Securities

9 Months Ended

Sep. 30, 2013

Marketable Securities [Abstract]

Securities [Text Block]

(2) Securities

Trading Securities

The fair value and net unrealized gain (loss) included in trading securities is as follows (in thousands):

	September 30, 2013					December 31, 2012					September 30, 2012
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. Government agency debentures	$	74,632	$	(598	)	$	16,545	$	(57	)	$	3,100	$	1
U.S. agency residential mortgage-backed securities	26,129		456			86,361		447			119,835		566
Municipal and other tax-exempt securities	37,057		81			90,326		(226		)	58,150		118
Other trading securities	13,069		(25		)	20,870		(13		)	23,157		(1		)
Total	$	150,887	$	(86	)	$	214,102	$	151		$	204,242	$	684

Investment Securities

The amortized cost and fair values of investment securities are as follows (in thousands):

	September 30, 2013
	Amortized		Carrying		Fair		Gross Unrealized2
	Cost		Value1		Value		Gain		Loss
Municipal and other tax-exempt	$	409,542	$	409,542	$	407,562	$	2,316	$	(4,296	)
U.S. agency residential mortgage-backed securities – Other	53,858		56,182		58,442		2,260		—
Other debt securities	178,501		178,501		188,475		10,094		(120		)
Total	$	641,901	$	644,225	$	654,479	$	14,670	$	(4,416	)

¹  Carrying value includes $2.3 million of net unrealized gain which remains in Accumulated other comprehensive income (“AOCI”) in the Consolidated Balance Sheets related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio as discussed in greater detail following.

²  Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

	December 31, 2012
	Amortized		Carrying		Fair		Gross Unrealized2
	Cost		Value1		Value		Gain		Loss
Municipal and other tax-exempt	$	232,700	$	232,700	$	235,940	$	3,723	$	(483	)
U.S. agency residential mortgage-backed securities – Other	77,726		82,767		85,943		3,176		—
Other debt securities	184,067		184,067		206,575		22,528		(20		)
Total	$	494,493	$	499,534	$	528,458	$	29,427	$	(503	)

¹  Carrying value includes $5.0 million of net unrealized gain which remains in Accumulated other comprehensive income (“AOCI”) in the Consolidated Balance Sheets related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio as discussed in greater detail following.

²  Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

	September 30, 2012
	Amortized		Carrying		Fair		Gross Unrealized2
	Cost		Value1		Value		Gain		Loss
Municipal and other tax-exempt	$	155,144	$	155,144	$	159,464	$	4,329	$	(9	)
U.S. agency residential mortgage-backed securities – Other	85,699		91,911		95,128		3,356		(139		)
Other debt securities	185,059		185,059		205,766		20,737		(30		)
Total	$	425,902	$	432,114	$	460,358	$	28,422	$	(178	)

¹  Carrying value includes $6.2 million of net unrealized gain which remains in Accumulated other comprehensive income (“AOCI”) in the Consolidated Balance Sheets related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio as discussed in greater detail following.

²  Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

During the three months ended September 30, 2011, the Company transferred certain U.S. government agency residential mortgage-backed securities from the available for sale portfolio to the investment securities (held-to-maturity) portfolio as the Company has the positive intent and ability to hold these securities to maturity. No gains or losses were recognized in the Consolidated Statement of Earnings at the time of the transfer. Transfers of debt securities into the investment securities portfolio (held-to-maturity) are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income and in the carrying value of the investment securities portfolio.  Such amounts are amortized over the estimated remaining life of the security as an adjustment to yield, offsetting the related amortization of the premium or accretion of the discount on the transferred securities. At the time of transfer, the fair value totaled $131 million, amortized cost totaled $118 million and the pretax unrealized gain totaled $13 million.

