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INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2023

INVESTMENT SECURITIES

INVESTMENT SECURITIES

NOTE C: INVESTMENT SECURITIES

The amortized cost and estimated fair value of investment securities as of December 31 are as follows:


		2023												2022
					Gross			Gross									Gross			Gross
		Amortized			Unrealized			Unrealized			Estimated			Amortized			Unrealized			Unrealized			Estimated
(000’s omitted)		Cost			Gains			Losses			Fair Value			Cost			Gains			Losses			Fair Value
Available-for-Sale Portfolio:
U.S. Treasury and agency securities		$	2,381,168		$	0		$	300,385		$	2,080,783		$	3,660,546		$	0		$	417,009		$	3,243,537
Obligations of state and political subdivisions			502,879			1,469			29,985			474,363			549,118			506			45,327			504,297
Government agency mortgage-backed securities			400,062			76			51,612			348,526			444,689			58			60,114			384,633
Corporate debt securities			8,000			0			606			7,394			8,000			0			886			7,114
Government agency collateralized mortgage obligations			9,498			0			572			8,926			13,121			1			852			12,270
Total available-for-sale portfolio		$	3,301,607		$	1,545		$	383,160		$	2,919,992		$	4,675,474		$	565		$	524,188		$	4,151,851
Held-to-Maturity Portfolio:
U.S. Treasury and agency securities		$	1,109,101		$	0		$	50,866		$	1,058,235		$	1,079,695		$	0		$	44,900		$	1,034,795
Government agency mortgage-backed securities			63,073			688			180			63,581			0			0			0			0
Total held-to-maturity portfolio		$	1,172,174		$	688		$	51,046		$	1,121,816		$	1,079,695		$	0		$	44,900		$	1,034,795
Equity and other Securities:
Equity securities, at fair value		$	251		$	121		$	0		$	372		$	251		$	168		$	0		$	419
Federal Home Loan Bank common stock			32,526			0			0			32,526			47,497			0			0			47,497
Federal Reserve Bank common stock			33,568			0			0			33,568			31,144			0			0			31,144
Other equity securities, at adjusted cost			5,930			750			0			6,680			3,532			750			0			4,282
Total equity and other securities		$	72,275		$	871		$	0		$	73,146		$	82,424		$	918		$	0		$	83,342

Included in the Company’s investment securities portfolio is Federal Reserve Bank (“FRB”) common stock with a carrying value of $33.6 million and $31.1 million at December 31, 2023 and 2022, respectively. The investment in FRB stock represents approximately half of the total required subscription, and the remaining half is unpaid and remains subject to call by the FRB.

A summary of investment securities that have been in a continuous unrealized loss position for less than or greater than twelve months is as follows:

As of December 31, 2023


	Less than 12 Months						12 Months or Longer						Total
					Gross						Gross						Gross
					Unrealized						Unrealized						Unrealized
(000’s omitted)		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
Available-for-Sale Portfolio:
U.S. Treasury and agency securities		$	0		$	0		$	2,080,783		$	300,385		$	2,080,783		$	300,385
Obligations of state and political subdivisions			63,541			878			287,191			29,107			350,732			29,985
Government agency mortgage-backed securities			8,586			55			336,266			51,557			344,852			51,612
Corporate debt securities			0			0			7,394			606			7,394			606
Government agency collateralized mortgage obligations			0			0			8,907			572			8,907			572
Total available-for-sale investment portfolio		$	72,127		$	933		$	2,720,541		$	382,227		$	2,792,668		$	383,160
Held-to-Maturity Portfolio:
U.S Treasury and agency securities		$	536,885		$	15,953		$	521,350		$	34,913		$	1,058,235		$	50,866
Government agency mortgage-backed securities			18,951			158			1,393			22			20,344			180
Total held-to-maturity portfolio		$	555,836		$	16,111		$	522,743		$	34,935		$	1,078,579		$	51,046

As of December 31, 2022


	Less than 12 Months						12 Months or Longer						Total
					Gross						Gross						Gross
					Unrealized						Unrealized						Unrealized
(000’s omitted)		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
Available-for-Sale Portfolio:
U.S. Treasury and agency securities		$	1,384,075		$	132,511		$	1,859,462		$	284,498		$	3,243,537		$	417,009
Obligations of state and political subdivisions			370,524			35,488			47,923			9,839			418,447			45,327
Government agency mortgage-backed securities			190,727			19,508			189,919			40,606			380,646			60,114
Corporate debt securities			0			0			7,114			886			7,114			886
Government agency collateralized mortgage obligations			9,968			600			2,274			252			12,242			852
Total available-for-sale investment portfolio		$	1,955,294		$	188,107		$	2,106,692		$	336,081		$	4,061,986		$	524,188
Held-to-Maturity Portfolio:
U.S Treasury and agency securities		$	1,034,795		$	44,900		$	0		$	0		$	1,034,795		$	44,900
Total held-to-maturity portfolio		$	1,034,795		$	44,900		$	0		$	0		$	1,034,795		$	44,900

