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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

INVESTMENT SECURITIES

The following table presents the amortized cost and fair value of the investment securities portfolio as of the dates indicated:

($ in thousands)						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses												Fair Value
September 30, 2022
Securities held-to-maturity:
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						$	153,127					$	—					$	(29,178)											$	123,949
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						61,426						—						(11,950)												49,476
Municipal securities						114,204						—						(24,277)												89,927
Total securities held-to-maturity						$	328,757					$	—					$	(65,405)											$	263,352
Securities available-for-sale:
SBA loan pool securities						$	12,156					$	4					$	(54)											$	12,106
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						12,012						—						(1,316)												10,696
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						151,582						—						(10,425)												141,157
Non-agency residential mortgage-backed securities						52,076						—						(10,562)												41,514
Collateralized loan obligations						492,775						—						(20,099)												472,676
Corporate debt securities						177,774						12						(8,370)												169,416
Total securities available-for-sale						$	898,375					$	16					$	(50,826)											$	847,565
December 31, 2021
Securities available-for-sale:
SBA loan pool securities						$	14,679					$	—					$	(88)											$	14,591
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						190,382						2,898						(1,311)												191,969
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						242,458						1,171						(2,088)												241,541
Municipal securities						117,913						2,641						(1,539)												119,015
Non-agency residential mortgage-backed securities						56,014						11						—												56,025
Collateralized loan obligations						521,275						—						(2,311)												518,964
Corporate debt securities						162,002						11,603						(7)												173,598
Total securities available-for-sale						$	1,304,723					$	18,324					$	(7,344)											$	1,315,703

During the first quarter of 2022, certain longer-duration fixed-rate mortgage-backed securities and municipal securities with an amortized cost basis of $346.0 million were transferred from the available-for-sale portfolio to the held-to-maturity portfolio. At the time of the transfer, the securities had an unrealized gross loss of $16.6 million, which is subsequently amortized into interest income as a yield adjustment over the remaining life of the securities. The unrealized losses remaining in accumulated other comprehensive income are also accreted into interest income in a consistent manner. As a result, there is no impact on the consolidated statements of operations.

At September 30, 2022, our investment securities portfolio consisted of agency securities, municipal securities, mortgage-backed securities, collateralized loan obligations, and corporate debt securities. The expected maturities of these types of securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

There was no allowance for credit losses for debt securities held-to-maturity and available-for sale as of September 30, 2022 and December 31, 2021. We do not consider unrealized losses on these securities to be attributable to credit-related factors, as the unrealized losses have occurred as a result of changes in non-credit related factors such as interest rates, market spreads, and market conditions subsequent to purchase.

Accrued interest receivable on debt securities held-to-maturity and available-for-sale totaled $8.2 million and $4.7 million at September 30, 2022 and December 31, 2021, and is included within other assets in the accompanying consolidated statements of financial condition.

At September 30, 2022 and December 31, 2021, there were no holdings of any one issuer, other than U.S. government agency and sponsored enterprises, in an amount greater than 10 percent of our stockholders’ equity.

Pledged Securities

Investment securities with carrying values of $123.1 million and $8.9 million as of September 30, 2022 and December 31, 2021 were pledged to the Federal Reserve Discount Window ("FRB Discount Window"). Investments securities with carrying values of $214.6 million and zero as of September 30, 2022 and December 31, 2021 were pledged to secure FHLB advances.

Securities Available-for-Sale

The following table presents proceeds from sales and calls of securities available-for-sale and the associated gross gains and losses realized through earnings upon the sales and calls of securities available-for-sale for the periods indicated:

						Three Months Ended September 30,												Nine Months Ended September 30,
($ in thousands)						2022						2021						2022						2021
Gross realized gains						$	—					$	—					$	209					$	—
Gross realized losses						—						—						(193)						—
Net realized gains on sales and calls						$	—					$	—					$	16					$	—
Proceeds from sales and calls						$	—					$	20,000					$	56,145					$	120,230

The following table summarizes the investment securities available-for-sale with unrealized losses by security type and length of time in a continuous, unrealized loss position as of the dates indicated:

						Less Than 12 Months												12 Months or Longer												Total
($ in thousands)						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
September 30, 2022
Securities available-for-sale:
SBA loan pool securities						$	—					$	—					$	9,474					$	(54)					$	9,474					$	(54)
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						10,696						(1,316)						—						—						10,696						(1,316)
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						110,864						(4,705)						30,293						(5,720)						141,157						(10,425)
Non-agency residential mortgage-backed securities						41,514						(10,562)						—						—						41,514						(10,562)
Collateralized loan obligations						233,975						(10,025)						238,702						(10,074)						472,677						(20,099)
Corporate debt securities						166,497						(8,370)						—						—						166,497						(8,370)
Total securities available-for-sale						$	563,546					$	(34,978)					$	278,469					$	(15,848)					$	842,015					$	(50,826)
December 31, 2021
Securities available-for-sale:
SBA loan pool securities						$	—					$	—					$	14,591					$	(88)					$	14,591					$	(88)
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						67,588						(1,311)						—						—						67,588						(1,311)
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						85,290						(1,184)						17,754						(904)						103,044						(2,088)
Municipal securities						44,748						(919)						10,762						(620)						55,510						(1,539)
Collateralized loan obligations						81,962						(38)						253,002						(2,273)						334,964						(2,311)
Corporate debt securities						4,993						(7)						—						—						4,993						(7)
Total securities available-for-sale						$	284,581					$	(3,459)					$	296,109					$	(3,885)					$	580,690					$	(7,344)

At September 30, 2022, our securities available-for-sale portfolio consisted of 82 securities, of which 80 securities were in an unrealized loss position. At December 31, 2021, our securities available-for-sale portfolio consisted of 119 securities, of which 46 securities were in an unrealized loss position.