The amortized cost and fair values of investment securities at September 30, 2013, by contractual maturity, are as shown in the following table (dollars in thousands):

	Less than One Year			One to Five Years			Six to Ten Years			Over Ten Years			Total			Weighted Average Maturity²
Municipal and other tax-exempt:
Carrying value	$	28,674		$	277,808		$	93,703		$	9,357		$	409,542		3.92
Fair value	28,928			276,908			92,195			9,531			407,562
Nominal yield¹	3.35		%	1.52		%	2.29		%	2.74		%	1.85		%
Other debt securities:
Carrying value	9,631			32,542			35,539			100,789			178,501			8.78
Fair value	9,647			32,883			36,445			109,500			188,475
Nominal yield	3.98		%	5.08		%	5.51		%	6.27		%	5.78		%
Total fixed maturity securities:
Carrying value	$	38,305		$	310,350		$	129,242		$	110,146		$	588,043		5.39
Fair value	38,575			309,791			128,640			119,031			596,037
Nominal yield	3.51		%	1.90		%	3.17		%	5.97		%	3.04		%
Residential mortgage-backed securities:
Carrying value													$	56,182		³
Fair value													58,442
Nominal yield4													2.73		%
Total investment securities:
Carrying value													$	644,225
Fair value													654,479
Nominal yield													3.02		%

¹  Calculated on a taxable equivalent basis using a 39% effective tax rate.

²  Expected maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without penalty.

³  The average expected lives of residential mortgage-backed securities were 4.2 years based upon current prepayment assumptions.

⁴  The nominal yield on residential mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments. See Quarterly Financial Summary - Unaudited for current yields on the investment securities portfolio.

Available for Sale Securities

The amortized cost and fair value of available for sale securities are as follows (in thousands):

	September 30, 2013
	Amortized		Fair		Gross Unrealized1
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,052	$	1,052	$	—	$	—		$	—
Municipal and other tax-exempt	93,897		95,440		2,792		(1,249		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,513,161		4,544,505		81,984		(50,640		)	—
FHLMC	2,412,948		2,412,116		30,673		(31,505		)	—
GNMA	978,361		984,065		11,054		(5,350		)	—
Other	38,979		40,701		1,722		—			—
Total U.S. government agencies	7,943,449		7,981,387		125,433		(87,495		)	—
Private issue:
Alt-A loans	109,234		109,592		2,970		—			(2,612		)
Jumbo-A loans	118,312		121,308		3,816		(138		)	(682		)
Total private issue	227,546		230,900		6,786		(138		)	(3,294		)
Total residential mortgage-backed securities	8,170,995		8,212,287		132,219		(87,633		)	(3,294		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,985,924		1,946,295		354		(39,983		)	—
Other debt securities	35,091		35,362		459		(188		)	—
Perpetual preferred stock	22,171		23,680		1,534		(25		)	—
Equity securities and mutual funds	56,348		58,787		2,479		(40		)	—
Total	$	10,365,478	$	10,372,903	$	139,837	$	(129,118	)	$	(3,294	)

¹ Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet.

² Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.

	December 31, 2012
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	1,002	$	2	$	—		$	—
Municipal and other tax-exempt	84,892		87,142		2,414		(164		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	5,308,463		5,453,549		146,247		(1,161		)	—
FHLMC	2,978,608		3,045,564		66,956		—			—
GNMA	1,215,554		1,237,041		21,487		—			—
Other	148,025		153,667		5,642		—			—
Total U.S. government agencies	9,650,650		9,889,821		240,332		(1,161		)	—
Private issue:
Alt-A loans	124,314		123,174		1,440		—			(2,580		)
Jumbo-A loans	198,588		201,989		5,138		(134		)	(1,603		)
Total private issue	322,902		325,163		6,578		(134		)	(4,183		)
Total residential mortgage-backed securities	9,973,552		10,214,984		246,910		(1,295		)	(4,183		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	890,746		895,075		5,006		(677		)	—
Other debt securities	35,680		36,389		709		—			—
Perpetual preferred stock	22,171		25,072		2,901		—			—
Equity securities and mutual funds	24,593		27,557		3,242		(278		)	—
Total	$	11,032,634	$	11,287,221	$	261,184	$	(2,414	)	$	(4,183	)

¹ Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet.

² Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.

