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INVESTMENT SECURITIES | 9 Months Ended
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Sep. 30, 2011
INVESTMENT SECURITIES [Abstract] |
INVESTMENT SECURITIES | NOTE 5 - INVESTMENT SECURITIES An analysis of the investment securities available-for-sale portfolio is presented as follows:
|  |  |  |  | Gross |  |  | Gross |  |  | Estimated |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
|  | (In thousands) |
As of September 30, 2011 |  |  |  |  |  |  |  |  |  |  |  |
Investment securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 19,881 |  |  | $ | 880 |  |  | $ | - |  |  | $ | 20,761 |
U.S. Government agency and U.S. Government sponsored enterprise debt securities |  |  | 641,698 |  |  |  | 1,961 |  |  |  | (708 | ) |  |  | 642,951 |
U.S. Government agency and U.S. Government sponsored enterprise |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial mortgage-backed securities |  |  | 16,335 |  |  |  | 488 |  |  |  | - |  |  |  | 16,823 |
Residential mortgage-backed securities |  |  | 1,058,168 |  |  |  | 36,728 |  |  |  | (1,067 | ) |  |  | 1,093,829 |
Municipal securities |  |  | 74,557 |  |  |  | 3,042 |  |  |  | (133 | ) |  |  | 77,466 |
Other residential mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-investment grade |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Corporate debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  |  | 1,471,569 |  |  |  | 6,140 |  |  |  | (74,277 | ) |  |  | 1,403,432 |
Non-investment grade (1) |  |  | 26,175 |  |  |  | - |  |  |  | (11,980 | ) |  |  | 14,195 |
Other securities |  |  | 9,918 |  |  |  | 218 |  |  |  | (1 | ) |  |  | 10,135 |
Total investment securities available-for-sale |  | $ | 3,318,301 |  |  | $ | 49,457 |  |  | $ | (88,166 | ) |  | $ | 3,279,592 |
As of December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 19,847 |  |  | $ | 607 |  |  | $ | - |  |  | $ | 20,454 |
U.S. Government agency and U.S. Government sponsored enterprise debt securities |  |  | 1,349,289 |  |  |  | 2,297 |  |  |  | (18,121 | ) |  |  | 1,333,465 |
U.S. Government agency and U.S. Government sponsored enterprise |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial mortgage-backed securities |  |  | 18,620 |  |  |  | 512 |  |  |  | - |  |  |  | 19,132 |
Residential mortgage-backed securities |  |  | 295,140 |  |  |  | 11,574 |  |  |  | - |  |  |  | 306,714 |
Municipal securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other residential mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-investment grade |  |  | 14,996 |  |  |  | - |  |  |  | (8,742 | ) |  |  | 6,254 |
Corporate debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  |  | 1,056,537 |  |  |  | 9,095 |  |  |  | (8,765 | ) |  |  | 1,056,867 |
Non-investment grade (1) |  |  | 50,015 |  |  |  | 31 |  |  |  | (11,316 | ) |  |  | 38,730 |
Other securities |  |  | 95,966 |  |  |  | 267 |  |  |  | (1,908 | ) |  |  | 94,325 |
Total investment securities available-for-sale |  | $ | 2,900,410 |  |  | $ | 24,383 |  |  | $ | (48,852 | ) |  | $ | 2,875,941 |
_______________________
| (1) | For the nine months ended September 30, 2011, the Company recorded $464 thousand, on a pre-tax basis, of the credit portion of OTTI through earnings and $5.1 million of the non-credit portion of OTTI for pooled trust preferred securities in other comprehensive income. The Company recorded $16.7 million, on a pre-tax basis, of the credit portion of OTTI through earnings and $15.4 million of the non-credit portion of OTTI for pooled trust preferred securities and other mortgage-backed securities in other comprehensive income for the year ended December 31, 2010.
