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Securities Available for Sale | 9 Months Ended
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Sep. 30, 2022
Debt Securities, Available-for-Sale [Abstract] |
Securities Available for Sale | Investment Securities The following is a summary of investment securities as of the dates indicated:
| September 30, 2022
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  |  |  | Fair Value
| (Dollars in thousands)
Debt securities available for sale: |  |  |  |  |  |  |  |  |
U.S. Treasury securities | $ | 3,988 |  |  | $ | — |  |  | $ | (99) |  |  |  |  | $ | 3,889 |
U.S. Government agency and U.S. Government sponsored enterprises: |  |  |  |  |  |  |  |  |
Agency securities | 4,000 |  |  | — |  |  | (125) |  |  |  |  | 3,875 |
Collateralized mortgage obligations | 974,052 |  |  | 9 |  |  | (149,734) |  |  |  |  | 824,327 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |
Residential | 555,997 |  |  | — |  |  | (99,407) |  |  |  |  | 456,590 |
Commercial | 426,483 |  |  | — |  |  | (46,868) |  |  |  |  | 379,615 |
Asset-backed securities | 153,548 |  |  | — |  |  | (9,645) |  |  |  |  | 143,903 |
Corporate securities | 23,362 |  |  | — |  |  | (4,647) |  |  |  |  | 18,715 |
Municipal securities | 180,265 |  |  | — |  |  | (17,831) |  |  |  |  | 162,434 |
Total investment securities available for sale | $ | 2,321,695 |  |  | $ | 9 |  |  | $ | (328,356) |  |  |  |  | $ | 1,993,348 |
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  |  |  | Fair Value
| (Dollars in thousands)
Debt securities held to maturity: |  |  |  |  |  |  |  |  |
U.S. Government agency and U.S. Government sponsored enterprises: |  |  |  |  |  |  |  |  |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |
Residential | $ | 159,538 |  |  | $ | — |  |  | $ | (7,840) |  |  |  |  | $ | 151,698 |
Commercial | 111,647 |  |  | — |  |  | (4,668) |  |  |  |  | 106,979 |
Total investment securities held to maturity | $ | 271,185 |  |  | $ | — |  |  | $ | (12,508) |  |  |  |  | $ | 258,677 |
| December 31, 2021
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  |  |  | Fair Value
| (Dollars in thousands)
Debt securities available for sale: |  |  |  |  |  |  |  |  |
U.S. Government agency and U.S. Government sponsored enterprises: |  |  |  |  |  |  |  |  |
Collateralized mortgage obligations | $ | 1,039,543 |  |  | $ | 3,357 |  |  | $ | (16,470) |  |  |  |  | $ | 1,026,430 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |
Residential | 769,113 |  |  | 1,985 |  |  | (11,874) |  |  |  |  | 759,224 |
Commercial | 595,659 |  |  | 9,103 |  |  | (5,360) |  |  |  |  | 599,402 |
Asset-backed securities | 153,564 |  |  | 11 |  |  | (124) |  |  |  |  | 153,451 |
Corporate securities | 23,398 |  |  | 130 |  |  | (1,044) |  |  |  |  | 22,484 |
Municipal securities | 104,371 |  |  | 1,680 |  |  | (767) |  |  |  |  | 105,284 |
Total investment securities available for sale | $ | 2,685,648 |  |  | $ | 16,266 |  |  | $ | (35,639) |  |  |  |  | $ | 2,666,275 |
During the second quarter of 2022, the Company transferred $238.9 million in fair value of debt securities from available for sale (“AFS”) to held to maturity (“HTM”). The transferred securities had an amortized cost of $275.5 million with a pre-tax net unrealized loss of $36.6 million, which was recorded as a discount subsequent to the transfer and will be amortized as an adjustment of yield. The unrealized holding loss at the date of transfer will continue to be reported, net of taxes, in accumulated other comprehensive income (“AOCI”) as a component of stockholders’ equity, and will be amortized over the remaining life of the securities as an adjustment of yield, offsetting the impact on yield of the corresponding discount amortization. The Company has the ability and intent to hold these securities to maturity. At the time of transfer, there was no previously recorded allowance for credit losses on investment securities AFS transferred to HTM. The Company has elected to exclude accrued interest from the amortized cost of its investment debt securities. Accrued interest receivable for investment debt securities at September 30, 2022 and December 31, 2021 totaled $6.5 million and $5.6 million, respectively. As of September 30, 2022 and December 31, 2021, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity. At September 30, 2022 and December 31, 2021, $230.8 million and $13.0 million in unrealized losses on investment securities AFS, net of taxes, respectively, were included in accumulated other comprehensive income (loss). For the three and nine months ended September 30, 2022 and 2021, there were no reclassifications out of accumulated other comprehensive income (loss) into earnings resulting from the sale of investments securities AFS. The following table presents a breakdown of interest income recorded for investment securities that are taxable and nontaxable.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (Dollars in thousands)
Interest income on investment securities |  |  |  |  |  |  |
Taxable | $ | 12,907 |  |  | $ | 9,025 |  |  | $ | 36,303 |  |  | $ | 24,182 |
Nontaxable | 591 |  |  | 182 |  |  | 1,159 |  |  | 653 |
Total | $ | 13,498 |  |  | $ | 9,207 |  |  | $ | 37,462 |  |  | $ | 24,835 |
The amortized cost and estimated fair value of investment securities at September 30, 2022, by contractual maturity, are presented in the table below. Collateralized mortgage obligations, mortgage-backed securities, and asset-backed securities are presented by final maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.
