x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 91-1962278 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3003 Tasman Drive, Santa Clara, California | 95054-1191 | |
(Address of principal executive offices) | (Zip Code) |
Page | ||
Item 1. | ||
Interim Consolidated Statements of Stockholders' Equity (unaudited) for the six months ended June 30, 2014 and 2013 | ||
Interim Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2014 and 2013 | ||
Notes to Interim Consolidated Financial Statements | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
(Dollars in thousands, except par value and share data) | June 30, 2014 | December 31, 2013 | ||||||
(Unaudited) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 2,649,831 | $ | 1,538,779 | ||||
Available-for-sale securities, at fair value (cost $11,613,679 and $12,055,524, respectively) | 11,672,790 | 11,986,821 | ||||||
Held-to-maturity securities, at cost (fair value $5,454,996 and $0, respectively) | 5,463,920 | — | ||||||
Non-marketable and other securities | 1,757,235 | 1,595,494 | ||||||
Total investment securities | 18,893,945 | 13,582,315 | ||||||
Loans, net of unearned income | 11,348,711 | 10,906,386 | ||||||
Allowance for loan losses | (120,728 | ) | (142,886 | ) | ||||
Net loans | 11,227,983 | 10,763,500 | ||||||
Premises and equipment, net of accumulated depreciation and amortization | 71,465 | 67,485 | ||||||
Accrued interest receivable and other assets | 465,792 | 465,110 | ||||||
Total assets | $ | 33,309,016 | $ | 26,417,189 | ||||
Liabilities and total equity | ||||||||
Liabilities: | ||||||||
Noninterest-bearing demand deposits | $ | 20,235,549 | $ | 15,894,360 | ||||
Interest-bearing deposits | 8,116,998 | 6,578,619 | ||||||
Total deposits | 28,352,547 | 22,472,979 | ||||||
Short-term borrowings | 4,910 | 5,080 | ||||||
Other liabilities | 559,073 | 404,586 | ||||||
Long-term debt | 454,462 | 455,216 | ||||||
Total liabilities | 29,370,992 | 23,337,861 | ||||||
Commitments and contingencies (Note 11 and Note 14) | ||||||||
SVBFG stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value, 20,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
Common stock, $0.001 par value, 150,000,000 shares authorized; 50,695,206 shares and 45,800,418 shares outstanding, respectively | 51 | 46 | ||||||
Additional paid-in capital | 1,092,582 | 624,256 | ||||||
Retained earnings | 1,532,830 | 1,390,732 | ||||||
Accumulated other comprehensive income (loss) | 50,276 | (48,764 | ) | |||||
Total SVBFG stockholders’ equity | 2,675,739 | 1,966,270 | ||||||
Noncontrolling interests | 1,262,285 | 1,113,058 | ||||||
Total equity | 3,938,024 | 3,079,328 | ||||||
Total liabilities and total equity | $ | 33,309,016 | $ | 26,417,189 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Interest income: | ||||||||||||||||
Loans | $ | 147,680 | $ | 131,785 | $ | 295,852 | $ | 255,529 | ||||||||
Investment securities: | ||||||||||||||||
Taxable | 63,424 | 44,657 | 117,844 | 90,409 | ||||||||||||
Non-taxable | 794 | 807 | 1,590 | 1,606 | ||||||||||||
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities | 1,943 | 734 | 3,579 | 1,453 | ||||||||||||
Total interest income | 213,841 | 177,983 | 418,865 | 348,997 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 3,068 | 2,085 | 5,972 | 4,136 | ||||||||||||
Borrowings | 5,808 | 5,817 | 11,600 | 11,611 | ||||||||||||
Total interest expense | 8,876 | 7,902 | 17,572 | 15,747 | ||||||||||||
Net interest income | 204,965 | 170,081 | 401,293 | 333,250 | ||||||||||||
Provision for loan losses | 1,947 | 18,572 | 2,441 | 24,385 | ||||||||||||
