Securities

3 Months Ended

Mar. 31, 2025

Investments, Debt and Equity Securities [Abstract]

4. SECURITIES

The amortized cost and fair value of investment securities were as follows:


	March 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
Corporate debt securities	$	13,650	$	2,297	$	—		$	15,947
Collateralized mortgage obligations		215,807		1		(2,816	)		212,992
Mortgage-backed securities		107,762		56		(912	)		106,906
Total	$	337,219	$	2,354	$	(3,728	)	$	335,845
Held to Maturity
U.S. Government agencies	$	5,903	$	—	$	(22	)	$	5,881
States and political subdivisions		82,788		282		(2,262	)		80,808
Corporate debt securities		12,000		—		(3,360	)		8,640
Collateralized mortgage obligations		237,409		9		(16,898	)		220,520
Mortgage-backed securities		10,118,786		3,299		(1,135,330	)		8,986,755
Total	$	10,456,886	$	3,590	$	(1,157,872	)	$	9,302,604


	December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
Corporate debt securities	$	14,350	$	2,035	$	(60	)	$	16,325
Collateralized mortgage obligations		216,142		81		(3,233	)		212,990
Mortgage-backed securities		108,524		41		(920	)		107,645
Total	$	339,016	$	2,157	$	(4,213	)	$	336,960
Held to Maturity
U.S. Government agencies	$	5,861	$	—	$	(44	)	$	5,817
States and political subdivisions		98,125		220		(2,510	)		95,835
Corporate debt securities		12,000		—		(3,840	)		8,160
Collateralized mortgage obligations		232,345		—		(24,128	)		208,217
Mortgage-backed securities		10,409,133		380		(1,345,063	)		9,064,450
Total	$	10,757,464	$	600	$	(1,375,585	)	$	9,382,479

The investment securities portfolio is measured for expected credit losses by segregating the portfolio into two general classifications and applying the appropriate expected credit losses methodology. Investment securities classified as available for sale or held to maturity are evaluated for expected credit losses under FASB ASC Topic 326, “Financial Instruments – Credit Losses” (“CECL”).

Available for sale securities. For available for sale securities in an unrealized loss position, the amount of the expected credit losses recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the expected credit losses will be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the expected credit losses will be separated into the amount representing the credit-related portion of the impairment loss (“credit loss”) and the noncredit portion of the impairment loss (“noncredit portion”). The amount of the total expected credit losses related to the credit loss is determined based on the difference between the present value of cash flows expected to be collected and the amortized cost basis and such difference is recognized in earnings. The amount of the total expected credit losses related to the noncredit portion is recognized in other

comprehensive income, net of applicable taxes. The previous amortized cost basis less the expected credit losses recognized in earnings will become the new amortized cost basis of the investment.

As of March 31, 2025, management does not have the intent to sell any of the securities classified as available for sale before a recovery of cost. In addition, management believes it is more likely than not that the Company will not be required to sell any of its investment securities before a recovery of cost. The unrealized losses are largely due to changes in market interest rates and spread relationships since 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. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of March 31, 2025, management believes that there is no potential for credit losses on available for sale securities.

Held to maturity securities. The Company’s held to maturity investments include mortgage-related bonds issued by either the Government National Mortgage Corporation (“Ginnie Mae”), Federal National Mortgage Association (“Fannie Mae”) or Federal Home Loan Mortgage Corporation (“Freddie Mac”). Ginnie Mae-issued securities are explicitly guaranteed by the U.S. government, while Fannie Mae- and Freddie Mac-issued securities are fully guaranteed by those respective United States government-sponsored agencies and conditionally guaranteed by the full faith and credit of the United States. The Company’s held to maturity securities also include taxable and tax-exempt municipal securities issued primarily by school districts, utility districts and municipalities located in Texas. The Company’s investment in municipal securities is exposed to credit risk. The securities are highly rated by major rating agencies and regularly reviewed by management. A significant portion are guaranteed or insured by either the Texas Permanent School Fund, Assured Guaranty or Build America Mutual. As of March 31, 2025, the Company’s municipal securities represent 0.8% of the securities portfolio. Management has the ability and intent to hold the securities classified as held to maturity until they mature, at which time the Company will receive full value for the securities. Accordingly, as of March 31, 2025, management believes that there is no potential for material credit losses on held to maturity securities.

