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Securities | 9 Months Ended
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Sep. 30, 2024
Investments, Debt and Equity Securities [Abstract] |
Securities | Securities Securities - Held to Maturity. A summary of the amortized cost, fair value and allowance for credit losses related to securities held to maturity as of September 30, 2024 and December 31, 2023, is presented below.
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Allowance for Credit Losses |  | Net Carrying Amount
September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
Residential mortgage-backed securities | $ | 1,211,798 |  |  | $ | 7,380 |  |  | $ | 39,632 |  |  | $ | 1,179,546 |  |  | $ | — |  |  | $ | 1,211,798 |
States and political subdivisions | 2,356,730 |  |  | 31,823 |  |  | 71,318 |  |  | 2,317,235 |  |  | (310) |  |  | 2,356,420 |
Other | 1,500 |  |  | — |  |  | 10 |  |  | 1,490 |  |  | — |  |  | 1,500 |
Total | $ | 3,570,028 |  |  | $ | 39,203 |  |  | $ | 110,960 |  |  | $ | 3,498,271 |  |  | $ | (310) |  |  | $ | 3,569,718 |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Residential mortgage-backed securities | $ | 1,250,431 |  |  | $ | 76 |  |  | $ | 54,175 |  |  | $ | 1,196,332 |  |  | $ | — |  |  | $ | 1,250,431 |
States and political subdivisions | 2,367,807 |  |  | 42,990 |  |  | 76,540 |  |  | 2,334,257 |  |  | (310) |  |  | 2,367,497 |
Other | 1,500 |  |  | — |  |  | 45 |  |  | 1,455 |  |  | — |  |  | 1,500 |
Total | $ | 3,619,738 |  |  | $ | 43,066 |  |  | $ | 130,760 |  |  | $ | 3,532,044 |  |  | $ | (310) |  |  | $ | 3,619,428 |
All mortgage-backed securities included in the above table were issued by U.S. government agencies and corporations. The carrying value of held-to-maturity securities pledged to secure public funds, trust deposits, repurchase agreements and for other purposes, as required or permitted by law was $1.0 billion at both September 30, 2024 and December 31, 2023, respectively. Accrued interest receivable on held-to-maturity securities totaled $20.2 million and $40.9 million at September 30, 2024 and December 31, 2023, respectively and is included in accrued interest receivable and other assets in the accompanying consolidated balance sheets. From time to time, we have reclassified certain securities from available for sale to held to maturity. The net unamortized, unrealized gain remaining on transferred securities included in accumulated other comprehensive income in the accompanying balance sheet totaled $685 thousand ($541 thousand, net of tax) at September 30, 2024 and $1.2 million ($909 thousand, net of tax) at December 31, 2023. This amount will be amortized out of accumulated other comprehensive income over the remaining life of the underlying securities as an adjustment of the yield on those securities. The following table summarizes Moody's and/or Standard & Poor's bond ratings for our portfolio of held-to-maturity securities issued by States and political subdivisions and other securities as of September 30, 2024 and December 31, 2023:
| States and Political Subdivisions |  |
| Not Guaranteed or Pre-Refunded |  | Guaranteed by the Texas PSF |  | Guaranteed by Third Party |  | Pre-Refunded |  | Total |  | Other Securities
September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
Aaa/AAA | $ | 301,414 |  |  | $ | 1,522,654 |  |  | $ | 13,643 |  |  | $ | 14,528 |  |  | $ | 1,852,239 |  |  | $ | — |
Aa/AA | 498,379 |  |  | — |  |  | 6,112 |  |  | — |  |  | 504,491 |  |  | — |
Not rated | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,500 |
Total | $ | 799,793 |  |  | $ | 1,522,654 |  |  | $ | 19,755 |  |  | $ | 14,528 |  |  | $ | 2,356,730 |  |  | $ | 1,500 |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Aaa/AAA | $ | 301,721 |  |  | $ | 1,541,913 |  |  | $ | 13,651 |  |  | $ | 1,401 |  |  | $ | 1,858,686 |  |  | $ | — |
Aa/AA | 503,016 |  |  | — |  |  | 6,105 |  |  | — |  |  | 509,121 |  |  | — |
Not rated | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,500 |
Total | $ | 804,737 |  |  | $ | 1,541,913 |  |  | $ | 19,756 |  |  | $ | 1,401 |  |  | $ | 2,367,807 |  |  | $ | 1,500 |
The following table details activity in the allowance for credit losses on held-to-maturity securities during the three and nine months ended September 30, 2024 and 2023.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Beginning balance | $ | 310 |  |  | $ | 267 |  |  | $ | 310 |  |  | $ | 158 |
Credit loss expense (benefit) | — |  |  | 43 |  |  | — |  |  | 152 |
Ending balance | $ | 310 |  |  | $ | 310 |  |  | $ | 310 |  |  | $ | 310 |
Securities - Available for Sale. A summary of the amortized cost, fair value and allowance for credit losses related to securities available for sale as of September 30, 2024 and December 31, 2023, is presented below.