Net interest income after provision for loan losses | 203,018 | 151,509 | 398,852 | 308,865 | ||||||||||||
Noninterest income: | ||||||||||||||||
(Losses) gains on investment securities, net | (57,320 | ) | 40,561 | 166,592 | 67,999 | |||||||||||
Foreign exchange fees | 17,928 | 13,667 | 35,124 | 27,863 | ||||||||||||
Gains on derivative instruments, net | 12,775 | 8,087 | 36,942 | 18,379 | ||||||||||||
Credit card fees | 10,249 | 7,609 | 20,531 | 15,057 | ||||||||||||
Deposit service charges | 9,611 | 8,907 | 19,218 | 17,700 | ||||||||||||
Lending related fees | 5,876 | 4,596 | 12,179 | 8,570 | ||||||||||||
Client investment fees | 3,519 | 3,524 | 6,937 | 6,999 | ||||||||||||
Letters of credit and standby letters of credit fees | 2,810 | 3,654 | 6,950 | 7,089 | ||||||||||||
Other | 8,762 | 7,634 | 19,962 | 7,187 | ||||||||||||
Total noninterest income | 14,210 | 98,239 | 324,435 | 176,843 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Compensation and benefits | 99,820 | 84,742 | 202,327 | 173,446 | ||||||||||||
Professional services | 21,113 | 16,633 | 42,302 | 33,793 | ||||||||||||
Premises and equipment | 12,053 | 11,402 | 23,635 | 22,127 | ||||||||||||
Business development and travel | 9,249 | 7,783 | 19,443 | 16,055 | ||||||||||||
Net occupancy | 7,680 | 5,795 | 15,000 | 11,562 | ||||||||||||
FDIC assessments | 4,945 | 2,853 | 9,073 | 6,235 | ||||||||||||
Correspondent bank fees | 3,274 | 3,049 | 6,477 | 6,104 | ||||||||||||
Provision for unfunded credit commitments | 2,185 | 1,347 | 3,308 | 3,361 | ||||||||||||
Other | 13,127 | 9,688 | 24,317 | 19,623 | ||||||||||||
Total noninterest expense | 173,446 | 143,292 | 345,882 | 292,306 | ||||||||||||
Income before income tax expense | 43,782 | 106,456 | 377,405 | 193,402 | ||||||||||||
Income tax expense | 33,582 | 29,968 | 92,499 | 56,369 | ||||||||||||
Net income before noncontrolling interests | 10,200 | 76,488 | 284,906 | 137,033 | ||||||||||||
Net loss (income) attributable to noncontrolling interests | 40,597 | (27,904 | ) | (142,808 | ) | (47,558 | ) | |||||||||
Net income available to common stockholders | $ | 50,797 | $ | 48,584 | $ | 142,098 | $ | 89,475 | ||||||||
Earnings per common share—basic | $ | 1.05 | $ | 1.08 | $ | 3.02 | $ | 1.99 | ||||||||
Earnings per common share—diluted | 1.04 | 1.06 | 2.96 | 1.96 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income before noncontrolling interests | $ | 10,200 | $ | 76,488 | $ | 284,906 | $ | 137,033 | ||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Change in cumulative translation Income (loss): | ||||||||||||||||
Foreign currency translation income (loss) | 157 | (3,975 | ) | 1,621 | (4,801 | ) | ||||||||||
Related tax (expense) benefit | (76 | ) | 1,611 | (654 | ) | 1,908 | ||||||||||
Change in unrealized gains (losses) on available-for-sale securities: | ||||||||||||||||
Unrealized holding gains (losses) | 82,064 | (172,209 | ) | 111,393 | (194,311 | ) | ||||||||||
Related tax (expense) benefit | (33,203 | ) | 69,666 | (45,008 | ) | 79,332 | ||||||||||
Reclassification adjustment for losses (gains) included in net income | 16,480 | (775 | ) | 16,421 | (730 | ) | ||||||||||
Related tax (benefit) expense | (6,653 | ) | 296 | (6,630 | ) | 278 | ||||||||||
Cumulative-effect adjustment for unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of amortization | 36,653 | — | 36,653 | — | ||||||||||||
Related tax expense, net of amortization | (14,756 | ) | — | (14,756 | ) | — | ||||||||||
Other comprehensive income (loss), net of tax | 80,666 | (105,386 | ) | 99,040 | (118,324 | ) | ||||||||||