| Available for Sale |  | Held to Maturity
| Amortized Cost |  | Estimated Fair Value |  | Amortized Cost |  | Estimated Fair Value
| (Dollars in thousands)
Debt securities: |  |  |  |  |  |  |
Due within one year | $ | 2,616 |  |  | $ | 2,565 |  |  | $ | — |  |  | $ | — |
Due after one year through five years | 102,687 |  |  | 95,593 |  |  | — |  |  | — |
Due after five years through ten years | 159,709 |  |  | 143,728 |  |  | 36,906 |  |  | 35,677 |
Due after ten years | 2,056,683 |  |  | 1,751,462 |  |  | 234,279 |  |  | 223,000 |
Total | $ | 2,321,695 |  |  | $ | 1,993,348 |  |  | $ | 271,185 |  |  | $ | 258,677 |
Securities with carrying values of approximately $369.5 million and $362.2 million at September 30, 2022 and December 31, 2021, respectively, were pledged to secure public deposits, for various borrowings, and for other purposes as required or permitted by law. The following tables show the Company’s investments’ gross unrealized losses and estimated fair values, aggregated by investment category and the length of time that the individual securities have been in a continuous unrealized loss position as of the dates indicated. The length of time that the individual securities have been in a continuous unrealized loss position is not a factor in determining credit impairment with the adoption of current expected credit losses (“CECL”).
|  | September 30, 2022
|  | Less than 12 months |  | 12 months or longer |  | Total
Description of Securities AFS |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses
|  | (Dollars in thousands)
U.S. Treasury securities |  | 1 |  |  | $ | 3,889 |  |  | $ | (99) |  |  | — |  |  | $ | — |  |  | $ | — |  |  | 1 |  |  | $ | 3,889 |  |  | $ | (99) |
Agency securities* |  | 1 |  |  | 3,875 |  |  | (125) |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 3,875 |  |  | (125) |
Collateralized mortgage obligations* |  | 87 |  |  | 213,800 |  |  | (23,090) |  |  | 36 |  |  | 605,594 |  |  | (126,644) |  |  | 123 |  |  | 819,394 |  |  | (149,734) |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential* |  | 31 |  |  | 102,932 |  |  | (16,266) |  |  | 34 |  |  | 353,658 |  |  | (83,141) |  |  | 65 |  |  | 456,590 |  |  | (99,407) |
Commercial* |  | 42 |  |  | 259,911 |  |  | (23,430) |  |  | 13 |  |  | 119,704 |  |  | (23,438) |  |  | 55 |  |  | 379,615 |  |  | (46,868) |
Asset-backed securities |  | 9 |  |  | 71,998 |  |  | (4,759) |  |  | 9 |  |  | 71,905 |  |  | (4,886) |  |  | 18 |  |  | 143,903 |  |  | (9,645) |
Corporate securities |  | 1 |  |  | 3,533 |  |  | (467) |  |  | 5 |  |  | 15,182 |  |  | (4,180) |  |  | 6 |  |  | 18,715 |  |  | (4,647) |
Municipal securities |  | 61 |  |  | 131,751 |  |  | (13,514) |  |  | 13 |  |  | 30,683 |  |  | (4,317) |  |  | 74 |  |  | 162,434 |  |  | (17,831) |
Total |  | 233 |  |  | $ | 791,689 |  |  | $ | (81,750) |  |  | 110 |  |  | $ | 1,196,726 |  |  | $ | (246,606) |  |  | 343 |  |  | $ | 1,988,415 |  |  | $ | (328,356) |
|  | December 31, 2021
|  | Less than 12 months |  | 12 months or longer |  | Total
Description of Securities AFS |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses
|  | (Dollars in thousands)
Collateralized mortgage obligations* |  | 39 |  |  | $ | 757,799 |  |  | $ | (15,445) |  |  | 2 |  |  | $ | 37,438 |  |  | $ | (1,025) |  |  | 41 |  |  | $ | 795,237 |  |  | $ | (16,470) |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential* |  | 49 |  |  | 603,372 |  |  | (9,371) |  |  | 13 |  |  | 75,211 |  |  | (2,503) |  |  | 62 |  |  | 678,583 |  |  | (11,874) |
Commercial* |  | 24 |  |  | 214,384 |  |  | (3,339) |  |  | 4 |  |  | 57,656 |  |  | (2,021) |  |  | 28 |  |  | 272,040 |  |  | (5,360) |
Asset-backed securities |  | 13 |  |  | 115,885 |  |  | (124) |  |  | — |  |  | — |  |  | — |  |  | 13 |  |  | 115,885 |  |  | (124) |
Corporate securities |  | 4 |  |  | 14,067 |  |  | (331) |  |  | 1 |  |  | 4,288 |  |  | (713) |  |  | 5 |  |  | 18,355 |  |  | (1,044) |
Municipal securities |  | 23 |  |  | 59,403 |  |  | (767) |  |  | — |  |  | — |  |  | — |  |  | 23 |  |  | 59,403 |  |  | (767) |
Total |  | 152 |  |  | $ | 1,764,910 |  |  | $ | (29,377) |  |  | 20 |  |  | $ | 174,593 |  |  | $ | (6,262) |  |  | 172 |  |  | $ | 1,939,503 |  |  | $ | (35,639) |
