| HELD-TO-MATURITY SECURITIES |
HELD-TO-MATURITY SECURITIES
Held-to-maturity securities are debt securities that Huntington has the intent and ability to hold until maturity. The debt securities are carried at amortized cost and adjusted for amortization of premiums and accretion of discounts using the interest method.
During the second quarter of 2017, Huntington transferred $1.0 billion of mortgage-backed and other agency securities from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The securities were reclassified at fair value at the date of transfer. At the time of the transfer, $13.5 million of unrealized net losses were recognized in OCI. The amounts in OCI will be recognized in earnings over the remaining life of the securities as an offset to the adjustment of yield in a manner consistent with the amortization of the premium on the same transferred securities, resulting in an immaterial impact on net income.
Listed below are the contractual maturities of held-to-maturity securities at September 30, 2017 and December 31, 2016.
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September 30, 2017 |
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December 31, 2016 |
(dollar amounts in thousands) |
Amortized
Cost
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Fair
Value
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Amortized
Cost
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Fair
Value
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Federal agencies mortgage-backed securities: |
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1 year or less |
$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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After 1 year through 5 years |
— |
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— |
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— |
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— |
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After 5 years through 10 years |
68,668 |
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68,478 |
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41,261 |
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40,791 |
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After 10 years |
8,067,957 |
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8,035,777 |
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7,157,083 |
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7,139,943 |
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Total Federal agencies mortgage-backed securities |
8,136,625 |
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8,104,255 |
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7,198,344 |
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7,180,734 |
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Other agencies: |
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1 year or less |
— |
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— |
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— |
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— |
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After 1 year through 5 years |
— |
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— |
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— |
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— |
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After 5 years through 10 years |
375,580 |
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376,393 |
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398,341 |
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399,452 |
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After 10 years |
170,628 |
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169,741 |
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204,083 |
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201,180 |
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Total other agencies |
546,208 |
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546,134 |
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602,424 |
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600,632 |
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Total Federal agencies |
8,682,833 |
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8,650,389 |
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7,800,768 |
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7,781,366 |
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Municipal securities: |
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1 year or less |
— |
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— |
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— |
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— |
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After 1 year through 5 years |
— |
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— |
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— |
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— |
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After 5 years through 10 years |
— |
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— |
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— |
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— |
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After 10 years |
5,566 |
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5,416 |
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6,171 |
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5,902 |
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Total municipal securities |
5,566 |
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5,416 |
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6,171 |
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5,902 |
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Total held-to-maturity securities |
$ |
8,688,399 |
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$ |
8,655,805 |
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$ |
7,806,939 |
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$ |
7,787,268 |
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The following table provides amortized cost, gross unrealized gains and losses, and fair value by investment category at September 30, 2017 and December 31, 2016.
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Unrealized |
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(dollar amounts in thousands) |
Amortized
Cost
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Gross
Gains
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Gross
Losses
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Fair Value |
September 30, 2017 |
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Federal agencies: |
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Mortgage-backed securities |
$ |
8,136,625 |
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$ |
14,868 |
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$ |
(47,238 |
) |
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$ |
8,104,255 |
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Other agencies |
546,208 |
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1,697 |
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(1,771 |
) |
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546,134 |
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Total Federal agencies |
8,682,833 |
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16,565 |
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(49,009 |
) |
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8,650,389 |
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Municipal securities |
5,566 |
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— |
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(150 |
) |
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5,416 |
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Total held-to-maturity securities |
$ |
8,688,399 |
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$ |
16,565 |
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$ |
(49,159 |
) |
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$ |
8,655,805 |
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Unrealized |
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(dollar amounts in thousands) |
Amortized
Cost
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Gross
Gains
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Gross
Losses
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Fair Value |
December 31, 2016 |
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Federal agencies: |
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Mortgage-backed securities |
$ |
7,198,344 |
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$ |
20,883 |
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$ |
(38,493 |
) |
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$ |
7,180,734 |
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Other agencies |
602,424 |
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1,690 |
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(3,482 |
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600,632 |
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Total Federal agencies |
7,800,768 |
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22,573 |
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(41,975 |
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7,781,366 |
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Municipal securities |
6,171 |
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— |
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(269 |
) |
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5,902 |
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Total held-to-maturity securities |
$ |
7,806,939 |
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$ |
22,573 |
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$ |
(42,244 |
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$ |
7,787,268 |
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The following tables provide detail on held-to-maturity securities with unrealized gross losses aggregated by investment category and the length of time the individual securities have been in a continuous loss position, at September 30, 2017 and December 31, 2016.
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Less than 12 Months |
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Over 12 Months |
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Total |
(dollar amounts in thousands) |
Fair
Value |
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Unrealized
Losses |
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Fair
Value |
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Unrealized
Losses |
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Fair
Value |
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Unrealized
Losses |
September 30, 2017 |
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Federal agencies: |
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Mortgage-backed securities |
$ |
5,729,896 |
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$ |
(38,204 |
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$ |
301,637 |
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$ |
(9,034 |
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$ |
6,031,533 |
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$ |
(47,238 |
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Other agencies |
248,109 |
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(1,771 |
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— |
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— |
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248,109 |
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(1,771 |
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Total Federal agencies |
5,978,005 |
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(39,975 |
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301,637 |
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(9,034 |
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6,279,642 |
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(49,009 |
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Municipal securities |
— |
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— |
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5,416 |
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(150 |
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5,416 |
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(150 |
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Total temporarily impaired securities |
$ |
5,978,005 |
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$ |
(39,975 |
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$ |
307,053 |
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$ |
(9,184 |
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$ |
6,285,058 |
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$ |
(49,159 |
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Less than 12 Months |
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Over 12 Months |
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Total |
(dollar amounts in thousands) |
Fair
Value
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Unrealized
Losses
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Fair
Value
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Unrealized
Losses
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Fair
Value
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Unrealized
Losses
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December 31, 2016 |
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Federal agencies: |
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Mortgage-backed securities |
$ |
2,855,360 |
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$ |
(31,470 |
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$ |
186,226 |
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$ |
(7,023 |
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$ |
3,041,586 |
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$ |
(38,493 |
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Other agencies |
413,207 |
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(3,482 |
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— |
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— |
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413,207 |
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(3,482 |
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Total Federal agencies |
3,268,567 |
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(34,952 |
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186,226 |
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(7,023 |
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3,454,793 |
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(41,975 |
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Municipal securities |
5,902 |
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(269 |
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— |
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— |
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5,902 |
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(269 |
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Total temporarily impaired securities |
$ |
3,274,469 |
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$ |
(35,221 |
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$ |
186,226 |
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$ |
(7,023 |
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$ |
3,460,695 |
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$ |
(42,244 |
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Security Impairment
Huntington evaluates the held-to-maturity securities portfolio on a quarterly basis for impairment. Impairment exists when the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis at the balance sheet date. Under these circumstances, any impairment would be recognized in earnings. As of September 30, 2017, Management has evaluated held-to-maturity securities with unrealized losses for impairment and concluded no OTTI is required.
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