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Investment Securities
12 Months Ended
Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
Note 3 – Investment Securities
 
The amortized cost and estimated fair value of AFS investment securities were as follows:
(Dollars in thousands)Amortized
Cost
Gross Unrealized
Gain
Gross Unrealized
Loss
Estimated
Fair Value
AFS investment securities:
December 31, 2022    
U.S. Treasury$49,156 $— $(2,139)$47,017 
Agency485,331 — (53,893)431,438 
Corporate586,652 — (44,104)542,548 
Collateralized mortgage obligations829,928 — (65,699)764,229 
Mortgage-backed securities953,678 — (137,897)815,781 
Total AFS investment securities$2,904,745 $— $(303,732)$2,601,013 
December 31, 2021
U.S. Treasury$57,708 $614 $(456)$57,866 
Agency440,183 2,081 (10,129)432,135 
Corporate451,621 6,096 (3,856)453,861 
Municipal bonds1,061,985 32,209 (4,281)1,089,913 
Collateralized mortgage obligations680,686 2,012 (6,055)676,643 
Mortgage-backed securities1,586,406 3,220 (26,180)1,563,446 
Total AFS investment securities$4,278,589 $46,232 $(50,957)$4,273,864 

The carrying amount and estimated fair value of HTM investment securities were as follows:
(Dollars in thousands)Amortized
Cost
Allowance for Credit LossesNet Carrying AmountGross Unrecognized
Gain
Gross Unrecognized
Loss
Estimated
Fair Value
HTM investment securities:    
December 31, 2022
Municipal bonds$1,148,055 $(43)$1,148,012 $44 $(257,430)$890,626 
Mortgage-backed securities231,692 — 231,692 — (33,621)198,071 
Other8,399 — 8,399 — — 8,399 
Total HTM investment securities$1,388,146 $(43)$1,388,103 $44 $(291,051)$1,097,096 
December 31, 2021
Municipal bonds$368,344 $(22)$368,322 $3,834 $(1,649)$370,507 
Mortgage-backed securities11,843 — 11,843 564 — 12,407 
Other1,509 — 1,509 — — 1,509 
Total HTM investment securities$381,696 $(22)$381,674 $4,398 $(1,649)$384,423 
The Company reassesses classification of certain investments as part of the ongoing review of the investment securities portfolio. During 2022, the Company transferred all of the AFS municipal bond portfolio of $831.4 million as well as mortgage-backed securities of $255.0 million to HTM securities. The Company intends and has the ability to hold the securities transferred to maturity. The transfer of these securities was accounted for at fair value on the transfer date. In total, the municipal bonds had a net carrying amount of $780.7 million with a pre-tax unrealized loss of $50.8 million, and the mortgage-backed securities had a net carrying amount of $238.8 million with a pre-tax unrealized loss of $16.2 million, and both realized losses were reflected as discounts on the date of transfer. These discounts are accreted into interest income as yield adjustments over the remaining term of the securities. The amortization of the unrealized losses reported in accumulated other comprehensive income (loss) largely offsets the effect on interest income of the accretion of the discounts. No gains or losses were recorded at the time of transfer.

Investment securities with carrying values of $195.6 million and $130.7 million as of December 31, 2022 and 2021, respectively, were pledged to secure public deposits, other borrowings, and for other purposes as required or permitted by law.
 
Unrealized Gains and Losses

Unrealized gains and losses on AFS investment securities are recognized in stockholders’ equity as accumulated other comprehensive income or loss. At December 31, 2022, the Company had a net unrealized loss on AFS investment securities of $303.7 million, or $217.4 million net of tax in accumulated other comprehensive loss, compared to a net unrealized loss of $4.7 million, or $3.3 million net of tax in accumulated other comprehensive loss, at December 31, 2021. 

For investment securities transferred from AFS to HTM, the unrealized gains and losses at the date of transfer continue to be reported in stockholders’ equity as accumulated other comprehensive income or loss and are amortized over the remaining lives of the securities with an offsetting entry to interest income as an adjustment of yield. At December 31, 2022, the unrealized loss on investment securities transferred from AFS to HTM was $66.9 million, or $47.9 million net of tax.

