Investment Securities

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

The amortized cost and estimated fair value of the Company's available-for-sale and held-to-maturity securities are summarized as follows:


			Gross		Gross		Allowance		Estimated
	Amortized		Unrealized		Unrealized		for Credit		Fair
(dollars in thousands)	Cost		Gains		Losses		Losses		Value
March 31, 2022
Investment securities available-for-sale:
U.S. treasury bonds	$	49,718	$	—	$	(2,225)	$	—	$	47,493
U.S. agency securities	744,404		106		(37,957)		—		706,553
Residential mortgage-backed securities	1,062,085		435		(58,095)		—		1,004,425
Municipal bonds	15,284		102		(206)		(1)		15,179
Corporate bonds	2,000		—		—		(17)		1,983

Total securities available-for-sale	$	1,873,491	$	643	$	(98,483)	$	(18)	$	1,775,633

			Gross		Gross		Estimated		Allowance
	Amortized		Unrecognized		Unrecognized		Fair		for Credit
(dollars in thousands)	Cost		Gains		Losses		Value		Losses
March 31, 2022
Investment securities held-to-maturity:


Residential mortgage-backed securities	$	886,526	$	—	$	(8,910)	$	877,616	$	—
Municipal bonds	128,926		—		(552)		128,374		(16)
Corporate bonds	138,764		—		(249)		138,515		(801)

Total securities held-to-maturity	$	1,154,216	$	—	$	(9,711)	$	1,144,505	$	(817)

			Gross		Gross		Allowance		Estimated
	Amortized		Unrealized		Unrealized		for Credit		Fair
(dollars in thousands)	Cost		Gains		Losses		Losses		Value
December 31, 2021
Investment securities available-for-sale:
U.S. treasury bonds	$	49,693	$	22	$	(257)	$	—	$	49,458
U.S. agency securities	629,273		736		(7,622)		—		622,387
Residential mortgage-backed securities	1,692,773		5,697		(20,797)		—		1,677,673
Municipal bonds	141,916		3,865		(347)		(3)		145,431
Corporate bonds	129,012		648		(584)		(617)		128,459
Total	$	2,642,667	$	10,968	$	(29,607)	$	(620)	$	2,623,408

In addition, at March 31, 2022 and December 31, 2021 the Company held $29.0 million and $34.2 million, respectively, in equity securities in a combination of FRB and FHLB stocks, which were required to be held for regulatory purposes and which were not marketable, and therefore are carried at cost.

The Company reassessed classification of certain investments in the first quarter of 2022 and, effective March 31, 2022, it transferred a total of $1.1 billion of residential mortgage-backed securities, municipal bonds and corporate bonds from available-for-sale to held-to-maturity securities, including $237.0 million of securities acquired in the first quarter of 2022 for which its intention to hold to maturity was finalized. At the time of transfer, the Company reversed the allowance for credit losses associated with the available-for-sale securities through provision for credit losses. The securities were transferred at their amortized cost basis, net of any remaining unrealized gain or loss reported in accumulated other comprehensive income. The related unrealized loss totaling $66.2 million included in other comprehensive loss remained in other comprehensive loss, to be amortized out of other comprehensive loss with an offsetting entry to interest income as a yield adjustment through earnings over the remaining term of the securities. No gain or loss was recorded at the time of transfer. Subsequent to transfer, the allowance for credit losses on these securities was evaluated under the accounting policy for held-to-maturity securities.

Accrued interest receivable on available-for-sale securities totaled $4.5 million and $6.0 million at March 31, 2022 and December 31, 2021, respectively, and accrued interest receivable on held-to-maturity securities totaled $4.1 million at March 31, 2022. The accrued interest on investment securities is excluded from the amortized cost of the securities and is reported in other assets in the Consolidated Balance Sheets.

