| AVAILABLE-FOR-SALE AND OTHER SECURITIES |
AVAILABLE-FOR-SALE AND OTHER SECURITIES
Contractual maturities of available-for-sale and other securities as of December 31, 2017 and 2016 were:
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|
|
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|
2017 |
|
2016 |
(dollar amounts in millions) |
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
Under 1 year |
$ |
111 |
|
|
$ |
111 |
|
|
$ |
224 |
|
|
$ |
222 |
|
After 1 year through 5 years |
1,333 |
|
|
1,327 |
|
|
1,147 |
|
|
1,150 |
|
After 5 years through 10 years |
2,088 |
|
|
2,083 |
|
|
1,957 |
|
|
1,962 |
|
After 10 years |
11,595 |
|
|
11,348 |
|
|
11,885 |
|
|
11,665 |
|
Other securities: |
|
|
|
|
|
|
|
Nonmarketable equity securities |
581 |
|
|
581 |
|
|
548 |
|
|
548 |
|
Mutual funds |
18 |
|
|
18 |
|
|
15 |
|
|
15 |
|
Marketable equity securities |
1 |
|
|
1 |
|
|
1 |
|
|
1 |
|
Total available-for-sale and other securities |
$ |
15,727 |
|
|
$ |
15,469 |
|
|
$ |
15,777 |
|
|
$ |
15,563 |
|
Other securities at December 31, 2017 and 2016 include nonmarketable equity securities of $287 million and $249 million of stock issued by the FHLB of Cincinnati and $293 million and $299 million of FRB stock, respectively. Nonmarketable equity securities are recorded at amortized cost. Other securities also include mutual funds and marketable equity securities.
The following tables provide amortized cost, fair value, and gross unrealized gains and losses recognized in OCI by investment category at December 31, 2017 and 2016:
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|
|
|
|
|
|
|
|
|
|
Unrealized |
|
|
(dollar amounts in millions) |
Amortized
Cost
|
|
Gross
Gains
|
|
Gross
Losses
|
|
Fair Value |
December 31, 2017 |
|
|
|
|
|
|
|
U.S. Treasury |
$ |
5 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5 |
|
Federal agencies: |
|
|
|
|
|
|
|
Residential CMO |
6,661 |
|
|
1 |
|
|
(178 |
) |
|
6,484 |
|
Residential MBS |
1,371 |
|
|
1 |
|
|
(5 |
) |
|
1,367 |
|
Commercial MBS |
2,539 |
|
|
— |
|
|
(52 |
) |
|
2,487 |
|
Other agencies |
69 |
|
|
1 |
|
|
— |
|
|
70 |
|
Total U.S. Treasury, Federal agency, and other agency securities |
10,645 |
|
|
3 |
|
|
(235 |
) |
|
10,413 |
|
Municipal securities |
3,892 |
|
|
21 |
|
|
(35 |
) |
|
3,878 |
|
Asset-backed securities |
482 |
|
|
1 |
|
|
(16 |
) |
|
467 |
|
Corporate debt |
106 |
|
|
3 |
|
|
— |
|
|
109 |
|
Other securities |
602 |
|
|
— |
|
|
— |
|
|
602 |
|
Total available-for-sale and other securities |
$ |
15,727 |
|
|
$ |
28 |
|
|
$ |
(286 |
) |
|
$ |
15,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized |
|
|
(dollar amounts in millions) |
Amortized
Cost |
|
Gross
Gains |
|
Gross
Losses |
|
Fair Value |
December 31, 2016 |
|
|
|
|
|
|
|
U.S. Treasury |
$ |
6 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6 |
|
Federal agencies: |
|
|
|
|
|
|
|
Residential CMO |
6,955 |
|
|
6 |
|
|
(151 |
) |
|
6,810 |
|
Residential MBS |
196 |
|
|
5 |
|
|
(1 |
) |
|
200 |
|
Commercial MBS |
3,700 |
|
|
2 |
|
|
(39 |
) |
|
3,663 |
|
Other agencies |
73 |
|
|
— |
|
|
— |
|
|
73 |
|
Total U.S. Treasury, Federal agency, and other agency securities |
10,930 |
|
|
13 |
|
|
(191 |
) |
|
10,752 |
|
Municipal securities |
3,260 |
|
|
29 |
|
|
(39 |
) |
|
3,250 |
|
Asset-backed securities |
824 |
|
|
2 |
|
|
(32 |
) |
|
794 |
|
Corporate debt |
195 |
|
|
4 |
|
|
— |
|
|
199 |
|
Other securities |
568 |
|
|
— |
|
|
— |
|
|
568 |
|
Total available-for-sale and other securities |
$ |
15,777 |
|
|
$ |
48 |
|
|
$ |
(262 |
) |
|
$ |
15,563 |
|
The following tables provide detail on investment securities with unrealized losses aggregated by investment category and the length of time the individual securities have been in a continuous loss position at December 31, 2017 and 2016:
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|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months |
|
Over 12 Months |
|
Total |
(dollar amounts in millions) |
Fair Value |
|
Unrealized
Losses
|
|
Fair Value |
|
Unrealized
Losses
|
|
Fair Value |
|
Unrealized
Losses
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
Federal agencies: |
|
|
|
|
|
|
|
|
|
|
|
Residential CMO |
$ |
1,660 |
|
|
$ |
(19 |
) |
|
$ |
4,520 |
|
|
$ |
(159 |
) |
|
$ |
6,180 |
|
|
$ |
(178 |
) |
Residential MBS |
1,078 |
|
|
(5 |
) |
|
11 |
|
|
— |
|
|
1,089 |
|
|
(5 |
) |
Commercial MBS |
960 |
|
|
(15 |
) |
|
1,527 |
|
|
(37 |
) |
|
2,487 |
|
|
(52 |
) |
Other agencies |
39 |
|
|
— |
|
|
— |
|
|
— |
|
|
39 |
|
|
— |
|
Total Federal agency, and other agency securities |
3,737 |
|
|
(39 |
) |
|
6,058 |
|
|
(196 |
) |
|
9,795 |
|
|
(235 |
) |
Municipal securities |
1,681 |
|
|
(21 |
) |
|
497 |
|
|
(14 |
) |
|
2,178 |
|
|
(35 |
) |
Asset-backed securities |
127 |
|
|
(1 |
) |
|
173 |
|
|
(15 |
) |
|
300 |
|
|
(16 |
) |
Corporate debt |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Other securities |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total temporarily impaired securities |
$ |
5,545 |
|
|
$ |
(61 |
) |
|
$ |
6,728 |
|
|
$ |
(225 |
) |
|
$ |
12,273 |
|
|
$ |
(286 |
) |
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|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months |
|
Over 12 Months |
|
Total |
(dollar amounts in millions) |
Fair Value |
|
Unrealized
Losses
|
|
Fair Value |
|
Unrealized
Losses
|
|
Fair Value |
|
Unrealized
Losses
|
December 31, 2016 |
|
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|
|
|
|
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|
|
|
|
Federal agencies: |
|
|
|
|
|
|
|
|
|
|
|
Residential CMO |
$ |
5,858 |
|
|
$ |
(150 |
) |
|
$ |
21 |
|
|
$ |
(1 |
) |
|
$ |
5,879 |
|
|
$ |
(151 |
) |
Residential MBS |
31 |
|
|
(1 |
) |
|
— |
|
|
— |
|
|
31 |
|
|
(1 |
) |
Commercial MBS |
3,019 |
|
|
(39 |
) |
|
21 |
|
|
— |
|
|
3,040 |
|
|
(39 |
) |
Other agencies |
1 |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
— |
|
Total Federal agency, and other agency securities |
8,909 |
|
|
(190 |
) |
|
42 |
|
|
(1 |
) |
|
8,951 |
|
|
(191 |
) |
Municipal securities |
1,412 |
|
|
(29 |
) |
|
272 |
|
|
(10 |
) |
|
1,684 |
|
|
(39 |
) |
Asset-backed securities |
361 |
|
|
(3 |
) |
|
179 |
|
|
(29 |
) |
|
540 |
|
|
(32 |
) |
Corporate debt |
4 |
|
|
— |
|
|
— |
|
|
— |
|
|
4 |
|
|
— |
|
Other securities |
1 |
|
|
— |
|
|
2 |
|
|
— |
|
|
3 |
|
|
— |
|
Total temporarily impaired securities |
$ |
10,687 |
|
|
$ |
(222 |
) |
|
$ |
495 |
|
|
$ |
(40 |
) |
|
$ |
11,182 |
|
|
$ |
(262 |
) |
At December 31, 2017, the carrying value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements totaled $6.1 billion. There were no securities of a single issuer, which are not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at December 31, 2017.
The following table is a summary of realized securities gains and losses for the years ended December 31, 2017, 2016, and 2015:
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|
Year Ended December 31, |
(dollar amounts in millions) |
2017 |
|
2016 |
|
2015 |
Gross gains on sales of securities |
$ |
10 |
|
|
$ |
23 |
|
|
$ |
7 |
|
Gross (losses) on sales of securities |
(10 |
) |
|
(21 |
) |
|
(4 |
) |
Net gain (loss) on sales of securities |
$ |
— |
|
|
$ |
2 |
|
|
$ |
3 |
|
OTTI recognized in earnings |
(4 |
) |
|
(2 |
) |
|
(2 |
) |
Net securities gains (losses) |
$ |
(4 |
) |
|
$ |
— |
|
|
$ |
1 |
|
Security Impairment
Huntington evaluates the available-for-sale securities portfolio on a quarterly basis for impairment and conducts a comprehensive security-level assessment on all available-for-sale securities. Impairment exists when the present value of the expected cash flows are not sufficient to recover the entire amortized cost basis at the balance sheet date. Under these circumstances, any credit impairment would be recognized in earnings. During 2017, Huntington changed its intent from able and willing to hold for two CDO securities which were subsequently sold. Related to this change in intent, Huntington recognized $4 million of OTTI on these two securities. For all other securities, Huntington does not intend to sell, nor does it believe it will be required to sell these securities until the amortized cost is recovered, which may be at maturity.
The highest risk segment in our investment portfolio is the trust preferred CDO securities which are in the asset-backed securities portfolio. This portfolio is in run off, and the Company has not purchased this type of security since 2005. The fair values of the CDO assets have been impacted by various market conditions. The unrealized losses are primarily the result of wider liquidity spreads on asset-backed securities and the longer expected average lives of the trust-preferred CDO securities, due to changes in the expectations of when the underlying securities will be repaid.
The following table summarizes the Company's CDO securities portfolio, which are included in asset-backed securities, at December 31, 2017 and 2016.
Collateralized Debt Obligation Securities
|
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|
|
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|
|
|
|
|
|
|
|
(dollar amounts in millions) |
Par Value |
|
Amortized
Cost
|
|
Fair
Value
|
|
Unrealized
Loss (1)
|
MM Comm III |
4 |
|
|
4 |
|
|
4 |
|
|
— |
|
Tropic III |
31 |
|
|
31 |
|
|
20 |
|
|
(11 |
) |
Total at December 31, 2017 |
$ |
35 |
|
|
$ |
35 |
|
|
$ |
24 |
|
|
$ |
(11 |
) |
Total at December 31, 2016 |
$ |
137 |
|
|
$ |
101 |
|
|
$ |
76 |
|
|
$ |
(25 |
) |
|
|
(1) |
One of the two remaining securities in the portfolio has been in a continuous loss position for 12 months or longer. |
For the periods ended December 31, 2017, 2016, and 2015, the following table summarizes by security type, the total OTTI losses recognized in the Consolidated Statements of Income for securities evaluated for impairment as described above:
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|
|
|
|
Year Ended December 31, |
(dollar amounts in millions) |
2017 |
|
2016 |
|
2015 |
Available-for-sale and other securities: |
|
|
|
|
|
Collateralized Debt Obligations |
$ |
(4 |
) |
|
$ |
— |
|
|
$ |
(2 |
) |
Municipal Securities |
— |
|
|
(2 |
) |
|
— |
|
Total available-for-sale and other securities |
$ |
(4 |
) |
|
$ |
(2 |
) |
|
$ |
(2 |
) |
The following table rolls forward the OTTI recognized in earnings on debt securities held by Huntington for the years ended December 31, 2017, and 2016 as follows:
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|
|
|
|
|
|
|
|
|
Year Ended December 31, |
(dollar amounts in millions) |
2017 |
|
2016 |
|
2015 |
Balance, beginning of year |
$ |
12 |
|
|
$ |
18 |
|
|
$ |
31 |
|
Reductions from sales |
(15 |
) |
|
(8 |
) |
|
(15 |
) |
Credit losses not previously recognized |
4 |
|
|
2 |
|
|
— |
|
Additional credit losses |
— |
|
|
— |
|
|
2 |
|
Balance, end of year |
$ |
1 |
|
|
$ |
12 |
|
|
$ |
18 |
|
|