Comprehensive income (loss) | 90,866 | (28,898 | ) | 383,946 | 18,709 | |||||||||||
Comprehensive loss (income) attributable to noncontrolling interests | 40,597 | (27,904 | ) | (142,808 | ) | (47,558 | ) | |||||||||
Comprehensive income (loss) attributable to SVBFG | $ | 131,463 | $ | (56,802 | ) | $ | 241,138 | $ | (28,849 | ) |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total SVBFG Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||
(Dollars in thousands) | Shares | Amount | |||||||||||||||||||||||||||||
Balance at December 31, 2012 | 44,627,182 | $ | 45 | $ | 547,079 | $ | 1,174,878 | $ | 108,553 | $ | 1,830,555 | $ | 774,678 | $ | 2,605,233 | ||||||||||||||||
Common stock issued under employee benefit plans, net of restricted stock cancellations | 758,415 | — | 27,120 | — | — | 27,120 | — | 27,120 | |||||||||||||||||||||||
Common stock issued under ESOP | 74,946 | — | 5,166 | — | — | 5,166 | — | 5,166 | |||||||||||||||||||||||
Income tax benefit from stock options exercised, vesting of restricted stock and other | — | — | 1,515 | — | — | 1,515 | — | 1,515 | |||||||||||||||||||||||
Net income | — | — | — | 89,475 | — | 89,475 | 47,558 | 137,033 | |||||||||||||||||||||||
Capital calls, net | — | — | — | — | — | — | 1,903 | 1,903 | |||||||||||||||||||||||
Net change in unrealized gains and losses on available-for-sale securities, net of tax | — | — | — | — | (115,431 | ) | (115,431 | ) | — | (115,431 | ) | ||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | — | — | (2,893 | ) | (2,893 | ) | — | (2,893 | ) | ||||||||||||||||||||
Share-based compensation expense | — | — | 12,445 | — | — | 12,445 | — | 12,445 | |||||||||||||||||||||||
Other, net | — | — | 3 | 1 | — | 4 | — | 4 | |||||||||||||||||||||||
Balance at June 30, 2013 | 45,460,543 | $ | 45 | $ | 593,328 | $ | 1,264,354 | $ | (9,771 | ) | $ | 1,847,956 | $ | 824,139 | $ | 2,672,095 | |||||||||||||||
Balance at December 31, 2013 | 45,800,418 | $ | 46 | $ | 624,256 | $ | 1,390,732 | $ | (48,764 | ) | $ | 1,966,270 | $ | 1,113,058 | $ | 3,079,328 | |||||||||||||||
Common stock issued under employee benefit plans, net of restricted stock cancellations | 379,026 | — | 8,127 | — | — | 8,127 | — | 8,127 | |||||||||||||||||||||||
Common stock issued under ESOP | 30,762 | — | 3,890 | — | — | 3,890 | — | 3,890 | |||||||||||||||||||||||
Income tax benefit from stock options exercised, vesting of restricted stock and other | — | — | 6,164 | — | — | 6,164 | — | 6,164 | |||||||||||||||||||||||
Net income | — | — | — | 142,098 | — | 142,098 | 142,808 | 284,906 | |||||||||||||||||||||||
Capital calls, net | — | — | — | — | — | — | 6,419 | 6,419 | |||||||||||||||||||||||
Net change in unrealized gains and losses on available-for-sale securities, net of tax | — | — | — | — | 76,176 | 76,176 | — | 76,176 | |||||||||||||||||||||||
Cumulative-effect for unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax | — | — | — | — | 22,522 | 22,522 | — | 22,522 | |||||||||||||||||||||||
Amortization of unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax | — | — | — | — | (625 | ) | (625 | ) | — | (625 | ) | ||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | 967 | 967 | — | 967 | |||||||||||||||||||||||||
Common stock issued in public offering | 4,485,000 | 5 | 434,861 | — | — | 434,866 | — | 434,866 | |||||||||||||||||||||||
Share-based compensation expense | — | — | 15,284 | — | — | 15,284 | — | 15,284 | |||||||||||||||||||||||
Balance at June 30, 2014 | 50,695,206 | $ | 51 | $ | 1,092,582 | $ | 1,532,830 | $ | 50,276 | $ | 2,675,739 | $ | 1,262,285 | $ | 3,938,024 |
