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Securities
12 Months Ended
Dec. 31, 2022
Investments Debt And Equity Securities [Abstract]  
Securities

4. SECURITIES

The amortized cost and fair value of investment securities were as follows:

 

 

 

December 31, 2022

 

 

 

Amortized Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair Value

 

 

 

(Dollars in thousands)

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

$

359,251

 

 

$

1,190

 

 

$

(3,039

)

 

$

357,402

 

Mortgage-backed securities

 

 

101,647

 

 

 

93

 

 

 

(2,640

)

 

 

99,100

 

Total

 

$

460,898

 

 

$

1,283

 

 

$

(5,679

)

 

$

456,502

 

Held to Maturity

 

 

 

 

 

 

 

 

 

 

 

 

States and political subdivisions

 

$

122,361

 

 

$

868

 

 

$

(3,255

)

 

$

119,974

 

Corporate debt securities

 

 

12,000

 

 

 

 

 

 

(2,520

)

 

 

9,480

 

Collateralized mortgage obligations

 

 

271,727

 

 

 

377

 

 

 

(22,922

)

 

 

249,182

 

Mortgage-backed securities

 

 

13,613,415

 

 

 

2,575

 

 

 

(1,607,501

)

 

 

12,008,489

 

Total

 

$

14,019,503

 

 

$

3,820

 

 

$

(1,636,198

)

 

$

12,387,125

 

 

 

 

 

December 31, 2021

 

 

 

Amortized Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair Value

 

 

 

(Dollars in thousands)

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

$

483,761

 

 

$

1,942

 

 

$

(32

)

 

$

485,671

 

Mortgage-backed securities

 

 

28,881

 

 

 

550

 

 

 

(170

)

 

 

29,261

 

Total

 

$

512,642

 

 

$

2,492

 

 

$

(202

)

 

$

514,932

 

Held to Maturity

 

 

 

 

 

 

 

 

 

 

 

 

States and political subdivisions

 

$

132,620

 

 

$

5,968

 

 

$

(114

)

 

$

138,474

 

Collateralized mortgage obligations

 

 

39,675

 

 

 

483

 

 

 

(78

)

 

 

40,080

 

Mortgage-backed securities

 

 

12,131,674

 

 

 

87,967

 

 

 

(146,982

)

 

 

12,072,659

 

Total

 

$

12,303,969

 

 

$

94,418

 

 

$

(147,174

)

 

$

12,251,213

 

 

The investment securities portfolio is measured for expected credit losses by segregating the portfolio into two general segments and applying the appropriate expected credit losses methodology. Investment securities classified as available for sale or held to maturity are evaluated for expected credit losses under FASB ASC Topic 326, “Financial Instruments – Credit Losses.”

Available for sale securities. For available for sale securities in an unrealized loss position, the amount of the expected credit losses recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the expected credit losses will be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the expected credit losses will be separated into the amount representing the credit-related portion of the impairment loss (“credit loss”) and the noncredit portion of the impairment loss (“noncredit portion”). The amount of the total expected credit losses related to the credit loss is determined based on the difference between the present value of cash flows expected to be collected and the amortized cost basis and such difference is recognized in earnings. The amount of the total expected credit losses related to the noncredit portion is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the expected credit losses recognized in earnings will become the new amortized cost basis of the investment.

As of December 31, 2022, management does not have the intent to sell any of the securities classified as available for sale before a recovery of cost. In addition, management believes it is more likely than not that the Company will not be required to sell any of its investment securities before a recovery of cost. The unrealized losses are largely due to changes in market interest rates and spread relationships since the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of December 31, 2022, management believes that there is no potential for credit losses on available for sale securities.

Held to maturity securities. The Company’s held to maturity investments include mortgage-related bonds issued by either the Government National Mortgage Corporation (“Ginnie Mae”), Federal National Mortgage Association (“Fannie Mae”) or Federal Home Loan Mortgage Corporation (“Freddie Mac”). Ginnie Mae issued securities are explicitly guaranteed by the U.S. government, while Fannie Mae and Freddie Mac issued securities are fully guaranteed by those respective United States government-sponsored agencies, and conditionally guaranteed by the full faith and credit of the United States. The Company’s held to maturity securities also include taxable and tax-exempt municipal securities issued primarily by school districts, utility districts and municipalities located in Texas. The Company’s investment in municipal securities is exposed to credit risk. The securities are highly rated by major rating agencies and regularly reviewed by management. A significant portion are guaranteed or insured by either the Texas Permanent School Fund, Assured Guaranty or Build America Mutual. As of December 31, 2022, the Company’s municipal securities represent 0.8% of the securities portfolio. Management has the ability and intent to hold the securities classified as held to maturity until they mature, at which time the Company will receive full value for the securities. Accordingly, as of December 31, 2022, management believes that there is no potential for material credit losses on held to maturity securities.