The table below summarizes the number, fair value, and gross unrealized holding losses of the Company’s AFS investment securities in an unrealized loss position for which an allowance for credit losses has not been recorded as of the dates indicated, aggregated by investment category and length of time in a continuous loss position.

 December 31, 2022
 Less than 12 months12 months or LongerTotal
(Dollars in thousands)NumberFair
Value
Gross
Unrealized
Losses
NumberFair
Value
Gross
Unrealized
Losses
NumberFair
Value
Gross
Unrealized
Losses
AFS investment securities:
U.S. Treasury$33,982 $(237)$13,036 $(1,902)$47,018 $(2,139)
Agency79,895 (1,265)35 351,543 (52,628)43 431,438 (53,893)
Corporate35 327,984 (20,840)21 214,565 (23,264)56 542,549 (44,104)
Collateralized mortgage obligations41 522,955 (33,318)40 241,229 (32,381)81 764,184 (65,699)
Mortgage-backed securities13 91,762 (6,987)68 724,019 (130,910)81 815,781 (137,897)
Total AFS investment securities102 $1,056,578 $(62,647)165 $1,544,392 $(241,085)267 $2,600,970 $(303,732)
 December 31, 2021
 Less than 12 months12 months or LongerTotal
(Dollars in thousands)NumberFair
Value
Gross
Unrealized
Losses
NumberFair
Value
Gross
Unrealized
Losses
NumberFair
Value
Gross
Unrealized
Losses
AFS investment securities:
U.S. Treasury$47,235 $(456)— $— $— $47,235 $(456)
Agency19 278,078 (5,634)16 119,750 (4,495)35 397,828 (10,129)
Corporate17 166,563 (849)57,274 (3,007)20 223,837 (3,856)
Municipal bonds36 277,564 (4,079)6,596 (202)38 284,160 (4,281)
Collateralized mortgage obligations26 226,763 (3,738)15 121,185 (2,317)41 347,948 (6,055)
Mortgage-backed securities103 1,306,455 (20,417)15 173,121 (5,763)118 1,479,576 (26,180)
Total AFS investment securities204 $2,302,658 $(35,173)51 $477,926 $(15,784)255 $2,780,584 $(50,957)

Allowance for Credit Losses on Investment Securities

The Company reviews individual securities classified as AFS to determine whether a decline in fair value below the amortized cost basis is deemed credit related or due to other factors such as changes in interest rates and general market conditions. An ACL on AFS investment securities is recorded when the fair value of the investment is below its amortized cost and the decline in fair value has been deemed, through the Company’s qualitative assessment, to be credit related. Non-credit related declines in fair value of AFS investment securities, which may be attributed to changes in interest rates and other market related factors, are not recorded through an ACL. Such declines are recorded as an adjustment to accumulated other comprehensive income (loss), net of tax. In the event the Company is required to sell or has the intent to sell an AFS security that has experienced a decline in fair value below its amortized cost, the Company writes the amortized cost of the security down to fair value in the current period.

Credit losses on HTM investment securities are representative of current expected credit losses that may be incurred over the life of the investment and are recorded at the time of purchase or acquisition and when the Company has designated securities as HTM.

The Company determines credit losses on both AFS and HTM investment securities through the use of a discounted cash flow approach using the security’s effective interest rate. The ACL is measured as the amount by which an investment security’s amortized cost exceeds the net present value of expected future cash flows. However, the amount of credit losses for AFS investment securities is limited to the amount of a security’s unrealized loss. The ACL is established through a charge to provision for credit losses in current period earnings.

