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Investment Securities | 9 Months Ended
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Sep. 30, 2015
Investment Securities [Abstract] |
Investment Securities | Note 3 – Investment Securities
The following tables summarize FHN’s investment securities on September 30, 2015 and 2014: |
| September 30, 2015 |
|  |  |  | Gross |  | Gross |  |  |  |
| Amortized | Unrealized | Unrealized | Fair
(Dollars in thousands) | Cost | Gains | Losses | Value
Securities available-for-sale ("AFS"): |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasuries | $ | 100 |  | $ | - |  | $ | - |  | $ | 100 |
Government agency issued mortgage-backed securities ("MBS") |  | 914,878 |  |  | 31,773 |  |  | (700) |  |  | 945,951 |
Government agency issued collateralized mortgage obligations ("CMO") |  | 2,514,362 |  |  | 30,281 |  |  | (9,207) |  |  | 2,535,436 |
Other U.S. government agencies |  | 1,443 |  |  | 3 |  |  | - |  |  | 1,446 |
States and municipalities |  | 9,155 |  |  | - |  |  | - |  |  | 9,155 |
Equity and other (a) |  | 182,014 |  |  | - |  |  | (461) |  |  | 181,553 |
Total securities available-for-sale (b) | $ | 3,621,952 |  | $ | 62,057 |  | $ | (10,368) |  | $ | 3,673,641 |
Securities held-to-maturity ("HTM"): |  |  |  |  |  |  |  |  |  |  |  |
States and municipalities | $ | 4,313 |  | $ | 1,091 |  | $ | - |  | $ | 5,404 |
Total securities held-to-maturity | $ | 4,313 |  | $ | 1,091 |  | $ | - |  | $ | 5,404 |
Includes restricted investments in FHLB-Cincinnati stock of $87.9 million and FRB stock of $65.8 million. The remainder is money market, mutual funds, and cost method investments. Includes $2.9 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.
| September 30, 2014 |
|  |  |  | Gross |  | Gross |  |  |  |
| Amortized | Unrealized | Unrealized | Fair
(Dollars in thousands) | Cost | Gains | Losses | Value
Securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasuries | $ | 100 |  | $ | - |  | $ | - |  | $ | 100 |
Government agency issued MBS |  | 685,426 |  |  | 33,820 |  |  | (2,381) |  |  | 716,865 |
Government agency issued CMO |  | 2,648,047 |  |  | 15,637 |  |  | (39,999) |  |  | 2,623,685 |
Other U.S. government agencies |  | 1,859 |  |  | 70 |  |  | - |  |  | 1,929 |
States and municipalities |  | 10,205 |  |  | - |  |  | - |  |  | 10,205 |
Equity and other (a) |  | 182,119 |  |  | - |  |  | (232) |  |  | 181,887 |
Total securities available-for-sale (b) | $ | 3,527,756 |  | $ | 49,527 |  | $ | (42,612) |  | $ | 3,534,671 |
Securities held-to-maturity: |  |  |  |  |  |  |  |  |  |  |  |
States and municipalities | $ | 4,286 |  | $ | 1,094 |  | $ | - |  | $ | 5,380 |
Total securities held-to-maturity | $ | 4,286 |  | $ | 1,094 |  | $ | - |  | $ | 5,380 |
Includes restricted investments in FHLB-Cincinnati stock of $87.9 million and FRB stock of $66.0 million. The remainder is money market, mutual funds, and cost method investments. Includes $3.2 billion of securities pledged to secure public deposits, securities sold under agreements to repu rchase, 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 September 30, 2015, are provided below: |
|  | Held-to-Maturity |  | Available-for-Sale |
|  | Amortized |  | Fair |  | Amortized |  | Fair |
(Dollars in thousands) | Cost | Value |  | Cost | Value
Within 1 year | $ | - |  | $ | - |  | $ | 2,943 |  | $ | 2,946 |
