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Investment Securities | 6 Months Ended
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Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract] |
Investment Securities | Investment Securities Investment securities are generally classified as available for sale or held to maturity at the time of purchase. The majority of the Corporation's investment securities are mortgage-related securities issued by the Government National Mortgage Association (“GNMA”) or government-sponsored enterprises ("GSE") such as the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”). A portion of the portfolio is also comprised of asset-backed securities backed by student loans made under the Federal Family Education Loan Program ("FFELP"). The amortized cost and fair values of securities available for sale and held to maturity were as follows.
| June 30, 2018 | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
|  | ($ in Thousands)
| Investment securities available for sale |  |  |  |  |  |  |
| U. S. Treasury securities | $ | 1,001 |  |  | $ | — |  |  | $ | (6 | ) |  | $ | 996 |
| Residential mortgage-related securities |  |  |  |  |  |  |
| FNMA / FHLMC | 396,368 |  |  | 5,573 |  |  | (5,232 | ) |  | 396,709 |
| GNMA | 2,275,481 |  |  | 23 |  |  | (65,315 | ) |  | 2,210,189 |
| Private-label | 1,037 |  |  | — |  |  | (5 | ) |  | 1,031 |
| GNMA commercial mortgage-related securities | 1,400,680 |  |  | — |  |  | (52,399 | ) |  | 1,348,282 |
| FFELP asset backed securities | 298,263 |  |  | 1,679 |  |  | (111 | ) |  | 299,831 |
| Other debt securities | 3,000 |  |  | — |  |  | — |  |  | 3,000 |
| Other equity securities | 1,613 |  |  | — |  |  | — |  |  | 1,613 |
| Total investment securities available for sale | $ | 4,377,443 |  |  | $ | 7,275 |  |  | $ | (123,068 | ) |  | $ | 4,261,651 |
| Investment securities held to maturity |  |  |  |  |  |  |
| Obligations of state and political subdivisions (municipal securities) | $ | 1,593,147 |  |  | $ | 4,851 |  |  | $ | (17,698 | ) |  | $ | 1,580,300 |
| Residential mortgage-related securities |  |  |  |  |  |  |
| FNMA / FHLMC | 97,822 |  |  | 191 |  |  | (2,306 | ) |  | 95,707 |
| GNMA | 388,174 |  |  | 1,969 |  |  | (13,020 | ) |  | 377,123 |
| GNMA commercial mortgage-related securities | 523,103 |  |  | 8,542 |  |  | (23,832 | ) |  | 507,813 |
| Total investment securities held to maturity | $ | 2,602,247 |  |  | $ | 15,553 |  |  | $ | (56,856 | ) |  | $ | 2,560,943 |
| December 31, 2017 | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
|  | ($ in Thousands)
| Investment securities available for sale |  |  |  |  |  |  |
| U. S. Treasury securities | $ | 1,003 |  |  | $ | — |  |  | $ | (7 | ) |  | $ | 996 |
| Residential mortgage-related securities |  |  |  |  |  |  |
| FNMA / FHLMC | 457,680 |  |  | 9,722 |  |  | (2,634 | ) |  | 464,768 |
| GNMA | 1,944,453 |  |  | 275 |  |  | (31,378 | ) |  | 1,913,350 |
| Private-label | 1,067 |  |  | — |  |  | (8 | ) |  | 1,059 |
| GNMA commercial mortgage-related securities | 1,547,173 |  |  | 5 |  |  | (33,901 | ) |  | 1,513,277 |
| FFELP asset backed securities | 144,322 |  |  | 867 |  |  | (13 | ) |  | 145,176 |
| Other debt securities | 3,200 |  |  | — |  |  | (12 | ) |  | 3,188 |
| Other equity securities | 1,519 |  |  | 127 |  |  | (14 | ) |  | 1,632 |
| Total investment securities available for sale | $ | 4,100,417 |  |  | $ | 10,996 |  |  | $ | (67,967 | ) |  | $ | 4,043,446 |
| Investment securities held to maturity |  |  |  |  |  |  |