At December 31, 2022 and December 31, 2021, the Company had an ACL of $43,000 and $22,000, respectively, for HTM investment securities classified as municipal bonds. The following table presents a rollforward by major security type of the ACL on the Company's HTM debt securities as of, and for the periods indicated:
For the Year Ended December 31, 2022
(Dollars in thousands)Balance, December 31, 2021Provision for Credit Losses Balance, December 31, 2022
HTM Investment securities:
Municipal bonds$22 $21 $43 
For the Year Ended December 31, 2021
(Dollars in thousands)Balance at December 31, 2020Provision for Credit Losses Balance, December 31, 2021
HTM Investment securities:
Municipal bonds$— $22 $22 
The Company had no ACL for AFS investment securities at December 31, 2022 and 2021. The Company performed a qualitative assessment of these investments as of December 31, 2022 and determined that the increase in unrealized losses during 2022 was the result of general market conditions, including changes in interest rates driven by the Federal Reserve’s policy to fight against inflation, and not related to a deterioration in credit quality. As of December 31, 2022, the Company has not recorded credit losses on certain AFS securities that were in an unrealized loss position due to the high quality of the investments, with investment grade ratings, and many of them are issued by U.S. government agencies. Additionally, the Company continues to receive contractual principal and interest payments in a timely manner. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell the securities prior to their anticipated recoveries. There was no provision for credit losses recognized for AFS investment securities during the years ended December 31, 2022 and 2021.

At December 31, 2022 and 2021, there were no AFS or HTM securities in nonaccrual status. All securities in the portfolio were current with their contractual principal and interest payments. At December 31, 2022 and 2021, there were no securities purchased with deterioration in credit quality since their origination. At December 31, 2022 and 2021, there were no collateral dependent AFS or HTM securities.
    
Realized Gains and Losses

The following table presents the amortized cost of securities sold with related gross realized gains, gross realized losses, and net realized (losses) gains for the periods indicated:

For the Year Ended December 31,
(Dollars in thousands)202220212020
Amortized cost of AFS investment securities sold$934,703 $884,231 $752,630 
Gross realized gains$13,645 $23,185 $15,682 
Gross realized losses(11,935)(6,279)(1,800)
Net realized gains on sales of AFS investment securities$1,710 $16,906 $13,882 
Contractual Maturities

The amortized cost and fair value of investment securities at December 31, 2022, by contractual maturity, are shown in the table below.
Due in One Year
or Less
Due after One Year
through Five Years
Due after Five Years
through Ten Years
Due after
Ten Years
Total
(Dollars in thousands)Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
AFS investment securities:          
Treasury$9,743 $9,701 $24,475 $24,280 $14,938 $13,036 $— $— $49,156 $47,017 
Agency25,575 25,281 326,466 299,758 96,148 78,702 37,142 27,697 485,331 431,438 
Corporate— — 283,332 273,415 303,320 269,133 — — 586,652 542,548 
Collateralized mortgage obligations34,473 34,192 66,535 64,986 202,571 180,391 526,349 484,660 829,928 764,229 
Mortgage-backed securities— — 34,922 34,258 519,895 454,049 398,861 327,474 953,678 815,781 
Total AFS investment securities69,791 69,174 735,730 696,697 1,136,872 995,311 962,352 839,831 2,904,745 2,601,013 
HTM investment securities:          
Municipal bonds— — 10,537 9,893 50,674 43,861 1,086,844 836,872 1,148,055 890,626 
Mortgage-backed securities— — — — — — 231,692 198,071 231,692 198,071 
Other— — — — — — 8,399 8,399 8,399 8,399 
Total HTM investment securities— — 10,537 9,893 50,674 43,861 1,326,935 1,043,342 1,388,146 1,097,096 
Total investment securities$69,791 $69,174 $746,267 $706,590 $1,187,546 $1,039,172 $2,289,287 $1,883,173 $4,292,891 $3,698,109 

FHLB, FRB, and Other Stock

The Company’s equity securities primarily consist of FHLB and FRB stock, which are considered restricted securities and held as a condition of membership of the FHLB and the Board of Governors of the Federal Reserve System. These equity securities without readily determinable fair values are carried at cost less impairment. At December 31, 2022, the Company had $27.7 million in FHLB stock, $74.8 million in FRB stock, and $17.4 million in other stock. At December 31, 2021, the Company had $17.3 million in FHLB stock, $74.5 million in FRB stock, and $25.7 million in other stock.
The Company evaluates its investments in FHLB, FRB, and other stock for impairment periodically, including their capital adequacy and overall financial condition. No impairment losses have been recorded through December 31, 2022.