Six months ended June 30, | ||||||||
(Dollars in thousands) | 2014 | 2013 | ||||||
Cash flows from operating activities: | ||||||||
Net income before noncontrolling interests | $ | 284,906 | $ | 137,033 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Provision for loan losses | 2,441 | 24,385 | ||||||
Provision for unfunded credit commitments | 3,308 | 3,361 | ||||||
Changes in fair values of derivatives, net | 14,566 | (4,296 | ) | |||||
Gains on investment securities, net | (166,592 | ) | (67,999 | ) | ||||
Depreciation and amortization | 19,036 | 17,281 | ||||||
Amortization of premiums and discounts on investment securities, net | 14,419 | 14,884 | ||||||
Tax expense from stock exercises | — | (1,346 | ) | |||||
Amortization of share-based compensation | 14,765 | 12,222 | ||||||
Amortization of deferred loan fees | (39,071 | ) | (32,066 | ) | ||||
Deferred income tax expense | 5,123 | 321 | ||||||
Changes in other assets and liabilities: | ||||||||
Accrued interest receivable and payable, net | (11,326 | ) | (4,312 | ) | ||||
Accounts receivable and payable, net | (3,303 | ) | 4,140 | |||||
Income tax payable and receivable, net | 5,176 | (11,591 | ) | |||||
Accrued compensation | (48,848 | ) | (39,658 | ) | ||||
Foreign exchange spot contracts, net | 119,577 | 20,933 | ||||||
Other, net | (12,910 | ) | (40,920 | ) | ||||
Net cash provided by operating activities | 201,267 | 32,372 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of available-for-sale securities | (6,045,269 | ) | (220,031 | ) | ||||
Proceeds from sales of available-for-sale securities | 23,708 | 8,293 | ||||||
Proceeds from maturities and pay downs of available-for-sale securities | 1,050,927 | 1,337,107 | ||||||
Purchases of held-to-maturity securities | (120,426 | ) | — | |||||
Proceeds from maturities and pay downs of held-to-maturity securities | 74,236 | — | ||||||
Purchases of non-marketable and other securities (cost and equity method accounting) | (13,532 | ) | (10,858 | ) | ||||
Proceeds from sales and distributions of non-marketable and other securities (cost and equity method accounting) | 38,265 | 20,378 | ||||||
Purchases of non-marketable and other securities (fair value accounting) | (126,907 | ) | (65,943 | ) | ||||
Proceeds from sales and distributions of non-marketable and other securities (fair value accounting) | 146,509 | 52,103 | ||||||
Net increase in loans | (440,780 | ) | (671,105 | ) | ||||
Proceeds from recoveries of charged-off loans | 2,933 | 5,536 | ||||||
Purchases of premises and equipment | (18,744 | ) | (13,546 | ) | ||||
Net cash (used for) provided by investing activities | (5,429,080 | ) | 441,934 | |||||
Cash flows from financing activities: | ||||||||
Net increase (decrease) in deposits | 5,879,568 | (486,378 | ) | |||||
Decrease in short-term borrowings | (170 | ) | (160,710 | ) | ||||
Capital contributions from noncontrolling interests, net of distributions | 6,419 | 1,903 | ||||||
Tax benefit from stock exercises | 6,164 | 2,861 | ||||||
Proceeds from issuance of common stock, ESPP, and ESOP | 12,018 | 32,286 | ||||||
Net proceeds from public equity offering | 434,866 | — | ||||||
Net cash provided by (used for) financing activities | 6,338,865 | (610,038 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 1,111,052 | (135,732 | ) | |||||
Cash and cash equivalents at beginning of period | 1,538,779 | 1,008,983 | ||||||
Cash and cash equivalents at end of period | $ | 2,649,831 | $ | 873,251 | ||||
Supplemental disclosures: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 17,535 | $ | 15,655 | ||||