Securities with unrealized losses, segregated by length of time, that have been in a continuous loss position were as follows:


	March 31, 2025
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in thousands)
Available for Sale
Collateralized mortgage obligations	$	53,344	$	(244	)	$	144,740	$	(2,572	)	$	198,084	$	(2,816	)
Mortgage-backed securities		15,001		(88	)		88,888		(824	)		103,889		(912	)
Total	$	68,345	$	(332	)	$	233,628	$	(3,396	)	$	301,973	$	(3,728	)
Held to Maturity
U.S. Government agencies	$	5,881	$	(22	)	$	—	$	—		$	5,881	$	(22	)
States and political subdivisions		14,506		(92	)		34,918		(2,170	)		49,424		(2,262	)
Corporate debt securities		—		—			8,640		(3,360	)		8,640		(3,360	)
Collateralized mortgage obligations		27,629		(93	)		180,046		(16,805	)		207,675		(16,898	)
Mortgage-backed securities		121,645		(1,552	)		8,515,283		(1,133,778	)		8,636,928		(1,135,330	)
Total	$	169,661	$	(1,759	)	$	8,738,887	$	(1,156,113	)	$	8,908,548	$	(1,157,872	)


	December 31, 2024
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in thousands)
Available for Sale
Corporate debt securities	$	2,040	$	(60	)	$	—	$	—		$	2,040	$	(60	)
Collateralized mortgage obligations		47,114		(307	)		125,942		(2,926	)		173,056		(3,233	)
Mortgage-backed securities		6,837		(53	)		89,513		(867	)		96,350		(920	)
Total	$	55,991	$	(420	)	$	215,455	$	(3,793	)	$	271,446	$	(4,213	)
Held to Maturity
U.S. Government agencies	$	5,817	$	(44	)	$	—	$	—		$	5,817	$	(44	)
States and political subdivisions		23,270		(113	)		47,943		(2,397	)		71,213		(2,510	)
Corporate debt securities		—		—			8,160		(3,840	)		8,160		(3,840	)
Collateralized mortgage obligations		28,362		(663	)		179,855		(23,465	)		208,217		(24,128	)
Mortgage-backed securities		331,265		(4,647	)		8,646,541		(1,340,416	)		8,977,806		(1,345,063	)
Total	$	388,714	$	(5,467	)	$	8,882,499	$	(1,370,118	)	$	9,271,213	$	(1,375,585	)

At March 31, 2025 and December 31, 2024, there were 912 securities and 949 securities, respectively, in an unrealized loss position for 12 months or more.

The table below summarizes the amortized cost and fair value of investment securities at March 31, 2025, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations at any time with or without call or prepayment penalties.


	Held to Maturity				Available for Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	17,098	$	17,099	$	—	$	—
Due after one year through five years		42,703		42,247		—		—
Due after five years through ten years		33,464		29,331		13,650		15,947
Due after ten years		7,426		6,652		—		—
Subtotal		100,691		95,329		13,650		15,947
Mortgage-backed securities and collateralized mortgage obligations		10,356,195		9,207,275		323,569		319,898
Total	$	10,456,886	$	9,302,604	$	337,219	$	335,845

At March 31, 2025 and December 31, 2024, the Company did not own securities of any one issuer (other than the U.S. government and its agencies) for which aggregate adjusted cost exceeded 10% of the consolidated shareholders’ equity at such respective dates.

Securities with an amortized cost of $8.33 billion and $10.26 billion and a fair value of $7.38 billion and $8.91 billion at March 31, 2025 and December 31, 2024, respectively, were pledged to collateralize public deposits and for other purposes required or permitted by law.

The Company recorded no gain or loss on the sale of investment securities for the three months ended March 31, 2025 and a $298 thousand net gain on the sale of securities for the three months ended March 31, 2024. As of March 31, 2025, the Company did not own any non-agency collateralized mortgage obligations.