SIVB-3.31.2015-10Q
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 (Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         .
Commission File Number: 000-15637 
SVB FINANCIAL GROUP
(Exact name of registrant as specified in its charter)
  
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)
(408) 654-7400
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
At April 30, 2015, 51,240,105 shares of the registrant’s common stock ($0.001 par value) were outstanding.

Table of Contents

TABLE OF CONTENTS
 
 
 
Page
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
 

2
Table of Contents

Glossary of Acronyms that may be used in this Report
ASC — Accounting Standards Codification
ASU – Accounting Standards Update
EHOP – Employee Home Ownership Program of the Company
EPS – Earnings Per Share
ESOP – Employee Stock Ownership Plan of the Company
ESPP – 1999 Employee Stock Purchase Plan of the Company
FASB – Financial Accounting Standards Board
FDIC – Federal Deposit Insurance Corporation
FHLB – Federal Home Loan Bank
FRB - Federal Reserve Bank
FTE - Full-Time Employee
FTP – Funds Transfer Pricing
GAAP - Accounting principles generally accepted in the United States of America
IASB – International Accounting Standards Board
IPO – Initial Public Offering
IRS – Internal Revenue Service
IT – Information Technology
LIBOR – London Interbank Offered Rate
M&A – Merger and Acquisition
OTTI – Other Than Temporary Impairment
SEC – Securities and Exchange Commission
TDR – Troubled Debt Restructuring
UK – United Kingdom
VIE – Variable Interest Entity

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PART I - FINANCIAL INFORMATION
ITEM 1.        INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
 
(Dollars in thousands, except par value and share data)
 
March 31,
2015
 
December 31,
2014
 
 
(Unaudited)
 
 
Assets
 
 
 
 
Cash and cash equivalents
 
$
1,308,003

 
$
1,796,062

Available-for-sale securities, at fair value (cost of $13,619,702 and $13,497,945, respectively)
 
13,746,923

 
13,540,655

Held-to-maturity securities, at cost (fair value of $7,869,653 and $7,415,656, respectively)
 
7,816,797

 
7,421,042

Non-marketable and other securities (1)
 
1,706,873

 
1,728,140

Total investment securities
 
23,270,593

 
22,689,837

Loans, net of unearned income
 
14,439,574

 
14,384,276

Allowance for loan losses
 
(167,875
)
 
(165,359
)
Net loans
 
14,271,699

 
14,218,917

Premises and equipment, net of accumulated depreciation and amortization
 
82,724

 
79,845

Accrued interest receivable and other assets (1)
 
762,971

 
555,289

Total assets
 
$
39,695,990

 
$
39,339,950

Liabilities and total equity
 
 
 
 
Liabilities:
 
 
 
 
Noninterest-bearing demand deposits
 
$
25,716,586

 
$
24,583,682

Interest-bearing deposits
 
8,134,989

 
9,759,817

Total deposits
 
33,851,575

 
34,343,499

Short-term borrowings
 
77,766

 
7,781

Other liabilities
 
686,501

 
483,493

Long-term debt
 
802,917

 
453,443

Total liabilities
 
35,418,759

 
35,288,216

Commitments and contingencies (Note 12 and Note 15)
 

 


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; 51,095,341 shares and 50,924,925 shares outstanding, respectively
 
51

 
51

Additional paid-in capital
 
1,140,435

 
1,120,350

Retained earnings (1)
 
1,738,483

 
1,649,967

Accumulated other comprehensive income
 
92,668

 
42,704

Total SVBFG stockholders’ equity
 
2,971,637

 
2,813,072

Noncontrolling interests
 
1,305,594

 
1,238,662

Total equity
 
4,277,231

 
4,051,734

Total liabilities and total equity
 
$
39,695,990

 
$
39,339,950

 
 
(1)
Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1 - "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report.
See accompanying notes to interim consolidated financial statements (unaudited).

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SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 
 
Three months ended March 31,
(Dollars in thousands, except per share amounts)
 
2015
 
2014
Interest income:
 
 
 
 
Loans
 
$
165,458

 
$
148,172

Investment securities:
 
 
 
 
Taxable
 
81,274

 
54,420

Non-taxable
 
772

 
796

Federal funds sold, securities purchased under agreements to resell and other short-term investment securities
 
1,285

 
1,636

Total interest income
 
248,789

 
205,024

Interest expense:
 
 
 
 
Deposits
 
1,943

 
2,904

Borrowings
 
7,956

 
5,792

Total interest expense
 
9,899

 
8,696

Net interest income
 
238,890

 
196,328

Provision for loan losses
 
6,452

 
494

Net interest income after provision for loan losses
 
232,438

 
195,834

Noninterest income:
 
 
 
 
Gains on investment securities, net
 
83,159

 
223,912

Gains on derivative instruments, net
 
39,729

 
24,167

Foreign exchange fees
 
17,678

 
17,196

Credit card fees
 
12,090

 
10,282

Deposit service charges
 
10,736

 
9,607

Lending related fees
 
8,022

 
6,303

Letters of credit and standby letters of credit fees
 
5,202

 
4,140

Client investment fees
 
4,482

 
3,418

Other
 
(9,080
)
 
