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INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2023

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						Allowance for Credit Losses						Fair Value
June 30, 2023
Securities held-to-maturity:
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						$	152,843					$	—					$	(27,987)					$	—					$	124,856
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						61,359						—						(11,937)						—						49,422
Municipal securities						114,203						—						(21,436)						—						92,767
Total securities held-to-maturity						$	328,405					$	—					$	(61,360)					$	—					$	267,045
Securities available-for-sale:
SBA loan pool securities						$	9,251					$	7					$	(43)					$	—					$	9,215
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						82,913						—						(1,205)						—						81,708
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						95,760						—						(6,500)						—						89,260
Non-agency residential mortgage-backed securities						122,995						—						(11,487)						—						111,508
Collateralized loan obligations						490,534						—						(7,703)						—						482,831
Corporate debt securities						175,796						—						(27,191)						(1,036)						147,569
Total securities available-for-sale						$	977,249					$	7					$	(54,129)					$	(1,036)					$	922,091
December 31, 2022
Securities held-to-maturity:
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						$	153,033					$	—					$	(29,807)					$	—					$	123,226
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						61,404						—						(11,946)						—						49,458
Municipal securities						114,204						—						(24,428)						—						89,776
Total securities held-to-maturity						$	328,641					$	—					$	(66,181)					$	—					$	262,460
Securities available-for-sale:
SBA loan pool securities						$	11,241					$	—					$	(54)					$	—					$	11,187
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						40,431						—						(225)						—						40,206
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						99,075						—						(5,884)						—						93,191
Non-agency residential mortgage-backed securities						90,832						—						(10,340)						—						80,492
Collateralized loan obligations						492,203						—						(15,600)						—						476,603
Corporate debt securities						175,781						32						(9,195)						—						166,618
Total securities available-for-sale						$	909,563					$	32					$	(41,298)					$	—					$	868,297

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 (“AFS”) portfolio to the held-to-maturity (“HTM”) portfolio. At the time of the transfer, the securities had an unrealized gross loss of $16.6 million, which became part of the securities’ amortized cost basis. This amount, along with the unrealized loss included in accumulated other comprehensive income, is subsequently amortized over the remaining life of the security as an adjustment to its yield using the interest method. As a result, there is no impact on the consolidated statements of operations. At June 30, 2023, the gross unrealized loss included in accumulated other comprehensive income was $15.3 million.

At June 30, 2023, our investment securities portfolio consisted of agency securities, municipal securities, mortgage-backed securities (“MBS”), collateralized loan obligations (“CLOs”), 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.

Accrued interest receivable on AFS and HTM securities totaled $10.4 million and $9.2 million at June 30, 2023 and December 31, 2022, and is included within other assets in the accompanying consolidated statements of financial condition.

At June 30, 2023 and December 31, 2022, 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 $535.1 million and $356.5 million as of June 30, 2023 and December 31, 2022 were pledged to secure FHLB advances, FRB borrowings, public deposits and for other deposits as required or permitted by law.

Securities Available-for-Sale

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

						Three Months Ended June 30,												Six Months Ended June 30,
($ in thousands)						2023						2022						2023						2022
Gross realized gains						$	—					$	—					$	—					$	209
Gross realized losses						—						—						—						(193)
Net realized gains on sales and calls						$	—					$	—					$	—					$	16
Proceeds from sales and calls						$	20,000					$	38,500					$	20,000					$	56,146

The following table summarizes the AFS investment securities 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
June 30, 2023
Securities available-for-sale:
SBA loan pool securities						$	—					$	—					$	7,461					$	(43)					$	7,461					$	(43)
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						81,708						(1,205)						—						—						81,708						(1,205)
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						51,780						(767)						37,478						(5,733)						89,258						(6,500)
Non-agency residential mortgage-backed securities						71,394						(1,734)						40,114						(9,753)						111,508						(11,487)
Collateralized loan obligations						41,278						(481)						441,552						(7,222)						482,830						(7,703)
Corporate debt securities						95,031						(10,265)						52,538						(16,926)						147,569						(27,191)
Total securities available-for-sale						$	341,191					$	(14,452)					$	579,143					$	(39,677)					$	920,334					$	(54,129)
December 31, 2022
Securities available-for-sale:
SBA loan pool securities						$	2,260					$	(3)					$	8,927					$	(51)					$	11,187					$	(54)
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						40,206						(225)						—						—						40,206						(225)
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						76,441						(2,533)						16,750						(3,351)						93,191						(5,884)
Non-agency residential mortgage-backed securities						80,492						(10,340)						—						—						80,492						(10,340)
Collateralized loan obligations						235,936						(7,492)						240,667						(8,108)						476,603						(15,600)
Corporate debt securities						159,492						(8,374)						4,180						(821)						163,672						(9,195)
Total securities available-for-sale						$	594,827					$	(28,967)					$	270,524					$	(12,331)					$	865,351					$	(41,298)