| Obligations of state and political subdivisions (municipal securities) | $ | 1,281,320 |  |  | $ | 13,899 |  |  | $ | (3,177 | ) |  | $ | 1,292,042 |
| Residential mortgage-related securities |  |  |  |  |  |  |
| FNMA / FHLMC | 40,995 |  |  | 398 |  |  | (489 | ) |  | 40,904 |
| GNMA | 414,440 |  |  | 2,700 |  |  | (6,400 | ) |  | 410,740 |
| GNMA commercial mortgage-related securities | 546,098 |  |  | 9,546 |  |  | (15,756 | ) |  | 539,888 |
| Total investment securities held to maturity | $ | 2,282,853 |  |  | $ | 26,543 |  |  | $ | (25,822 | ) |  | $ | 2,283,574 |
The expected maturities of investment securities available for sale and held to maturity at June 30, 2018 are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
| Available for Sale |  | Held to Maturity
| Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
| ($ in Thousands)
Due in one year or less | $ | 3,001 |  |  | $ | 2,996 |  |  | $ | 46,938 |  |  | $ | 47,269 |
Due after one year through five years | 1,000 |  |  | 1,000 |  |  | 200,725 |  |  | 199,266 |
Due after five years through ten years | — |  |  | — |  |  | 366,997 |  |  | 361,260 |
Due after ten years | — |  |  | — |  |  | 978,487 |  |  | 972,504 |
Total debt securities | 4,001 |  |  | 3,996 |  |  | 1,593,147 |  |  | 1,580,300 |
Residential mortgage-related securities |  |  |  |  |  |  |
FNMA / FHLMC | 396,368 |  |  | 396,709 |  |  | 97,822 |  |  | 95,707 |
GNMA | 2,275,481 |  |  | 2,210,189 |  |  | 388,174 |  |  | 377,123 |
Private-label | 1,037 |  |  | 1,031 |  |  | — |  |  | — |
GNMA commercial mortgage-related securities | 1,400,680 |  |  | 1,348,282 |  |  | 523,103 |  |  | 507,813 |
FFELP asset backed securities | 298,263 |  |  | 299,831 |  |  | — |  |  | — |
Equity securities | 1,613 |  |  | 1,613 |  |  | — |  |  | — |
Total investment securities | $ | 4,377,443 |  |  | $ | 4,261,651 |  |  | $ | 2,602,247 |  |  | $ | 2,560,943 |
Ratio of Fair Value to Amortized Cost |  |  | 97.4 | % |  |  |  | 98.4 | %
The proceeds from the sale of investment securities for the six months ended June 30, 2018 and 2017 are shown below.
| Six Months Ended June 30,
| 2018 |  | 2017
| ($ in Thousands)
Gross gains on available for sale securities | $ | — |  |  | $ | — |
Gross gains on held to maturity securities | — |  |  | 361 |
Total gains | — |  |  | 361 |
Gross losses on available for sale securities | (2,015 | ) |  | — |
Gross losses on held to maturity securities | $ | — |  |  | $ | (5 | )
Total losses | $ | (2,015 | ) |  | $ | (5 | )
Investment securities gains (losses), net | $ | (2,015 | ) |  | $ | 356 |
Proceeds from sales of investment securities | $ | 493,060 |  |  | $ | 16,059 |
During the first six months of 2018, the Corporation sold approximately $40 million of lower yielding GNMA commercial mortgage-related securities. In addition, on the acquisition date, the Corporation sold Bank Mutual's entire $453 million securities portfolio. During the first six months of 2017, the Corporation sold approximately $16 million of municipal securities classified as held to maturity due to credit concerns stemming from budgetary pressure and continued credit rating deterioration concerns in the State of Illinois. Investment securities with a carrying value of approximately $3.1 billion at both June 30, 2018 and December 31, 2017 were pledged to secure certain deposits or for other purposes as required or permitted by law. The following represents gross unrealized losses and the related fair value of investment securities available for sale and held to maturity, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position, at June 30, 2018.