	September 30, 2012
	Amortized		Fair		Gross Unrealized1
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	1,002	$	2	$	—		$	—
Municipal and other tax-exempt	86,326		87,969		2,760		(152		)	(965		)
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	5,740,232		5,900,174		161,314		(1,372		)	—
FHLMC	3,322,692		3,400,215		77,523		—			—
GNMA	1,151,058		1,181,134		30,076		—			—
Other	167,262		173,298		6,036		—			—
Total U.S. government agencies	10,381,244		10,654,821		274,949		(1,372		)	—
Private issue:
Alt-A loans	128,090		123,583		663		—			(5,170		)
Jumbo-A loans	208,900		208,139		3,617		(152		)	(4,226		)
Total private issue	336,990		331,722		4,280		(152		)	(9,396		)
Total residential mortgage-backed securities	10,718,234		10,986,543		279,229		(1,524		)	(9,396		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	336,130		339,095		3,271		(306		)	—
Other debt securities	35,710		36,456		746		—			—
Perpetual preferred stock	22,170		25,288		3,118		—			—
Equity securities and mutual funds	25,409		30,081		4,998		(326		)	—
Total	$	11,224,979	$	11,506,434	$	294,124	$	(2,308	)	$	(10,361	)

¹  Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet

²  Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.

The amortized cost and fair values of available for sale securities at September 30, 2013, by contractual maturity, are as shown in the following table (dollars in thousands):

	Less than One Year			One to Five Years			Six to Ten Years			Over Ten Years				Total			Weighted Average Maturity5
U.S. Treasuries:
Amortized cost	$	1,052		$	—		$	—		$	—			$	1,052		1.42
Fair value	1,052			—			—			—				1,052
Nominal yield	0.24		%	—		%	—		%	—		%		0.24		%
Municipal and other tax-exempt:
Amortized cost	$	1,379		$	34,349		$	5,446		$	52,723			$	93,897		14.50
Fair value	1,404			35,542			5,689			52,805				95,440
Nominal yield¹	—		%	0.97		%	0.51		%	2.62		%	6	1.85		%
Commercial mortgage-backed securities:
Amortized cost	$	—		$	520,499		$	1,150,637		$	314,788			$	1,985,924		10.18
Fair value	—			514,668			1,121,936			309,691				1,946,295
Nominal yield	—		%	1.11		%	1.37		%	1.36		%		1.30		%
Other debt securities:
Amortized cost	$	—		$	30,191		$	—		$	4,900			$	35,091		5.56
Fair value	—			30,650			—			4,712				35,362
Nominal yield	—		%	1.80		%	—		%	1.54		%	6	1.77		%
Total fixed maturity securities:
Amortized cost	$	2,431		$	585,039		$	1,156,083		$	372,411			$	2,115,964		10.29
Fair value	2,456			580,860			1,127,625			367,208				2,078,149
Nominal yield	—		%	1.13		%	1.36		%	1.54		%		1.33		%
Residential mortgage-backed securities:
Amortized cost														$	8,170,995		2
Fair value														8,212,287
Nominal yield4														1.92		%
Equity securities and mutual funds:
Amortized cost														$	78,519		³
Fair value														82,467
Nominal yield														0.70		%
Total available-for-sale securities:
Amortized cost														$	10,365,478
Fair value														10,372,903
Nominal yield														1.79		%

¹  Calculated on a taxable equivalent basis using a 39% effective tax rate.

²  The average expected lives of mortgage-backed securities were 3.5 based upon current prepayment assumptions.

³  Primarily common stock and preferred stock of corporate issuers with no stated maturity.

⁴  The nominal yield on mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments. See Quarterly Financial Summary –– Unaudited following for current yields on available for sale securities portfolio.

⁵  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.

⁶  Nominal yield on municipal and other tax-exempt securities and other debt securities with contractual maturity dates over ten years are based on variable rates which generally are reset within 35 days.

Sales of available for sale securities resulted in gains and losses as follows (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013			2012		2013			2012
Proceeds	$	355,650		$	209,325	$	2,140,531		$	1,660,876
Gross realized gains	3,164			7,967		18,948			40,133
Gross realized losses	(2,686		)	—		(9,862		)	(7,354		)
Related federal and state income tax expense	184			3,099		3,533			12,751

A summary of investment and available for sale securities that have been pledged as collateral for repurchase agreements, public trust funds on deposit and for other purposes, as required by law was as follows (in thousands):

	September 30, 2013		December 31, 2012		September 30, 2012
Investment:
Carrying value	$	92,442	$	117,346	$	153,224
Fair value	95,658		121,647		158,899
Available for sale:
Amortized cost	5,020,732		4,070,250		3,634,955
Fair value	5,009,611		4,186,390		3,763,664

The secured parties do not have the right to sell or re-pledge these securities. At December 31, 2012, municipal trading securities with a fair value of $13 million were pledged as collateral on a line of credit for the trading activities of BOSC, Inc. Under the terms of the credit agreement, the creditor has the right to sell or repledge the collateral. There were no securities pledged under this line of credit at September 30, 2013 or September 30, 2012.

