Investment Securities

6 Months Ended

Jun. 30, 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
June 30, 2022
Investment securities available-for-sale:
U.S. treasury bonds	$	49,742	$	—	$	(2,661)	$	—	$	47,081
U.S. agency securities	750,903		4		(52,850)		—		698,057
Residential mortgage-backed securities	968,589		41		(82,941)		—		885,689
Commercial mortgage-backed securities	113,243		26		(3,720)		—		109,549
Municipal bonds	13,508		63		(638)		(1)		12,932
Corporate bonds	2,000		—		(37)		(17)		1,946

Total	$	1,897,985	$	134	$	(142,847)	$	(18)	$	1,755,254

			Gross		Gross		Estimated		Allowance
	Amortized		Unrecognized		Unrecognized		Fair		for Credit
(dollars in thousands)	Cost		Gains		Losses		Value		Losses
June 30, 2022
Investment securities held-to-maturity:


Residential mortgage-backed securities	$	785,857	$	9	$	(40,413)	$	745,453	$	—
Commercial mortgage-backed securities	94,841		—		(6,569)		88,272		—
Municipal bonds	128,509		—		(8,233)		120,276		(16)
Corporate bonds	135,251		—		(4,546)		130,705		(810)

Total	$	1,144,458	$	9	$	(59,761)	$	1,084,706	$	(826)

			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 June 30, 2022 and December 31, 2021 the Company held $34.0 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 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 the 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 of $66.2 million was included in other comprehensive loss at the time of transfer and, as of June 30, 2022, $63.5 million remains in accumulated other comprehensive loss, to be amortized out through interest income as a yield adjustment 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 $4.4 million and $6.0 million at June 30, 2022 and December 31, 2021, respectively, and accrued interest receivable on held-to-maturity securities totaled $3.7 million at June 30, 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.

The following table summarizes available for sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded, by length of time:


		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
June 30, 2022
U.S. treasury bonds	2	$	47,081	$	2,661	$	—	$	—	$	47,081	$	2,661
U. S. agency securities	83	501,147		32,941		191,362		19,909		692,509		52,850
Residential mortgage-backed securities	148	713,803		62,471		143,708		20,470		857,511		82,941
Commercial mortgage-backed securities	13	104,688		3,720		—		—		104,688		3,720
Municipal bonds	1	8,404		638		—		—		8,404		638
Corporate bonds	1	1,963		37		—		—		1,963		37
	248	$	1,377,086	$	102,468	$	335,070	$	40,379	$	1,712,156	$	142,847

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 June 30, 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 June 30, 2022, the Company determined that certain of the unrealized loss positions in available-for-sale and 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 $826 thousand for HTM securities. The weighted average duration of debt securities, which comprise 100% of total investment securities, is 5.13 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 June 30, 2022 and December 31, 2021 by contractual maturity are shown in the table below. Contractual maturities for 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.


	June 30, 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 (maturing after one year through five years)	$	49,742	$	47,081	$	49,693	$	49,458
U. S. agency securities maturing:
One year or less	530,539		492,427		425,597		421,347
After one year through five years	165,716		156,493		141,584		140,785
After five years through ten years	54,648		49,137		62,092		60,255
Residential mortgage-backed securities	968,589		885,689		1,692,773		1,677,673
Commercial mortgage-backed securities	113,243		109,549		—		—
Municipal bonds maturing:
One year or less	3,050		3,053		4,806		4,861
After one year through five years	1,416		1,476		25,457		26,816
After five years through ten years	9,042		8,404		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	2,000		1,963		54,630		54,833
After five years through ten years	—		—		55,458		55,252

Allowance for credit losses	—		(18)		—		(620)
	1,897,985		1,755,254		2,642,667		2,623,408
Investment securities held-to-maturity





Residential mortgage-backed securities	785,857		745,453		—		—
Commercial mortgage-backed securities	94,841		88,272		—		—
Municipal bonds maturing:
One year or less	666		663		—		—
After one year through five years	38,194		36,531		—		—
After five years through ten years	72,954		67,639		—		—
After ten years	16,695		15,443		—		—
Corporate bonds maturing:
One year or less	25,042		24,936		—		—
After one year through five years	74,903		72,526		—		—
After five years through ten years	35,306		33,243		—		—

Allowance for credit losses	(826)		—		—		—
	1,143,632		1,084,706		—		—
	$	3,041,617	$	2,839,960	$	2,642,667	$	2,623,408

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

For the three and six months ended June 30, 2022, net realized losses on sales of investments securities were $151 thousand and $176 thousand, respectively, on sales of investment securities. For the three and six months ended June 30, 2021, net realized gains on sales of investments securities were $318 thousand and $539 thousand, respectively. The Company received proceeds of $6.2 million and $52.0 million for the six months ended June 30, 2022 and 2021, respectively, on sales and calls of securities.

The book 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 June 30, 2022 and December 31, 2021 was $244.7 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 June 30, 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.