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Investment Securities
 12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
5.
INVESTMENT SECURITIES
The amortized cost and estimated fair value of investment securities are summarized below. The majority of securities held are
available-for-sale
securities with fair value based on quoted prices for similar assets in active markets or quoted prices for identical assets in markets that are not active. Estimated fair values were obtained from an independent pricing service based upon market quotes.
                                         
 
December 31, 2019
 
 
  Amortized  
Cost
 
  
Gross
  Unrealized  
Holding
Gain
 
  
Gross
  Unrealized  
Holding Loss
 
  
Fair Value
 
  
Total Percent
 
 
(Dollars in thousands)
 
Investment securities
available-for-sale:
   
     
     
     
     
 
Mortgage-backed securities
   $
 
 
 
1,185,757
    $
21,306
    $
(750
)   $
1,206,313
     
69.32
 %
CMO/REMIC
    
493,214
     
1,392
     
(896
)    
493,710
     
28.37
 %
Municipal bonds
   
38,506
     
850
     
(2
)    
39,354
     
2.26
 %
Other securities
   
880
     
-
     
-
     
880
     
0.05
 %
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
available-for-sale
securities
   $
1,718,357
    $
23,548
    $
(1,648
)   $
 
 
 
1,740,257
     
      100.00
 %
                                         
Investment securities
held-to-maturity:
   
     
     
     
     
 
Government agency/GSE
  $
117,366
    $
2,280
    $
(657
)   $
118,989
     
17.40
 %
Mortgage-backed securities
    
168,479
     
2,083
     
(54
)    
170,508
     
24.98
 %
CMO/REMIC
    
192,548
     
-
     
(2,458
)    
190,090
     
28.55
 %
Municipal bonds
   
196,059
     
3,867
     
(565
)    
199,361
     
29.07
 %
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
held-to-maturity
securities
   $
674,452
    $
8,230
    $
(3,734
)   $
678,948
     
100.00
 %
                                         
 
 
 
 
 
 
 
 
 
 
 
 
                                         
 
December 31, 2018
 
 
   Amortized   
Cost
 
  
Gross
  Unrealized  
Holding
Gain
 
  
Gross
  Unrealized  
Holding Loss
 
  
Fair Value
 
  
Total
Percent
 
 
(Dollars in thousands)
 
Investment securities
available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
$
1,494,106
 
 
$
1,348
 
 
$
(20,946
)
 
$
1,474,508
 
 
 
85.03
%
CMO/REMIC
 
 
217,223
 
 
 
353
 
 
 
(3,525
)
 
 
214,051
 
 
 
12.34
%
Municipal bonds
 
 
45,621
 
 
 
332
 
 
 
(1,143
)
 
 
44,810
 
 
 
2.59
%
Other securities
 
 
716
 
 
 
-
 
 
 
-
 
 
 
716
 
 
 
0.04
%
Total
available-for-sale
securities
 
$
   1,757,666
 
 
$
2,033
 
 
$
(25,614
)
 
$
1,734,085
 
 
 
100.00
%
Investment securities
held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency/GSE
 
$
138,274
 
 
$
572
 
 
$
(2,622
)
 
$
136,224
 
 
 
18.57
%
Mortgage-backed securities
 
 
153,874
 
 
 
-
 
 
 
(3,140
)
 
 
150,734
 
 
 
20.67
%
CMO/REMIC
 
 
215,336
 
 
 
-
 
 
 
(12,081
)
 
 
203,255
 
 
 
28.93
%
Municipal bonds
 
 
236,956
 
 
 
556
 
 
 
(6,188
)
 
 
231,324
 
 
 
31.83
%
Total
held-to-maturity
securities
 
$
744,440
 
 
$
1,128
 
 
$
(24,031
)
 
$
721,537
 
 
 
100.00
%
 
 
 
 
 
 
 
 
 
 
 
 
The following table provides information about the amount of interest income earned on investment securities which is fully taxable and which is exempt from regular federal income tax.
 