11,200

Total noninterest income
 
172,018

 
310,225

Noninterest expense:
 
 
 
 
Compensation and benefits
 
115,770

 
102,507

Professional services
 
24,185

 
21,189

Premises and equipment
 
12,657

 
11,582

Business development and travel
 
11,112

 
10,194

Net occupancy
 
7,313

 
7,320

FDIC and state assessments
 
5,789

 
4,128

Correspondent bank fees
 
3,421

 
3,203

Provision for unfunded credit commitments
 
2,263

 
1,123

Other (1)
 
13,598

 
9,162

Total noninterest expense (1)
 
196,108

 
170,408

Income before income tax expense (1)
 
208,348

 
335,651

Income tax expense (1)
 
63,066

 
61,296

Net income before noncontrolling interests (1)
 
145,282

 
274,355

Net income attributable to noncontrolling interests
 
(56,766
)
 
(183,405
)
Net income available to common stockholders (1)
 
$
88,516

 
$
90,950

Earnings per common share—basic (1)
 
$
1.74

 
$
1.98

Earnings per common share—diluted
 
1.71

 
1.95

 
 
 
(1)
Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1 - "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report.

See accompanying notes to interim consolidated financial statements (unaudited).

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SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 
 
Three months ended March 31,
(Dollars in thousands)
 
2015
 
2014
Net income before noncontrolling interests (1)
 
$
145,282

 
$
274,355

Other comprehensive income, net of tax:
 
 
 
 
Change in cumulative translation gains:
 
 
 
 
Foreign currency translation gains
 
2,129

 
1,464

Related tax expense
 
(820
)
 
(578
)
Change in unrealized gains on available-for-sale securities:
 
 
 
 
Unrealized holding gains
 
87,107

 
29,329

Related tax expense
 
(35,215
)
 
(11,805
)
Reclassification adjustment for gains included in net income
 
(2,596
)
 
(60
)
Related tax expense
 
1,048

 
24

Amortization of unrealized gains on securities transferred from available-for-sale to held-to-maturity

 
(2,828
)
 
—

Related tax benefit
 
1,139

 
—

Other comprehensive income, net of tax
 
49,964

 
18,374

Comprehensive income
 
195,246

 
292,729

Comprehensive income attributable to noncontrolling interests
 
(56,766
)
 
(183,405
)
Comprehensive income attributable to SVBFG
 
$
138,480

 
$
109,324

 
 
(1)
Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1 - "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report.

See accompanying notes to interim consolidated financial statements (unaudited).

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SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
 
 
 
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, 2013 (As Reported)
 
45,800,418

 
$
46

 
$
624,256

 
$
1,390,732

 
$
(48,764
)
 
$
1,966,270

 
$
1,113,058

 
$
3,079,328

Cumulative effective of adopting ASU 2014-01 (1)
 
—

 
—

 
—

 
(4,635
)
 
—

 
(4,635
)
 
—

 
(4,635
)
Balance at December 31, 2013 (As Revised)
 
45,800,418

 
$
46

 
$
624,256

 
$
1,386,097

 
$
(48,764
)
 
$
1,961,635

 
$
1,113,058

 
$
3,074,693

Common stock issued under employee benefit plans, net of restricted stock cancellations
 
103,341

 
—

 
4,254

 
—

 
—

 
4,254

 
—

 
4,254

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
 
—

 
—

 
1,996

 
—

 
—

 
1,996

 
—

 
1,996

Net income (1)
 
—

 
—

 
—

 
90,950

 
—

 
90,950

 
183,405

 
274,355

Capital calls and distributions, net
 
—

 
—

 
—

 
—

 
—

 
—

 
(23,482
)
 
(23,482
)
Net change in unrealized gains and losses on available-for-sale securities, net of tax
 
—

 
—

 
—

 
—

 
17,488

 
17,488

 
—

 
17,488

Foreign currency translation adjustments, net of tax
 
—

 
—

 
—

 
—

 
886

 
886

 
—

 
886

Share-based compensation expense
 
—

 
—

 
7,892

 
—

 
—

 
7,892

 
—

 
7,892

Other, net
 
—

 
—

 
23

 
—

 
—

 
23

 
—

 
23

Balance at March 31, 2014 (1)
 
45,934,521

 
$
46

 
$
642,311

 
$
1,477,047

 
$
(30,390
)
 
$
2,089,014

 
$
1,272,981

 
$
3,361,995

Balance at December 31, 2014 (1)
 
50,924,925

 
$
51

 
$
1,120,350

 
$
1,649,967

 
$
42,704

 
$
2,813,072

 
$
1,238,662

 
$
4,051,734

Common stock issued under employee benefit plans, net of restricted stock cancellations
 