The fair values of investment securities are generally determined by reference to the average of at least two quoted market prices obtained from independent external brokers or prices obtained from independent external pricing service providers who have experience in valuing these securities. The Company performs a monthly analysis on the broker quotes received from third parties to ensure that the prices represent a reasonable estimate of fair value. The procedures include, but are not limited to, initial and ongoing review of third party pricing methodologies, review of pricing trends, and monitoring of trading volumes. The Company assesses that prices received from independent brokers represent a reasonable estimate of fair value through the use of internal and external cash flow models developed that are based on spreads and, when available, market indices. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon available market data, the price received from third parties is adjusted accordingly. Prices from third party pricing services are often unavailable for securities that are rarely traded or are traded only in privately negotiated transactions. As a result, certain securities are priced via independent broker quotations that utilize inputs that may be difficult to corroborate with observable market based data. Additionally, the majority of these independent broker quotations are non-binding. As a result of the global financial crisis and continued illiquidity in the U.S. markets, the market for the pooled trust preferred securities has been inactive since mid-2007. It is the Company's view that current broker prices (which are typically non-binding) on these securities are based on forced liquidation or distressed sale values in very inactive markets that are not representative of the fair value of these securities. As such, the Company considered what weight, if any, to place on transactions that are not orderly when estimating fair value. For the pooled trust preferred securities the Company determined their fair values using the methodologies set forth in Note 3 to the Company's condensed consolidated financial statements presented elsewhere in this report. The following table shows the Company's rollforward of the amount related to OTTI credit losses for the periods shown:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2011 |  |  | 2010 |  |  | 2011 |  |  | 2010 |
|  | (In thousands) |
Beginning balance |  | $ | 115,243 |  |  | $ | 114,891 |  |  | $ | 124,340 |  |  | $ | 107,671 |
Addition of other-than-temporary impairment that was not previously recognized |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Additional increases to the amount related to the credit loss for which an other-than-temporary impairment was previously recognized |  |  | - |  |  |  | 888 |  |  |  | 464 |  |  |  | 8,108 |
Reduction for securities sold |  |  | - |  |  |  | - |  |  |  | (9,561 | ) |  |  | - |
Ending balance |  | $ | 115,243 |  |  | $ | 115,779 |  |  | $ | 115,243 |  |  | $ | 115,779 |
The following tables show the Company's investment portfolio's gross unrealized losses and related fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2011 and December 31, 2010:
|  | Less Than 12 Months |  |  | 12 Months or More |  |  | Total |
|  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
|  | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
|  | (In thousands) |
As of September 30, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
U.S. Government agency and U.S. Government sponsored enterprise debt securities |  |  | 177,715 |  |  |  | (708 | ) |  |  | - |  |  |  | - |  |  |  | 177,715 |  |  |  | (708 | )
U.S. Government agency and U.S. Government |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
sponsored enterprise mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial mortage-backed securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Residential mortage-backed securities |  |  | 195,248 |  |  |  | (1,067 | ) |  |  | - |  |  |  | - |  |  |  | 195,248 |  |  |  | (1,067 | )
Municipal securities |  |  | 9,715 |  |  |  | (133 | ) |  |  | - |  |  |  | - |  |  |  | 9,715 |  |  |  | (133 | )
Other residential mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-investment grade |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Corporate debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  |  | 944,337 |  |  |  | (61,314 | ) |  |  | 247,020 |  |  |  | (12,963 | ) |  |  | 1,191,357 |  |  |  | (74,277 | )
Non-investment grade |  |  | 5,580 |  |  |  | (387 | ) |  |  | 8,616 |  |  |  | (11,593 | ) |  |  | 14,196 |  |  |  | (11,980 | )
Other securities |  |  | 4,490 |  |  |  | (1 | ) |  |  | - |  |  |  | - |  |  |  | 4,490 |  |  |  | (1 | )
Total investment securities available-for-sale |  | $ | 1,337,085 |  |  | $ | (63,610 | ) |  | $ | 255,636 |  |  | $ | (24,556 | ) |  | $ | 1,592,721 |  |  | $ | (88,166 | )
|  | Less Than 12 Months |  |  | 12 Months or More |  |  | Total |
|  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
|  | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
|  | (In thousands) |
As of December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
U.S. Government agency and U.S. Government sponsored enterprise debt securities |  |  | 935,654 |  |  |  | (18,121 | ) |  |  | - |  |  |  | - |  |  |  | 935,654 |  |  |  | (18,121 | )
U.S. Government agency and U.S. Government |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
