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SECURITIES | 9 Months Ended
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Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract] |
SECURITIES | The amortized cost, gross unrealized gains and losses and estimated fair value of securities at September 30, 2023 and December 31, 2022 are summarized as follows (in thousands):
| September 30, 2023
| Amortized Cost |  |  |  |  |  | Fair Value
Trading: |  |  |  |  |  |  |
Corporate bonds | $ | 27,203 |  |  |  |  |  |  | $ | 25,268 |
| $ | 27,203 |  |  |  |  |  |  | $ | 25,268 |
| September 30, 2023
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Allowance for Credit Losses |  | Fair Value
Available-for-Sale: |  |  |  |  |  |  |  |  |
U.S. Government and agency obligations | $ | 35,342 |  |  | $ | — |  |  | $ | (1,015) |  |  | $ | — |  |  | $ | 34,327 |
Municipal bonds | 166,902 |  |  | — |  |  | (43,304) |  |  | — |  |  | 123,598 |
Corporate bonds | 106,015 |  |  | — |  |  | (14,247) |  |  | (750) |  |  | 91,018 |
Mortgage-backed or related securities | 2,244,179 |  |  | — |  |  | (424,727) |  |  | — |  |  | 1,819,452 |
Asset-backed securities | 222,534 |  |  | 207 |  |  | (3,143) |  |  | — |  |  | 219,598 |
| $ | 2,774,972 |  |  | $ | 207 |  |  | $ | (486,436) |  |  | $ | (750) |  |  | $ | 2,287,993 |
| September 30, 2023
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | Allowance for Credit Losses
Held-to-Maturity: |  |  |  |  |  |  |  |  |
U.S. Government and agency obligations | $ | 308 |  |  | $ | — |  |  | $ | (8) |  |  | $ | 300 |  |  | $ | — |
Municipal bonds | 491,152 |  |  | 12 |  |  | (95,444) |  |  | 395,551 |  |  | (169) |
Corporate bonds | 2,813 |  |  | — |  |  | (27) |  |  | 2,606 |  |  | (180) |
Mortgage-backed or related securities | 588,232 |  |  | — |  |  | (133,036) |  |  | 455,196 |  |  | — |
| $ | 1,082,505 |  |  | $ | 12 |  |  | $ | (228,515) |  |  | $ | 853,653 |  |  | $ | (349) |
| December 31, 2022
| Amortized Cost |  |  |  |  |  | Fair Value
Trading: |  |  |  |  |  |  |
Corporate bonds | $ | 27,203 |  |  |  |  |  |  | $ | 28,694 |
| $ | 27,203 |  |  |  |  |  |  | $ | 28,694 |
| December 31, 2022
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  |  |  | Fair Value
Available-for-Sale: |  |  |  |  |  |  |  |  |
U.S. Government and agency obligations | $ | 56,344 |  |  | $ | 8 |  |  | $ | (1,244) |  |  |  |  | $ | 55,108 |
Municipal bonds | 301,449 |  |  | 530 |  |  | (40,770) |  |  |  |  | 261,209 |
Corporate bonds | 133,334 |  |  | — |  |  | (11,481) |  |  |  |  | 121,853 |
Mortgage-backed or related securities | 2,505,172 |  |  | 885 |  |  | (366,721) |  |  |  |  | 2,139,336 |
Asset-backed securities | 222,478 |  |  | 40 |  |  | (10,993) |  |  |  |  | 211,525 |
| $ | 3,218,777 |  |  | $ | 1,463 |  |  | $ | (431,209) |  |  |  |  | $ | 2,789,031 |
| December 31, 2022
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | Allowance for Credit Losses
Held-to-Maturity: |  |  |  |  |  |  |  |  |
U.S. Government and agency obligations | $ | 312 |  |  | $ | — |  |  | $ | (7) |  |  | $ | 305 |  |  | $ | — |
Municipal bonds | 503,117 |  |  | 109 |  |  | (70,907) |  |  | 432,319 |  |  | (183) |
Corporate bonds | 2,961 |  |  | — |  |  | (16) |  |  | 2,945 |  |  | (196) |
Mortgage-backed or related securities | 611,577 |  |  | — |  |  | (104,966) |  |  | 506,611 |  |  | — |
| $ | 1,117,967 |  |  | $ | 109 |  |  | $ | (175,896) |  |  | $ | 942,180 |  |  | $ | (379) |
Accrued interest receivable on held-to-maturity debt securities was $4.2 million and $4.8 million at September 30, 2023 and December 31, 2022, respectively, and was $11.0 million and $12.4 million on available-for-sale debt securities at September 30, 2023 and December 31, 2022, respectively. Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Statements of Financial Condition and is excluded from the calculation of the allowance for credit losses. At September 30, 2023 and December 31, 2022, the gross unrealized losses and the fair value for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows (in thousands):
