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Investment Securities | 6 Months Ended
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Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract] |
Investment Securities | Investment SecuritiesAt June 30, 2023, the Company had $1.75 billion and $378.9 million in available for sale debt securities and held to maturity debt securities, respectively. Many factors, including lack of liquidity in the secondary market for certain securities, variations in pricing information, changes in interest rates, regulatory actions, changes in the business environment or any changes in the competitive marketplace could have an adverse effect on the Company’s investment portfolio. The total number of available for sale and held to maturity debt securities in an unrealized loss position at June 30, 2023 totaled 937, compared with 914 at December 31, 2022. The increase in the number of securities in an unrealized loss position at June 30, 2023 was due to higher current market interest rates compared to rates at December 31, 2022. Available for Sale Debt Securities The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for available for sale debt securities at June 30, 2023 and December 31, 2022 (in thousands):
|  | June 30, 2023
|  | Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
U.S. Treasury obligations |  | $ | 276,106 |  |  | — |  |  | (29,039) |  |  | 247,067 |
Agency obligations |  | 31,452 |  |  | 301 |  |  | — |  |  | 31,753 |
Mortgage-backed securities |  | 1,549,842 |  |  | 84 |  |  | (203,202) |  |  | 1,346,724 |
Asset-backed securities |  | 34,351 |  |  | 379 |  |  | (224) |  |  | 34,506 |
State and municipal obligations |  | 64,939 |  |  | — |  |  | (9,214) |  |  | 55,725 |
Corporate obligations |  | 40,495 |  |  | — |  |  | (6,381) |  |  | 34,114 |
|  | $ | 1,997,185 |  |  | 764 |  |  | (248,060) |  |  | 1,749,889 |
|  | December 31, 2022
|  | Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
U.S. Treasury obligations |  | $ | 275,620 |  |  | — |  |  | (29,804) |  |  | 245,816 |
Mortgage-backed securities |  | 1,636,913 |  |  | 209 |  |  | (209,983) |  |  | 1,427,139 |
Asset-backed securities |  | 37,706 |  |  | 278 |  |  | (363) |  |  | 37,621 |
State and municipal obligations |  | 67,706 |  |  | — |  |  | (10,842) |  |  | 56,864 |
Corporate obligations |  | 40,540 |  |  | 50 |  |  | (4,482) |  |  | 36,108 |
|  | $ | 2,058,485 |  |  | 537 |  |  | (255,474) |  |  | 1,803,548 |
The amortized cost and fair value of available for sale debt securities at June 30, 2023, by contractual maturity, are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.
|  | June 30, 2023
|  | Amortized cost |  | Fair value
Due in one year or less |  | $ | — |  |  | — |
Due after one year through five years |  | 242,910 |  |  | 218,600 |
Due after five years through ten years |  | 82,226 |  |  | 70,318 |
Due after ten years |  | 56,404 |  |  | 47,988 |
|  | $ | 381,540 |  |  | 336,906 |
Investments which pay principal on a periodic basis totaling $1.62 billion at amortized cost and $1.41 billion at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments. There were no sales of securities from the available for sale debt securities portfolio for the three and six months ended June 30, 2023 and 2022. For the three and six months ended June 30, 2023, there were no proceeds from calls on securities in the available for sale debt securities portfolio. For the three and six months ended June 30, 2022, proceeds from calls on securities in the available for sale debt securities portfolio totaled $5.4 million with gains of $58,000 and no losses recognized. The number of available for sale debt securities in an unrealized loss position at June 30, 2023 totaled 464, compared with 475 at December 31, 2022. The decline in the number of securities in an unrealized loss position at June 30, 2023 was due to maturities and calls of securities in the quarter. All securities in an unrealized loss position were investment grade at June 30, 2023. Held to Maturity Debt Securities The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for held to maturity debt securities at June 30, 2023 and December 31, 2022 (in thousands):
|  | June 30, 2023
|  | Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  |  |  | Fair value
Agency obligations |  | $ | 12,096 |  |  | — |  |  | (929) |  |  |  |  | 11,167 |
State and municipal obligations |  | 357,003 |  |  | 168 |  |  | (12,510) |  |  |  |  | 344,661 |
Corporate obligations |  | 9,820 |  |  | — |  |  | (619) |  |  |  |  | 9,201 |
|  | $ | 378,919 |  |  | 168 |  |  | (14,058) |  |  |  |  | 365,029 |
|  | December 31, 2022
|  | Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  |  |  | Fair value
Agency obligations |  | $ | 9,997 |  |  | — |  |  | (1,033) |  |  |  |  | 8,964 |
State and municipal obligations |  | 366,164 |  |  | 268 |  |  | (13,015) |  |  |  |  | 353,417 |
Corporate obligations |  | 11,789 |  |  | 1 |  |  | (703) |  |  |  |  | 11,087 |
|  | $ | 387,950 |  |  | 269 |  |  | (14,751) |  |  |  |  | 373,468 |
The Company generally purchases securities for long-term investment purposes, and differences between amortized cost and fair value may fluctuate during the investment period. There were no sales of securities from the held to maturity debt securities portfolio for the three and six months ended June 30, 2023 and 2022. For the three and six months ended June 30, 2023, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $3.5 million and $6.6 million, respectively. As to these calls on securities, for the three months ended June 30, 2023, there were gross gains of $28,000 and no gross losses, while for the six months ended June 30, 2023, gross gains totaled $24,000, with no gross losses. For the three and six months ended June 30, 2022, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $10.3 million and $26.2 million, respectively. As to these calls on securities for the three and six months ended June 30, 2022, gross gains totaled $83,000 and $99,000, respectively, with no gross losses. The amortized cost and fair value of investment securities in the held to maturity debt securities portfolio at June 30, 2023 by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.
