INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

6. INVESTMENT SECURITIES

The following tables detail the amortized cost and the estimated fair value of our investments in available-for-sale and held-to-maturity debt securities as well as our equity investments. None of our investments in debt securities are classified as trading.


	September 30, 2019
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Available-for-Sale Debt Securities
CMO	$	358,826	$	6,550	$	130	$	365,246
FNMA MBS	1,136,645		27,118		1,016		1,162,747
FHLMC MBS	338,326		8,690		261		346,755
GNMA MBS	33,561		584		72		34,073
	$	1,867,358	$	42,942	$	1,479	$	1,908,821
Held-to-Maturity Debt Securities⁽¹⁾
State and political subdivisions	$	132,959	$	3,298	$	—	$	136,257
Foreign bonds	2,002		3		—		2,005
	$	134,961	$	3,301	$	—	$	138,262


Equity Investments⁽²⁾
Visa Class B shares	$	15,716	$	45,565	$	—	$	61,281
Other equity investments	8,149		625		—		8,774
	$	23,865	$	46,190	$	—	$	70,055

⁽¹⁾Held-to–maturity securities transferred from available-for-sale are included in held-to-maturity at fair value at the time of transfer. The amortized cost of held-to-maturity securities included net unrealized gains of $0.7 million at September 30, 2019, related to securities transferred, which are offset in Accumulated other comprehensive income, net of tax.

⁽²⁾Equity investments are included in Other investments in the unaudited Consolidated Statements of Financial Condition.


	December 31, 2018
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Available-for-Sale Debt Securities
CMO	$	376,867	$	1,721	$	6,838	$	371,750
FNMA MBS	655,485		1,526		12,938		644,073
FHLMC MBS	155,758		558		2,394		153,922
GNMA MBS	36,117		97		880		35,334
	$	1,224,227	$	3,902	$	23,050	$	1,205,079
Held-to-Maturity Debt Securities⁽¹⁾
State and political subdivisions	$	149,950	$	275	$	794	$	149,431

Equity Investments⁽²⁾
Visa Class B shares	$	13,918	$	20,015	$	—	$	33,933
Other equity investments	3,300		—		—		3,300
	$	17,218	$	20,015	$	—	$	37,233

⁽¹⁾Held-to–maturity securities transferred from available-for-sale are included in held-to-maturity at fair value at the time of transfer. The amortized cost of held-to-maturity securities included net unrealized gains of $1.0 million at December 31, 2018, related to securities transferred, which are offset in Accumulated other comprehensive loss, net of tax.

⁽²⁾Equity investments are included in Other investments in the unaudited Consolidated Statements of Financial Condition.

The scheduled maturities of our available-for-sale debt securities at September 30, 2019 and December 31, 2018 are presented in the table below:


	Available for Sale
	Amortized		Fair
(Dollars in thousands)	Cost		Value
September 30, 2019⁽¹⁾
Within one year	$	—	$	—
After one year but within five years	18,892		19,000
After five years but within ten years	186,164		189,078
After ten years	1,662,302		1,700,743
	$	1,867,358	$	1,908,821
December 31, 2018⁽¹⁾
Within one year	$	—	$	—
After one year but within five years	19,714		19,423
After five years but within ten years	170,118		163,731
After ten years	1,034,395		1,021,925
	$	1,224,227	$	1,205,079

⁽¹⁾Actual maturities could differ from contractual maturities.

The scheduled maturities of our held-to-maturity debt securities at September 30, 2019 and December 31, 2018 are presented in the table below:


	Held to Maturity
	Amortized		Fair
(Dollars in thousands)	Cost		Value
September 30, 2019 ⁽¹⁾
Within one year	$	2,659	$	2,666
After one year but within five years	5,251		5,280
After five years but within ten years	32,696		33,345
After ten years	94,355		96,971
	$	134,961	$	138,262
December 31, 2018⁽¹⁾
Within one year	$	1,018	$	1,016
After one year but within five years	6,703		6,701
After five years but within ten years	29,613		29,547
After ten years	112,616		112,167
	$	149,950	$	149,431

⁽¹⁾Actual maturities could differ from contractual maturities.