Temporarily Impaired Securities as of September 30, 2013

(in thousands):

	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax-exempt	136	$	257,359	$	4,292	$	803	$	4	$	258,162	$	4,296
U.S. Agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	29	1,326		59		780		61		2,106		120
Total investment	165	$	258,685	$	4,351	$	1,583	$	65	$	260,268	$	4,416

	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:
U.S. Treasury	—	$	—	$	—	$	—	$	—	$	—	$	—
Municipal and other tax-exempt1	46	$	20,274	$	352	$	19,575	$	897	$	39,849	$	1,249
Residential mortgage-backed securities:
U. S. agencies:
FNMA	79	2,328,213		50,640		—		—		2,328,213		50,640
FHLMC	46	1,402,010		31,505		—		—		1,402,010		31,505
GNMA	23	674,512		5,350		—		—		674,512		5,350
Total U.S. agencies	148	4,404,735		87,495		—		—		4,404,735		87,495
Private issue1:
Alt-A loans	10	11,336		707		48,849		1,905		60,185		2,612
Jumbo-A loans	10	15,326		682		11,742		138		27,068		820
Total private issue	20	26,662		1,389		60,591		2,043		87,253		3,432
Total residential mortgage-backed securities	168	4,431,397		88,884		60,591		2,043		4,491,988		90,927
Commercial mortgage-backed securities guaranteed by U.S. government agencies	116	1,803,008		39,983		—		—		1,803,008		39,983
Other debt securities	3	4,712		188		—		—		4,712		188
Perpetual preferred stocks	1	4,975		25		—		—		4,975		25
Equity securities and mutual   funds	97	1,529		40		—		—		1,529		40
Total available for sale	431	$	6,265,895	$	129,472	$	80,166	$	2,940	$	6,346,061	$	132,412

¹Includes the following securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income:

Municipal and other tax-exempt	—	$	—	$	—	$	—	$	—	$	—	$	—
Alt-A loans	10	11,336		707		48,849		1,905		60,185		2,612
Jumbo-A loans	9	15,326		682		—		—		15,326		682

Temporarily Impaired Securities as of December 31, 2012

(In thousands)

	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax-exempt	53	$	92,768	$	483	$	—	$	—	$	92,768	$	483
U.S. Agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	14	881		20		—		—		881		20
Total investment	67	$	93,649	$	503	$	—	$	—	$	93,649	$	503

	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:
Municipal and other tax-exempt	38	$	6,150	$	11	$	26,108	$	153	$	32,258	$	164
Residential mortgage-backed securities:
U. S. agencies:
FNMA	12	161,828		1,161		—		—		161,828		1,161
FHLMC	—	—		—		—		—		—		—
GNMA	—	—		—		—		—		—		—
Total U.S. agencies	12	161,828		1,161		—		—		161,828		1,161
Private issue1:
Alt-A loans	12	—		—		87,907		2,580		87,907		2,580
Jumbo-A loans	11	—		—		43,252		1,737		43,252		1,737
Total private issue	23	—		—		131,159		4,317		131,159		4,317
Total residential mortgage-backed securities	35	161,828		1,161		131,159		4,317		292,987		5,478
Commercial mortgage-backed securities guaranteed by U.S. government agencies	8	275,065		677		—		—		275,065		677
Other debt securities	3	4,899		—		—		—		4,899		—
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	22	202		1		2,161		277		2,363		278
Total available for sale	106	$	448,144	$	1,850	$	159,428	$	4,747	$	607,572	$	6,597

¹  Includes the following securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income:

Municipal and other tax-exempt	—	$	—	$	—	$	—	$	—	$	—	$	—
Alt-A loans	12	$	—	$	—	$	87,907	$	2,580	$	87,907	$	2,580
Jumbo-A loans	10	—		—		29,128		1,602		29,128		1,602