| Less than 12 months |  | 12 months or more |  | Total
June 30, 2018 | Number of Securities |  | Unrealized Losses |  | Fair Value |  | Number of Securities |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value
| ($ in Thousands)
Investment securities available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities | — |  |  | $ | — |  |  | $ | — |  |  | 1 |  |  | $ | (6 | ) |  | $ | 996 |  |  | $ | (6 | ) |  | $ | 996 |
Residential mortgage-related securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FNMA / FHLMC | 19 |  |  | (1,613 | ) |  | 100,946 |  |  | 9 |  |  | (3,620 | ) |  | 128,509 |  |  | (5,233 | ) |  | 229,455 |
GNMA | 62 |  |  | (31,430 | ) |  | 1,453,394 |  |  | 29 |  |  | (33,885 | ) |  | 756,061 |  |  | (65,315 | ) |  | 2,209,455 |
Private-label | — |  |  | — |  |  | — |  |  | 1 |  |  | (5 | ) |  | 1,031 |  |  | (5 | ) |  | 1,031 |
GNMA commercial mortgage-related securities | 22 |  |  | (8,821 | ) |  | 284,733 |  |  | 80 |  |  | (43,577 | ) |  | 1,063,701 |  |  | (52,398 | ) |  | 1,348,434 |
FFELP asset backed securities | 7 |  |  | (111 | ) |  | 100,757 |  |  | — |  |  | — |  |  | — |  |  | (111 | ) |  | 100,757 |
Total | 110 |  |  | $ | (41,975 | ) |  | $ | 1,939,830 |  |  | 120 |  |  | $ | (81,093 | ) |  | $ | 1,950,298 |  |  | $ | (123,068 | ) |  | $ | 3,890,128 |
Investment securities held to maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Obligations of state and political subdivisions (municipal securities) | 890 |  |  | $ | (10,814 | ) |  | $ | 609,381 |  |  | 142 |  |  | $ | (6,884 | ) |  | $ | 128,244 |  |  | $ | (17,698 | ) |  | $ | 737,625 |
Residential mortgage-related securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FNMA / FHLMC | 25 |  |  | (1,518 | ) |  | 76,046 |  |  | 10 |  |  | (788 | ) |  | 14,728 |  |  | (2,306 | ) |  | 90,774 |
GNMA | 61 |  |  | (7,062 | ) |  | 236,008 |  |  | 20 |  |  | (5,957 | ) |  | 137,093 |  |  | (13,019 | ) |  | 373,101 |
GNMA commercial mortgage-related securities | 1 |  |  | (813 | ) |  | 29,243 |  |  | 24 |  |  | (23,019 | ) |  | 478,570 |  |  | (23,832 | ) |  | 507,813 |
Total | 977 |  |  | $ | (20,207 | ) |  | $ | 950,678 |  |  | 196 |  |  | $ | (36,648 | ) |  | $ | 758,635 |  |  | $ | (56,856 | ) |  | $ | 1,709,313 |
For comparative purposes, the following represents gross unrealized losses and the related fair value of investment securities available for sale and held to maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2017.
