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Securities

12 Months Ended

Dec. 31, 2021

Note 3—Securities

Investment Securities

The following is the amortized cost and fair value of investment securities held to maturity:


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
(Dollars in thousands)		Cost			Gains			Losses			Value
December 31, 2021:
U.S. Government agencies		$	112,913		$	—		$	(2,627)		$	110,286
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			1,120,104			14			(24,278)			1,095,840
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises			174,178			—			(4,937)			169,241
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			350,116			304			(8,021)			342,399
Small Business Administration loan-backed securities			62,590			—			(2,292)			60,298
		$	1,819,901		$	318		$	(42,155)		$	1,778,064
December 31, 2020:
U.S. Government agencies		$	25,000		$	1		$	—		$	25,001
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			632,269			1,827			(1,032)			633,064
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises			75,767			405			—			76,172
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			174,506			300			(91)			174,715
Small Business Administration loan-backed securities			48,000			231			—			48,231
		$	955,542		$	2,764		$	(1,123)		$	957,183

The following is the amortized cost and fair value of investment securities available for sale:


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
(Dollars in thousands)		Cost			Gains			Losses			Value
December 31, 2021:
U.S. Government agencies		$	98,882		$	—		$	(1,765)		$	97,117
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			1,851,700			5,324			(25,985)			1,831,039
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises			730,949			5,957			(10,911)			725,995
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			1,220,233			5,438			(18,430)			1,207,241
State and municipal obligations			798,211			16,697			(2,219)			812,689
Small Business Administration loan-backed securities			502,812			2,330			(4,479)			500,663
Corporate securities			18,509			234			(9)			18,734
		$	5,221,296		$	35,980		$	(63,798)		$	5,193,478
December 31, 2020:
U.S. Government agencies		$	29,882		$	16		$	(642)		$	29,256
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			1,351,506			16,657			(1,031)			1,367,132
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises			739,797			16,579			(825)			755,551
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			229,219			10,939			(50)			240,108
State and municipal obligations			502,575			17,491			(27)			520,039
Small Business Administration loan-backed securities			401,496			4,978			(1,590)			404,884
Corporate securities			13,562			140			—			13,702
		$	3,268,037		$	66,800		$	(4,165)		$	3,330,672

The following is the amortized cost and carrying value of other investment securities:


		Carrying
(Dollars in thousands)		Value
December 31, 2021:
Federal Home Loan Bank stock		$	16,283
Federal Reserve Bank stock			129,716
Investment in unconsolidated subsidiaries			3,563
Other nonmarketable investment securities			11,006
		$	160,568
December 31, 2020:
Federal Home Loan Bank stock		$	15,083
Federal Reserve Bank stock			129,871
Investment in unconsolidated subsidiaries			4,941
Other nonmarketable investment securities			10,548
		$	160,443

The Company’s other investment securities consist of non-marketable equity securities that have no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of December 31, 2021, the Company has determined that there was no impairment on its other investment securities.

The amortized cost and fair value of debt and equity securities at December 31, 2021 by contractual maturity are detailed below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties.

Securities

Securities

Held to Maturity

Available for Sale

Amortized

Fair

Amortized

Fair

(Dollars in thousands)

Cost

Value

Cost

Value

Due in one year or less

$

—

$

—

$

7,263

$

7,296

Due after one year through five years

—

—

132,157

133,418

Due after five years through ten years

140,439

135,931

920,768

919,669

Due after ten years

1,679,462

1,642,133

4,161,108

4,133,095

$

1,819,901

$

1,778,064

$

5,221,296

$

5,193,478

The following table summarizes information with respect to sales of available for sale securities:


		Year Ended December 31,
(Dollars in thousands)		2021			2020			2019
Securities Available for Sale:
Sale proceeds		$	151,314		$	100,754		$	242,733
Gross realized gains			750			662			6,030
Gross realized losses			(648)			(612)			(3,319)
Net realized gain		$	102		$	50		$	2,711

There was a net realized gain of $102,000 on the sale of securities for the year ended December 31, 2021, compared to a net gain of $50,000 and $2.7 million for the years ended December 31, 2020 and 2019, respectively. The net realized gain of $2.7 million for the year ended December 31, 2019 includes net realized gains totaling $5.4 million from the sale of VISA Class B shares in the first and second quarters of 2019. If the gains from the VISA Class B share are excluded in 2019, the Company would have had a net realized loss of $2.7 million on the sale of available for sale securities for the year ended December 31, 2019.