sponsored enterprise mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial mortage-backed securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Residential mortage-backed securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Municipal securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other residential mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-investment grade |  |  | - |  |  |  | - |  |  |  | 6,254 |  |  |  | (8,742 | ) |  |  | 6,254 |  |  |  | (8,742 | )
Corporate debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment grade |  |  | 656,434 |  |  |  | (8,765 | ) |  |  | - |  |  |  | - |  |  |  | 656,434 |  |  |  | (8,765 | )
Non-investment grade |  |  | 24,105 |  |  |  | (623 | ) |  |  | 9,926 |  |  |  | (10,693 | ) |  |  | 34,031 |  |  |  | (11,316 | )
Other securities |  |  | 76,692 |  |  |  | (1,908 | ) |  |  | - |  |  |  | - |  |  |  | 76,692 |  |  |  | (1,908 | )
Total investment securities available-for-sale |  | $ | 1,692,885 |  |  | $ | (29,417 | ) |  | $ | 16,180 |  |  | $ | (19,435 | ) |  | $ | 1,709,065 |  |  | $ | (48,852 | )
Unrealized Losses The majority of the unrealized losses related to securities that have been in a continuous loss position for less than twelve months is related to investment grade corporate debt securities. As of September 30, 2011, the Company had $1.40 billion in investment grade corporate debt securities available-for-sale, representing 43% of the total investment securities available-for-sale portfolio. As of September 30, 2011, there were 17 individual securities that have been in a continuous unrealized loss position for twelve months or more. These securities are comprised of 5 trust preferred securities with a total fair value of $8.6 million and 12 investment grade corporate debt securities with a fair value of $247.0 million. As of September 30, 2011, there were also 157 securities, not including the 17 securities above, which have been in a continuous unrealized loss position for less than twelve months. The securities in an unrealized loss position for less than twelve months include 128 investment grade corporate debt securities, 14 residential mortgage-backed securities, 9 government agency securities, 4 municipal securities, 1 non-investment grade corporate debt security and 1 other security. The unrealized losses on these securities are primarily attributed to the sovereign debt crisis in Europe. The issuers of these securities have not, to our knowledge, established any cause for default on these securities. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated. The Company does not intend to sell these securities and it is not more likely than not that the company will be required to sell these securities before recovery of their current amortized cost basis. As such, the Company does not deem these securities, other than those previously stated, to be other-than-temporarily impaired as of September 30, 2011. Corporate Debt Securities The unrealized losses related to securities that have been in a continuous loss position of twelve months or longer are related to 5 trust preferred debt securities and 12 investment grade corporate debt securities. As of September 30, 2011, these 5 trust preferred securities had an estimated fair value of $8.6 million, representing less than 1% of the total investment securities available-for-sale portfolio. As of September 30, 2011, these non-investment grade trust preferred debt securities had gross unrealized losses amounting to $11.6 million, or 57% of the total amortized cost basis of these securities, comprised of $6.5 million in unrealized losses on securities that are not other-than-temporarily impaired and $5.1 million in noncredit-related impairment losses on securities that are other-than-temporarily impaired as of September 30, 2011 pursuant to the provisions of ASC 320-10-65. We recorded an impairment loss of $464 thousand on our portfolio of pooled trust preferred securities during the first nine months of 2011 for additional increases to the amount related to the credit loss for which an other-than-temporary impairment was previously recognized. The scheduled maturities of investment securities at September 30, 2011 are presented as follows:
|  | Amortized |  |  | Estimated |
|  | Cost |  |  | Fair Value |
|  | (In thousands) |
Due within one year |  | $ | 801,503 |  |  | $ | 795,333 |
Due after one year through five years |  |  | 360,252 |  |  |  | 351,417 |
Due after five years through ten years |  |  | 1,030,845 |  |  |  | 978,194 |
Due after ten years |  |  | 1,125,701 |  |  |  | 1,154,648 |
Total investment securities available-for-sale |  | $ | 3,318,301 |  |  | $ | 3,279,592 |

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- Definition Tabular disclosure of marketable securities. This may consist of investments in certain debt and equity securities, short-term investments and other assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.9-03.4) -URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 5 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27232-111563 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 45 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6871852&loc=d3e26626-111562 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.2,12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6871852&loc=d3e26610-111562 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27161-111563 + Details
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