During the three and nine months ended September 30, 2022 and 2021, there was no provision for credit losses related to securities available-for-sale. We monitor our securities portfolio to ensure it has adequate credit support. We consider the lowest credit rating for identification of credit impairment for collateralized loan obligations and other securities. The decline in fair value of our securities since acquisition was attributable to a combination of changes in interest rates and general volatility in the credit market conditions in response to the economic uncertainty caused by many factors, including but not limited to, the global pandemic, rising inflation and conflict between Russia and Ukraine. We do not currently intend to sell any of the securities in an unrealized loss position and further believe, it is more likely than not, that we will not be required to sell these securities before their anticipated recovery. As of September 30, 2022, all of our collateralized loan obligations investment securities in an unrealized loss position received an investment grade credit rating.

The following table presents the amortized cost and fair value of the investment securities portfolio, based on the earlier of contractual maturity dates or next repricing date, as of September 30, 2022:

						Held-to-Maturity												Available-for-Sale
($ in thousands)						Amortized Cost						Fair Value						Amortized Cost						Fair Value
Earlier of maturity or next repricing date:
Within one year						$	—					$	—					$	585,237					$	564,436
One to five years						—						—						173,721						164,704
Five to ten years						28,705						24,157						64,851						56,549
Greater than ten years						300,052						239,195						74,566						61,876
Total						$	328,757					$	263,352					$	898,375					$	847,565

Contractual maturities may not reflect the actual maturities of the investments. The average lives for mortgage-backed securities and collateralized mortgage obligations likely will be shorter than their contractual maturities due to prepayments and amortization.

The following table presents the fair value and weighted average yields or tax-equivalent yields using amortized cost of the securities held-to-maturity portfolio as of September 30, 2022, based on the earlier of contractual maturity dates or next repricing dates:

						One year or less												More than One Year through Five Years												More than Five Years through Ten Years												More than Ten Years												Total
($ in thousands)						Fair Value						Weighted-Average Yield						Fair Value						Weighted-Average Yield						Fair Value						Weighted-Average Yield						Fair Value						Weighted-Average Yield						Fair Value						Weighted-Average Yield
Securities held-to-maturity:
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						$	—					—		%				$	—					—		%				$	7,960					2.52		%				$	115,989					2.70		%				$	123,949					2.69		%
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						—						—		%				—						—		%				—						—		%				49,476						2.64		%				49,476						2.64		%
Municipal securities (1)						—						—		%				—						—		%				16,197						2.19		%				73,730						2.71		%				89,927						2.62		%
Total securities held-to-maturity						$	—					—		%				$	—					—		%				$	24,157					2.29		%				$	239,195					2.69		%				$	263,352					2.65		%

(1) Computed on a tax-equivalent basis.

The following table presents the fair value and weighted average yields using amortized cost of the securities available-for-sale portfolio as of September 30, 2022, based on the earlier of contractual maturity dates or next repricing dates:

						One year or less												More than One Year through Five Years												More than Five Years through Ten Years												More than Ten Years												Total
($ in thousands)						Fair Value						Weighted-Average Yield						Fair Value						Weighted-Average Yield						Fair Value						Weighted-Average Yield						Fair Value						Weighted-Average Yield						Fair Value						Weighted-Average Yield
Securities available-for-sale:
SBA loan pool securities						$	12,106					1.82		%				$	—					—		%				$	—					—		%				$	—					—		%				$	12,106					1.82		%
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						—						—		%				—						—		%				10,696						2.23		%				—						—		%				10,696						2.23		%
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						79,654						3.16		%				8,138						2.72		%				33,003						1.92		%				20,362						1.83		%				141,157						2.61		%
Non-agency residential mortgage-backed securities						—						—		%				—						—		%				—						—		%				41,514						2.50		%				41,514						2.50		%
Collateralized loan obligations						472,676						4.23		%				—						—		%				—						—		%				—						—		%				472,676						4.23		%
Corporate debt securities						—						—		%				156,566						4.82		%				12,850						5.73		%				—						—		%				169,416						4.89		%
Total securities available-for-sale						$	564,436					4.03		%				$	164,704					4.71		%				$	56,549					2.76		%				$	61,876					2.30		%				$	847,565					3.93		%

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X

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 320
-URI https://asc.fasb.org/subtopic&trid=2209399

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 946
-SubTopic 320
-URI https://asc.fasb.org/subtopic&trid=2324412

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-URI https://asc.fasb.org/topic&trid=2196928

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 940
-SubTopic 320
-URI https://asc.fasb.org/subtopic&trid=2176304

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1403
-Paragraph (b)

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