The unrealized losses reported pertaining to available-for-sale securities issued by the U.S. government and its sponsored entities include treasuries, agencies, and mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac, which are currently rated AAA by Moody’s Investor Services, AA+ by Standard & Poor’s and are guaranteed by the U.S. government. The majority of the obligations of state and political subdivisions carry a credit rating of A or better. Additionally, a portion of the obligations of state and political subdivisions carry a secondary level of credit enhancement. The Company holds two corporate debt securities in an unrealized loss position and, based on an analysis of the financial position of the issuers including financial performance, liquidity and regulatory capital ratios, the issuers of the securities show a remote risk of default. Timely interest payments continue to be made on the securities. The unrealized losses in the portfolios are primarily attributable to changes in interest rates. As such, management does not believe any individual unrealized loss as of December 31, 2023 and 2022 represents credit losses and no unrealized losses have been recognized in the provision for credit losses. Accordingly, there is no allowance for credit losses on the Company’s available-for-sale investment portfolio as of December 31, 2023 and 2022. Accrued interest receivable on available-for-sale debt securities, included in accrued interest and fees receivable on the consolidated statements of condition, totaled $14.4 million and $19.3 million at December 31, 2023 and 2022, respectively, and is excluded from the estimate of credit losses.

Securities classified as held-to-maturity are included under the CECL methodology. Calculation of expected credit loss under CECL is done on a collective (“pooled”) basis, with assets grouped when similar risk characteristics exist. The Company notes that at December 31, 2023 and 2022 all securities in the held-to-maturity classification are U.S. Treasury securities and government agency mortgage-backed securities; therefore, they share the same risk characteristics and can be evaluated on a collective basis. The expected credit loss on these securities is evaluated based on historical credit losses of this security type and the expected possibility of default in the future, and these securities are guaranteed by the U.S. government. U.S. Treasury securities and government agency mortgage-backed securities often receive the highest credit rating by rating agencies and the Company has concluded that the possibility of default is considered remote. At December 31, 2023 and 2022, the U.S. Treasury securities and government agency mortgage-backed securities held by the Company in the held-to-maturity category carry an AAA rating from Moody’s Investor Services and an AA+ rating from Standard & Poor’s. On August 1, 2023, Fitch downgraded the U.S. government’s long term rating from AAA to AA+. The credit rating downgrade does not impact the Company’s conclusion regarding the credit risk of U.S. government debt securities held in its investment portfolio. The Company concludes that the long history with no credit losses for these securities (adjusted for current conditions and reasonable and supportable forecasts) indicates an expectation that nonpayment of the amortized cost basis is zero. Management has concluded that the prepayment risk associated with these securities is insignificant and it is expected to recover the recorded investment. Accordingly, there is no allowance for credit losses on the Company’s held-to-maturity debt portfolio as of December 31, 2023 and 2022. Accrued interest receivable on held-to-maturity debt securities, included in accrued interest and fees receivable on the consolidated statements of condition, totaled $5.0 million and $4.7 million at December 31, 2023 and 2022, respectively, and is excluded from the estimate of credit losses. The Company has the intent and ability to hold the securities to maturity.

The amortized cost and estimated fair value of debt securities at December 31, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


		Held-to-Maturity						Available-for-Sale
(000’s omitted)		Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due in one year or less		$	0		$	0		$	16,671		$	16,566
Due after one through five years			0			0			1,583,809			1,441,328
Due after five years through ten years			552,838			536,885			579,092			523,830
Due after ten years			556,263			521,350			712,475			580,816
Subtotal			1,109,101			1,058,235			2,892,047			2,562,540
Government agency mortgage-backed securities			63,073			63,581			400,062			348,526
Government agency collateralized mortgage obligations			0			0			9,498			8,926
Total		$	1,172,174		$	1,121,816		$	3,301,607		$	2,919,992

Investment securities with a carrying value of $2.14 billion and $2.18 billion at December 31, 2023 and 2022, respectively, were pledged to collateralize certain deposits and borrowings. Securities pledged to collateralize certain deposits and borrowings included $598.9 million and $466.9 million of U.S. Treasury securities that were pledged as collateral for securities sold under agreement to repurchase at December 31, 2023 and 2022, respectively. All securities sold under agreement to repurchase as of December 31, 2023 and 2022 have an overnight and continuous maturity.

During the first quarter of 2023, the Company sold $786.1 million in book value of available-for-sale U.S. Treasury and agency securities, recognizing $52.3 million of gross realized losses. The sales were completed in January and February 2023 as part of a strategic balance sheet repositioning and were unrelated to the negative developments in the banking industry that occurred in March 2023. The proceeds from these sales of $733.8 million were redeployed entirely towards paying off existing overnight borrowings.