Gross unrealized losses and fair value of available-for-sale securities, by length of time that individual securities have been in a continuous unrealized loss position are as follows:


		Less Than				12 Months
		12 Months				or Greater				Total
		Estimated				Estimated				Estimated
	Number of	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Securities	Value		Losses		Value		Losses		Value		Losses
March 31, 2022
U.S. treasury bonds	2	$	47,492	$	2,225	$	—	$	—	$	47,492	$	2,225
U. S. agency securities	80	469,018		22,925		194,355		15,032		663,373		37,957
Residential mortgage-backed securities	146	812,079		43,414		159,548		14,681		971,627		58,095
Municipal bonds	1	8,879		206		—		—		8,879		206

	229	$	1,337,468	$	68,770	$	353,903	$	29,713	$	1,691,371	$	98,483

December 31, 2021
U.S. treasury bond	1	$	24,593	$	257	$	—	$	—	$	24,593	$	257
U. S. agency securities	64	452,966		6,256		68,977		1,366		521,943		7,622
Residential mortgage-backed securities	153	1,327,519		16,841		108,061		3,956		1,435,580		20,797
Municipal bonds	8	20,181		347		—		—		20,181		347
Corporate bonds	13	66,051		584		—		—		66,051		584
	239	$	1,891,310	$	24,285	$	177,038	$	5,322	$	2,068,348	$	29,607

Unrealized losses at March 31, 2022 were generally attributable to changes in market interest rates and interest spread relationships since the investment securities were originally purchased, and not due to the credit quality concerns on the investment securities. However, as of March 31, 2022, the Company determined that certain of the unrealized loss positions in available-for-sale & held-to-maturity corporate and municipal bonds were evidence of expected credit losses, and therefore, an allowance for credit losses of $18 thousand was recorded for AFS securities and $817 thousand for HTM securities. The weighted average duration of debt securities, which comprise 100.0% of total investment securities, is 4.9 years. If quoted prices are not available, fair value is measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. The Company does not intend to sell the investments and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be at maturity.

The amortized cost and estimated fair value of available-for-sale and held-to-maturity securities at March 31, 2022 and December 31, 2021 by contractual maturity are shown in the table below. Contractual maturities for residential mortgage-backed securities ("MBS") are excluded as they may differ significantly from expected maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	March 31, 2022				December 31, 2021
	Amortized		Estimated		Amortized		Estimated
(dollars in thousands)	Cost (1)		Fair Value		Cost		Fair Value
Investment securities available-for-sale
U.S. treasury bonds (after one year through five years)	$	49,718	$	47,492	$	49,693	$	49,458
U. S. agency securities maturing:
One year or less	521,053		494,594		425,597		421,347
After one year through five years	168,414		160,927		131,918		140,785
After five years through ten years	54,937		51,033		71,758		60,255
Residential mortgage-backed securities	1,062,085		1,004,425		1,692,773		1,677,673
Municipal bonds maturing:
One year or less	4,797		4,815		4,806		4,861
After one year through five years	1,403		1,486		25,457		26,816
After five years through ten years	9,084		8,879		97,945		99,960
After ten years	—		—		13,708		13,797
Corporate bonds maturing:
One year or less	—		—		18,924		18,991
After one year through five years	—		—		54,630		54,833
After five years through ten years	2,000		2,000		55,458		55,252

Allowance for credit losses	—		(18)		—		(620)
	1,873,491		1,775,633		2,642,667		2,623,408
Investment securities held-to-maturity





Residential mortgage-backed securities	886,526		877,616		—		—
Municipal bonds maturing:

After one year through five years	35,460		35,460		—		—
After five years through ten years	76,633		76,410		—		—
After ten years	16,833		16,502		—		—
Corporate bonds maturing:
One year or less	18,492		18,492		—		—
After one year through five years	82,943		82,696		—		—
After five years through ten years	37,329		37,329		—		—

Allowance for credit losses	(817)		—		—		—
	1,153,399		1,144,505		—		—
	$	3,026,890	$	2,920,138	$	2,642,667	$	2,623,408

(1)Amortized cost for investment securities held-to-maturity is presented net of the allowance for credit losses.

For the three months ended March 31, 2022, net realized losses on sales of investments securities were $25 thousand on sales of investment securities. For the three months ended March 31, 2021, net realized gains on sales of investments securities were $221 thousand. The Company received proceeds of $6.2 million and $28.5 million for the three months ended March 31, 2022 and 2021, respectively, on sales and calls of securities.

The carrying value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase, and certain lines of credit with correspondent banks at March 31, 2022 and December 31, 2021 was $251.0 million and $261.0 million, respectively, which were well in excess of required amounts in order to operationally provide significant reserve amounts for new business. As of March 31, 2022 and December 31, 2021, there were no holdings of securities of any one issuer, other than the U.S. Government and U.S. agency securities, which exceeded ten percent of shareholders' equity.