Mortgage-backed securities (MBS) may have expected maturities that differ from their contractual maturities. These differences arise because issuers may have the right to call securities and borrowers may have the right to prepay obligations with or without prepayment penalty.

Investment securities with fair market values aggregating $1.2 billion and $914.5 million were pledged as collateral for retail customer repurchase agreements, municipal deposits, and other obligations as of September 30, 2019 and December 31, 2018, respectively.

During the nine months ended September 30, 2019, we sold $602.5 million of debt securities categorized as available for sale, of which $578.8 million was related to the acquisition of Beneficial (see Note 3 for further information about the acquisition). The remaining $23.7 million resulted in realized gains of less than $0.1 million and no realized losses. During the nine months ended September 30, 2018, we sold $7.0 million of debt securities categorized as available for sale, resulting in realized gains of less than $0.1 million and no realized losses. The cost basis of all debt securities sales is based on the specific identification method.

During the nine months ended September 30, 2018, we sold $6.2 million of equity securities, specifically Visa Class B shares, resulting in realized gains of $3.8 million and no realized losses. There were no such sales during the nine months ended September 30, 2019.

As of September 30, 2019 and December 31, 2018, our debt securities portfolio had remaining unamortized premiums of $16.7 million and $12.7 million, respectively, and unaccreted discounts of $3.5 million and $2.5 million, respectively.

For debt securities with unrealized losses, the table below shows our gross unrealized losses and fair value by investment category and length of time that individual debt securities were in a continuous unrealized loss position at September 30, 2019.


	Duration of Unrealized Loss Position
	Less than 12 months						12 months or longer						Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Available-for-sale debt securities:

CMO	$	22,506	$	73	$	8,135	$	57	$	30,641	$	130
FNMA MBS	138,397		919		6,920		97		145,317		1,016
FHLMC MBS	31,148		230		2,941		31		34,089		261
GNMA MBS	901		4		5,773		68		6,674		72
Total temporarily impaired investments	$	192,952	$	1,226	$	23,769	$	253	$	216,721	$	1,479

Held-to-maturity debt securities:

Foreign bonds ⁽¹⁾	$	501	$	—	$	—	$	—	$	501	$	—

⁽¹⁾Foreign bonds with an unrealized loss position of less than twelve months had an unrealized loss of less than $1 thousand at September 30, 2019.


	Duration of Unrealized Loss Position
	Less than 12 months						12 months or longer						Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Available-for-sale debt securities:

CMO	$	17,143	$	40	$	212,208	$	6,798	$	229,351	$	6,838
FNMA MBS	34,214		162		407,638		12,776		441,852		12,938
FHLMC MBS	16,025		21		76,469		2,373		92,494		2,394
GNMA MBS	5,837		79		21,805		801		27,642		880
Total temporarily impaired investments	$	73,219	$	302	$	718,120	$	22,748	$	791,339	$	23,050

Held-to-maturity debt securities:
State and political subdivisions	$	91,228	$	155	$	58,203	$	639	$	149,431	$	794

At September 30, 2019, we owned debt securities totaling $217.2 million for which the amortized cost basis exceeded fair value. Total unrealized losses on these securities were $1.5 million at September 30, 2019. The temporary impairment is the result of changes in market interest rates subsequent to purchase. Our investment portfolio is reviewed each quarter for indications of OTTI. This review includes analyzing the length of time and the extent to which the fair value has been lower than the amortized cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and our intent and ability to hold the investment for a period of time sufficient to allow for full recovery of the unrealized loss. We evaluate our intent and ability to hold debt securities based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not have the intent to sell, nor is it more likely-than-not we will be required to sell these securities before we are able to recover the amortized cost basis.

All debt securities, with the exception of one having a fair value of $0.4 million at September 30, 2019, were A-rated or better at the time of purchase and remained investment grade at September 30, 2019. All securities were evaluated for OTTI at September 30, 2019 and December 31, 2018. The result of this evaluation showed no OTTI as of September 30, 2019 or December 31, 2018. The estimated weighted average duration of MBS was 2.9 years at September 30, 2019.