Investment Securities

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

4. 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.


	September 30, 2021
	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	$	2,256,252	$	31,251	$	(18,430	)	$	2,269,073		77.57	%
CMO/REMIC		630,351		2,846		(8,030	)		625,167		21.37	%
Municipal bonds		28,697		1,123		-			29,820		1.02	%
Other securities		1,000		-		-			1,000		0.04	%
Total available-for-sale securities	$	2,916,300	$	35,220	$	(26,460	)	$	2,925,060		100.00	%
Investment securities held-to-maturity:
Government agency/GSE	$	585,022	$	6,785	$	(8,112	)	$	583,695		34.19	%
Mortgage-backed securities		648,613		5,450		(1,502	)		652,561		37.91	%
CMO/REMIC		264,324		1,642		(1,118	)		264,848		15.45	%
Municipal bonds		212,979		4,761		(1,614	)		216,126		12.45	%
Total held-to-maturity securities	$	1,710,938	$	18,638	$	(12,346	)	$	1,717,230		100.00	%


	December 31, 2020
	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	$	1,857,030	$	48,006	$	(101	)	$	1,904,935		79.41	%
CMO/REMIC		457,548		5,515		(249	)		462,814		19.29	%
Municipal bonds		28,707		1,578		-			30,285		1.26	%
Other securities		889		-		-			889		0.04	%
Total available-for-sale securities	$	2,344,174	$	55,099	$	(350	)	$	2,398,923		100.00	%
Investment securities held-to-maturity:
Government agency/GSE	$	98,663	$	5,877	$	-		$	104,540		17.05	%
Mortgage-backed securities		146,382		7,644		(32	)		153,994		25.30	%
CMO/REMIC		145,309		5,202		-			150,511		25.11	%
Municipal bonds		188,272		6,980		(74	)		195,178		32.54	%
Total held-to-maturity securities	$	578,626	$	25,703	$	(106	)	$	604,223		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.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(Dollars in thousands)
Investment securities available-for-sale:
Taxable	$	9,630	$	8,244	$	27,824	$	26,313
Tax-advantaged		183		203		558		632
Total interest income from available-for-sale securities		9,813		8,447		28,382		26,945
Investment securities held-to-maturity:
Taxable		4,099		2,265		10,917		7,410
Tax-advantaged		1,089		1,110		3,341		3,623
Total interest income from held-to-maturity securities		5,188		3,375		14,258		11,033
Total interest income from investment securities	$	15,001	$	11,822	$	42,640	$	37,978

The adoption of CECL did not and continues to not have a material impact on the accounting for investment securities, as approximately 95% of the total investment securities portfolio at September 30, 2021 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 remaining securities are predominately AA- or better general-obligation municipal bonds. The allowance for credit losses for held-to-maturity investment securities under the new CECL model was zero at September 30, 2021 and December 31, 2020.

We adopted ASU 2016-13 on January 1, 2020, on a modified retrospective basis. Under this ASU, once it is determined that a credit loss has occurred, an allowance for credit losses is established on our AFS and HTM securities. Management determined that there were no credit losses for securities in an unrealized loss position as of September 30, 2021 and December 31, 2020.

The following table presents the Company’s available-for-sale investment securities, by investment category, in an unrealized loss position for which an allowance for credit losses has not been recorded as of September 30, 2021 and December 31, 2020.


	September 30, 2021
	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	$	1,349,856	$	(18,243	)	$	21,273	$	(187	)	$	1,371,129	$	(18,430	)
CMO/REMIC		510,308		(7,758	)		11,162		(272	)		521,470		(8,030	)
Municipal bonds		-		-			-		-			-		-
Total available-for-sale securities	$	1,860,164	$	(26,001	)	$	32,435	$	(459	)	$	1,892,599	$	(26,460	)


	December 31, 2020
	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	$	72,219	$	(101	)	$	-	$	-	$	72,219	$	(101	)
CMO/REMIC		96,974		(249	)		-		-		96,974		(249	)
Municipal bonds		-		-			-		-		-		-
Total available-for-sale securities	$	169,193	$	(350	)	$	-	$	-	$	169,193	$	(350	)

At September 30, 2021 and December 31, 2020, investment securities having a carrying value of approximately $2.20 billion and $1.81 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 September 30, 2021, by contractual maturity, are shown in the table below. Although mortgage-backed and CMO/REMIC securities have weighted average remaining contractual maturities of approximately 22 years, 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.


	September 30, 2021
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
			(Dollars in thousands)
Due in one year or less	$	23,634	$	23,919	$	3,769	$	3,834
Due after one year through five years		1,803,142		1,820,712		270,074		276,504
Due after five years through ten years		721,776		718,076		798,605		798,051
Due after ten years		367,748		362,353		638,490		638,841
Total investment securities	$	2,916,300	$	2,925,060	$	1,710,938	$	1,717,230

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 September 30, 2021.