| AVAILABLE-FOR-SALE AND OTHER SECURITIES |
AVAILABLE-FOR-SALE SECURITIES
Upon adoption of ASU 2017-12, Huntington transferred $2.8 billion of securities eligible to be hedged under the last-of-layer method from the HTM portfolio to the AFS portfolio. At the time of the transfer, $26 million of unrealized losses were recognized in OCI. Concurrently, Huntington transferred $2.7 billion of securities from the AFS portfolio to the HTM portfolio. At the time of the transfer, AOCI included $56 million of unrealized losses attributed to these securities. This loss will be recognized and amortized into interest income over the remaining life of the securities.
Contractual maturities of available-for-sale securities at March 31, 2018 and December 31, 2017 were:
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March 31, 2018 |
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December 31, 2017 |
(dollar amounts in millions) |
Amortized
Cost
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Fair Value |
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Amortized
Cost
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Fair Value |
U.S. Treasury, Federal agency, and other agency securities: |
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U.S. Treasury: |
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1 year or less |
$ |
5 |
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$ |
5 |
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$ |
5 |
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$ |
5 |
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Total U.S. Treasury |
5 |
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|
5 |
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|
5 |
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|
5 |
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Federal agencies: |
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|
|
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Residential CMO: |
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After 1 year through 5 years |
1 |
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1 |
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|
1 |
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|
1 |
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After 5 years through 10 years |
47 |
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|
45 |
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|
90 |
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|
89 |
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After 10 years |
7,742 |
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7,485 |
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6,570 |
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6,394 |
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Total Residential CMO |
7,790 |
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7,531 |
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6,661 |
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6,484 |
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Residential MBS: |
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After 1 year through 5 years |
6 |
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5 |
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6 |
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6 |
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After 5 years through 10 years |
33 |
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33 |
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7 |
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8 |
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After 10 years |
700 |
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|
686 |
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1,358 |
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1,353 |
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Total Residential MBS |
739 |
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|
724 |
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1,371 |
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1,367 |
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Commercial MBS: |
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After 1 year through 5 years |
69 |
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67 |
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23 |
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22 |
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After 5 years through 10 years |
9 |
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8 |
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151 |
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148 |
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After 10 years |
1,775 |
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1,716 |
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2,365 |
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2,317 |
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Total Commercial MBS |
1,853 |
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1,791 |
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2,539 |
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2,487 |
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Other agencies: |
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1 year or less |
1 |
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1 |
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2 |
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2 |
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After 1 year through 5 years |
8 |
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8 |
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9 |
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9 |
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After 5 years through 10 years |
181 |
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178 |
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58 |
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59 |
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Total other agencies |
190 |
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187 |
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69 |
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70 |
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Total U.S. Treasury, Federal agency, and other agency securities |
10,577 |
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10,238 |
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10,645 |
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10,413 |
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Municipal securities: |
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1 year or less |
153 |
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153 |
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103 |
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103 |
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After 1 year through 5 years |
1,129 |
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1,121 |
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1,140 |
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1,134 |
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After 5 years through 10 years |
1,738 |
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1,717 |
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1,709 |
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1,704 |
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After 10 years |
867 |
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843 |
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940 |
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937 |
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Total municipal securities |
3,887 |
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3,834 |
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3,892 |
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3,878 |
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Asset-backed securities: |
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After 1 year through 5 years |
80 |
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79 |
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|
80 |
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80 |
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After 5 years through 10 years |
61 |
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60 |
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53 |
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54 |
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After 10 years |
294 |
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288 |
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|
349 |
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|
333 |
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Total asset-backed securities |
435 |
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427 |
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482 |
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467 |
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Corporate debt: |
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1 year or less |
1 |
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1 |
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— |
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— |
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After 1 year through 5 years |
67 |
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67 |
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73 |
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74 |
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After 5 years through 10 years |
19 |
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20 |
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20 |
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21 |
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After 10 years |
13 |
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14 |
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13 |
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14 |
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Total corporate debt |
100 |
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102 |
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106 |
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109 |
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Other securities/Sovereign debt: |
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1 year or less |
2 |
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2 |
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1 |
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1 |
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After 1 year through 5 years |
4 |
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4 |
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1 |
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1 |
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Total other securities/Sovereign debt |
6 |
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6 |
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2 |
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2 |
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Total available-for-sale securities |
$ |
15,005 |
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$ |
14,607 |
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$ |
15,127 |
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$ |
14,869 |
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The following tables provide amortized cost, fair value, and gross unrealized gains and losses recognized in OCI by investment category at March 31, 2018 and December 31, 2017:
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Unrealized |
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(dollar amounts in millions) |
Amortized
Cost
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Gross
Gains
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Gross
Losses
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Fair Value |
March 31, 2018 |
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U.S. Treasury |
$ |
5 |
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$ |
— |
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$ |
— |
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$ |
5 |
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Federal agencies: |
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Residential CMO |
7,790 |
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— |
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(259 |
) |
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7,531 |
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Residential MBS |
739 |
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2 |
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(16 |
) |
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724 |
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Commercial MBS |
1,853 |
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— |
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(63 |
) |
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1,791 |
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Other agencies |
190 |
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— |
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(3 |
) |
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187 |
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Total U.S. Treasury, Federal agency and other agency securities |
10,577 |
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2 |
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(341 |
) |
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10,238 |
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Municipal securities |
3,887 |
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14 |
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(67 |
) |
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3,834 |
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Asset-backed securities |
435 |
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— |
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(8 |
) |
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427 |
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Corporate debt |
100 |
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2 |
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— |
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102 |
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Other securities/Sovereign debt |
6 |
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— |
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— |
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6 |
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Total available-for-sale securities |
$ |
15,005 |
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$ |
18 |
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$ |
(416 |
) |
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$ |
14,607 |
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Unrealized |
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(dollar amounts in millions) |
Amortized
Cost
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Gross
Gains
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Gross
Losses
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Fair Value |
December 31, 2017 |
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U.S. Treasury |
$ |
5 |
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$ |
— |
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$ |
— |
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$ |
5 |
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Federal agencies: |
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Residential CMO |
6,661 |
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1 |
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(178 |
) |
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6,484 |
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Residential MBS |
1,371 |
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1 |
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(5 |
) |
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1,367 |
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Commercial MBS |
2,539 |
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— |
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(52 |
) |
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2,487 |
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Other agencies |
69 |
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1 |
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— |
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|
70 |
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Total U.S. Treasury, Federal agency and other agency securities |
10,645 |
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3 |
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(235 |
) |
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10,413 |
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Municipal securities |
3,892 |
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21 |
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(35 |
) |
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3,878 |
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Asset-backed securities |
482 |
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1 |
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(16 |
) |
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467 |
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Corporate debt |
106 |
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3 |
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— |
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|
109 |
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Other securities/Sovereign debt |
2 |
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— |
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— |
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2 |
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Total available-for-sale securities |
$ |
15,127 |
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$ |
28 |
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$ |
(286 |
) |
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$ |
14,869 |
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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 as of March 31, 2018 and December 31, 2017.
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Less than 12 Months |
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Over 12 Months |
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Total |
(dollar amounts in millions) |
Fair Value |
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Gross Unrealized
Losses
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Fair Value |
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Gross Unrealized
Losses
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Fair Value |
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Gross Unrealized
Losses
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March 31, 2018 |
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Federal agencies: |
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Residential CMO |
$ |
3,291 |
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$ |
(71 |
) |
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$ |
4,027 |
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$ |
(188 |
) |
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$ |
7,318 |
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$ |
(259 |
) |
Residential MBS |
648 |
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(16 |
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11 |
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|
— |
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|
659 |
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(16 |
) |
Commercial MBS |
322 |
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(9 |
) |
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1,469 |
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(54 |
) |
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1,791 |
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(63 |
) |
Other agencies |
107 |
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(1 |
) |
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69 |
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(2 |
) |
|
176 |
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(3 |
) |
Total Federal Agency and other agency securities |
4,368 |
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(97 |
) |
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5,576 |
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(244 |
) |
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9,944 |
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(341 |
) |
Municipal securities |
2,182 |
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(45 |
) |
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623 |
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(22 |
) |
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2,805 |
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(67 |
) |
Asset-backed securities |
240 |
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(3 |
) |
|
144 |
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|
(5 |
) |
|
384 |
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(8 |
) |
Corporate debt |
14 |
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|
— |
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|
— |
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|
— |
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|
14 |
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|
— |
|
Other securities/Sovereign debt |
— |
|
|
— |
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|
2 |
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|
— |
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|
2 |
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|
— |
|
Total temporarily impaired securities |
$ |
6,804 |
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$ |
(145 |
) |
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$ |
6,345 |
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|
$ |
(271 |
) |
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$ |
13,149 |
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|
$ |
(416 |
) |
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Less than 12 Months |
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Over 12 Months |
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Total |
(dollar amounts in millions) |
Fair Value |
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Gross Unrealized
Losses
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Fair Value |
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Gross Unrealized
Losses
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Fair Value |
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Gross Unrealized
Losses
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December 31, 2017 |
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Federal agencies: |
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Residential CMO |
$ |
1,660 |
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|
$ |
(19 |
) |
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$ |
4,520 |
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$ |
(159 |
) |
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$ |
6,180 |
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$ |
(178 |
) |
Residential MBS |
1,078 |
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(5 |
) |
|
11 |
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|
— |
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|
1,089 |
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(5 |
) |
Commercial MBS |
960 |
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(15 |
) |
|
1,527 |
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|
(37 |
) |
|
2,487 |
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|
(52 |
) |
Other agencies |
39 |
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|
— |
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|
— |
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|
— |
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|
39 |
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|
— |
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Total Federal Agency and other agency securities |
3,737 |
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|
(39 |
) |
|
6,058 |
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|
(196 |
) |
|
9,795 |
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|
(235 |
) |
Municipal securities |
1,681 |
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|
(21 |
) |
|
497 |
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|
(14 |
) |
|
2,178 |
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|
(35 |
) |
Asset-backed securities |
127 |
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|
(1 |
) |
|
173 |
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|
(15 |
) |
|
300 |
|
|
(16 |
) |
Total temporarily impaired securities |
$ |
5,545 |
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|
$ |
(61 |
) |
|
$ |
6,728 |
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|
$ |
(225 |
) |
|
$ |
12,273 |
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|
$ |
(286 |
) |
At March 31, 2018 and 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 $6.5 billion and $6.1 billion, respectively. There were no securities of a single issuer, which are not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at either March 31, 2018 or December 31, 2017.
The following table is a summary of realized securities gains and losses for the three-month periods ended March 31, 2018 and 2017, respectively.
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Three Months Ended
March 31, |
(dollar amounts in millions) |
2018 |
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2017 |
Gross gains on sales of securities |
$ |
5 |
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|
$ |
1 |
|
Gross (losses) on sales of securities |
(5 |
) |
|
(1 |
) |
Net gain on sales of securities |
$ |
— |
|
|
$ |
— |
|
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 would exist 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 the 2018 first quarter, Huntington sold the remaining trust preferred CDO securities resulting in a gain of $3 million. As of March 31, 2018, the Huntington has evaluated available-for-sale securities with gross unrealized losses for impairment and concluded no OTTI is required.
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