| Less than 12 months |  | 12 months or more |  | Total
December 31, 2017 | Number of Securities |  | Unrealized Losses |  | Fair Value |  | Number of Securities |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value
| ($ in Thousands)
Investment securities available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities | 1 |  |  | $ | (7 | ) |  | $ | 996 |  |  | — |  |  | $ | — |  |  | $ | — |  |  | $ | (7 | ) |  | $ | 996 |
Residential mortgage-related securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FNMA / FHLMC | 9 |  |  | (572 | ) |  | 69,939 |  |  | 9 |  |  | (2,062 | ) |  | 142,093 |  |  | (2,634 | ) |  | 212,032 |
GNMA | 44 |  |  | (8,927 | ) |  | 1,028,221 |  |  | 25 |  |  | (22,451 | ) |  | 737,198 |  |  | (31,378 | ) |  | 1,765,419 |
Private-label | — |  |  | — |  |  | — |  |  | 1 |  |  | (8 | ) |  | 1,059 |  |  | (8 | ) |  | 1,059 |
GNMA commercial mortgage-related securities | 33 |  |  | (5,554 | ) |  | 480,514 |  |  | 70 |  |  | (28,347 | ) |  | 1,026,642 |  |  | (33,901 | ) |  | 1,507,156 |
FFELP asset backed securities | 1 |  |  | (13 | ) |  | 12,158 |  |  | — |  |  | — |  |  | — |  |  | (13 | ) |  | 12,158 |
Other debt securities | 1 |  |  | (12 | ) |  | 188 |  |  | — |  |  | — |  |  | — |  |  | (12 | ) |  | 188 |
Other equity securities | 3 |  |  | (14 | ) |  | 1,487 |  |  | — |  |  | — |  |  | — |  |  | (14 | ) |  | 1,487 |
Total | 92 |  |  | $ | (15,099 | ) |  | $ | 1,593,503 |  |  | 105 |  |  | $ | (52,868 | ) |  | $ | 1,906,992 |  |  | $ | (67,967 | ) |  | $ | 3,500,495 |
Investment securities held to maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Obligations of state and political subdivisions (municipal securities) | 157 |  |  | $ | (746 | ) |  | $ | 122,761 |  |  | 132 |  |  | $ | (2,431 | ) |  | $ | 127,043 |  |  | $ | (3,177 | ) |  | $ | 249,804 |
Residential mortgage-related securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FNMA / FHLMC | 8 |  |  | (73 | ) |  | 13,143 |  |  | 10 |  |  | (417 | ) |  | 16,262 |  |  | (490 | ) |  | 29,405 |
GNMA | 35 |  |  | (3,373 | ) |  | 268,388 |  |  | 18 |  |  | (3,026 | ) |  | 120,892 |  |  | (6,399 | ) |  | 389,280 |
GNMA commercial mortgage-related securities | 2 |  |  | (299 | ) |  | 52,997 |  |  | 23 |  |  | (15,457 | ) |  | 486,891 |  |  | (15,756 | ) |  | 539,888 |
Total | 202 |  |  | $ | (4,491 | ) |  | $ | 457,289 |  |  | 183 |  |  | $ | (21,331 | ) |  | $ | 751,088 |  |  | $ | (25,822 | ) |  | $ | 1,208,377 |
The Corporation reviews the investment securities portfolio on a quarterly basis to monitor its exposure to other-than-temporary impairment. A determination as to whether a security’s decline in fair value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Corporation may consider in the other-than-temporary impairment analysis include the length of time and extent to which the security has been in an unrealized loss position, changes in security ratings, financial condition and near-term prospects of the issuer, as well as security and industry specific economic conditions. Based on the Corporation’s evaluation, management does not believe any unrealized loss at June 30, 2018 represents an other-than-temporary impairment as these unrealized losses are primarily attributable to changes in interest rates and the current market conditions, and not credit deterioration. The unrealized losses reported for municipal securities relate to various state and local political subdivisions and school districts. The unrealized losses at June 30, 2018 for mortgage-related securities is due to the increase in overall interest rates. The U.S. Treasury 3 year and 5 year rates increased by 65 bp and 53 bp, respectively, from December 31, 2017. The Corporation does not intend to sell nor does it believe that it will be required to sell the securities in an unrealized loss position before recovery of their amortized cost basis. Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank stocks: The Corporation is required to maintain Federal Reserve stock and FHLB stock as a member of both the Federal Reserve System and the FHLB, and in amounts as required by these institutions. These equity securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other marketable equity securities and their fair value is equal to amortized cost. At June 30, 2018, and December 31, 2017, the Corporation had FHLB stock of $173 million and $89 million, respectively. The Corporation had Federal Reserve Bank stock of $76 million at both June 30, 2018 and December 31, 2017.

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