Investment Securities

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

The amortized cost, estimated fair values and allowance for credit losses of investments in debt securities are summarized in the following tables:


	March 31, 2022
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
Debt Securities Available for Sale
Obligations of U.S. government agencies	$	1,789,218	$	578	$	(99,052)	$	—	$	1,690,744
Obligations of states and political subdivisions	276,042		2,557		(11,404)		—		267,195
Corporate bonds	7,652		29		(65)		—		7,616
Asset backed securities	401,689		508		(4,845)		—		397,352
Total debt securities available for sale	$	2,474,601	$	3,672	$	(115,366)	$	—	$	2,362,907




Debt Securities Held to Maturity
Obligations of U.S. government agencies	$	180,289	$	222	$	(3,070)	$	—	$	177,441
Obligations of states and political subdivisions	6,459		70		—		—		6,529
Total debt securities held to maturity	$	186,748	$	292	$	(3,070)	$	—	$	183,970


	December 31, 2021
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
Debt Securities Available for Sale
Obligations of U.S. government agencies	$	1,260,226	$	8,193	$	(11,030)	$	—	$	1,257,389
Obligations of states and political subdivisions	187,197		5,832		(785)		—		192,244
Corporate bonds	6,722		34		—		—		6,756
Asset backed securities	754,185		2,354		(4,990)		—		751,549
Total debt securities available for sale	$	2,208,330	$	16,413	$	(16,805)	$	—	$	2,207,938
Debt Securities Held to Maturity
Obligations of U.S. government agencies	192,068		8,131		—		$	—	200,199
Obligations of states and political subdivisions	7,691		250		—		—		7,941
Total debt securities held to maturity	$	199,759	$	8,381	$	—	$	—	$	208,140

There were no sales of investment securities during the three months ended March 31, 2022 and 2021, respectively. Investment securities with an aggregate carrying value of $475,674,000 and $423,892,000 at March 31, 2022 and December 31, 2021, respectively, were pledged as collateral for specific borrowings, lines of credit or local agency deposits.

The amortized cost and estimated fair value of debt securities at March 31, 2022 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. At March 31, 2022, obligations of U.S. government corporations and agencies with a cost basis totaling $1,404,095,000 consist almost entirely of residential real estate mortgage-backed securities whose contractual maturity, or principal repayment, will follow the repayment of the underlying mortgages. For purposes of the following table, the entire outstanding balance of these mortgage-backed securities issued by U.S. government corporations and agencies is categorized based on final maturity date. At March 31, 2022, the Company estimates the average remaining life of these mortgage-backed securities issued by U.S. government corporations and agencies to be approximately 6.28 years. Average remaining life is defined as the time span after which the principal balance has been reduced by half.

As of March 31, 2022, the contractual final maturity for available for sale and held to maturity investment securities is as follows:


Debt Securities	Available for Sale				Held to Maturity
(in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value

Due in one year	$	14,060	$	13,955	$	—	$	—
Due after one year through five years	124,473		120,609		1,693		1,717
Due after five years through ten years	376,294		370,606		14,559		14,431
Due after ten years	1,959,774		1,857,737		170,496		167,822
Totals	$	2,474,601	$	2,362,907	$	186,748	$	183,970

Gross unrealized losses on debt securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:


March 31, 2022:	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Debt Securities Available for Sale
Obligations of U.S. government agencies	$	1,385,647	$	(79,940)	$	220,899	$	(19,112)	$	1,606,546	$	(99,052)
Obligations of states and political subdivisions	106,944		(10,040)		9,045		(1,364)		115,989		(11,404)
Corporate bonds	4,112		(65)		—		—		4,112		(65)
Asset backed securities	212,168		(2,544)		107,603		(2,301)		319,771		(4,845)
Total debt securities available for sale	$	1,708,871	$	(92,589)	$	337,547	$	(22,777)	$	2,046,418	$	(115,366)

Debt Securities Held to Maturity
Obligations of U.S. government agencies	$	147,078	$	(3,070)	$	—	$	—	$	147,078	$	(3,070)


December 31, 2021:	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Debt Securities Available for Sale
Obligations of U.S. government agencies	$	947,108	$	(9,737)	$	44,086	$	(1,293)	$	991,194	$	(11,030)
Obligations of states and political subdivisions	56,153		(785)		—		—		56,153		(785)
Asset backed securities	389,837		(4,118)		109,748		(872)		499,585		(4,990)
Total debt securities available for sale	$	1,393,098	$	(14,640)	$	153,834	$	(2,165)	$	1,546,932	$	(16,805)

Obligations of U.S. government agencies: The unrealized losses on investments in obligations of U.S. government agencies are caused by interest rate increases and illiquidity. The contractual cash flows of these securities are guaranteed by U.S. Government Sponsored Entities (principally Fannie Mae and Freddie Mac). It is expected that the securities would not be settled at a price less than the amortized cost of the investment. Because management believes the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell and more likely than not will not be required to sell, there is no impairment on these securities and there has been no allowance for credit losses recorded. At March 31, 2022, 199 debt securities representing obligations of U.S. government agencies had unrealized losses with aggregate depreciation of 5.50% from the Company’s amortized cost basis.

Obligations of states and political subdivisions: The unrealized losses on investments in obligations of states and political subdivisions were caused by increases in required yields by investors in these types of securities. It is expected that the securities would not be settled at a price less than the amortized cost of the investment. Because management believes the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell and more likely than not will not be required to sell, there is no impairment on these securities and there has been no allowance for credit losses recorded as of March 31, 2022. At March 31, 2022, 79 debt securities representing obligations of states and political subdivisions had unrealized losses with aggregate depreciation of 8.95% from the Company’s amortized cost basis.

Corporate bonds: The unrealized losses on investments in corporate bonds were caused by increases in required yields by investors in these types of securities. It is expected that the securities would not be settled at a price less than the amortized cost of the investment. Because management believes the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell and more likely than not will not be required to sell, there is no impairment on these securities and there has been no allowance for credit losses recorded as of March 31, 2022. At March 31, 2022, 3 debt securities representing corporate bonds had unrealized losses with aggregate depreciation of 1.56% from the Company’s amortized cost basis.

Asset backed securities: The unrealized losses on investments in asset backed securities were caused by increases in required yields by investors for these types of securities. At the time of purchase, each of these securities was rated AA or AAA and through March 31, 2022 has not experienced any deterioration in credit rating. At March 31, 2022, 29 asset backed securities had unrealized losses with aggregate depreciation of 1.49% from the Company’s amortized cost basis. The Company continues to monitor these securities for changes in credit rating or other indications of credit deterioration. Because management believes the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell and more likely than not will not be required to sell, there is no impairment on these securities and there has been no allowance for credit losses recorded as of March 31, 2022.

The Company monitors credit quality of debt securities held-to-maturity through the use of credit rating. The Company monitors the credit rating on a monthly basis. The following table summarizes the amortized cost of debt securities held-to-maturity at the dates indicated, aggregated by credit quality indicator:


	March 31, 2022				December 31, 2021
	AAA/AA/A		BBB/BB/B		AAA/AA/A		BBB/BB/B
	(In thousands)				(In thousands)
Debt Securities Held to Maturity
Obligations of U.S. government agencies	$	180,290	$	—	$	192,068	$	—
Obligations of states and political subdivisions	6,458		—		7,691		—
Total debt securities held to maturity	$	186,748	$	—	$	199,759	$	—