  
Year Ended December 31,
  
  
2019
 
  
2018
 
  
2017
 
  
(Dollars in thousands)
 
Investment securities
available-for-sale:
   
     
     
 
Taxable
  $
  38,189
    $
     44,423
    $
     47,596
 
Tax-advantaged
   
1,141
     
1,565
     
2,182
 
   
 
 
    
 
 
    
 
 
  
Total interest income from
available-for-sale
securities
    
39,330
     
45,988
     
49,778
 
   
 
 
    
 
 
    
 
 
  
Investment securities
held-to-maturity:
   
     
     
 
Taxable
   
11,498
     
11,848
     
12,558
 
Tax-advantaged
   
5,890
     
7,053
     
8,457
 
   
 
 
    
 
 
    
 
 
  
Total interest income from
held-to-maturity
securities
    
17,388
     
18,901
     
21,015
 
   
 
 
    
 
 
    
 
 
  
Total interest income from investment securities
  $
     56,718
    $
64,889
    $
70,793
 
                         
Approximately 90% of the total investment securities portfolio at December 31, 2019 represents securities issued by the U.S government or U.S. government-sponsored enterprises, with the implied guarantee of payment of principal and interest.
The tables below show the Company’s investment securities’ gross unrealized losses and fair value by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2019 and 2018. Management has reviewed individual securities to determine whether a decline in fair value below the amortized cost basis is other-than-temporary. The unrealized losses on these securities were primarily attributed to changes in interest rates. The issuers of these securities have not, to our knowledge, evidenced any cause for default on these securities. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated. However, we have the ability and the intention to hold these securities until their fair values recover to cost or maturity. As such, management does not deem these securities to be OTTI.
 
December 31, 2019
 
  
Less Than 12 Months
   
12 Months or Longer
   
Total
 
  
  Fair Value  
 
  
Gross
  Unrealized  
Holding
Losses
 
  
  Fair Value  
 
  
Gross
  Unrealized  
Holding
Losses
 
  
  Fair Value  
 
  
Gross
  Unrealized  
Holding
Losses
 
  
(Dollars in thousands)
 
Investment securities
available-for-sale:
   
     
     
     
     
     
 
Mortgage-backed securities
   $
20,289
     $
(6
 )   $
97,964
     $
(744
 )   $
   
118,253
     $
(750
 )
CMO/REMIC
    
177,517
      
(705
 )    
34,565
      
(191
 )    
212,082
      
(896
 )
Municipal bonds
   
-
      
-
      
563
      
(2
 )    
563
      
(2
 )
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
available-for-sale
securities
   $
197,806
     $
(711
 )   $
133,092
     $
(937
 )   $
330,898
     $
(1,648
 )
                                                 
Investment securities
held-to-maturity:
   
     
     
     
     
     
 
Government agency/GSE
   $
28,359
     $
(252
 )   $
19,405
     $
(405
 )   $
47,764
     $
(657
 )
Mortgage-backed securities
    
10,411
      
(54
 )    
-
      
-
      
10,411
      
(54
 )
CMO/REMIC
    
23,897
      
(104
 )    
166,193
      
(2,354
 )    
190,090
      
(2,458
 )
Municipal bonds
   
7,583
      
(32
 )    
29,981
      
(533
 )    
37,564
      
(565
 )
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
held-to-maturity
securities
   $
70,250
     $
(442
 )   $
215,579
     $
(3,292
 )   $
285,829
     $
(3,734
 )
                                                 
                                                 
  
December 31, 2018
 
  
Less Than 12 Months
   
12 Months or Longer
   
Total
 
  
  Fair Value  
 
  
Gross
  Unrealized  
Holding
Losses
 
  
  Fair Value  
 
  
Gross
  Unrealized
Holding
Losses
 
  
  Fair
Value  
 
  
Gross
  Unrealized  
Holding
Losses
 
  
(Dollars in thousands)
 
Investment securities
available-for-sale:
   
 
      
 
      
 
      
 
      
 
      
 
  
Mortgage-backed securities
   $
692,311
     $
(4,864
 )   $
593,367
     $
(16,082
 )   $
1,285,678
     $
(20,946
 )
CMO/REMIC
    
36,582
      
(365
 )    
135,062
      
(3,160
 )    
171,644
      
(3,525
 )
Municipal bonds
    
9,568
      
(188
 )    
14,181
      
(955
 )    
23,749
      
(1,143
 )
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
available-for-sale
securities
   $
738,461
     $
(5,417
 )   $
742,610
     $
(20,197
 )   $
1,481,071
     $
(25,614
 )
                                                 