Temporarily Impaired Securities as of September 30, 2012

(In thousands)

	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax-exempt	6	$	7,548	$	9	$	—	$	—	$	7,548	$	9
U.S. Agency residential mortgage-backed securities – Other	1	—		—		19,066		139		19,066		139
Other debt securities	14	871		30		—		—		871		30
Total investment	21	$	8,419	$	39	$	19,066	$	139	$	27,485	$	178

	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:
Municipal and other tax-exempt1	51	$	13,492	$	970	$	27,485	$	147	$	40,977	$	1,117
Residential mortgage-backed securities:
U. S. agencies:
FNMA	12	483,258		1,372		—		—		483,258		1,372
FHLMC	—	—		—		—		—		—		—
GNMA	—	—		—		—		—		—		—
Total U.S. agencies	12	483,258		1,372		—		—		483,258		1,372
Private issue1:
Alt-A loans	13	—		—		105,862		5,170		105,862		5,170
Jumbo-A loans	15	—		—		121,746		4,378		121,746		4,378
Total private issue	28	—		—		227,608		9,548		227,608		9,548
Total residential mortgage-backed securities	40	483,258		1,372		227,608		9,548		710,866		10,920
Commercial mortgage-backed securities guaranteed by U.S. government agencies	8	42,445		306		—		—		42,445		306
Other debt securities	—	—		—		—		—		—		—
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	2	2,551		326		—		—		2,551		326
Total available for sale	101	$	541,746	$	2,974	$	255,093	$	9,695	$	796,839	$	12,669

¹  Includes the following securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income:

Municipal and other tax-exempt	21	$	12,431	$	965	$	—	$	—	$	12,431	$	965
Alt-A loans	13	—		—		105,862		5,170		105,862		5,170
Jumbo-A loans	14	—		—		107,071		4,226		107,071		4,226

On a quarterly basis, the Company performs separate evaluations of impaired debt and equity investments and available for sale securities to determine if the unrealized losses are temporary.

For debt securities, management determines whether it intends to sell or if it is more-likely-than-not that it will be required to sell impaired securities. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements and securities portfolio management. Based on this evaluation as of September 30, 2013, the Company recorded a $1.4 million impairment related to certain municipal securities, which the Company now intends to sell prior to recovery of its amortized cost based on a tentative settlement offer from the securities issuer. We do not intend to sell any other impaired available for sale securities before fair value recovers to our current amortized cost and it is more-likely-than-not that we will not be required to sell impaired securities before fair value recovers, which may be maturity.

Impairment of debt securities rated investment grade by all nationally-recognized rating agencies are considered temporary unless specific contrary information is identified. None of the debt securities rated investment grade were considered to be other-than-temporarily impaired at September 30, 2013.

At September 30, 2013, the composition of the Company’s investment and available for sale securities portfolios by the lowest current credit rating assigned by any of the three nationally-recognized rating agencies is as follows (in thousands):

	U.S. Govt / GSE1				AAA - AA				A - BBB				Below Investment Grade				Not Rated				Total
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Investment:
Municipal and other tax-exempt	$	—	$	—	$	275,067	$	271,781	$	21,162	$	21,405	$	—	$	—	$	113,313	$	114,376	$	409,542	$	407,562
Mortgage-backed securities -- other	56,182		58,442		—		—		—		—		—		—		—		—		56,182		58,442
Other debt securities	—		—		167,463		177,502		—		—		—		—		11,038		10,973		178,501		188,475
Total investment securities	$	56,182	$	58,442	$	442,530	$	449,283	$	21,162	$	21,405	$	—	$	—	$	124,351	$	125,349	$	644,225	$	654,479