Income taxes | 75,057 | 64,423 | ||||||
Noncash items during the period: | ||||||||
Changes in unrealized gains and losses on available-for-sale securities, net of tax | $ | 76,176 | $ | (115,431 | ) | |||
Transfers from available-for-sale securities to held-to-maturity | 5,418,572 | — |
1. | Basis of Presentation |
1. | We have the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; |
2. | The aggregate indirect and direct variable interests held by the Company have the obligation to absorb losses or the right to receive benefits from the entity that could be significant to the VIE; and, |
3. | Qualitative and quantitative factors regarding the nature, size, and form of our involvement with the VIE. |
2. | Stockholders’ Equity and EPS |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars and shares in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Numerator: | ||||||||||||||||
Net income available to common stockholders | $ | 50,797 | $ | 48,584 | $ | 142,098 | $ | 89,475 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding-basic | 48,168 | 45,164 | 47,025 | 44,985 | ||||||||||||
Weighted average effect of dilutive securities: | ||||||||||||||||
Stock options and ESPP | 569 | 380 | 601 | 384 | ||||||||||||
Restricted stock units | 308 | 140 | 361 | 168 | ||||||||||||
Denominator for diluted calculation | 49,045 | 45,684 | 47,987 | 45,537 | ||||||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 1.05 | $ | 1.08 | $ | 3.02 | $ | 1.99 | ||||||||
Diluted | $ | 1.04 | $ | 1.06 | $ | 2.96 | $ | 1.96 |
Three months ended June 30, | Six months ended June 30, | |||||||||||
(Shares in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||
Stock options | 167 | 635 | 90 | 693 | ||||||||
Restricted stock units | 2 | — | 1 | — | ||||||||
Total | 169 | 635 | 91 | 693 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
(Dollars in thousands) | Income Statement Location | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Reclassification adjustment for losses (gains) included in net income | (Losses) gains on investment securities, net | $ | 16,480 | $ | (775 | ) | $ | 16,421 | $ | (730 | ) | |||||||
Related tax (benefit) expense | Income tax expense | (6,653 | ) | 296 | (6,630 | ) | 278 | |||||||||||
Total reclassification adjustment for losses (gains) included in net income, net of tax | $ | 9,827 | $ | (479 | ) | $ | 9,791 | $ | (452 | ) |
3. | Share-Based Compensation |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Share-based compensation expense | $ | 7,687 | $ | 6,396 | $ | 14,765 | $ | 12,222 | ||||||||
Income tax benefit related to share-based compensation expense | (2,515 | ) | (1,955 | ) | (4,675 | ) | (3,558 | ) |
(Dollars in thousands) | Unrecognized Expense | Average Expected Recognition Period - in Years | ||||
Stock options | $ | 18,118 | 2.80 | |||
Restricted stock units | 38,897 | 2.69 | ||||
Total unrecognized share-based compensation expense | $ | 57,015 |
Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value of In-The- Money Options | ||||||||||
Outstanding at December 31, 2013 | 1,514,159 | $ | 55.27 | ||||||||||
Granted | 229,476 | 108.30 | |||||||||||
Exercised | (160,652 | ) | 46.96 | ||||||||||
Forfeited | (13,654 | ) | 70.36 | ||||||||||
Outstanding at June 30, 2014 | 1,569,329 | 63.74 | 4.38 | $ | 83,017,236 | ||||||||
Vested and expected to vest at June 30, 2014 | 1,510,886 | 62.94 | 4.32 | 81,128,378 | |||||||||
Exercisable at June 30, 2014 | 820,343 | 50.28 | 3.28 | 54,421,775 |
Shares | Weighted Average Grant Date Fair Value | ||||||
