prior to their scheduled contractual maturity dates.

	Amortized	Fair
(dollars in thousands)	Cost	Value
Available-for-Sale:
Due in One Year or Less	$             312,101	$            313,003
Due After One Year Through Five Years	761,553	769,983
Due After Five Years Through Ten Years	108,303	111,747
Due After Ten Years	381,400	383,971
	1,563,357	1,578,704
Mortgage-Backed Securities Issued by
Government Agencies	2,721,303	2,799,632
U.S. Government-Sponsored Enterprises	67,147	70,562
Total Mortgage-Backed Securities	2,788,450	2,870,194
Total	$          4,351,807	$         4,448,898
Held-to-Maturity:
Due After One Year Through Five Years	$             179,481	$            186,082
Mortgage-Backed Securities Issued by
Government Agencies	2,285,502	2,365,365
U.S. Government-Sponsored Enterprises	55,439	58,634
Total Mortgage-Backed Securities	2,340,941	2,423,999
Total	$          2,520,422	$         2,610,081

Investment securities with carrying values of $3.2 billion as of September 30, 2011 and December 31, 2010 were pledged to secure deposits of governmental entities and securities sold under agreements to repurchase.  As of September 30, 2011 and December 31, 2010, the Company did not have any investment securities pledged where the secured party had the right to sell or repledge the collateral.

There were no sales of investment securities for the three months ended September 30, 2011.  Gross gains on the sales of investment securities were $7.9 million for the three months ended September 30, 2010 and $10.3 million and $42.9 million for the nine months ended September 30, 2011 and 2010, respectively.  Gross losses on the sales of investment securities were $4.2 million for the nine months ended September 30, 2011 and were not material for the three and nine months ended September 30, 2010.  The Company’s sales of available-for-sale investment securities during the nine months ended September 30, 2011 were primarily due to management’s ongoing evaluation of the investment securities portfolio in response to established asset/liability management objectives.

The Company’s investment securities in an unrealized loss position, segregated by continuous length of impairment, were as follows:

	Less Than 12 Months		12 Months or Longer		Total
		Gross		Gross		Gross
		Unrealized		Unrealized		Unrealized
(dollars in thousands)	Fair Value	Losses	Fair Value	Losses	Fair Value	Losses
September 30, 2011
Debt Securities Issued by the U.S. Treasury and Government Agencies	$   258,363	$  (1,033)	$         991	$         (6)	$   259,354	$   (1,039)
Debt Securities Issued by States and Political Subdivisions	221	(1)	-	-	221	(1)
Debt Securities Issued by Corporations	59,659	(1,611)	-	-	59,659	(1,611)
Mortgage-Backed Securities Issued by Government Agencies	149,158	(1,091)	943	(16)	150,101	(1,107)
Total	$   467,401	$  (3,736)	$      1,934	$       (22)	$   469,335	$   (3,758)
December 31, 2010
Debt Securities Issued by the U.S. Treasury and Government Agencies	$       1,366	$       (36)	$      1,204	$         (9)	$       2,570	$        (45)
Debt Securities Issued by States and Political Subdivisions	67,754	(1,583)	-	-	67,754	(1,583)
Mortgage-Backed Securities Issued by Government Agencies	1,662,897	(30,887)	-	-	1,662,897	(30,887)
Total	$ 1,732,017	$ (32,506)	$      1,204	$         (9)	$ 1,733,221	$ (32,515)

The Company does not believe that the investment securities that were in an unrealized loss position as of September 30, 2011, which was comprised of 59 securities, represent an other-than-temporary impairment.  Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities.  The Company does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost bases, which may be at maturity.

As of September 30, 2011, the gross unrealized losses reported for mortgage-backed securities related to investment securities issued by the Government National Mortgage Association.

As of September 30, 2011, the carrying value of the Company’s Federal Home Loan Bank stock and Federal Reserve Bank stock was $61.3 million and $18.6 million, respectively.  These securities do not have a readily determinable fair value as their ownership is restricted and there is no market for these securities.  These securities can only be redeemed or sold at their par value and only to the respective issuing government supported institution or to another member institution.  The Company records these non-marketable equity securities as a component of other assets and periodically evaluates these securities for impairment.  Management considers these non-marketable equity securities to be long-term investments.  Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than by recognizing temporary declines in value.