	U.S. Govt / GSE1				AAA - AA				A - BBB				Below Investment Grade				Not Rated				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for Sale:
U.S. Treasury	$	1,052	$	1,052	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,052	$	1,052
Municipal and other tax-exempt	—		—		47,747		48,564		15,819		15,525		17,924		19,140		12,407		12,211		93,897		95,440
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,513,161		4,544,505		—		—		—		—		—		—		—		—		4,513,161		4,544,505
FHLMC	2,412,948		2,412,116		—		—		—		—		—		—		—		—		2,412,948		2,412,116
GNMA	978,361		984,065		—		—		—		—		—		—		—		—		978,361		984,065
Other	38,979		40,701		—		—		—		—		—		—		—		—		38,979		40,701
Total U.S. government agencies	7,943,449		7,981,387		—		—		—		—		—		—		—		—		7,943,449		7,981,387
Private issue:
Alt-A loans	—		—		—		—		—		—		109,234		109,592		—		—		109,234		109,592
Jumbo-A loans	—		—		—		—		—		—		118,312		121,308		—		—		118,312		121,308
Total private issue	—		—		—		—		—		—		227,546		230,900		—		—		227,546		230,900
Total residential mortgage-backed securities	7,943,449		7,981,387		—		—		—		—		227,546		230,900		—		—		8,170,995		8,212,287
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,985,924		1,946,295		—		—		—		—		—		—		—		—		1,985,924		1,946,295
Other debt securities	—		—		4,900		4,712		30,191		30,650		—		—		—		—		35,091		35,362
Perpetual preferred stock	—		—		—		—		11,406		11,822		10,765		11,858		—		—		22,171		23,680
Equity securities and mutual funds	—		—		4		441		—		—		—		—		56,344		58,346		56,348		58,787
Total available for sale securities	$	9,930,425	$	9,928,734	$	52,651	$	53,717	$	57,416	$	57,997	$	256,235	$	261,898	$	68,751	$	70,557	$	10,365,478	$	10,372,903

¹  U.S. government and government sponsored enterprises are not rated by the nationally-recognized rating agencies as these securities are guaranteed by agencies of the U.S. government or government-sponsored enterprises.

At September 30, 2013, the entire portfolio of privately issued residential mortgage-backed securities was rated below investment grade. The gross unrealized loss on these securities totaled $3.4 million. Ratings by the nationally-recognized rating agencies are subjective in nature and accordingly ratings can vary significantly amongst the agencies. Limitations generally expressed by the rating agencies include statements that ratings do not predict the specific percentage default likelihood over any given period of time and that ratings do not opine on expected loss severity of an obligation should the issuer default. As such, the impairment of securities rated below investment grade was evaluated to determine if we expect not to recover the entire amortized cost basis of the security. This evaluation was based on projections of estimated cash flows based on individual loans underlying each security using current and anticipated increases in unemployment and default rates, decreases in housing prices and estimated liquidation costs at foreclosure.

The primary assumptions used in this evaluation were:

	September 30, 2013	December 31, 2012	September 30, 2012
Unemployment rate	Increasing to 7.5% over the next 12 months and remain at 7.5% thereafter	Increasing to 8.5% over the next 12 months, dropping to 8% over the following 21 months and holding at 8% thereafter.	Increasing to 8.5% over the next 12 months, dropping to 8% over the following 21 months and holding at 8% thereafter.
Housing price appreciation/depreciation	Starting with current depreciated housing prices based on information derived from the FHFA1, appreciating 5% over the next 12 months, then flat for the following 12 months and then appreciating at 2% per year thereafter.	Starting with current depreciated housing prices based on information derived from the FHFA1, depreciating 2% over the next 12 months, then flat for the following 12 months and then appreciating at 2% per year thereafter.	Starting with current depreciated housing prices based on information derived from the FHFA1, depreciating 2% over the next 12 months and then appreciating at 2% per year thereafter.
Estimated liquidation costs	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.
Discount rates	Estimated cash flows were discounted at rates that range from 2.00% to 6.25% based on our current expected yields.	Estimated cash flows were discounted at rates that range from 2.00% to 6.25% based on our current expected yields.	Estimated cash flows were discounted at rates that range from 2.00% to 6.25% based on our current expected yields.

¹  Federal Housing Finance Agency

We also consider the current loan-to-value ratio and remaining credit enhancement as part of the assessment of the cash flows available to recover the amortized cost of the debt securities. Each factor is considered in the evaluation.

The Company calculates the current loan-to-value ratio for each mortgage-backed security using loan-level data. Current loan-to-value ratio is the current outstanding loan amount divided by an estimate of the current home value. The current home value is derived from FHFA data. FHFA provides historical information on home price depreciation at both the Metropolitan Statistical Area and state level.  This information is matched to each loan to estimate the home price depreciation. Data is accumulated from the loan level to determine the current loan-to-value ratio for the security as a whole.