Nonvested at December 31, 2013 | 682,347 | $ | 65.93 | ||||
Granted | 180,679 | 108.06 | |||||
Vested | (196,253 | ) | 64.08 | ||||
Forfeited | (11,549 | ) | 71.33 | ||||
Nonvested at June 30, 2014 | 655,224 | 78.00 |
4. | Cash and Cash Equivalents |
(Dollars in thousands) | June 30, 2014 | December 31, 2013 | ||||||
Cash and due from banks (1) | $ | 2,589,946 | $ | 1,349,688 | ||||
Securities purchased under agreements to resell (2) | 53,764 | 172,989 | ||||||
Other short-term investment securities | 6,121 | 16,102 | ||||||
Total cash and cash equivalents | $ | 2,649,831 | $ | 1,538,779 |
(1) | At June 30, 2014 and December 31, 2013, $1.7 billion and $715 million, respectively, of our cash and due from banks was deposited at the Federal Reserve Bank and was earning interest at the Federal Funds target rate, and interest-earning deposits in other financial institutions were $443 million and $300 million, respectively. |
(2) | At June 30, 2014 and December 31, 2013, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fair values of $55 million and $176 million, respectively. None of these securities received as collateral were sold or repledged as of June 30, 2014 or December 31, 2013. |
5. | Investment Securities |
June 30, 2014 | ||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Carrying Value | ||||||||||||
Available-for-sale securities, at fair value: | ||||||||||||||||
U.S. treasury securities | $ | 4,871,469 | $ | 11,526 | $ | (823 | ) | $ | 4,882,172 | |||||||
U.S. agency debentures | 3,714,346 | 41,999 | (10,472 | ) | 3,745,873 | |||||||||||
Residential mortgage-backed securities: | ||||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 2,128,052 | 28,146 | (13,369 | ) | 2,142,829 | |||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 887,862 | 3,073 | (23 | ) | 890,912 | |||||||||||
Equity securities | 11,950 | 629 | (1,575 | ) | 11,004 | |||||||||||
Total available-for-sale securities | $ | 11,613,679 | $ | 85,373 | $ | (26,262 | ) | $ | 11,672,790 |
December 31, 2013 | ||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Carrying Value | ||||||||||||
Available-for-sale securities, at fair value: | ||||||||||||||||
U.S. agency debentures | $ | 4,344,652 | $ | 41,365 | $ | (40,785 | ) | $ | 4,345,232 | |||||||
Residential mortgage-backed securities: | ||||||||||||||||
Agency-issued mortgage-backed securities | 2,472,528 | 17,189 | (16,141 | ) | 2,473,576 | |||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 3,386,670 | 24,510 | (85,422 | ) | 3,325,758 | |||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 1,183,333 | 3,363 | (123 | ) | 1,186,573 | |||||||||||
Agency-issued commercial mortgage-backed securities | 581,475 | 552 | (17,423 | ) | 564,604 | |||||||||||
Municipal bonds and notes | 82,024 | 4,024 | (21 | ) | 86,027 | |||||||||||
Equity securities | 4,842 | 692 | (483 | ) | 5,051 | |||||||||||
Total available-for-sale securities | $ | 12,055,524 | $ | 91,695 | $ | (160,398 | ) | $ | 11,986,821 |
June 30, 2014 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
(Dollars in thousands) | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | ||||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||||||
U.S. treasury securities | $ | 698,273 | $ | (823 | ) | $ | — | $ | — | $ | 698,273 | $ | (823 | ) | ||||||||||
U.S. agency debentures | 200,773 | (290 | ) | 555,839 | (10,182 | ) | 756,612 | (10,472 | ) | |||||||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 135,122 | (189 | ) | 479,641 | (13,180 | ) | 614,763 | (13,369 | ) | |||||||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 75,974 | (23 | ) | — | — | 75,974 | (23 | ) | ||||||||||||||||