At June 30, 2023, our AFS securities portfolio consisted of 86 securities, of which 85 securities were in an unrealized loss position. At December 31, 2022, our AFS securities portfolio consisted of 77 securities, of which 76 securities were in an unrealized loss position.

We monitor our securities portfolio for identification of potential credit impairment. During the three and six months ended June 30, 2023, we recognized a $1.0 million provision for credit losses on three corporate debt securities of other financial institutions that were downgraded to below investment grade by external credit agencies. During the three and six months ended June 30, 2022, there was no provision for credit losses related to AFS or HTM securities.

Except for the corporate debt securities noted above, we believe there was no credit impairment and the decline in fair value of our securities since acquisition was attributable to a combination of changes in interest rates and general volatility in market conditions. As of June 30, 2023, we did not have the intent to sell 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 June 30, 2023, 82 of our 85 AFS securities in an unrealized loss position received an investment grade credit rating, and all of our HTM 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 as of June 30, 2023, based on the earlier of contractual maturity dates or next repricing date:

						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						$	—					$	—					$	505,106					$	497,279
One to five years						—						—						171,438						144,892
Five to ten years						37,339						31,963						42,240						34,914
Greater than ten years						291,066						235,082						258,465						245,006
Total						$	328,405					$	267,045					$	977,249					$	922,091

Contractual maturities may not reflect the actual maturities of the investments. The average lives for MBS and collateralized mortgage obligations (“CMOs”) will likely be shorter than their contractual maturities due to prepayments and amortization.

The following table presents the fair value and weighted average yields using amortized cost of the AFS securities portfolio as of June 30, 2023, 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						$	9,215					3.87		%				$	—					—		%				$	—					—		%				$	—					—		%				$	9,215					3.87		%
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						—						—		%				—						—		%				—						—		%				81,708						5.54		%				81,708						5.54		%
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						5,233						5.70		%				7,795						3.61		%				24,442						3.14		%				51,790						5.19		%				89,260						4.45		%
Non-agency residential mortgage-backed securities						—						—		%				—						—		%				—						—		%				111,508						3.92		%				111,508						3.92		%
Collateralized loan obligations						482,831						6.88		%				—						—		%				—						—		%				—						—		%				482,831						6.88		%
Corporate debt securities						—						—		%				137,097						4.82		%				10,472						5.73		%				—						—		%				147,569						4.89		%
Total securities available-for-sale						$	497,279					6.81		%				$	144,892					4.76		%				$	34,914					3.95		%				$	245,006					4.70		%				$	922,091					5.77		%

The following table presents the amortized cost and weighted average yields using amortized cost of the HTM securities portfolio as of June 30, 2023, 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)						Amortized Cost						Weighted-Average Yield						Amortized Cost						Weighted-Average Yield						Amortized Cost						Weighted-Average Yield						Amortized Cost						Weighted-Average Yield						Amortized Cost						Weighted-Average Yield
Securities held-to-maturity:
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities						$	—					—		%				$	—					—		%				$	9,344					2.52		%				$	143,499					2.70		%				$	152,843					2.69		%
U.S. government agency and U.S. government sponsored enterprise collateralized mortgage obligations						—						—		%				—						—		%				—						—		%				61,359						2.64		%				61,359						2.64		%
Municipal securities						—						—		%				—						—		%				27,995						2.32		%				86,208						2.72		%				114,203						2.62		%
Total securities held-to-maturity						$	—					—		%				$	—					—		%				$	37,339					2.37		%				$	291,066					2.69		%				$	328,405					2.66		%

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

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-Name Accounting Standards Codification
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