Investment Securities

12 Months Ended

Dec. 31, 2020

Investments, Debt and Equity Securities [Abstract]

NOTE 3 – INVESTMENT SECURITIES

The following tables present the amortized cost and estimated fair values of investment securities, as of December 31:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
2020
Available for Sale


State and municipal securities	$	891,327	$	61,286	$	—	$	952,613
Corporate debt securities	348,391		19,445		(691)		367,145
Collateralized mortgage obligations	491,321		12,560		(115)		503,766
Residential mortgage-backed securities	373,779		4,246		(27)		377,998
Commercial mortgage-backed securities	741,172		22,384		(1,141)		762,415
Auction rate securities	101,510		—		(3,304)		98,206
Total	$	2,947,500	$	119,921	$	(5,278)	$	3,062,143



Held to Maturity

Residential mortgage-backed securities	$	278,281	$	18,576	$	—	$	296,857
Total	$	278,281	$	18,576	$	—	$	296,857

2019
Available for Sale


State and municipal securities	$	638,125	$	15,826	$	(1,024)	$	652,927
Corporate debt securities	370,401		8,490		(1,534)		377,357
Collateralized mortgage obligations	682,307		11,726		(315)		693,718
Residential mortgage-backed securities	177,183		1,078		(949)		177,312
Commercial mortgage-backed securities	489,603		6,471		(1,777)		494,297
Auction rate securities	107,410		—		(5,484)		101,926


Total	$	2,465,029	$	43,591	$	(11,083)	$	2,497,537

Held to Maturity

Residential mortgage-backed securities	$	369,841	$	13,864	$	—	$	383,705
Total	$	369,841	$	13,864	$	—	$	383,705

On July 1, 2019, the Corporation transferred state and municipal securities from the HTM classification to the AFS classification as permitted through the early adoption of ASU 2019-04, as disclosed in "Note 1 - Summary of Significant Accounting Policies." The amortized cost of the securities transferred was $158.9 million and the estimated fair value was $168.5 million. The Corporation has the positive intent and ability to hold the remainder of the HTM portfolio, consisting of residential mortgage-backed securities, to maturity.

On August 1, 2018, the Corporation transferred debt securities with an amortized cost of $665.5 million and an estimated fair value of $641.7 million from the AFS classification to the HTM classification. These securities consisted of residential mortgage-backed securities ($505.5 million amortized cost and $485.3 million estimated fair value) and state and municipal securities ($160.0 million amortized cost and $156.4 million estimated fair value) and were transferred as the Corporation had the positive intent and ability to hold these securities to maturity. The transfer of debt securities into the HTM category from the AFS category was recorded at fair value on the date of transfer. The net unrealized gains or losses at the transfer date are included in AOCI and are being amortized over the remaining lives of the securities. This amortization is expected to offset the amortization of the related premium or discount created by the investment securities transfer into the HTM classification, with no expected impact on future net income.

Securities carried at $520.5 million at December 31, 2020 and $462.6 million at December 31, 2019, were pledged as collateral to secure public and trust deposits and customer repurchase agreements.

The amortized cost and estimated fair values of debt securities as of December 31, 2020, by contractual maturity, are shown in the following table. 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.


	Available for Sale				Held to Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(in thousands)
Due in one year or less	$	11,250	$	11,350	$	—	$	—
Due from one year to five years	39,069		40,717		—		—
Due from five years to ten years	327,456		345,612		—		—
Due after ten years	963,453		1,020,285		—		—
	1,341,228		1,417,964		—		—
Residential mortgage-backed securities (1)	373,779		377,998		278,281		296,857
Commercial mortgage-backed securities (1)	741,172		762,415		—		—
Collateralized mortgage obligations (1)	491,321		503,766		—		—
Total	$	2,947,500	$	3,062,143	$	278,281	$	296,857

(1) Maturities for mortgage-backed securities and collateralized mortgage obligations are dependent upon the interest rate environment and prepayments on the underlying loans.

The following table presents information related to gross gains and losses on the sales of securities:


	Gross Realized Gains		Gross Realized Losses		Net Gains
	(in thousands)
2020	$	6,545	$	(3,492)	$	3,053
2019	11,554		(6,821)		4,733
2018	1,665		(1,628)		37

During 2020, the Corporation completed a limited balance sheet restructuring that included the sale of investment securities, with an amortized cost $79.0 million and an estimated fair value of $82.0 million, resulting in net investment securities gains of $3.0 million. Offsetting these gains were $2.9 million of prepayment penalties recorded in non-interest expense for the redemption of FHLB advances.

During 2019, the Corporation completed a limited balance sheet restructuring that included the sale of investment securities, with an amortized cost of $409.2 million and an estimated fair value of $413.7 million, resulting in net investment securities gains of $4.5 million. Offsetting these gains were $4.3 million of prepayment penalties recorded in non-interest expense for the redemption of FHLB advances.

The Corporation had cumulative credit-related OTTI charges, recognized as components of earnings, for debt securities held by the Corporation of $990,000 for both December 31, 2020 and 2019 and $11.5 million as of December 31, 2018.

The following tables present the gross unrealized losses and estimated fair values of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31:


	Less Than 12 months					12 Months or Longer					Total
	Number of Securities	Estimated Fair Value		Unrealized Losses		Number of Securities	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
2020	(dollars in thousands)
Available for Sale


Corporate debt securities	9	$	44,528	$	(377)	1	$	6,871	$	(314)	$	51,399	$	(691)
Collateralized mortgage obligations	3	57,601		(115)		—	—		—		57,601		(115)
Residential mortgage-backed securities	1	20,124		(27)		—	—		—		20,124		(27)
Commercial mortgage-backed securities	9	144,383		(1,141)		—	—		—		144,383		(1,141)
Auction rate securities	—	—		—		162	98,206		(3,304)		98,206		(3,304)
Total available for sale	22	$	266,636	$	(1,660)	163	$	105,077	$	(3,618)	$	371,713	$	(5,278)




2019
Available for Sale

State and municipal securities	44	$	136,344	$	(1,024)	—	$	—	$	—	$	136,344	$	(1,024)
Corporate debt securities	5	30,719		(346)		8	18,759		(1,188)		49,478		(1,534)
Collateralized mortgage obligations	5	33,865		(190)		1	5,330		(125)		39,195		(315)
Residential mortgage-backed securities	5	12,247		(40)		26	127,373		(909)		139,620		(949)
Commercial mortgage-backed securities	7	121,340		(1,777)		—	—		—		121,340		(1,777)
Auction rate securities	—	—		—		177	101,926		(5,484)		101,926		(5,484)
Total available for sale	66	$	334,515	$	(3,377)	212	$	253,388	$	(7,706)	$	587,903	$	(11,083)

No held to maturity securities were in an unrealized loss position as of December 31, 2020 and 2019.

The Corporation’s collateralized mortgage obligations and mortgage-backed securities have contractual terms that generally do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. The change in fair value of these securities is attributable to changes in interest rates and not credit quality. The Corporation does not have the intent to sell and does not believe it will more likely than not be required to sell any of these securities prior to a recovery of their fair value to amortized cost. Therefore, the Corporation does not have an ACL for these investments as of December 31, 2020.

As of December 31, 2020, all auction rate certificates ("ARCs") and corporate debt securities were rated above investment grade. All of the loans underlying the ARCs have principal payments which are guaranteed by the federal government. Based on the payment status, rating and management’s evaluation of these securities, no ACL was required for ARCs or corporate debt securities as of December 31, 2020.