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Allowance for Credit Losses |  | Estimated Fair Value
September 30, 2024 |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 4,188,623 |  |  | $ | — |  |  | $ | 200,877 |  |  | $ | — |  |  | $ | 3,987,746 |
Residential mortgage-backed securities | 7,418,797 |  |  | 22,023 |  |  | 748,157 |  |  | — |  |  | 6,692,663 |
States and political subdivisions | 4,799,347 |  |  | 9,228 |  |  | 212,015 |  |  | — |  |  | 4,596,560 |
Other | 43,074 |  |  | — |  |  | — |  |  | — |  |  | 43,074 |
Total | $ | 16,449,841 |  |  | $ | 31,251 |  |  | $ | 1,161,049 |  |  | $ | — |  |  | $ | 15,320,043 |
December 31, 2023 |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 5,212,894 |  |  | $ | — |  |  | $ | 285,305 |  |  | $ | — |  |  | $ | 4,927,589 |
Residential mortgage-backed securities | 7,463,954 |  |  | 9,066 |  |  | 876,338 |  |  | — |  |  | 6,596,682 |
States and political subdivisions | 5,245,721 |  |  | 5,762 |  |  | 240,152 |  |  | — |  |  | 5,011,331 |
Other | 42,769 |  |  | — |  |  | — |  |  | — |  |  | 42,769 |
Total | $ | 17,965,338 |  |  | $ | 14,828 |  |  | $ | 1,401,795 |  |  | $ | — |  |  | $ | 16,578,371 |
All mortgage-backed securities included in the above table were issued by U.S. government agencies and corporations. At September 30, 2024, all of the securities in our available for sale municipal bond portfolio were issued by the State of Texas or political subdivisions or agencies within the State of Texas, of which approximately 72.6% are either guaranteed by the Texas Permanent School Fund (“PSF”) or have been pre-refunded. Securities with limited marketability, such as stock in the Federal Reserve Bank and the Federal Home Loan Bank, are carried at cost and are reported as other available for sale securities in the table above. The carrying value of available-for-sale securities pledged to secure public funds, trust deposits, repurchase agreements and for other purposes, as required or permitted by law was $5.4 billion and $6.1 billion at September 30, 2024 and December 31, 2023, respectively. Accrued interest receivable on available-for-sale securities totaled $75.8 million and $114.9 million at September 30, 2024 and December 31, 2023, respectively, and is included in accrued interest receivable and other assets in the accompanying consolidated balance sheets. The table below summarizes, as of September 30, 2024, securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by type of security and length of time in a continuous unrealized loss position.
| Less than 12 Months |  | More than 12 Months |  | Total
| Estimated Fair Value |  | Unrealized Losses |  | Estimated Fair Value |  | Unrealized Losses |  | Estimated Fair Value |  | Unrealized Losses
U.S. Treasury | $ | — |  |  | $ | — |  |  | $ | 3,987,746 |  |  | $ | 200,877 |  |  | $ | 3,987,746 |  |  | $ | 200,877 |
Residential mortgage-backed securities | 719 |  |  | 2 |  |  | 5,093,851 |  |  | 748,155 |  |  | 5,094,570 |  |  | 748,157 |
States and political subdivisions | 325,850 |  |  | 919 |  |  | 3,633,545 |  |  | 211,096 |  |  | 3,959,395 |  |  | 212,015 |
Total | $ | 326,569 |  |  | $ | 921 |  |  | $ | 12,715,142 |  |  | $ | 1,160,128 |  |  | $ | 13,041,711 |  |  | $ | 1,161,049 |
As of September 30, 2024, no allowance for credit losses has been recognized on available for sale securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality. This is based upon our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our available for sale securities and in consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. Furthermore, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Contractual Maturities. The following table summarizes the maturity distribution schedule of securities held to maturity and securities available for sale as of September 30, 2024. Mortgage-backed securities are included in maturity categories based on their stated maturity date. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Other securities classified as available for sale include stock in the Federal Reserve Bank and the Federal Home Loan Bank, which have no maturity date. These securities have been included in the total column only.