142,991

 
—

 
6,595

 
—

 
—

 
6,595

 
—

 
6,595

Common stock issued under ESOP
 
27,425

 
—

 
3,512

 
—

 
—

 
3,512

 
—

 
3,512

Income tax benefit from stock options exercised, vesting of restricted stock and other
 
—

 
—

 
2,514

 
—

 
—

 
2,514

 
—

 
2,514

Net income
 
—

 
—

 
—

 
88,516

 
—

 
88,516

 
56,766

 
145,282

Capital calls and distributions, net
 
—

 
—

 
—

 
—

 
—

 
—

 
10,166

 
10,166

Net change in unrealized gains and losses on available-for-sale securities, net of tax
 
—

 
—

 
—

 
—

 
50,344

 
50,344

 
—

 
50,344

Amortization of unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax
 
—

 
—

 
—

 
—

 
(1,689
)
 
(1,689
)
 
—

 
(1,689
)
Foreign currency translation adjustments, net of tax
 
—

 
—

 
—

 
—

 
1,309

 
1,309

 
—

 
1,309

Share-based compensation expense
 
—

 
—

 
7,464

 
—

 
—

 
7,464

 
—

 
7,464

Balance at March 31, 2015
 
51,095,341

 
$
51

 
$
1,140,435

 
$
1,738,483

 
$
92,668

 
$
2,971,637

 
$
1,305,594

 
$
4,277,231

 
 
(1)
Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1 - "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report.

  See accompanying notes to interim consolidated financial statements (unaudited).

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SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
Three months ended March 31,
(Dollars in thousands)
 
2015
 
2014
Cash flows from operating activities:
 
 
 
 
Net income before noncontrolling interests (1)
 
$
145,282

 
$
274,355

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Provision for loan losses
 
6,452

 
494

Provision for unfunded credit commitments
 
2,263

 
1,123

Changes in fair values of derivatives, net
 
(20,404
)
 
13,356

Gains on investment securities, net
 
(83,159
)
 
(223,912
)
Depreciation and amortization
 
9,892

 
9,765

Amortization of premiums and discounts on investment securities, net
 
6,418

 
7,541

Amortization of share-based compensation
 
7,771

 
7,078

Amortization of deferred loan fees
 
(21,169
)
 
(20,502
)
Pre-tax net gain on SVBIF sale transaction
 
(887
)
 
—

Deferred income tax benefit
 
1,311

 
15,828

Changes in other assets and liabilities:
 
 
 
 
Accrued interest receivable and payable, net
 
772

 
(6,604
)
Accounts receivable and payable, net
 
(4,015
)
 
(7,885
)
Income tax payable and receivable, net (1)
 
9,283

 
25,159

Accrued compensation
 
(74,614
)
 
(74,687
)
Foreign exchange spot contracts, net
 
33,934

 
22,634

Other, net
 
28,486

 
6,247

Net cash provided by operating activities
 
47,616

 
49,990

Cash flows from investing activities:
 
 
 
 
Purchases of available-for-sale securities
 
(552,573
)
 
(1,531,045
)
Proceeds from sales of available-for-sale securities
 
5,612

 
2,097

Proceeds from maturities and pay downs of available-for-sale securities
 
424,713

 
694,243

Purchases of held-to-maturity securities
 
(739,291
)
 
—

Proceeds from maturities and pay downs of held-to-maturity securities
 
336,511

 
—

Purchases of non-marketable and other securities (cost and equity method accounting)
 
(7,304
)
 
(9,824
)
Proceeds from sales and distributions of non-marketable and other securities (cost and equity method accounting)
 
14,123

 
19,053

Purchases of non-marketable and other securities (fair value accounting)
 
(60,039
)
 
(45,125
)
Proceeds from sales and distributions of non-marketable and other securities (fair value accounting)
 
154,031

 
92,558

Net (increase) decrease in loans
 
(53,886
)
 
66,086

Proceeds from recoveries of charged-off loans
 
1,551

 
1,312

Purchases of premises and equipment
 
(12,038
)
 
(5,974
)
Net cash used for investing activities
 
(488,590
)
 
(716,619
)
Cash flows from financing activities:
 
 
 
 
Net (decrease) increase in deposits
 
(491,924
)
 
3,003,926

Increase (decrease) in short-term borrowings
 
69,985

 
(270
)
Net capital contributions from (distributions to) noncontrolling interests
 
10,166

 
(23,482
)
Tax benefit from stock exercises
 
2,514

 
1,996

Proceeds from issuance of common stock, ESPP, and ESOP
 
10,107

 
8,144

Proceeds from issuance of 3.50% Senior Notes
 
346,431

 
—

Net cash (used for) provided by financing activities
 
(52,721
)
 
2,990,314

Net (decrease) increase in cash and cash equivalents
 
(493,695
)
 
2,323,685

Cash and cash equivalents at beginning of period (2)
 
1,811,014

 
1,538,779

Cash and cash equivalents at end of period (2)
 