Equity securities | 7,335 | (1,575 | ) | — | — | 7,335 | (1,575 | ) | ||||||||||||||||
Total temporarily impaired securities: (1) | $ | 1,117,477 | $ | (2,900 | ) | $ | 1,035,480 | $ | (23,362 | ) | $ | 2,152,957 | $ | (26,262 | ) |
(1) | As of June 30, 2014, we identified a total of 81 investments that were in unrealized loss positions, of which 33 investments totaling $1.0 billion with unrealized losses of $23.4 million have been in an impaired position for a period of time greater than 12 months. As of June 30, 2014, we do not intend to sell any impaired fixed income investment securities prior to recovery of our adjusted cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our adjusted cost basis. Based on our analysis as of June 30, 2014, we deem all impairments to be temporary, and therefore changes in value for our temporarily impaired securities as of the same date are included in other comprehensive income. Market valuations and impairment analyses on assets in the available-for-sale securities portfolio are reviewed and monitored on a quarterly basis. |
December 31, 2013 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
(Dollars in thousands) | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | ||||||||||||||||||
U.S. agency debentures | $ | 1,821,045 | $ | (40,785 | ) | $ | — | $ | — | $ | 1,821,045 | $ | (40,785 | ) | ||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||
Agency-issued mortgage-backed securities | 1,480,870 | (14,029 | ) | 19,830 | (2,112 | ) | 1,500,700 | (16,141 | ) | |||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 2,098,137 | (79,519 | ) | 134,420 | (5,903 | ) | 2,232,557 | (85,422 | ) | |||||||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 109,699 | (123 | ) | — | — | 109,699 | (123 | ) | ||||||||||||||||
Agency-issued commercial mortgage-backed securities | 464,171 | (17,423 | ) | — | — | 464,171 | (17,423 | ) | ||||||||||||||||
Municipal bonds and notes | 3,404 | (21 | ) | — | — | 3,404 | (21 | ) | ||||||||||||||||
Equity securities | 910 | (483 | ) | — | — | 910 | (483 | ) | ||||||||||||||||
Total temporarily impaired securities | $ | 5,978,236 | $ | (152,383 | ) | $ | 154,250 | $ | (8,015 | ) | $ | 6,132,486 | $ | (160,398 | ) |
June 30, 2014 | |||||||||||||||||||||||||||||||||||
Total | One Year or Less | After One Year to Five Years | After Five Years to Ten Years | After Ten Years | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Carrying Value | Weighted- Average Yield | Carrying Value | Weighted- Average Yield | Carrying Value | Weighted- Average Yield | Carrying Value | Weighted- Average Yield | Carrying Value | Weighted- Average Yield | |||||||||||||||||||||||||
U.S. treasury securities | $ | 4,882,172 | 1.11 | % | $ | 50,062 | 0.12 | % | $ | 4,337,387 | 1.01 | % | $ | 494,723 | 2.03 | % | $ | — | — | % | |||||||||||||||
U.S. agency debentures | 3,745,873 | 1.62 | 590,227 | 1.47 | 2,231,645 | 1.55 | 924,001 | 1.89 | — | — | |||||||||||||||||||||||||
Residential mortgage-backed securities: | |||||||||||||||||||||||||||||||||||
Agency-issued collateralized mortgage obligations - fixed rate | 2,142,829 | 2.01 | — | — | — | — | 380,924 | 2.69 | 1,761,905 | 1.87 | |||||||||||||||||||||||||
Agency-issued collateralized mortgage obligations - variable rate | 890,912 | 0.71 | — | — | — | — | — | — | 890,912 | 0.71 | |||||||||||||||||||||||||
Total | $ | 11,661,786 | 1.41 | $ | 640,289 | 1.36 | $ | 6,569,032 | 1.19 | $ | 1,799,648 | 2.10 | $ | 2,652,817 | 1.48 |
