Investment Securities

12 Months Ended

Dec. 31, 2019

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.


	December 31, 2019
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Available-for-Sale Debt Securities
CMO	$	336,194	$	4,578	$	542	$	340,230
FNMA MBS	1,219,522		25,717		2,786		1,242,453
FHLMC MBS	320,896		8,641		591		328,946
GNMA MBS	32,871		477		63		33,285
	$	1,909,483	$	39,413	$	3,982	$	1,944,914
Held-to-Maturity Debt Securities⁽¹⁾
State and political subdivisions	$	131,600	$	3,023	$	—	$	134,623
Foreign bonds	2,001		1		—		2,002
	$	133,601	$	3,024	$	—	$	136,625

Equity Investments⁽²⁾
Visa Class B shares	$	15,716	$	45,565	$	—	$	61,281
Other equity investments	8,140		625		—		8,765
	$	23,856	$	46,190	$	—	$	70,046

(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 $0.6 million at December 31, 2019, 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 audited 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 audited Consolidated Statements of Financial Condition.

The scheduled maturities of our available-for-sale and held-to-maturity at December 31, 2019 and December 31, 2018 are presented in the table below:


	Available-for-Sale
(Dollars in thousands)	Amortized Cost		Fair Value
December 31, 2019 ⁽¹⁾
Within one year	$	—	$	—
After one year but within five years	22,136		22,207
After five years but within ten years	194,197		194,376
After ten years	1,693,150		1,728,331
	$	1,909,483	$	1,944,914
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

	Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Fair Value
December 31, 2019 ⁽¹⁾
Within one year	$	2,649	$	2,653
After one year but within five years	4,239		4,270
After five years but within ten years	35,288		35,967
After ten years	91,425		93,735
	$	133,601	$	136,625
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 $1.1 billion and $914.5 million were pledged as collateral for retail customer repurchase agreements, municipal deposits, and other obligations as of December 31, 2019 and 2018, respectively.

During 2019, we sold $618.2 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 $39.8 million resulted in realized gains of $0.3 million and no realized losses. During 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. During 2017, we sold $457.0 million of investment securities categorized as available for sale, resulting in realized gains of $2.1 million and realized losses of less than $0.1 million.

During 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 2019 or 2017.

As of December 31, 2019, and December 31, 2018, our debt securities portfolio had remaining unamortized premiums of $15.1 million and $12.7 million, respectively, and unaccreted discounts of $4.1 million and $2.5 million, respectively.

For those 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 December 31, 2019.


	Duration of Unrealized Loss Position
	Less than 12 months						12 months or longer						Total
(Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available-for-sale debt securities:
CMO	$	47,376	$	481	$	7,999	$	61	$	55,375	$	542
FNMA MBS	310,312		2,681		6,522		105		316,834		2,786
FHLMC MBS	35,354		541		2,836		50		38,190		591
GNMA MBS	1,847		4		5,742		59		7,589		63
Total temporarily impaired investments	$	394,889	$	3,707	$	23,099	$	275	$	417,988	$	3,982

Held-to-maturity debt securities:
State and political subdivisions⁽¹⁾	$	523	$	—	$	—	$	—	$	523	$	—

(1)State and political subdivisions with an unrealized loss position of less than twelve months had an unrealized loss of less than $1 thousand at December 31, 2019.

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 December 31, 2018.


	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 December 31, 2019, we owned debt securities totaling $418.5 million for which the amortized cost basis exceeded fair value. Total unrealized losses on these securities were $4.0 million at December 31, 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 December 31, 2019, were A-rated or better at the time of purchase and remained investment grade at December 31, 2019. All securities were evaluated for OTTI at December 31, 2019 and 2018. The result of this evaluation showed no OTTI as of December 31, 2019 or 2018. The estimated weighted average duration of MBS was 3.7 years at December 31, 2019.