$
1,317,319

 
$
3,862,464

Supplemental disclosures:
 
 
 
 
Cash paid during the period for:
 
 
 
 
Interest
 
$
11,859

 
$
12,688

Income taxes
 
46,599

 
15,486

Noncash items during the period:
 
 
 
 
Changes in unrealized gains and losses on available-for-sale securities, net of tax
 
$
50,344

 
$
17,488

(1)
Cash flows for the quarters ended March 31, 2015 and March 31, 2014 were revised to reflect the retrospective application of our adoption of ASU 2014-01.
(2)
Cash and cash equivalents at March 31, 2015 and December 31, 2014 included $9.3 million and $15.0 million, respectively, recognized in assets held-for-sale in conjunction with the pending sale of SVBIF (refer to Note 7—”Disposal - Assets Held-for-Sale” of the “Notes to Interim Consolidated Financial Statements” under Part I, Item 1 of this report.
See accompanying notes to interim consolidated financial statements (unaudited).

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SVB FINANCIAL GROUP AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1.
Basis of Presentation
SVB Financial Group is a diversified financial services company, as well as a bank holding company and financial holding company. SVB Financial was incorporated in the state of Delaware in March 1999. Through our various subsidiaries and divisions, we offer a variety of banking and financial products and services to support our clients of all sizes and stages throughout their life cycles. In these notes to our consolidated financial statements, when we refer to “SVB Financial Group,” “SVBFG”, the “Company,” “we,” “our,” “us” or use similar words, we mean SVB Financial Group and all of its subsidiaries collectively, including Silicon Valley Bank (the “Bank”), unless the context requires otherwise. When we refer to “SVB Financial” or the “Parent” we are referring only to the parent company, SVB Financial Group, unless the context requires otherwise.
The accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary to fairly present our financial position, results of operations and cash flows in accordance with GAAP. Such unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of results to be expected for any future periods. These unaudited interim consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2014 (“2014 Form 10-K”).
The preparation of unaudited interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates may change as new information is obtained. Significant items that are subject to such estimates include measurements of fair value, the valuation of non-marketable securities, the valuation of equity warrant assets, the adequacy of the allowance for loan losses and reserve for unfunded credit commitments, and the recognition and measurement of income tax assets and liabilities.
Principles of Consolidation and Presentation
Our consolidated financial statements include the accounts of SVB Financial Group and entities in which we have a controlling financial interest. We determine whether we have a controlling financial interest in an entity by evaluating whether the entity is a voting interest entity or a VIE and whether the applicable accounting guidance requires consolidation. All significant intercompany accounts and transactions have been eliminated.
Voting interest entities are entities that have sufficient equity and provide the equity investors voting rights that enable them to make significant decisions relating to the entity’s operations. For these types of entities, the Company’s determination of whether it has a controlling interest is based on ownership of the majority of the entities’ voting equity interest or through control of management of the entities.
VIEs are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. We determine whether we have a controlling financial interest in a VIE by considering whether our involvement with the VIE is significant and whether we are the primary beneficiary based on the following:
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.
Voting interest entities in which we have a controlling financial interest or VIEs in which we are the primary beneficiary are consolidated into our financial statements.
We have not provided financial or other support during the periods presented to any VIE that we were not previously contractually required to provide. We are variable interest holders in certain partnerships for which we are not the primary beneficiary. We perform on-going reassessments on the status of the entities and whether facts or circumstances have changed

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in relation to previously evaluated voting interest entities and our involvement in VIEs which could cause our consolidation conclusion to change.
Adoption of New Accounting Standards
In January 2014, the FASB issued a new accounting standard (ASU 2014-01, Investments - Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects), which is effective for us for interim and annual reporting periods beginning after December 15, 2014. The standard is required to be applied retrospectively, with an adjustment to retained earnings in the earliest period presented. The ASU will be applicable to our portfolio of low income housing tax credit ("LIHTC") partnership interests. We adopted this guidance in the first quarter of 2015.
For prior periods, pursuant to ASU 2014-01, (i) amortization expense related to our low income housing tax credits was reclassified from Other noninterest expense to Income tax expense, (ii) additional amortization, net of the associated tax benefits, was recognized in Income tax expense as a result of our adoption of the proportional amortization method and (iii) net deferred tax assets, related to our low income housing tax investments, were written-off. The cumulative effect to retained earnings as of January 1, 2015 of adopting this guidance was a reduction of $4.7 million, inclusive of a $4.6 million reduction to retained earnings as of January 1, 2014. Our previously reported net income for the first quarter of 2014 decreased $0.4 million. This reduction had no impact on first quarter 2014 diluted earnings per share.