After 1 year; within 5 years |  | - |  |  | - |  |  | 100 |  |  | 100 |
After 5 years; within 10 years |  | - |  |  | - |  |  | - |  |  | - |
After 10 years |  | 4,313 |  |  | 5,404 |  |  | 7,655 |  |  | 7,655 |
| Subtotal |  | 4,313 |  |  | 5,404 |  |  | 10,698 |  |  | 10,701 |
Government agency issued MBS and CMO (a) |  | - |  |  | - |  |  | 3,429,240 |  |  | 3,481,387 |
Equity and other |  | - |  |  | - |  |  | 182,014 |  |  | 181,553 |
Total | $ | 4,313 |  | $ | 5,404 |  | $ | 3,621,952 |  | $ | 3,673,641 |
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 nine months ended September 30:
| Three Months Ended |  | Nine Months Ended |
|  | September 30 |  |  | September 30 |
(Dollars in thousands) | 2015 |  | 2014 |  | 2015 |  | 2014 |
Gross gains on sales of securities | $ | - |  | $ | 133 |  | $ | 284 |  | $ | 5,867 |
Gross losses on sales of securities |  | - |  |  | - |  |  | - |  |  | - |
Net gain/(loss) on sales of securities (a) |  | - |  |  | 133 |  |  | 284 |  |  | 5,867 |
Venture capital investments (b) |  | - |  |  | (995) |  |  | - |  |  | (2,995) |
Net other than temporary impairment ("OTTI") recorded (c) |  | (345) |  |  | - |  |  | (345) |  |  | - |
Total securities gain/(loss), net | $ | (345) |  | $ | (862) |  | $ | (61) |  | $ | 2,872 |
There were no sales proceeds for the three months ended September 30, 2015; proceeds for the nine months ended September 30, 2015 were not material. Proceeds from sales for the three months ended September 30, 2014 were $3.3 million and for the nine months ended September 30, 2014 were $9.2 million, inclusive of $1.4 million of equity securities. Includes write-offs and/or unrealized fair value adjustments related to venture capital investments. OTTI recorded in third quarter 2015 is rel ated to equity securities.
The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of September 30, 2015 and 2014: |
| As of September 30, 2015 |
| 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 | $ | 370,165 |  | $ | (1,487) |  | $ | 435,331 |  | $ | (7,720) |  | $ | 805,496 |  | $ | (9,207) |
Government agency issued MBS |  | 69,997 |  |  | (242) |  |  | 32,538 |  |  | (458) |  |  | 102,535 |  |  | (700) |
Total debt securities |  | 440,162 |  |  | (1,729) |  |  | 467,869 |  |  | (8,178) |  |  | 908,031 |  |  | (9,907) |
Equity |  | - |  |  | - |  |  | 630 |  |  | (461) |  |  | 630 |  |  | (461) |
Total temporarily impaired securities | $ | 440,162 |  | $ | (1,729) |  | $ | 468,499 |  | $ | (8,639) |  | $ | 908,661 |  | $ | (10,368) |
| As of September 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 | $ | 724,834 |  | $ | (5,113) |  | $ | 949,556 |  | $ | (34,886) |  | $ | 1,674,390 |  | $ | (39,999) |
Government agency issued MBS |  | 32,621 |  |  | (244) |  |  | 103,858 |  |  | (2,137) |  |  | 136,479 |  |  | (2,381) |
Total debt securities |  | 757,455 |  |  | (5,357) |  |  | 1,053,414 |  |  | (37,023) |  |  | 1,810,869 |  |  | (42,380) |
Equity |  | 849 |  |  | (198) |  |  | 10 |  |  | (34) |  |  | 859 |  |  | (232) |
Total temporarily impaired securities | $ | 758,304 |  | $ | (5,555) |  | $ | 1,053,424 |  | $ | (37,057) |  | $ | 1,811,728 |  | $ | (42,612) |
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 p rimarily attributable to changes in 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.

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