Remaining credit enhancement is the amount of credit enhancement available to absorb current projected losses within the pool of loans that support the security. The Company acquires the benefit of credit enhancement by investing in senior or super-senior tranches for many of our residential mortgage-backed securities. Subordinated tranches held by other investors are specifically designed to absorb losses before the senior or super-senior tranches which effectively increased the typical credit support for these types of bonds. Current projected losses consider depreciation of home prices based on FHFA data, estimated costs and additional losses to liquidate collateral and delinquency status of the individual loans underlying the security.

Credit loss impairment is recorded as a charge to earnings. Additional impairment based on the difference between the total unrealized loss and the estimated credit loss on these securities is charged against other comprehensive income, net of deferred taxes.

Based upon projected declines in expected cash flows from certain private-label residential mortgage-backed securities, the Company recognized $139 thousand of additional credit loss impairments in earnings during the three months ended September 30, 2013.

A distribution of the amortized cost (after recognition of the other-than-temporary impairment), fair value and credit loss impairments recognized on our privately issued residential mortgage-backed securities is as follows (in thousands, except for number of securities):

						Credit Losses Recognized
						Three months ended
						September 30, 2013			Life-to-date
	Number of Securities	Amortized Cost		Fair Value		Number of Securities	Amount		Number of Securities	Amount
Alt-A	16	$	109,234	$	109,592	1	$	139	16	$	49,126
Jumbo-A	29	118,312		121,308		—	—		29	18,220
Total	45	$	227,546	$	230,900	1	$	139	45	$	67,346

Impaired equity securities, including perpetual preferred stocks, are evaluated based on management's ability and intent to hold the securities until fair value recovers over periods not to exceed three years. The assessment of the ability and intent to hold these securities focuses on the liquidity needs, asset/liability management objectives and securities portfolio objectives. Factors considered when assessing recovery include forecasts of general economic conditions and specific performance of the issuer, analyst ratings and credit spreads for preferred stocks which have debt-like characteristics. The Company has evaluated the near-term prospects of the investments in relation to the severity and duration of the impairment and based on that evaluation has the ability and intent to hold these investments until a recovery in fair value. Accordingly, all impairment of equity securities was considered temporary at September 30, 2013.

The following is a tabular roll forward of the amount of credit-related OTTI recognized on available for sale debt securities in earnings (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013			2012		2013			2012
Balance of credit-related OTTI recognized on available for sale debt, beginning of period	$	76,027		$	72,915	$	75,228		$	76,131
Additions for credit-related OTTI not previously recognized	67			—		619			248
Additions for increases in credit-related OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost	73			1,104		320			5,436
Reductions for change in intent to hold before recovery	(3,589		)	—		(3,589		)	—
Sales	(5,232		)	—		(5,232		)	(7,796		)
Balance of credit-related OTTI recognized on available for sale debt securities, end of period	$	67,346		$	74,019	$	67,346		$	74,019

Additions above exclude other-than-temporary impairment recorded due to change in intent to hold before recovery.

Fair Value Option Securities

Fair value option securities represent securities which the Company has elected to carry at fair value and separately identified on the Consolidated Balance Sheets with changes in the fair value recognized in earnings as they occur. Certain residential mortgage-backed securities issued by U.S. government agencies and derivative contracts are held as an economic hedge of the mortgage servicing rights. In addition, certain corporate debt securities are economically hedged by derivative contracts to manage interest rate risk. Derivative contracts that have not been designated as hedging instruments effectively modify these fixed rate securities into variable rate securities.

The fair value and net unrealized gain (loss) included in Fair value option securities is as follows (in thousands):

	September 30, 2013					December 31, 2012				September 30, 2012
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain		Fair Value		Net Unrealized Gain
U.S. agency residential mortgage-backed securities	$	163,567	$	(5,365	)	$	257,040	$	3,314	$	305,445	$	13,827
Corporate debt securities	—		—			26,486		1,409		26,442		1,359
Other securities	4,293		1			770		47		—		—
Total	$	167,860	$	(5,364	)	$	284,296	$	4,770	$	331,887	$	15,186