Recent Accounting Pronouncements
In May 2014, the FASB issued a new accounting standard (ASU 2014-09, Revenue from Contracts with Customers (Topic 606)), which provides revenue recognition guidance that is intended to create greater consistency with respect to how and when revenue from contracts with customers is shown in the income statement. The guidance requires that revenue from contracts with customers be recognized upon delivery of a good or service based on the amount of consideration expected to be received, and requires additional disclosures about revenue. On April 29, 2015 the FASB issued an exposure draft to defer the effective date of Update 2014-09. If the FASB issues the proposed update, the guidance will be effective on a retrospective basis beginning on January 1, 2018. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or stockholders' equity.
In August 2014, the FASB issued a new accounting standard (ASU 2014-15, Going Concern (Topic 205-40)), which requires management to evaluate for each annual and interim reporting period whether there is substantial doubt about an entity's ability to continue as a going concern. The guidance will be effective for annual and quarterly periods beginning on or after December 15, 2016, with early adoption permitted. We are currently developing processes and controls to adopt this guidance by the adoption deadline and do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or stockholders' equity.
In February 2015, the FASB issued a new accounting standard (ASU 2015-02, Consolidation (Topic 810)), which amends the consolidation requirement for certain legal entities. The guidance will be effective for annual and quarterly periods beginning on January 1, 2016, with early adoption permitted. The standard may be applied using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. We are currently assessing the impact this amendment is expected to have upon adoption.
In April 2015, the FASB issued a new accounting standard (ASU 2015-03, Interest- Imputation of Interest (Subtopic 835-30), which simplifies the presentation of debt issuance costs. The guidance will be effective for annual and quarterly periods beginning on January 1, 2016, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our financial position.
Reclassifications
Certain prior period amounts have been reclassified to conform to current period presentations.

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Table of Contents

2.
Stockholders’ Equity and EPS
Accumulated Other Comprehensive Income
The following table summarizes the items reclassified out of accumulated other comprehensive income into the Consolidated Statements of Income (unaudited) for the three months ended March 31, 2015 and 2014:
 
 
 
 
Three months ended March 31,
(Dollars in thousands)
 
Income Statement Location
 
2015
 
2014
Reclassification adjustment for gains included in net income
 
Gains on investment securities, net
 
$
(2,596
)
 
$
(60
)
Related tax expense
 
Income tax expense
 
1,048

 
24

Total reclassification adjustment for gains included in net income, net of tax
 
 
 
$
(1,548
)
 
$
(36
)
EPS
Basic EPS is the amount of earnings available to each share of common stock outstanding during the reporting period. Diluted EPS is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issued for stock options and restricted stock units outstanding under our equity incentive plans and our ESPP. Potentially dilutive common shares are excluded from the computation of dilutive EPS in periods in which the effect would be antidilutive. The following is a reconciliation of basic EPS to diluted EPS for the three months ended March 31, 2015 and 2014:
 
 
Three months ended March 31,
(Dollars and shares in thousands, except per share amounts)
 
2015
 
2014
Numerator:
 
 
 
 
Net income available to common stockholders (1)
 
$
88,516

 
$
90,950

Denominator:
 
 
 
 
Weighted average common shares outstanding-basic
 
51,009

 
45,866

Weighted average effect of dilutive securities:
 
 
 
 
Stock options and ESPP
 
445

 
566

Restricted stock units
 
265

 
293

Denominator for diluted calculation
 
51,719

 
46,725

Earnings per common share:
 
 
 
 
Basic (1)
 
$
1.74

 
$
1.98

Diluted
 
$
1.71

 
$
1.95

 
 
(1)
Results for the quarter ended March 31, 2014 were restated to reflect the retrospective application of adopting new accounting guidance in 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1 of the Notes to Consolidated Financial Statements for additional information.
The following table summarizes the weighted-average common shares excluded from the diluted EPS calculation as they were deemed to be antidilutive for the three months ended March 31, 2015 and 2014:
 
 
Three months ended March 31,
(Shares in thousands)
 
2015
 
2014
Stock options
 
241

 
6

Restricted stock units
 
2

 
1

Total
 
243

 
7


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3.
Share-Based Compensation
For the three months ended March 31, 2015 and 2014, we recorded share-based compensation and related tax benefits as follows: 
 
 
Three months ended March 31,
(Dollars in thousands)
 
2015
 
2014
Share-based compensation expense
 
$
7,771

 
$
7,078

Income tax benefit related to share-based compensation expense
 
(2,638
)
 
(2,160
)
Unrecognized Compensation Expense
As of March 31, 2015, unrecognized share-based compensation expense was as follows:
(Dollars in thousands)
 
  Unrecognized  
Expense
 
Average
Expected
Recognition
  Period - in Years  
Stock options
 
$
12,436

 
2.39
Restricted stock units
 
32,100

 
2.40
Total unrecognized share-based compensation expense
 
$
44,536

 
 
Share-Based Payment Award Activity
The table below provides stock option information related to the 2006 Equity Incentive Plan for the three months ended March 31, 2015:
 
 
Options
 
Weighted
Average
 Exercise Price 
 
Weighted Average Remaining Contractual Life in Years  
 
Aggregate
  Intrinsic Value  
of In-The-
Money
Options
Outstanding at December 31, 2014
 