| September 30, 2023
| Less Than 12 Months |  | 12 Months or More |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Available-for-Sale: |  |  |  |  |  |  |  |  |  |  |
U.S. Government and agency obligations | $ | — |  |  | $ | — |  |  | $ | 34,327 |  |  | $ | (1,015) |  |  | $ | 34,327 |  |  | $ | (1,015) |
Municipal bonds | 24,409 |  |  | (2,095) |  |  | 99,189 |  |  | (41,209) |  |  | 123,598 |  |  | (43,304) |
Corporate bonds | 5,715 |  |  | (264) |  |  | 88,682 |  |  | (13,983) |  |  | 94,397 |  |  | (14,247) |
Mortgage-backed or related securities | 178,325 |  |  | (4,816) |  |  | 1,641,125 |  |  | (419,911) |  |  | 1,819,450 |  |  | (424,727) |
Asset-backed securities | 114,512 |  |  | (1,863) |  |  | 85,345 |  |  | (1,280) |  |  | 199,857 |  |  | (3,143) |
| $ | 322,961 |  |  | $ | (9,038) |  |  | $ | 1,948,668 |  |  | $ | (477,398) |  |  | $ | 2,271,629 |  |  | $ | (486,436) |
| December 31, 2022
| Less Than 12 Months |  | 12 Months or More |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Available-for-Sale: |  |  |  |  |  |  |  |  |  |  |
U.S. Government and agency obligations | $ | 33,407 |  |  | $ | (882) |  |  | $ | 16,732 |  |  | $ | (362) |  |  | $ | 50,139 |  |  | $ | (1,244) |
Municipal bonds | 188,920 |  |  | (25,592) |  |  | 33,907 |  |  | (15,178) |  |  | 222,827 |  |  | (40,770) |
Corporate bonds | 108,187 |  |  | (9,547) |  |  | 13,066 |  |  | (1,934) |  |  | 121,253 |  |  | (11,481) |
Mortgage-backed or related securities | 930,566 |  |  | (90,537) |  |  | 1,159,110 |  |  | (276,184) |  |  | 2,089,676 |  |  | (366,721) |
Asset-backed securities | 201,437 |  |  | (10,993) |  |  | — |  |  | — |  |  | 201,437 |  |  | (10,993) |
| $ | 1,462,517 |  |  | $ | (137,551) |  |  | $ | 1,222,815 |  |  | $ | (293,658) |  |  | $ | 2,685,332 |  |  | $ | (431,209) |
At September 30, 2023, there were 233 securities—available-for-sale with unrealized losses, compared to 298 at December 31, 2022. As of September 30, 2023, we had an allowance for credit losses of $750,000 related to the estimated credit loss on one security. Management does not believe that any remaining individual unrealized loss as of September 30, 2023 or December 31, 2022 resulted from credit loss. The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase. There were no sales of securities—trading during the nine months ended September 30, 2023 or 2022. There were no securities—trading in a nonaccrual status at September 30, 2023 or December 31, 2022. Net unrealized holding losses of $3.4 million were recognized during the nine months ended September 30, 2023, compared to $1.4 million of net unrealized holding gains recognized during the nine months ended September 30, 2022. The following table presents gross gains and losses on sales and partial calls of securities available-for-sale (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Available-for-Sale: |  |  |  |  |  |  |
Gross Gains | $ | — |  |  | $ | 6 |  |  | $ | 377 |  |  | $ | 522 |
Gross Losses | (2,657) |  |  | — |  |  | (14,813) |  |  | (49) |
Balance, end of the period | $ | (2,657) |  |  | $ | 6 |  |  | $ | (14,436) |  |  | $ | 473 |
There were no securities—available-for-sale in a nonaccrual status at September 30, 2023 or December 31, 2022. The following table presents the amortized cost and estimated fair value of securities at September 30, 2023, by contractual maturity and does not reflect any required periodic payments (in thousands). Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.