| Within 1 Year |  | 1 - 5 Years |  | 5 - 10 Years |  | After 10 Years |  | Total
Held To Maturity |  |  |  |  |  |  |  |  |
Amortized Cost |  |  |  |  |  |  |  |  |
Residential mortgage-backed securities | $ | — |  |  | $ | 391,052 |  |  | $ | 131,149 |  |  | $ | 689,597 |  |  | $ | 1,211,798 |
States and political subdivisions | 7,608 |  |  | 17,701 |  |  | 51,795 |  |  | 2,279,626 |  |  | 2,356,730 |
Other | 1,500 |  |  | — |  |  | — |  |  | — |  |  | 1,500 |
Total | $ | 9,108 |  |  | $ | 408,753 |  |  | $ | 182,944 |  |  | $ | 2,969,223 |  |  | $ | 3,570,028 |
Estimated Fair Value |  |  |  |  |  |  |  |  |
Residential mortgage-backed securities | $ | — |  |  | $ | 362,510 |  |  | $ | 120,099 |  |  | $ | 696,937 |  |  | $ | 1,179,546 |
States and political subdivisions | 7,599 |  |  | 17,916 |  |  | 50,384 |  |  | 2,241,336 |  |  | 2,317,235 |
Other | 1,490 |  |  | — |  |  | — |  |  | — |  |  | 1,490 |
Total | $ | 9,089 |  |  | $ | 380,426 |  |  | $ | 170,483 |  |  | $ | 2,938,273 |  |  | $ | 3,498,271 |
Available For Sale |  |  |  |  |  |  |  |  |
Amortized Cost |  |  |  |  |  |  |  |  |
U. S. Treasury | $ | 1,173,908 |  |  | $ | 2,623,994 |  |  | $ | 198,031 |  |  | $ | 192,690 |  |  | $ | 4,188,623 |
Residential mortgage-backed securities | 232 |  |  | 999 |  |  | 12,927 |  |  | 7,404,639 |  |  | 7,418,797 |
States and political subdivisions | 114,631 |  |  | 240,915 |  |  | 818,886 |  |  | 3,624,915 |  |  | 4,799,347 |
Other | — |  |  | — |  |  | — |  |  | — |  |  | 43,074 |
Total | $ | 1,288,771 |  |  | $ | 2,865,908 |  |  | $ | 1,029,844 |  |  | $ | 11,222,244 |  |  | $ | 16,449,841 |
Estimated Fair Value |  |  |  |  |  |  |  |  |
U. S. Treasury | $ | 1,166,473 |  |  | $ | 2,502,945 |  |  | $ | 171,836 |  |  | $ | 146,492 |  |  | $ | 3,987,746 |
Residential mortgage-backed securities | 231 |  |  | 1,015 |  |  | 13,011 |  |  | 6,678,406 |  |  | 6,692,663 |
States and political subdivisions | 114,501 |  |  | 240,215 |  |  | 794,936 |  |  | 3,446,908 |  |  | 4,596,560 |
Other | — |  |  | — |  |  | — |  |  | — |  |  | 43,074 |
Total | $ | 1,281,205 |  |  | $ | 2,744,175 |  |  | $ | 979,783 |  |  | $ | 10,271,806 |  |  | $ | 15,320,043 |
Sales of Securities. Sales of available for sale securities were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Proceeds from sales | $ | 60,591 |  |  | $ | 360,712 |  |  | $ | 60,591 |  |  | $ | 1,904,067 |
Gross realized gains | 538 |  |  | 341 |  |  | 538 |  |  | 5,758 |
Gross realized losses | (522) |  |  | (329) |  |  | (522) |  |  | (5,692) |
Tax (expense) benefit of securities gains/losses | (3) |  |  | (3) |  |  | (3) |  |  | (14) |
Premiums and Discounts. Premium amortization and discount accretion included in interest income on securities was as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Premium amortization | $ | (16,078) |  |  | $ | (19,367) |  |  | $ | (50,601) |  |  | $ | (66,534) |
Discount accretion | 5,287 |  |  | 5,672 |  |  | 15,024 |  |  | 15,920 |
Net (premium amortization) discount accretion | $ | (10,791) |  |  | $ | (13,695) |  |  | $ | (35,577) |  |  | $ | (50,614) |
Trading Account Securities. Trading account securities, at estimated fair value, were as follows:
| September 30, 2024 |  | December 31, 2023
U.S. Treasury | $ | 32,261 |  |  | $ | 30,265 |
States and political subdivisions | 92 |  |  | 1,452 |
Total | $ | 32,353 |  |  | $ | 31,717 |
Net gains and losses on trading account securities included in other non-interest income were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Net gain on sales transactions | $ | 1,250 |  |  | $ | 1,093 |  |  | $ | 3,632 |  |  | $ | 2,964 |
Net mark-to-market gains (losses) | 16 |  |  | (25) |  |  | (85) |  |  | (52) |
Net gain (loss) on trading account securities | $ | 1,266 |  |  | $ | 1,068 |  |  | $ | 3,547 |  |  | $ | 2,912 |

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