1,394,888

 
$
66.03

 
 
 
 
Granted
 
6,718

 
120.46

 
 
 
 
Exercised
 
(140,880
)
 
48.97

 
 
 
 
Forfeited
 
(12,400
)
 
82.72

 
 
 
 
Outstanding at March 31, 2015
 
1,248,326

 
68.08

 
4.06
 
$
73,596,215

Vested and expected to vest at March 31, 2015
 
1,213,499

 
67.45

 
4.01
 
72,313,282

Exercisable at March 31, 2015
 
554,601

 
51.32

 
2.84
 
41,996,945

The aggregate intrinsic value of outstanding options shown in the table above represents the pretax intrinsic value based on our closing stock price of $127.04 as of March 31, 2015. The total intrinsic value of options exercised during the three months ended March 31, 2015 was $10.2 million and $7.2 million for the comparable 2014 period.
The table below provides information for restricted stock units under the 2006 Equity Incentive Plan for the three months ended March 31, 2015:
 
 
Shares    
 
Weighted Average Grant Date Fair Value
Nonvested at December 31, 2014
 
614,666

 
$
79.92

Granted
 
53,219

 
125.99

Vested
 
(4,613
)
 
71.69

Forfeited
 
(9,994
)
 
80.52

Nonvested at March 31, 2015
 
653,278

 
83.73


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4.
Cash and Cash Equivalents
The following table details our cash and cash equivalents at March 31, 2015 and December 31, 2014:
(Dollars in thousands)
 
March 31, 2015
 
December 31, 2014
Cash and due from banks (1)
 
$
1,066,854

 
$
1,694,329

Securities purchased under agreements to resell (2)
 
236,027

 
95,611

Other short-term investment securities
 
5,122

 
6,122

Total cash and cash equivalents
 
$
1,308,003

 
$
1,796,062

 
 
(1)
At March 31, 2015 and December 31, 2014, $236 million and $861 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 $460 million and $440 million, respectively.
(2)
At March 31, 2015 and December 31, 2014, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fair values of $244 million and $98 million, respectively. None of these securities received as collateral were sold or pledged as of March 31, 2015 or December 31, 2014.
5.
Investment Securities
Our investment securities portfolio consists of an available-for-sale securities portfolio and a held-to-maturity securities portfolio, both of which represent interest-earning investment securities, and a non-marketable and other securities portfolio, which primarily represents investments managed as part of our funds management business.
Available-for-Sale Securities
The components of our available-for-sale investment securities portfolio at March 31, 2015 and December 31, 2014 are as follows:
 
 
March 31, 2015
(Dollars in thousands)
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Carrying
Value
Available-for-sale securities, at fair value:
 
 
 
 
 
 
 
 
U.S. treasury securities
 
$
7,842,942

 
$
71,447

 
$
(264
)
 
$
7,914,125

U.S. agency debentures
 
3,271,203

 
43,675

 
(1,214
)
 
3,313,664

Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
Agency-issued collateralized mortgage obligations—fixed rate
 
1,769,610

 
15,005

 
(6,460
)
 
1,778,155

Agency-issued collateralized mortgage obligations—variable rate
 
733,999

 
5,207

 
(3
)
 
739,203

Equity securities
 
1,948

 
121

 
(293
)
 
1,776

Total available-for-sale securities
 
$
13,619,702

 
$
135,455

 
$
(8,234
)
 
$
13,746,923


 
 
December 31, 2014
(Dollars in thousands)
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Carrying
Value
Available-for-sale securities, at fair value:
 
 
 
 
 
 
 
 
U.S. treasury securities
 
$
7,289,135

 
$
17,524

 
$
(4,386
)
 
$
7,302,273

U.S. agency debentures
 
3,540,055

 
30,478

 
(8,977
)
 
$
3,561,556

Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
Agency-issued collateralized mortgage obligations—fixed rate
 
1,884,450

 
14,851

 
(14,458
)
 
1,884,843

Agency-issued collateralized mortgage obligations—variable rate
 
779,103

 
5,372

 
—

 
784,475

Equity securities
 
5,202

 
2,628

 
(322
)
 
7,508

Total available-for-sale securities
 
$
13,497,945

 
$
70,853

 
$
(28,143
)
 
$
13,540,655




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Table of Contents

The following table summarizes our unrealized losses on our available-for-sale securities portfolio into categories of less than 12 months and 12 months or longer as of March 31, 2015:
 
 
March 31, 2015
 
 
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
 
$
176,467

 
$
(264
)
 
$
—

 
$
—

 
$
176,467

 
$
(264
)
U.S. agency debentures
 
390,034

 
(1,214
)
 
—

 
—

 
390,034

 
(1,214
)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 

 

Agency-issued mortgage-backed securities
 
—

 
—

 
—

 
—

 
—

 
—

Agency-issued collateralized mortgage obligations—fixed rate
 
244,285

 
(244
)
 
