Interest-bearing Time Deposits in Banks and Securities

3 Months Ended

Mar. 31, 2020

Cash and Cash Equivalents [Abstract]

Interest-bearing Time Deposits in Banks and Securities

Note 2 - Interest-bearing Time Deposits in Banks and Securities

Interest-bearing time deposits in banks totaled $1,458,000 at March 31, 2019. At March 31, 2020 and December 31, 2019, all interest-bearing time deposits in banks have matured.

A summary of the Company’s available-for-sale securities follows (in thousands):

	March 31, 2020
	Amortized Cost Basis		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
U.S. Treasury securities	$	10,039	$	74	$	—		$	10,113
Obligations of states and political subdivisions		1,731,392		78,996		(2,717	)		1,807,671
Corporate bonds and other		4,624		133		(6	)		4,751
Residential mortgage-backed securities		1,617,341		62,659		(20	)		1,679,980
Commercial mortgage-backed securities		587,114		17,624		(184	)		604,554
Total securities available-for-sale	$	3,950,510	$	159,486	$	(2,927	)	$	4,107,069

	March 31, 2019
	Amortized Cost Basis		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
U.S. Treasury securities	$	9,977	$	14	$	—		$	9,991
Obligations of states and political subdivisions		1,196,111		44,155		(536	)		1,239,730
Corporate bonds and other		4,874		—		(15	)		4,859
Residential mortgage-backed securities		1,519,004		8,506		(11,222	)		1,516,288
Commercial mortgage-backed securities		442,569		1,771		(2,396	)		441,944
Total securities available-for-sale	$	3,172,535	$	54,446	$	(14,169	)	$	3,212,812
	December 31, 2019
	Amortized Cost Basis		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
U.S. Treasury securities	$	9,997	$	22	$	—		$	10,019
Obligations of states and political subdivisions		1,231,619		57,764		(400	)		1,288,983
Corporate bonds and other		4,643		65		—			4,708
Residential mortgage-backed securities		1,586,872		23,139		(1,148	)		1,608,863
Commercial mortgage-backed securities		494,674		6,356		(286	)		500,744
Total securities available-for-sale	$	3,327,805	$	87,346	$	(1,834	)	$	3,413,317

The Company invests in mortgage-backed securities that have expected maturities that differ from their contractual maturities. These differences arise because borrowers may have the right to call or prepay obligations with or without a prepayment penalty. These securities include collateralized mortgage obligations (CMOs) and other asset backed securities. The expected maturities of these securities at March 31, 2020 were computed by using scheduled amortization of balances and historical prepayment rates. At March 31, 2020 and 2019, and December 31, 2019, the Company did not hold CMOs that entail higher risks than standard mortgage-backed securities.

The amortized cost and estimated fair value of available-for-sale securities at March 31, 2020 by contractual and expected maturity, are shown below (in thousands):

	Amortized Cost Basis		Estimated Fair Value
Due within one year	$	151,083	$	152,516
Due after one year through five years		621,902		654,116
Due after five years through ten years		971,325		1,013,634
Due after ten years		1,745		2,269
Mortgage-backed securities		2,204,455		2,284,534
Total	$	3,950,510	$	4,107,069

The following tables disclose the Company’s investment securities that have been in a continuous unrealized-loss position for less than 12 months and for 12 or more months (in thousands):

	Less than 12 Months				12 Months or Longer				Total
March 31, 2020	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Obligations of states and political subdivisions	$	168,725	$	2,717	$	—	$	—	$	168,725	$	2,717
Corporate bonds and other		220		6		—		—		220		6
Residential mortgage-backed securities		1		—		8,164		21		8,165		21
Commercial mortgage-backed securities		44,724		173		9,630		10		54,354		183
Total	$	213,670	$	2,896	$	17,794	$	31	$	231,464	$	2,927
	Less than 12 Months				12 Months or Longer				Total
March 31, 2019	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Obligations of states and political subdivisions	$	2,807	$	13	$	48,068	$	523	$	50,875	$	536
Corporate bonds and other		—		—		4,873		15		4,873		15
Residential mortgage-backed securities		2,473		17		854,482		11,205		856,955		11,222
Commercial mortgage-backed securities		—		—		303,637		2,396		303,637		2,396
Total	$	5,280	$	30	$	1,211,060	$	14,139	$	1,216,340	$	14,169
	Less than 12 Months				12 Months or Longer						Total
December 31, 2019	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Obligations of state and political subdivisions	$	65,787	$	400	$	326	$	—	$	66,113	$	400
Residential mortgage-backed securities		100,004		306		103,983		842		203,987		1,148
Commercial mortgage-backed securities		74,560		178		35,178		108		109,738		286
Total	$	240,351	$	884	$	139,487	$	950	$	379,838	$	1,834

The number of investments in an unrealized loss position totaled 46 at March 31, 2020. We do not believe these unrealized losses are “other-than-temporary” as (i) we do not have the intent to sell our securities prior to recovery and/or maturity and (ii) it is more likely than not that we will not have to sell our securities prior to recovery and/or maturity. In making this determination, we also consider the length of time and extent to which fair value has been less than cost and the financial condition of the issuer. The unrealized losses noted are interest rate related due to the level of interest rates at March 31, 2020 compared to the time of purchase. We have reviewed the ratings of the issuers and have not identified any issues related to the ultimate repayment of principal as a result of credit concerns on these securities. Our mortgage related securities are backed by GNMA, FNMA and FHLMC or are collateralized by securities backed by these agencies. At March 31, 2020, 86.82% of our available-for-sale securities that are obligations of states and political subdivisions were issued within the State of Texas, of which 48.30% are guaranteed by the Texas Permanent School Fund.

At March 31, 2020, $2,608,731,000 of the Company’s securities were pledged as collateral for public or trust fund deposits, repurchase agreements and for other purposes required or permitted by law.

During the three months ended March 31, 2020 and 2019, sales of investment securities that were classified as available-for-sale totaled $95,437,000 and $231,000, respectively. Gross realized gains from security sales during the first quarter of 2020 and 2019 totaled $2,062,000 and $4,000, respectively. Gross realized losses from security sales during first quarter of 2019 totaled $4,000. There were no gross realized losses from security sales during the first quarter of 2020.

The specific identification method was used to determine cost in order to compute the realized gains and losses.