__________________________________ * Investments in U.S. Government agency and U.S. Government sponsored enterprises The Company had collateralized mortgage obligations, mortgage-backed, asset-backed, corporate, and municipal securities classified as AFS that were in a continuous loss position for twelve months or longer at September 30, 2022. The collateralized mortgage obligations and mortgage-backed securities were investments in U.S. Government agency and U.S. Government sponsored enterprises and have high credit ratings (“AA” grade or better). The interest on other securities that were in an unrealized loss position have been paid as agreed, and the Company believes this will continue in the future and that the securities will be paid in full as scheduled. The market value declines for these securities were primarily due to movements in interest rates and are not reflective of management’s expectations of the Company’s ability to fully recover any unrealized losses, which may be at maturity. With the adoption of CECL, the length of time that the fair value of investment securities have been less than amortized cost is not considered when assessing for credit impairment. Allowance for Credit Losses on Securities Available for Sale—The Company evaluates investment securities AFS in unrealized loss positions for impairment related to credit losses on at least a quarterly basis. Investment securities AFS in unrealized loss positions are first assessed as to whether the Company intends to sell, or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If one of the criteria is met, the security’s amortized cost basis is written down to fair value through current earnings. For securities that do not meet these criteria, the Company evaluates whether the decline in fair value resulted from credit losses or other factors. In evaluating whether a credit loss exists, the Company has set up an initial filter for impairment triggers. Once the quantitative filters have been triggered, the securities are placed on a watch list and an additional assessment is performed to identify whether a credit impairment exists. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this assessment indicates that a credit loss exists, the Company compares the present value of cash flows expected to be collected from the security with the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. The Company did not have an allowance for credit losses on investment securities AFS as of September 30, 2022 and December 31, 2021. Approximately 85% of the Company’s investment portfolio at September 30, 2022 consisted of securities that were issued by U.S. Government agency and U.S. Government sponsored enterprises. Although a government guarantee exists on these investments, these entities are not legally backed by the full faith and credit of the federal government, and the current support is subject to a cap as part of the agreement entered into in 2008. Nonetheless, at this time the Company does not foresee any set of circumstances in which the government would not fund its commitments on these investments as the issuers are an integral part of the U.S. housing market in providing liquidity and stability. In addition, the Company had one U.S. Treasury note issued and guaranteed by the U.S. government. Therefore, the Company concluded that a zero allowance approach for these investments was appropriate. The Company also had 18 asset-backed securities, six corporate securities, and 74 municipal bonds in unrealized loss positions at September 30, 2022. The Company performed an assessment of investments in unrealized loss positions for credit impairment and concluded that no allowance for credit losses was required at September 30, 2022. Allowance for Credit Losses on Securities Held to Maturity—For each major HTM debt security type, the allowance for credit losses is estimated collectively for groups of securities with similar risk characteristics. For securities that do not share similar risk characteristics, the losses are estimated individually. Debt securities that are issued by the U.S. government or government-sponsored enterprises, are highly rated by major rating agencies, and have a long history of no credit losses are an example of such securities to which the Company applies a zero credit loss assumption. Any expected credit loss is provided through the allowance for credit losses on investment securities HTM and deducted from the amortized cost basis of the security, so that the balance sheet reflects the net amount the Company expects to collect. At September 30, 2022, all of the Company’s investment securities HTM are issued by the U.S. government or government-sponsored enterprises. The Company did not have an allowance for credit losses on investment securities HTM as of September 30, 2022.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI https://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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