Investment securities
held-to-maturity:
   
 
      
 
      
 
      
 
      
 
      
 
  
Government agency/GSE
   $
7,479
      
$ (15
 )   $
54,944
     $
(2,607
 )   $
62,423
     $
(2,622
 )
Mortgage-backed securities
    
59,871
      
(484
 )    
90,863
      
(2,656
 )    
150,734
      
(3,140
 )
CMO/REMIC
    
-
      
-
      
203,254
      
(12,081
 )    
203,254
      
(12,081
 )
Municipal bonds
    
70,989
      
(778
 )    
77,723
      
(5,410
 )    
148,712
      
(6,188
 )
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
held-to-maturity
securities
   $
138,339
     $
(1,277
 )   $
426,784
     $
(22,754
 )   $
565,123
     $
(24,031
 )
                                                 
The following summarizes our analysis of these securities and the unrealized losses.
Government Agency & Government-Sponsored Enterprise (“GSE”) — The government agency bonds are backed by the full faith and credit of agencies of the U.S. Government. While the Government-Sponsored Enterprise bonds are not expressly guaranteed by the U.S. Government, they are currently being supported by the U.S. Government under a conservatorship arrangement.
 
These securities are bullet securities, that is, they have a defined maturity date on which the principal is paid. The contractual term of these investments provides that the Company will receive the face value of the bond at maturity which will equal the amortized cost of the bond.
I
nterest is received throughout the life of the security. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the bond
s
.
Mortgage-Backed Securities (“MBS”) and CMO/REMIC — Most of the Company’s mortgage-backed and CMO/REMIC securities are issued by Government Agencies or Government-Sponsored Enterprises such as Ginnie Mae, Fannie Mae and Freddie Mac. These securities are collateralized or backed by the underlying residential or commercial mortgages. All mortgage-backed securities are considered to be rated investment grade with a weighted average life of approximately 3.5 years. Of the total MBS/CMO, 100.00% have the implied guarantee of U.S. Government-Sponsored Agencies and Enterprises. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the bonds. There were
no
credit-related OTTI recognized in earnings for the years ended December 31, 2019 and 2018.
Municipal Bonds — The majority of the Company’s municipal bonds, with maturities of approximately 9.0 years, represented approximately 10% of the total investment portfolio and are predominately AA or higher rated securities. The Company diversifies its holdings by owning selections of securities from different issuers and by holding securities from geographically diversified municipal issuers, thus reducing the Company’s exposure to any single adverse event. The decline in fair value is primarily due to the changes in interest rates. Since the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized costs, these investments are not considered OTTI at December 31, 2019.
At December 31, 2019 and 2018, investment securities having a carrying value of approximately $1.64 billion and $1.66 billion, respectively, were pledged to secure public deposits, short and long-term borrowings, and for other purposes as required or permitted by law.
The amortized cost and fair value of debt securities at December 31, 2019, by contractual maturity, are shown in the table below. Although mortgage-backed securities and CMO/REMIC have contractual maturities through 205
8
, expected maturities will differ from contractual maturities because borrowers may have the right to prepay such obligations without penalty.
 
Mortgage-backed and CMO/REMIC securities are included in maturity categories based upon estimated average lives which incorporate estimated prepayment speeds.
  
December 31, 2019
 
  
Available-for-sale
   
Held-to-maturity
 
  
    Amortized    
Cost
 
  
    Fair Value    
 
  
    Amortized    
Cost
 
  
    Fair Value    
 
  
(Dollars in thousands)
 
Due in one year or less
  $
  16,048
    $
  16,175
    $
  -
    $
  -
 
Due after one year through five years
   
1,414,580
     
1,435,647
     
339,132
     
338,758
 
Due after five years through ten years
   
266,108
     
266,349
     
140,143
     
141,903
 
Due after ten years
   
21,621
     
22,086
     
195,177
     
198,287
 
   
 
 
    
 
 
    
 
 
    
 
 
  
Total investment securities
  $
  1,718,357
    $
  1,740,257
    $
  674,452
    $
  678,948
 
                                 
The investment in FHLB stock is periodically evaluated for impairment based on, among other things, the capital adequacy of the FHLB and its overall financial condition.
No
impairment losses have been recorded through December 31, 2019.