| September 30, 2023
| Trading |  | Available-for-Sale |  | Held-to-Maturity
| Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Maturing within one year | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 17,239 |  |  | $ | 16,820 |
Maturing after one year through five years | — |  |  | — |  |  | 169,465 |  |  | 151,453 |  |  | 19,702 |  |  | 18,871 |
Maturing after five years through ten years | — |  |  | — |  |  | 385,977 |  |  | 334,298 |  |  | 25,857 |  |  | 24,234 |
Maturing after ten years | 27,203 |  |  | 25,268 |  |  | 2,219,530 |  |  | 1,802,242 |  |  | 1,019,707 |  |  | 793,728 |
| $ | 27,203 |  |  | $ | 25,268 |  |  | $ | 2,774,972 |  |  | $ | 2,287,993 |  |  | $ | 1,082,505 |  |  | $ | 853,653 |
The following table presents, as of September 30, 2023, investment securities which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):
| September 30, 2023
| Carrying Value |  | Amortized Cost |  | Fair Value
Purpose or beneficiary: |  |  |  |  |
State and local governments public deposits | $ | 251,566 |  |  | $ | 268,603 |  |  | $ | 214,868 |
Federal Reserve | 116,703 |  |  | 116,704 |  |  | 93,257 |
Interest rate swap counterparties | 974 |  |  | 974 |  |  | 755 |
Repurchase transaction accounts | 269,808 |  |  | 269,808 |  |  | 206,692 |
Other | 2,347 |  |  | 2,347 |  |  | 2,077 |
Total pledged securities | $ | 641,398 |  |  | $ | 658,436 |  |  | $ | 517,649 |
The Company monitors the credit quality of held-to-maturity debt securities through the use of credit ratings which are reviewed and updated quarterly. The Company’s non-rated held-to-maturity debt securities are primarily United States government sponsored enterprise debentures carrying minimal to no credit risk. The non-rated corporate bonds primarily consist of Community Reinvestment Act related bonds secured by loan instruments from low to moderate income borrowers. The remaining non-rated held-to-maturity debt securities balance is comprised of local municipal debt from within the Company’s geographic footprint and is monitored through quarterly or annual financial review. This municipal debt is predominately essential service or unlimited general obligation backed debt. The following tables summarize the amortized cost of held-to-maturity debt securities by credit rating at September 30, 2023 and December 31, 2022 (in thousands):
| September 30, 2023
| U.S. Government and agency obligations |  | Municipal bonds |  | Corporate bonds |  | Mortgage-backed or related securities |  | Total
AAA/AA/A | $ | — |  |  | $ | 481,496 |  |  | $ | 500 |  |  | $ | 16,518 |  |  | $ | 498,514 |
Not Rated | 308 |  |  | 9,656 |  |  | 2,313 |  |  | 571,714 |  |  | 583,991 |
| $ | 308 |  |  | $ | 491,152 |  |  | $ | 2,813 |  |  | $ | 588,232 |  |  | $ | 1,082,505 |
| December 31, 2022
| U.S. Government and agency obligations |  | Municipal bonds |  | Corporate bonds |  | Mortgage-backed or related securities |  | Total
AAA/AA/A | $ | — |  |  | $ | 492,105 |  |  | $ | 500 |  |  | $ | 16,681 |  |  | $ | 509,286 |
Not Rated | 312 |  |  | 11,012 |  |  | 2,461 |  |  | 594,896 |  |  | 608,681 |
| $ | 312 |  |  | $ | 503,117 |  |  | $ | 2,961 |  |  | $ | 611,577 |  |  | $ | 1,117,967 |
The following tables present the activity in the allowance for credit losses for securities available-for-sale by major type for the three and nine months ended September 30, 2023 (in thousands). We had no allowance for credit losses for securities available-for-sale during three and nine months ended September 30, 2022.
| For the Three Months Ended September 30, 2023
| U.S. Government and agency obligations |  | Municipal bonds |  | Corporate bonds |  | Mortgage-backed or related securities |  | Total
Allowance for credit losses – securities available-for-sale |  |  |  |  |  |  |  |  |
Beginning balance | $ | — |  |  | $ | — |  |  | $ | 2,000 |  |  | $ | — |  |  | $ | 2,000 |
(Recapture) provision for credit losses | — |  |  | — |  |  | (1,250) |  |  | — |  |  | (1,250) |
Ending balance | $ | — |  |  | $ | — |  |  | $ | 750 |  |  | $ | — |  |  | $ | 750 |
| For the Nine Months Ended September 30, 2023
| U.S. Government and agency obligations |  | Municipal bonds |  | Corporate bonds |  | Mortgage-backed or related securities |  | Total
Allowance for credit losses – securities available-for-sale |  |  |  |  |  |  |  |  |
Beginning balance | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Provision for credit losses | — |  |  | — |  |  | 750 |  |  | — |  |  | 750 |
Ending balance | $ | — |  |  | $ | — |  |  | $ | 750 |  |  | $ | — |  |  | $ | 750 |

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