Investment Securities

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

5. INVESTMENT SECURITIES

The amortized cost and estimated fair value of investment securities are summarized below. Investment securities are classified as either available-for-sale securities or held-to-maturity securities. The fair value is 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. Rising interest rates over the last nine months have resulted in declines in fair value for the majority of our investment securities, as reflected in the total unrealized holding loss in the following table.


	September 30, 2022
	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	$	3,288,484	$	30	$	(448,585	)	$	2,839,929		85.49	%
CMO/REMIC		545,638		-		(89,248	)		456,390		13.74	%
Municipal bonds		27,140		47		(2,636	)		24,551		0.74	%
Other securities		954		-		-			954		0.03	%
Total available-for-sale securities	$	3,862,216	$	77	$	(540,469	)	$	3,321,824		100.00	%
Investment securities held-to-maturity:
Government agency/GSE	$	555,777	$	-	$	(113,547	)	$	442,230		21.73	%
Mortgage-backed securities		718,908		-		(111,359	)		607,549		28.10	%
CMO/REMIC		839,971		-		(117,948	)		722,023		32.84	%
Municipal bonds		443,266		8		(64,088	)		379,186		17.33	%
Total held-to-maturity securities	$	2,557,922	$	8	$	(406,942	)	$	2,150,988		100.00	%


	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	%

The following table provides information about the amount of interest income earned on investment securities which is fully taxable and which is exempt from federal income tax.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(Dollars in thousands)
Investment securities available-for-sale:
Taxable	$	18,371	$	9,630	$	47,883	$	27,824
Tax-advantaged		172		183		534		558
Total interest income from available-for-sale securities		18,543		9,813		48,417		28,382
Investment securities held-to-maturity:
Taxable		10,845		4,099		29,927		10,917
Tax-advantaged		1,989		1,089		5,284		3,341
Total interest income from held-to-maturity securities		12,834		5,188		35,211		14,258
Total interest income from investment securities	$	31,377	$	15,001	$	83,628	$	42,640

Approximately 92% of the total investment securities portfolio at September 30, 2022 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 CECL model was zero at September 30, 2022 and December 31, 2021.

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 available-for-sale ("AFS") and held-to-maturity ("HTM") securities. Management determined that there were no credit losses for securities in an unrealized loss position as of September 30, 2022 and December 31, 2021.

The following table presents the Company’s 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, 2022 and December 31, 2021.


	September 30, 2022
	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	$	1,889,658	$	(248,476	)	$	948,800	$	(200,109	)	$	2,838,458	$	(448,585	)
CMO/REMIC		59,884		(4,693	)		396,503		(84,555	)		456,387		(89,248	)
Municipal bonds		23,057		(2,636	)		-		-			23,057		(2,636	)
Total available-for-sale securities	$	1,972,599	$	(255,805	)	$	1,345,303	$	(284,664	)	$	3,317,902	$	(540,469	)
Investment securities held-to-maturity:
Government agency/GSE	$	187,453	$	(39,548	)	$	254,777	$	(73,999	)	$	442,230	$	(113,547	)
Mortgage-backed securities		505,153		(86,409	)		102,395		(24,950	)		607,548		(111,359	)
CMO/REMIC		624,470		(97,023	)		97,553		(20,925	)		722,023		(117,948	)
Municipal bonds		314,186		(49,463	)		51,016		(14,625	)		365,202		(64,088	)
Total held-to-maturity securities	$	1,631,262	$	(272,443	)	$	505,741	$	(134,499	)	$	2,137,003	$	(406,942	)


	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	)

At September 30, 2022 and December 31, 2021, investment securities having a carrying value of approximately $2.31 billion and $2.18 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, 2022, 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.


	September 30, 2022
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
			(Dollars in thousands)
Due in one year or less	$	19,914	$	19,404	$	2,842	$	2,823
Due after one year through five years		892,491		809,644		645,420		568,453
Due after five years through ten years		2,610,587		2,213,671		694,667		595,729
Due after ten years		339,224		279,105		1,214,993		983,983
Total investment securities	$	3,862,216	$	3,321,824	$	2,557,922	$	2,150,988

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, 2022.