Investment Securities

3 Months Ended

Mar. 31, 2024

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.


	March 31, 2024
	Amortized Cost		Gross Unrealized Holding Gain		Gross Unrealized Holding Loss			Fair Value		Total Percent
	(Dollars in thousands)
Investment securities available-for-sale:
Government agency/GSE	$	32,644	$	—	$	(4	)	$	32,640		1.15	%
Mortgage-backed securities		2,766,695		25		(367,613	)		2,399,107		84.56	%
CMO/REMIC		495,576		—		(116,682	)		378,894		13.35	%
Municipal bonds		26,480		36		(1,372	)		25,144		0.89	%
Other securities		1,315		—		—			1,315		0.05	%
Unallocated portfolio layer fair value basis adjustments (1)		10,893		—		(10,893	)		—		0.00	%
Total available-for-sale securities	$	3,333,603	$	61	$	(496,564	)	$	2,837,100		100.00	%
Investment securities held-to-maturity:
Government agency/GSE	$	526,752	$	—	$	(103,672	)	$	423,080		21.46	%
Mortgage-backed securities		652,864		—		(109,336	)		543,528		26.60	%
CMO/REMIC		798,226		—		(162,528	)		635,698		32.52	%
Municipal bonds		465,289		2,223		(37,242	)		430,270		18.96	%
Other securities		11,455		—		—			11,455		0.46	%
Total held-to-maturity securities	$	2,454,586	$	2,223	$	(412,778	)	$	2,044,031		100.00	%


	December 31, 2023
	Amortized Cost			Gross Unrealized Holding Gain		Gross Unrealized Holding Loss			Fair Value		Total Percent
	(Dollars in thousands)
Investment securities available-for-sale:
Government agency/GSE	$	32,229		$	24	$	—		$	32,253		1.09	%
Mortgage-backed securities		2,843,744			42		(336,107	)		2,507,679		84.83	%
CMO/REMIC		502,234			—		(112,872	)		389,362		13.17	%
Municipal bonds		26,477			46		(888	)		25,635		0.87	%
Other securities		1,196			—		—			1,196		0.04	%
Unallocated portfolio layer fair value basis adjustments (1)		(6,938	)		6,938		—			—		0.00	%
Total available-for-sale securities	$	3,398,942		$	7,050	$	(449,867	)	$	2,956,125		100.00	%

Investment securities held-to-maturity:
Government agency/GSE	$	530,656		$	—	$	(97,972	)	$	432,684		21.53	%
Mortgage-backed securities		663,090			—		(97,436	)		565,654		26.90	%
CMO/REMIC		802,892			—		(156,155	)		646,737		32.58	%
Municipal bonds		467,972			3,438		(33,604	)		437,806		18.99	%
Total held-to-maturity securities	$	2,464,610		$	3,438	$	(385,167	)	$	2,082,881		100.00	%

(1)

Represents the amount of portfolio layer method basis adjustments related to AFS MBS securities hedged in a closed portfolio. Under U.S. GAAP, portfolio layer method basis adjustments are not allocated to individual securities, however the amounts impact the unrealized gains or losses for the individual securities being hedged. Refer to Note 3 and Note 9 for additional information.

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
	March 31,
	2024		2023
	(Dollars in thousands)
Investment securities available-for-sale:
Taxable	$	21,280	$	19,428
Tax-advantaged		166		168
Total interest income from available-for-sale securities		21,446		19,596
Investment securities held-to-maturity:
Taxable		10,984		11,507
Tax-advantaged		2,418		2,449
Total interest income from held-to-maturity securities		13,402		13,956
Total interest income from investment securities	$	34,848	$	33,552

Approximately 90% of the total investment securities portfolio at March 31, 2024 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 March 31, 2024 and December 31, 2023.

The following table presents the Company’s available-for-sale and held-to-maturity investment securities, by investment category, in an unrealized loss position for which an allowance for credit losses has not been recorded as of March 31, 2024 and December 31, 2023.


	March 31, 2024
	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:
Government agency/GSE	$	32,640	$	(4	)	$	—	$	—		$	32,640	$	(4	)
Mortgage-backed securities		22		—			2,397,803		(367,613	)		2,397,825		(367,613	)
CMO/REMIC		—		—			378,893		(116,682	)		378,893		(116,682	)
Municipal bonds		6,525		(145	)		17,743		(1,227	)		24,268		(1,372	)
Total available-for-sale securities	$	39,187	$	(149	)	$	2,794,439	$	(485,522	)	$	2,833,626	$	(485,671	)
Investment securities held-to-maturity:
Government agency/GSE	$	—	$	—		$	423,080	$	(103,672	)	$	423,080	$	(103,672	)
Mortgage-backed securities		—		—			543,529		(109,336	)		543,529		(109,336	)
CMO/REMIC		—		—			635,698		(162,528	)		635,698		(162,528	)
Municipal bonds		46,060		(649	)		289,996		(36,593	)		336,056		(37,242	)
Total held-to-maturity securities	$	46,060	$	(649	)	$	1,892,303	$	(412,129	)	$	1,938,363	$	(412,778	)


	December 31, 2023
	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:
Government agency/GSE	$	—	$	—		$	—	$	—		$	—	$	—
Mortgage-backed securities		48		—			2,506,162		(336,107	)		2,506,210		(336,107	)
CMO/REMIC		—		—			389,359		(112,872	)		389,359		(112,872	)
Municipal bonds		3,286		(17	)		18,105		(871	)		21,391		(888	)
Total available-for-sale securities	$	3,334	$	(17	)	$	2,913,626	$	(449,850	)	$	2,916,960	$	(449,867	)

Investment securities held-to-maturity:
Government agency/GSE	$	—	$	—		$	432,684	$	(97,972	)	$	432,684	$	(97,972	)
Mortgage-backed securities		—		—			565,655		(97,436	)		565,655		(97,436	)
CMO/REMIC		—		—			646,737		(156,155	)		646,737		(156,155	)
Municipal bonds		20,609		(200	)		293,467		(33,404	)		314,076		(33,604	)
Total held-to-maturity securities	$	20,609	$	(200	)	$	1,938,543	$	(384,967	)	$	1,959,152	$	(385,167	)

At March 31, 2024 investment securities with carrying values of $2.51 billion were pledged to secure various types of deposits, including $1.37 billion of public funds. In addition, investment securities with carrying values of $2.75 billion were pledged to secure $372.3 million for repurchase agreements, $1.88 billion for outstanding borrowings, $446 million for unused borrowing capacity and approximately $51 million for other purposes as required or permitted by law.

At December 31, 2023, investment securities with carrying values of $2.26 billion were pledged to secure various types of deposits, including $1.38 billion of public funds. In addition, investment securities with carrying values of $3.02 billion were pledged to secure $372.5 million for repurchase agreements, $1.8 billion for outstanding borrowings, $796 million for unused borrowing capacity and approximately $51 million for other purposes as required or permitted by law.

The amortized cost and fair value of debt securities at March 31, 2024, 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.


	March 31, 2024
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
			(Dollars in thousands)
Due in one year or less	$	36,409	$	36,328	$	3,565	$	3,554
Due after one year through five years		264,422		241,797		52,525		50,505
Due after five years through ten years		2,519,475		2,164,588		317,491		280,289
Due after ten years		513,297		394,387		2,081,005		1,709,683
Total investment securities	$	3,333,603	$	2,837,100	$	2,454,586	$	2,044,031

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 March 31, 2024.