428,635

 
(6,216
)
 
672,920

 
(6,460
)
Agency-issued collateralized mortgage obligations—variable rate
 
934

 
(3
)
 
—

 
—

 
934

 
(3
)
Equity securities
 
1,381

 
(293
)
 
—

 
—

 
1,381

 
(293
)
Total temporarily impaired securities: (1)
 
$
813,101

 
$
(2,018
)
 
$
428,635

 
$
(6,216
)
 
$
1,241,736

 
$
(8,234
)
 
 
(1)
As of March 31, 2015, we identified a total of 51 investments that were in unrealized loss positions, of which 17 investments totaling $428.6 million with unrealized losses of $6.2 million have been in an impaired position for a period of time greater than 12 months. As of March 31, 2015, 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 March 31, 2015, 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.
The following table summarizes our unrealized losses on our available-for-sale securities portfolio into categories of less than 12 months and 12 months or longer as of December 31, 2014:
 
 
December 31, 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
 
$
2,297,895

 
$
(4,386
)
 
$
—

 
$
—

 
$
2,297,895

 
$
(4,386
)
U.S. agency debentures
 
249,266

 
(489
)
 
507,385

 
(8,488
)
 
756,651

 
(8,977
)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
Agency-issued mortgage-backed securities
 
—

 
—

 
—

 
—

 
—

 
—

Agency-issued collateralized mortgage obligations—fixed rate
 
662,092

 
(3,104
)
 
453,801

 
(11,354
)
 
1,115,893

 
(14,458
)
Equity securities
 
568

 
(322
)
 
—

 
—

 
568

 
(322
)
Total temporarily impaired securities:
 
$
3,209,821

 
$
(8,301
)
 
$
961,186

 
$
(19,842
)
 
$
4,171,007

 
$
(28,143
)



14
Table of Contents

The following table summarizes the remaining contractual principal maturities and fully taxable equivalent yields on fixed income investment securities classified as available-for-sale as of March 31, 2015. The weighted average yield is computed using the amortized cost of fixed income investment securities, which are reported at fair value. For U.S. treasury securities, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for certain U.S. agency debentures may occur earlier than their contractual maturities because the note issuers have the right to call outstanding amounts ahead of their contractual maturity. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as available-for-sale typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower rate environments.
 
 
March 31, 2015
 
 
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
 
$
7,914,125

 
1.11
%
 
$
350,203

 
0.25
%
 
$
6,925,629

 
1.09
%
 
$
638,293

 
1.90
%
 
$
—

 
—
%
U.S. agency debentures
 
3,313,664

 
1.65

 
835,499

 
1.80

 
2,055,046

 
1.44

 
423,119

 
2.36

 
—

 
—

Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency-issued collateralized mortgage obligations - fixed rate
 
1,778,155

 
1.99

 
—

 
—

 
—

 
—

 
651,254

 
2.58

 
1,126,901

 
1.65

Agency-issued collateralized mortgage obligations - variable rate
 
739,203

 
0.71

 
—

 
—

 
—

 
—

 
—

 
—

 
739,203

 
0.71

Total
 
$
13,745,147

 
1.33

 
$
1,185,702

 
1.34

 
$
8,980,675

 
1.17

 
$
1,712,666

 
2.27

 
$
1,866,104

 
1.28




15
Table of Contents

Held-to-Maturity Securities

The components of our held-to-maturity investment securities portfolio at March 31, 2015 and December 31, 2014 are as follows:
 
 
March 31, 2015
(Dollars in thousands)
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
Held-to-maturity securities, at cost:
 
 
 
 
 
 
 
 
U.S. agency debentures (1)
 
$
473,373

 
$
8,700

 
$
—

 
$
482,073

Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
Agency-issued mortgage-backed securities
 
2,693,488

 
23,143

 
(501
)
 
2,716,130

Agency-issued collateralized mortgage obligations—fixed rate
 
3,553,640

 
19,339

 
(6,328
)
 
3,566,651

Agency-issued collateralized mortgage obligations—variable rate
 
124,195

 
337

 
(5
)
 
124,527

Agency-issued commercial mortgage-backed securities
 
888,823

 
9,023

 
(498
)
 
897,348

Municipal bonds and notes
 
83,278

 
126

 
(480
)
 
82,924

Total held-to-maturity securities
 
$
7,816,797

 
$
60,668

 
$
(7,812
)
 
$
7,869,653

 
 
(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.
 
 
 
December 31, 2014
(Dollars in thousands)
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
Held-to-maturity securities, at cost:
 
 
 
 
 
 
 
 
U.S. agency debentures (1)
 
$
405,899

 
$
4,589

 
$
(38
)
 
$
410,450

Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
Agency-issued mortgage-backed securities
 
2,799,923

 
5,789

 
(2,320
)
 
2,803,392

Agency-issued collateralized mortgage obligations—fixed rate
 
3,185,109

 
4,521

 
(14,885
)
 
3,174,745

Agency-issued collateralized mortgage obligations—variable rate
 
131,580

 
371

 
—

 
131,951

Agency-issued commercial mortgage-backed securities
 
814,589

 
1,026

 
(3,800
)
 
811,815

Municipal bonds and notes
 
83,942

 
18

 
(657
)
 
83,303

Total held-to-maturity securities
 
$
7,421,042

 
$
16,314

 
$
(21,700
)
 
$
7,415,656

 
 
(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.