|  | June 30, 2023
|  | Amortized cost |  | Fair value
Due in one year or less |  | $ | 25,283 |  |  | 25,199 |
Due after one year through five years |  | 169,684 |  |  | 166,605 |
Due after five years through ten years |  | 153,491 |  |  | 148,121 |
Due after ten years |  | 30,461 |  |  | 25,104 |
|  | $ | 378,919 |  |  | 365,029 |
The allowance for credit losses on held to maturity debt securities at June 30, 2023 and December 31, 2022 was $25,000 and $27,000, respectively, and are excluded from amortized cost in the tables above. The number of held to maturity debt securities in an unrealized loss position at June 30, 2023 totaled 473, compared with 439 at December 31, 2022. The increase in the number of securities in an unrealized loss position at June 30, 2023, was due to higher current market interest rates compared to rates at December 31, 2022. Management measures expected credit losses on held to maturity debt securities on a collective basis by security type. Management classifies the held to maturity debt securities portfolio into the following security types: •Agency obligations; •Mortgage-backed securities; •State and municipal obligations; and •Corporate obligations. All of the agency obligations held by the Company are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The majority of the state and municipal and corporate obligations carry credit ratings from the rating agencies at June 30, 2023 no lower than A and the Company had no securities rated BBB or worse by Moody’s Investors Service. Credit Quality Indicators. The following table provides the amortized cost of held to maturity debt securities by credit rating at June 30, 2023 and December 31, 2021 (in thousands):
|  | June 30, 2023
Total Portfolio |  | AAA |  | AA |  | A |  | BBB |  | Not Rated |  | Total
Agency obligations |  | $ | 12,096 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12,096 |
State and municipal obligations |  | 47,125 |  |  | 166,596 |  |  | 142,830 |  |  | — |  |  | 452 |  |  | 357,003 |
Corporate obligations |  | 505 |  |  | 2,073 |  |  | 6,146 |  |  | — |  |  | 1,096 |  |  | 9,820 |
|  | $ | 59,726 |  |  | 168,669 |  |  | 148,976 |  |  | — |  |  | 1,548 |  |  | 378,919 |
|  | December 31, 2022
Total Portfolio |  | AAA |  | AA |  | A |  | BBB |  | Not Rated |  | Total
Agency obligations |  | $ | 9,997 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9,997 |
State and municipal obligations |  | 48,453 |  |  | 171,934 |  |  | 143,829 |  |  | 770 |  |  | 1,178 |  |  | 366,164 |
Corporate obligations |  | 507 |  |  | 3,592 |  |  | 7,415 |  |  | — |  |  | 275 |  |  | 11,789 |
|  | $ | 58,957 |  |  | 175,526 |  |  | 151,244 |  |  | 770 |  |  | 1,453 |  |  | 387,950 |
Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities. At June 30, 2023, the held to maturity debt securities portfolio was comprised of 16% rated AAA, 45% rated AA, 39% rated A, and less than 1% either below an A rating or not rated by Moody’s Investors Service or Standard and Poor’s. Securities not explicitly rated, such as U.S. Government mortgage-backed securities, were grouped where possible under the credit rating of the issuer of the security.

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