Securities with unrealized losses segregated by length of time such securities have been in a continuous loss position were as follows:

 

 

 

December 31, 2022

 

 

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

 

(Dollars in thousands)

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

$

61,559

 

 

$

(3,012

)

 

$

99,179

 

 

$

(27

)

 

$

160,738

 

 

$

(3,039

)

Mortgage-backed securities

 

 

95,212

 

 

 

(2,627

)

 

 

291

 

 

 

(13

)

 

 

95,503

 

 

 

(2,640

)

Total

 

$

156,771

 

 

$

(5,639

)

 

$

99,470

 

 

$

(40

)

 

$

256,241

 

 

$

(5,679

)

Held to Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

States and political subdivisions

 

$

49,782

 

 

$

(885

)

 

$

16,298

 

 

$

(2,370

)

 

$

66,080

 

 

$

(3,255

)

Corporate debt securities

 

 

9,480

 

 

 

(2,520

)

 

 

 

 

 

 

 

 

9,480

 

 

 

(2,520

)

Collateralized mortgage obligations

 

 

214,538

 

 

 

(22,557

)

 

 

4,358

 

 

 

(365

)

 

 

218,896

 

 

 

(22,922

)

Mortgage-backed securities

 

 

5,276,315

 

 

 

(416,053

)

 

 

6,585,470

 

 

 

(1,191,448

)

 

 

11,861,785

 

 

 

(1,607,501

)

Total

 

$

5,550,115

 

 

$

(442,015

)

 

$

6,606,126

 

 

$

(1,194,183

)

 

$

12,156,241

 

 

$

(1,636,198

)

 

 

 

December 31, 2021

 

 

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

 

(Dollars in thousands)

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

$

164,220

 

 

$

(31

)

 

$

25,916

 

 

$

(1

)

 

$

190,136

 

 

$

(32

)

Mortgage-backed securities

 

 

2

 

 

 

 

 

 

19,674

 

 

 

(170

)

 

 

19,676

 

 

 

(170

)

Total

 

$

164,222

 

 

$

(31

)

 

$

45,590

 

 

$

(171

)

 

$

209,812

 

 

$

(202

)

Held to Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

States and political subdivisions

 

$

6,216

 

 

$

(60

)

 

$

1,454

 

 

$

(54

)

 

$

7,670

 

 

$

(114

)

Collateralized mortgage obligations

 

 

8,166

 

 

 

(78

)

 

 

 

 

 

 

 

 

8,166

 

 

 

(78

)

Mortgage-backed securities

 

 

7,553,096

 

 

 

(141,652

)

 

 

288,359

 

 

 

(5,330

)

 

 

7,841,455

 

 

 

(146,982

)

Total

 

$

7,567,478

 

 

$

(141,790

)

 

$

289,813

 

 

$

(5,384

)

 

$

7,857,291

 

 

$

(147,174

)

 

At December 31, 2022 and 2021 there were 174 securities and 30 securities, respectively, in an unrealized loss position for 12 months or more.

The table below summarizes the amortized cost and fair value of investment securities at December 31, 2022, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations at any time with or without call or prepayment penalties.

 

 

 

Held to Maturity

 

 

Available for Sale

 

 

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

 

 

(Dollars in thousands)

 

Due in one year or less

 

$

14,338

 

 

$

14,349

 

 

$

 

 

$

 

Due after one year through five years

 

 

57,687

 

 

 

58,215

 

 

 

 

 

 

 

Due after five years through ten years

 

 

47,138

 

 

 

43,330

 

 

 

 

 

 

 

Due after ten years

 

 

15,198

 

 

 

13,560

 

 

 

 

 

 

 

Subtotal

 

 

134,361

 

 

 

129,454

 

 

 

 

 

 

 

Mortgage-backed securities and collateralized mortgage obligations

 

 

13,885,142

 

 

 

12,257,671

 

 

 

460,898

 

 

 

456,502

 

Total

 

$

14,019,503

 

 

$

12,387,125

 

 

$

460,898

 

 

$

456,502

 

 

The Company recorded no gain or loss on sale of securities for the year ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022, the Company did not own any non-agency collateralized mortgage obligations.

At December 31, 2022 and 2021, the Company did not own securities of any one issuer (other than the U.S. government and its agencies) for which aggregate adjusted cost exceeded 10% of the consolidated shareholders’ equity at such respective dates.

Securities with an amortized cost of $7.87 billion and $6.97 billion and a fair value of $6.90 billion and $6.99 billion at December 31, 2022 and 2021, respectively, were pledged to collateralize public deposits and for other purposes required or permitted by law.