Investment Securities

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

. 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, 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	$	2,553,246	$	25,873	$	(15,905	)	$	2,563,214		80.50	%
CMO/REMIC		602,555		1,586		(13,983	)		590,158		18.53	%
Municipal bonds		28,365		1,103		-			29,468		0.93	%
Other securities		1,083		-		-			1,083		0.04	%
Total available-for-sale securities	$	3,185,249	$	28,562	$	(29,888	)	$	3,183,923		100.00	%
Investment securities held-to-maturity:
Government agency/GSE	$	576,899	$	5,907	$	(7,312	)	$	575,494		29.95	%
Mortgage-backed securities		647,390		4,109		(6,106	)		645,393		33.61	%
CMO/REMIC		490,670		596		(5,030	)		486,236		25.48	%
Municipal bonds		211,011		4,714		(1,155	)		214,570		10.96	%
Total held-to-maturity securities	$	1,925,970	$	15,326	$	(19,603	)	$	1,921,693		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.


	Year Ended December 31,
	2021		2020		2019
	(Dollars in thousands)
Investment securities available-for-sale:
Taxable	$	37,532	$	35,129	$	38,189
Tax-advantaged		741		923		1,141
Total interest income from available-for-sale securities		38,273		36,052		39,330
Investment securities held-to-maturity:
Taxable		17,747		9,542		11,498
Tax-advantaged		4,428		4,681		5,890
Total interest income from held-to-maturity securities		22,175		14,223		17,388
Total interest income from investment securities	$	60,448	$	50,275	$	56,718

The adoption of CECL did not have a material impact on the accounting for investment securities, as approximately 95% of the total investment securities portfolio at December 31, 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 December 31, 2021.

We adopted ASU 2016-13 on January 1, 2020, on a prospective 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. Prior to adoption of this standard, when a decline in fair value of a debt security was determined to be other than temporary, an impairment charge for the credit component was recorded, and a new cost basis in the investment was established. Management determined that there were no credit losses for securities in an unrealized loss position for 2021 and 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 December 31, 2021.


	December 31, 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	$	1,465,647	$	(15,099	)	$	44,244	$	(806	)	$	1,509,891	$	(15,905	)
CMO/REMIC		450,393		(11,515	)		53,745		(2,468	)		504,138		(13,983	)
Municipal bonds		-		-			-		-			-		-
Total available-for-sale securities	$	1,916,040	$	(26,614	)	$	97,989	$	(3,274	)	$	2,014,029	$	(29,888	)


	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	)

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. Interest 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 bonds.

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 4.7 years. Of the total MBS/CMO, 100% 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 impairments for the year ended December 31, 2021 and 2020.

Municipal Bonds — The majority of the Company’s municipal bonds, with maturities of approximately 10.7 years, represented approximately 5% 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 were not considered impaired for the year ended December 31, 2021 and December 31, 2020.

At December 31, 2021 and 2020, investment securities having a carrying value of approximately $2.18 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 December 31, 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 23 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.


	December 31, 2021
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
			(Dollars in thousands)
Due in one year or less	$	18,887	$	19,073	$	5,586	$	5,701
Due after one year through five years		1,731,066		1,744,199		402,803		405,175
Due after five years through ten years		1,079,941		1,074,606		901,078		893,932
Due after ten years		355,355		346,045		616,503		616,885
Total investment securities	$	3,185,249	$	3,183,923	$	1,925,970	$	1,921,693

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, 2021.