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Investment Securities
 6 Months Ended
Jun. 30, 2024
Investments, Debt and Equity Securities [Abstract]  
Investment Securities

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.

 

 

June 30, 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

$

33,496

 

 

$

—

 

 

$

(19

)

 

$

33,477

 

 

 

1.22

%

Mortgage-backed securities

 

2,682,003

 

 

 

7

 

 

 

(365,935

)

 

 

2,316,075

 

 

 

84.35

%

CMO/REMIC

 

490,390

 

 

 

—

 

 

 

(119,899

)

 

 

370,491

 

 

 

13.49

%

Municipal bonds

 

26,484

 

 

 

27

 

 

 

(2,085

)

 

 

24,426

 

 

 

0.89

%

Other securities

 

1,327

 

 

 

—

 

 

 

—

 

 

 

1,327

 

 

 

0.05

%

Unallocated portfolio layer fair value basis adjustments (1)

 

13,728

 

 

 

—

 

 

 

(13,728

)

 

 

—

 

 

 

0.00

%

Total available-for-sale securities

$

3,247,428

 

 

$

34

 

 

$

(501,666

)

 

$

2,745,796

 

 

 

100.00

%

Investment securities held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government agency/GSE

$

522,678

 

 

$

—

 

 

$

(105,876

)

 

$

416,802

 

 

 

21.51

%

Mortgage-backed securities

 

639,889

 

 

 

—

 

 

 

(111,532

)

 

 

528,356

 

 

 

26.34

%

CMO/REMIC

 

793,753

 

 

 

—

 

 

 

(167,006

)

 

 

626,747

 

 

 

32.67

%

Municipal bonds

 

462,111

 

 

 

1,477

 

 

 

(40,858

)

 

 

422,730

 

 

 

19.02

%

Other securities (2)

 

11,455

 

 

 

—

 

 

 

—

 

 

 

11,455

 

 

 

0.46

%

Total held-to-maturity securities

$

2,429,886

 

 

$

1,477

 

 

$

(425,272

)

 

$

2,006,090

 

 

 

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.
(2)
Represents Commercial Property Assessed Clean Energy ("C-PACE") bonds.

 

 

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

%

 

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

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

(Dollars in thousands)

 

Investment securities available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

Taxable

$

21,057

 

 

$

19,187

 

 

$

42,337

 

 

$

38,615

 

Tax-advantaged

 

168

 

 

 

169

 

 

 

334

 

 

 

337

 

Total interest income from available-for-sale securities

 

21,225

 

 

 

19,356

 

 

 

42,671

 

 

 

38,952

 

Investment securities held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

11,050

 

 

 

11,293

 

 

 

22,034

 

 

 

22,800

 

Tax-advantaged

 

2,395

 

 

 

2,447

 

 

 

4,813

 

 

 

4,896

 

Total interest income from held-to-maturity securities

 

13,445

 

 

 

13,740

 

 

 

26,847

 

 

 

27,696

 

Total interest income from investment securities

$

34,670

 

 

$

33,096

 

 

$

69,518

 

 

$

66,648

 

 

Approximately 90% of the total investment securities portfolio at June 30, 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 June 30, 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 June 30, 2024 and December 31, 2023.

 

 

June 30, 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

$

28,599

 

 

$

(19

)

 

$

—

 

 

$

—

 

 

$

28,599

 

 

$

(19

)

Mortgage-backed securities

 

248

 

 

 

(1

)

 

 

2,314,832

 

 

 

(365,934

)

 

 

2,315,080

 

 

 

(365,935

)

CMO/REMIC

 

1

 

 

 

(0

)

 

 

370,490

 

 

 

(119,899

)

 

 

370,491

 

 

 

(119,899

)

Municipal bonds

 

3,188

 

 

 

(183

)

 

 

20,362

 

 

 

(1,902

)

 

 

23,550

 

 

 

(2,085

)

Total available-for-sale securities

$

32,036

 

 

$

(203

)

 

$

2,705,684

 

 

$

(487,735

)

 

$

2,737,720

 

 

$

(487,938

)

Investment securities held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government agency/GSE

$

—

 

 

$

—

 

 

$

416,802

 

 

$

(105,876

)

 

$

416,802

 

 

$

(105,876

)

Mortgage-backed securities

 

—

 

 

 

—

 

 

 

528,357

 

 

 

(111,532

)

 

 

528,357

 

 

 

(111,532

)

CMO/REMIC

 

—

 

 

 

—

 

 

 

626,747

 

 

 

(167,006

)

 

 

626,747

 

 

 

(167,006

)

Municipal bonds

 

45,913

 

 

 

(737

)

 

 

300,985

 

 

 

(40,121

)

 

 

346,898

 

 

 

(40,858

)

Total held-to-maturity securities

$

45,913

 

 

$

(737

)

 

$

1,872,891

 

 

$

(424,535

)

 

$

1,918,804

 

 

$

(425,272

)

 

 

 

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 June 30, 2024, investment securities with carrying values of $2.52 billion were pledged to secure various types of deposits, including $1.41 billion of public funds. In addition, investment securities with carrying values of $2.18 billion were pledged to secure $363.3 million for repurchase agreements, $1.35 billion for outstanding borrowings, $427.4 million for unused borrowing capacity and approximately $46 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 June 30, 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.

 

 

June 30, 2024

 

 

Available-for-sale

 

 

Held-to-maturity

 

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

Due in one year or less

$

43,972

 

 

$

43,677

 

 

$

10,613

 

 

$

10,341

 

Due after one year through five years

 

240,902

 

 

 

216,478

 

 

 

48,043

 

 

 

45,765

 

Due after five years through ten years

 

2,470,052

 

 

 

2,114,826

 

 

 

323,158

 

 

 

280,962

 

Due after ten years

 

492,502

 

 

 

370,815

 

 

 

2,048,072

 

 

 

1,669,022

 

Total investment securities

$

3,247,428

 

 

$

2,745,796

 

 

$

2,429,886

 

 

$

2,006,090