16
Table of Contents

The following table summarizes our unrealized losses on our held-to-maturity securities portfolio into categories of less than 12 months and 12 months or longer as of March 31, 2015:
 
 
March 31, 2015
 
 
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
Held-to-maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
Agency-issued mortgage-backed securities
 
$
52,761

 
$
(501
)
 
$
—

 
$
—

 
$
52,761

 
$
(501
)
Agency-issued collateralized mortgage obligations—fixed rate
 
622,767

 
(6,328
)
 
—

 
—

 
622,767

 
(6,328
)
Agency-issued collateralized mortgage obligations—variable rate
 
8,660

 
(5
)
 
—

 
—

 
8,660

 
(5
)
Agency-issued commercial mortgage-backed securities
 
164,668

 
(498
)
 
—

 
—

 
164,668

 
(498
)
Municipal bonds and notes
 
48,864

 
(480
)
 
—

 
—

 
48,864

 
(480
)
Total temporarily impaired securities (1):
 
$
897,720

 
$
(7,812
)
 
$
—

 
$
—

 
$
897,720

 
$
(7,812
)
 
 
(1)
As of March 31, 2015, we identified a total of 120 investments that were in unrealized loss positions, none of which have been in an impaired position for a period of time greater than 12 months. As of March 31, 2015, 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 March 31, 2015, 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.
The following table summarizes our unrealized losses on our held-to-maturity securities portfolio into categories of less than 12 months and 12 months or longer as of December 31, 2014:
 
 
December 31, 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
 
$
48,335

 
$
(38
)
 
$
—

 
$
—

 
$
48,335

 
$
(38
)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
Agency-issued mortgage-backed securities
 
999,230

 
(2,320
)
 
—

 
—

 
999,230

 
(2,320
)
Agency-issued collateralized mortgage obligations—fixed rate
 
1,682,348

 
(9,705
)
 
783,558

 
(5,180
)
 
2,465,906

 
(14,885
)
Agency-issued commercial mortgage-backed securities
 
629,840

 
(3,800
)
 
—

 
—

 
629,840

 
(3,800
)
Municipal bonds and notes
 
79,141

 
(657
)
 
—

 
—

 
79,141

 
(657
)
Total temporarily impaired securities:
 
$
3,438,894

 
$
(16,520
)
 
$
783,558

 
$
(5,180
)
 
$
4,222,452

 
$
(21,700
)
 
 
(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.



17
Table of Contents

The following table summarizes the remaining contractual principal maturities and fully taxable equivalent yields on fixed income investment securities classified as held-to-maturity as of March 31, 2015. Interest income on certain municipal bonds and notes (non-taxable investments) are presented on a fully taxable equivalent basis using the federal statutory tax rate of 35%. The weighted average yield is computed using the amortized cost of fixed income investment securities, which are reported at fair value. Expected remaining maturities for certain U.S. agency debentures may occur earlier than their contractual maturities because the note issuers have the right to call outstanding amounts ahead of their contractual maturity. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as held-to-maturity typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower rate environments.
 
 
March 31, 2015
 
 
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
 
$
473,373

 
2.69
%
 
$
—

 
—
%
 
$
—

 
—
%
 
$
473,373

 
2.69
%
 
$
—

 
—
%
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency-issued mortgage-backed securities
 
2,693,488

 
2.42

 
—

 
—

 
42,382

 
2.38

 
794,716

 
2.23

 
1,856,390

 
2.51

Agency-issued collateralized mortgage obligations - fixed rate
 
3,553,640

 
1.65

 
—

 
—

 
—

 
—

 
—

 
—

 
3,553,640

 
1.65

Agency-issued collateralized mortgage obligations - variable rate
 
124,195

 
0.65

 
—

 
—

 
—

 
—

 
—

 
—

 
124,195

 
0.65

Agency-issued commercial mortgage-backed securities
 
888,823

 
2.16

 
—

 
—

 
—

 
—

 
—

 
—

 
888,823

 
2.16

Municipal bonds and notes
 
83,278

 
6.00

 
3,442

 
5.39

 
33,261

 
5.87

 
40,081

 
6.11

 
6,494

 
6.34

Total
 
$
7,816,797

 
2.07

 
$
3,442

 
5.39

 
$
75,643

 
3.91

 
$
1,308,170

 
2.52

 
$
6,429,542

 
1.95



18
Table of Contents

Non-marketable and Other Securities
The components of our non-marketable and other investment securities portfolio at March 31, 2015 and December 31, 2014 are as follows: