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Note 6 - Investment Securities
 6 Months Ended
Jun. 30, 2014
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

6.Investment Securities


Investment securities were $1.34 billion at June 30, 2014, compared to $1.59 billion at December 31, 2013. During the first quarter of 2013, due to the ongoing discussions regarding corporate income tax rates which could have a negative impact on the after-tax yields and fair values of the Company’s portfolio of municipal securities, the Company determined it may sell such securities in response to market conditions. As a result, the Company reclassified its municipal securities from securities held-to-maturity to securities available-for-sale. Concurrent with this reclassification, the Company also reclassified all other securities held-to-maturity, which together with the municipal securities had an amortized cost on the date of transfer of $722.5 million, to securities available-for-sale. At the reclassification date, a net unrealized gain was recorded in other comprehensive income for these securities totaling $40.5 million.


The following tables reflect the amortized cost, gross unrealized gains, gross unrealized losses, and fair value of investment securities as of June 30, 2014, and December 31, 2013:


   

June 30, 2014

 
   

Amortized

Cost

   

Gross

Unrealized

Gains

   

Gross

Unrealized

Losses

   

Fair Value

 
   

(In thousands)

 

Securities Available-for-Sale

                               

U.S. treasury securities

  $ 565,091     $ 73     $ 1     $ 565,163  

Mortgage-backed securities

    680,556       1,210       24,897       656,869  

Collateralized mortgage obligations

    81       -       35       46  

Corporate debt securities

    94,938       848       1,449       94,337  

Mutual funds

    6,000       -       167       5,833  

Preferred stock of government sponsored entities

    4,611       6,885       1       11,495  

Other equity securities

    3,608       2,638       -       6,246  

Total securities available-for-sale

  $ 1,354,885     $ 11,654     $ 26,550     $ 1,339,989  

Total investment securities

  $ 1,354,885     $ 11,654     $ 26,550     $ 1,339,989  

   

December 31, 2013

 
   

Amortized

Cost

   

Gross

Unrealized

Gains

   

Gross

Unrealized

Losses

   

Fair Value

 
   

(In thousands)

 

Securities Available-for-Sale

                               

U.S. treasury securities

  $ 460,095     $ 99     $ 1     $ 460,193  

Mortgage-backed securities

    1,010,294       7,049       64,529       952,814  

Collateralized mortgage obligations

    5,929       231       54       6,106  

Asset-backed securities

    123       -       -       123  

Corporate debt securities

    154,955       298       4,949       150,304  

Mutual funds

    6,000       -       275       5,725  

Preferred stock of government sponsored entities

    569       10,834       -       11,403  

Total securities available-for-sale

  $ 1,637,965     $ 18,511     $ 69,808     $ 1,586,668  

Total investment securities

  $ 1,637,965     $ 18,511     $ 69,808     $ 1,586,668  

The amortized cost and fair value of investment securities at June 30, 2014, by contractual maturities, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or repayment penalties.  


   

Securities available-for-sale

 
   

Amortized cost

   

Fair value

 
   

(In thousands)

         

Due in one year or less

  $ 450,032     $ 450,048  

Due after one year through five years

    138,285       139,329  

Due after five years through ten years

    85,857       85,165  

Due after ten years (1)

    680,711       665,447  
                 

Total

  $ 1,354,885     $ 1,339,989  
                 
                 

(1) Equity securities are reported in this category

               

Proceeds from sales of mortgage-backed securities were $386.5 million and from repayments, maturities and calls of mortgage-backed securities were $39.6 million during the first six months of 2014 compared to proceeds from sales of $113.6 million and proceeds of $179.0 million from repayments, maturities, and calls during the same period a year ago. Proceeds from sales of other investment securities were $80.4 million during the first six months of 2014 compared to $440.1 million during the same period a year ago. Proceeds from maturities and calls of other investment securities were $135.8 million during the first six months of 2014 compared to $80.1 million during the same period a year ago. Gains of $12.8 million and losses of $6.3 million were realized on sales and calls of investment securities during the first six months of 2014 compared to gains of $18.5 million and no losses realized during the same period a year ago.


At June 30, 2014, all of the Company’s mortgage-backed securities were rated as investment grade except for one non-agency issue. Total unrealized losses of $24.9 million from all mortgage-backed securities resulted from increases in interest rates subsequent to the date that these securities were purchased. Total unrealized losses of $1.4 million on corporate bonds relates to four issues of investments in bonds of financial institutions, all of which were investment grade at the date of acquisition and as of June 30, 2014. The unrealized losses were primarily caused by the widening of credit and liquidity spreads since the dates of acquisition. The contractual terms of those investments do not permit the issuers to settle the security at a price less than the amortized cost of the investment. The Company currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the investments. Therefore, it is expected that these mortgage-backed securities and corporate bonds would not be settled at a price less than the amortized cost of the investment. Because the Company does not intend to sell and would not be required to sell these investments until a recovery of fair value, which may be maturity, it does not consider its investments in these mortgaged-backed securities and corporate bonds to be other-than-temporarily impaired at June 30, 2014.


The temporarily impaired securities represent 60.2% of the fair value of investment securities as of June 30, 2014. Unrealized losses for securities with unrealized losses for less than twelve months represent 0.003%, and securities with unrealized losses for twelve months or more represent 3.6%, of the historical cost of these securities. Unrealized losses on these securities generally resulted from increases in interest rates or spreads subsequent to the date that these securities were purchased.


At June 30, 2014, management believed the impairment was temporary and, accordingly, no impairment loss has been recognized in our condensed consolidated statements of operations. The Company expects to recover the amortized cost basis of its debt securities, and has no intent to sell and will not be required to sell available-for-sale debt securities that have declined below their cost before their anticipated recovery.


The tables below show the fair value and unrealized losses of the temporarily impaired securities in our investment securities portfolio as of June 30, 2014, and December 31, 2013:


   

June 30, 2014

 
   

Temporarily impaired securities

 
                                                 
   

Less than 12 months

   

12 months or longer

   

Total

 
   

Fair

Value

   

Unrealized

Losses

   

Fair

Value

   

Unrealized

Losses

   

Fair

Value

   

Unrealized

Losses

 
   

(Dollars in thousands)

 
                                                 
                                                 

Securities Available-for-Sale

                                               

U.S. treasury securities

  $ 99,999     $ 1     $ -     $ -     $ 99,999     $ 1  

Mortgage-backed securities

    185       1       636,390       24,896       636,575       24,897  

Collateralized mortgage obligations

    -       -       46       35       46       35  

Corporate debt securities

    -       -       63,551       1,449       63,551       1,449  

Mutual funds

    -       -       5,833       167       5,833       167  

Preferred stock of government sponsored entities

    970       1       -       -       970       1  
                                                 

Total securities available-for-sale

  $ 101,154     $ 3     $ 705,820     $ 26,547     $ 806,974     $ 26,550  

Total investment securities

  $ 101,154     $ 3     $ 705,820     $ 26,547     $ 806,974     $ 26,550  

   

December 31, 2013

 
   

Temporarily impaired securities

 
                                                 
   

Less than 12 months

   

12 months or longer

   

Total

 
   

Fair

Value

   

Unrealized

Losses

   

Fair

Value

   

Unrealized

Losses

   

Fair

Value

   

Unrealized

Losses

 
   

(Dollars in thousands)

 
                                                 
                                                 

Securities Available-for-Sale

                                               

U.S. treasury securities

  $ 75,064     $ 1     $ -     $ -     $ 75,064     $ 1  

Mortgage-backed securities

    792,012       64,526       272       2       792,284       64,528  

Mortgage-backed securities-Non-agency

    94       1       -       -       94       1  

Collateralized mortgage obligations

    68       4       301       50       369       54  

Corporate debt securities

    9,970       30       100,081       4,919       110,051       4,949  

Mutual funds

    -       -       5,724       275       5,724       275  
                                                 

Total securities available-for-sale

  $ 877,208     $ 64,562     $ 106,378     $ 5,246     $ 983,586     $ 69,808  

Total investment securities

  $ 877,208     $ 64,562     $ 106,378     $ 5,246     $ 983,586     $ 69,808  

Investment securities having a carrying value of $849.1 million at June 30, 2014, and $926.5 million at December 31, 2013, were pledged to secure public deposits, other borrowings, treasury tax and loan, and securities sold under agreements to repurchase.