There were no sales of held to maturity securities for years ended December 31, 2021, 2020 or 2019.

The Company had 296 securities with gross unrealized losses at December 31, 2021. Information pertaining to securities with gross unrealized losses at December 31, 2021 and 2020, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:


		Less Than						Twelve Months
		Twelve Months						or More
		Gross Unrealized			Fair			Gross Unrealized			Fair
(Dollars in thousands)		Losses			Value			Losses			Value
December 31, 2021:
Securities Held to Maturity
U.S. Government agencies		$	1,745		$	86,168		$	882		$	24,118
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			18,768			868,327			5,510			184,819
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises			4,937			169,240			—			—
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			4,902			154,963			3,119			75,450
Small Business Administration loan-backed securities			1,281			37,408			1,011			22,890
		$	31,633		$	1,316,106		$	10,522		$	307,277
Securities Available for Sale
U.S. Government agencies		$	529		$	73,353		$	1,236		$	23,763
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			17,381			1,274,934			8,604			221,435
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises			10,911			432,300			—			—
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			13,120			846,581			5,310			98,106
State and municipal obligations			1,867			123,987			352			8,579
Small Business Administration loan-backed securities			2,720			179,168			1,759			110,309
Corporate securities			9			4,991			—			—
		$	46,537		$	2,935,314		$	17,261		$	462,192
December 31, 2020:
Securities Held to Maturity
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises		$	1,032		$	213,146		$	—		$	—
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			91			27,445			—			—
		$	1,123		$	240,591		$	—		$	—
Securities Available for Sale
U.S. Government agencies		$	642		$	24,358		$	—		$	—
Residential mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			1,031			260,411			—			—
Residential collateralized mortgage-obligations issued by U.S. government
agencies or sponsored enterprises			825			140,333			—			—
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			46			13,594			4			871
State and municipal obligations			27			8,620			—			—
Small Business Administration loan-backed securities			573			94,981			1,017			104,254

$

3,144

$

542,297

$

1,021

$

105,125

Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby Management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that we will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third-party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments. The Company performed an analysis that determined that the following securities have a zero expected credit loss: U.S. Treasury Securities, Agency-Backed Securities including securities issued by Ginnie Mae, Fannie Mae, FHLB, FFCB and SBA. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United States Government or one of its agencies. Municipal securities and all other securities that do not have a zero expected credit loss are evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value. All debt securities in an unrealized loss position as of December 31, 2021 continue to perform as scheduled and we do not believe that there is a credit loss or that a provision for credit losses is necessary. Also, as part of our evaluation of our intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, we consider our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not currently intend to sell the securities within the portfolio and it is not more-likely-than-not that we will be required to sell the debt securities. See Note 1—Summary of Significant Account Policies for further discussion.

Management continues to monitor all of our securities with a high degree of scrutiny. There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of its securities may be sold or would require a charge to earnings as a provision for credit losses in such periods.

At December 31, 2021 and 2020, investment securities with a carrying value of $2.1 billion were pledged to secure public funds deposits and for other purposes required and permitted by law. At December 31, 2021 and 2020, the carrying amount of the securities pledged to collateralize repurchase agreements was $471.3 million and $515.9 million, respectively.

Trading Securities

At December 31, 2021 and 2020, trading securities, at estimated fair value, were as follows:


(Dollars in thousands)		2021			2020
U.S. Government agencies		$	5,154		$	—
Residential mortgage pass-through securities issued or guaranteed by U.S.
government agencies or sponsored enterprises			6,853			—
Other residential mortgage issued or guaranteed by U.S. government
agencies or sponsored enterprises			12,315			—
Commercial mortgage-backed securities issued by U.S. government
agencies or sponsored enterprises			29,667			—
State and municipal obligations			20,798			10,674
Other debt securities			2,902			—
		$	77,689		$	10,674