| HELD-TO-MATURITY SECURITIES |
HELD-TO-MATURITY SECURITIES
These 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 2015, Huntington transferred $3.0 billion of federal agencies, mortgage-backed securities and other agency securities from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. At the time of the transfer, $6 million of unrealized net gains 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 (1 year or less, 1-5 years, 6-10 years, and over 10 years) of held-to-maturity securities at June 30, 2016 and December 31, 2015:
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June 30, 2016 |
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December 31, 2015 |
(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 |
43,441 |
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44,543 |
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25,909 |
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25,227 |
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After 10 years |
5,015,636 |
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5,126,798 |
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5,506,592 |
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5,484,407 |
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Total Federal agencies: mortgage-backed securities |
5,059,077 |
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5,171,341 |
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5,532,501 |
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5,509,634 |
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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 |
309,750 |
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317,300 |
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283,960 |
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284,907 |
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After 10 years |
283,113 |
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290,830 |
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336,092 |
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334,004 |
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Total other agencies |
592,863 |
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608,130 |
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620,052 |
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618,911 |
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Total U.S. Government backed agencies |
5,651,940 |
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5,779,471 |
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6,152,553 |
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6,128,545 |
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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 |
6,625 |
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6,753 |
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7,037 |
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6,913 |
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Total municipal securities |
6,625 |
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6,753 |
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7,037 |
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6,913 |
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Total held-to-maturity securities |
$ |
5,658,565 |
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$ |
5,786,224 |
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$ |
6,159,590 |
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$ |
6,135,458 |
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The following table provides amortized cost, gross unrealized gains and losses, and fair value by investment category at June 30, 2016 and December 31, 2015:
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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 |
June 30, 2016 |
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Federal agencies: |
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Mortgage-backed securities |
$ |
5,059,077 |
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$ |
114,311 |
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$ |
(2,047 |
) |
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$ |
5,171,341 |
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Other agencies |
592,863 |
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15,267 |
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— |
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608,130 |
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Total U.S. Government backed agencies |
5,651,940 |
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129,578 |
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(2,047 |
) |
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5,779,471 |
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Municipal securities |
6,625 |
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128 |
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— |
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6,753 |
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Total held-to-maturity securities |
$ |
5,658,565 |
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$ |
129,706 |
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$ |
(2,047 |
) |
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$ |
5,786,224 |
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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, 2015 |
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Federal agencies: |
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Mortgage-backed securities |
$ |
5,532,501 |
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$ |
14,637 |
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$ |
(37,504 |
) |
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$ |
5,509,634 |
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Other agencies |
620,052 |
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1,645 |
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(2,786 |
) |
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618,911 |
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Total U.S. Government backed agencies |
6,152,553 |
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16,282 |
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(40,290 |
) |
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6,128,545 |
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Municipal securities |
7,037 |
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— |
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(124 |
) |
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6,913 |
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Total held-to-maturity securities |
$ |
6,159,590 |
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$ |
16,282 |
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$ |
(40,414 |
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$ |
6,135,458 |
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The following tables provide detail on held-to-maturity securities with unrealized losses aggregated by investment category and the length of time the individual securities have been in a continuous loss position, at June 30, 2016 and December 31, 2015:
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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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June 30, 2016 |
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Federal agencies: |
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Mortgage-backed securities |
$ |
96,614 |
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$ |
(560 |
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$ |
162,973 |
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$ |
(1,487 |
) |
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$ |
259,587 |
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$ |
(2,047 |
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Other agencies |
— |
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— |
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— |
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— |
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— |
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— |
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Total U.S. Government backed securities |
96,614 |
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(560 |
) |
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162,973 |
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(1,487 |
) |
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259,587 |
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(2,047 |
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Municipal securities |
— |
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— |
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— |
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— |
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— |
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— |
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Total temporarily impaired securities |
$ |
96,614 |
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$ |
(560 |
) |
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$ |
162,973 |
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$ |
(1,487 |
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$ |
259,587 |
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$ |
(2,047 |
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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, 2015 |
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Federal agencies: |
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Mortgage-backed securities |
$ |
3,692,890 |
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$ |
(25,418 |
) |
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$ |
519,872 |
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$ |
(12,086 |
) |
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$ |
4,212,762 |
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$ |
(37,504 |
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Other agencies |
425,410 |
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(2,689 |
) |
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6,647 |
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(97 |
) |
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432,057 |
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(2,786 |
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Total U.S. Government backed securities |
4,118,300 |
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(28,107 |
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526,519 |
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(12,183 |
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4,644,819 |
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(40,290 |
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Municipal securities |
— |
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— |
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6,913 |
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(124 |
) |
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6,913 |
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(124 |
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Total temporarily impaired securities |
$ |
4,118,300 |
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$ |
(28,107 |
) |
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$ |
533,432 |
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$ |
(12,307 |
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$ |
4,651,732 |
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$ |
(40,414 |
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Security Impairment
Huntington evaluates the held-to-maturity securities portfolio on a quarterly basis for impairment. Impairment would exist 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 June 30, 2016, Management has evaluated held-to-maturity securities with unrealized losses for impairment and concluded no OTTI is required.
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