June 30, 2014 | ||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
Held-to-maturity securities, at cost: | ||||||||||||||||
U.S. agency debentures (1) | $ | 318,260 | $ | 1,244 | $ | (165 | ) | $ | 319,339 | |||||||
Residential mortgage-backed securities: | ||||||||||||||||
Agency-issued mortgage-backed securities | 3,051,644 | 847 | (3,991 | ) | 3,048,500 | |||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 1,309,382 | 619 | (8,939 | ) | 1,301,062 | |||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 148,422 | 19 | (1 | ) | 148,440 | |||||||||||
Agency-issued commercial mortgage-backed securities | 550,269 | 2,149 | (515 | ) | 551,903 | |||||||||||
Municipal bonds and notes | 85,943 | 16 | (207 | ) | 85,752 | |||||||||||
Total held-to-maturity securities | $ | 5,463,920 | $ | 4,894 | $ | (13,818 | ) | $ | 5,454,996 |
(1) | Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States. |
June 30, 2014 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer (1) | Total | ||||||||||||||||||||||
(Dollars in thousands) | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | ||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||||||
U.S. agency debentures | $ | 171,001 | $ | (105 | ) | $ | 48,590 | $ | (60 | ) | $ | 219,591 | $ | (165 | ) | |||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||
Agency-issued mortgage-backed securities | 2,473,332 | (3,945 | ) | 20,180 | (46 | ) | 2,493,512 | (3,991 | ) | |||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 383,763 | (2,035 | ) | 850,606 | (6,904 | ) | 1,234,369 | (8,939 | ) | |||||||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 10,799 | (1 | ) | — | — | 10,799 | (1 | ) | ||||||||||||||||
Agency-issued commercial mortgage-backed securities | 268,818 | (515 | ) | — | — | 268,818 | (515 | ) | ||||||||||||||||
Municipal bonds and notes | 69,524 | (207 | ) | — | — | 69,524 | (207 | ) | ||||||||||||||||
Total temporarily impaired securities (2): | $ | 3,377,237 | $ | (6,808 | ) | $ | 919,376 | $ | (7,010 | ) | $ | 4,296,613 | $ | (13,818 | ) |
(1) | Represents securities in an unrealized loss position for twelve months or longer in which the amortized cost basis was re-set for those securities re-designated from AFS to HTM effective June 1, 2014. |
(2) | As of June 30, 2014, we identified a total of 276 investments that were in unrealized loss positions, of which 31 investments totaling $919.4 million with unrealized losses of $7.0 million have been in an impaired position for a period of time greater than 12 months. As of June 30, 2014, we do not intend to sell any impaired fixed income investment securities prior to recovery of our adjusted cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our adjusted cost basis, which is consistent with our classification of these securities. Based on our analysis as of June 30, 2014, we deem all impairments to be temporary. Market valuations and impairment analyses on assets in the held-to-maturity securities portfolio are reviewed and monitored on a quarterly basis. |
June 30, 2014 | |||||||||||||||||||||||||||||||||||
Total | One Year or Less | After One Year to Five Years | After Five Years to Ten Years | After Ten Years | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Amortized Cost | Weighted- Average Yield | Amortized Cost | Weighted- Average Yield | Amortized Cost | Weighted- Average Yield | Amortized Cost | Weighted- Average Yield | Amortized Cost | Weighted- Average Yield | |||||||||||||||||||||||||
U.S. agency debentures | $ | 318,260 | 2.93 | % | $ | — | — | % | $ | — | — |