Securities

9 Months Ended

Sep. 30, 2022

4.	Securities

The amortized cost, estimated fair value and unrealized gains and losses of AFS securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2022
U.S. treasury	$	132,600	$	-	$	11,978	$	120,622
Federal agency		248,427		-		43,637		204,790
State & municipal		98,126		-		14,311		83,815
Mortgage-backed:
Government-sponsored enterprises		469,757		8		60,393		409,372
U.S. government agency securities		82,086		19		7,966		74,139
Collateralized mortgage obligations:
Government-sponsored enterprises		513,088		35		58,833		454,290
U.S. government agency securities		175,425		1		19,332		156,094
Corporate		58,980		-		5,601		53,379
Total AFS securities	$	1,778,489	$	63	$	222,051	$	1,556,501
As of December 31, 2021
U.S. treasury	$	73,016	$	59	$	6	$	73,069
Federal agency		248,454		-		8,523		239,931
State & municipal		95,531		116		1,559		94,088
Mortgage-backed:
Government-sponsored enterprises		538,036		8,036		5,589		540,483
U.S. government agency securities		65,339		1,108		255		66,192
Collateralized mortgage obligations:
Government-sponsored enterprises		484,550		2,723		5,113		482,160
U.S. government agency securities		139,380		939		884		139,435
Corporate		50,500		1,516		13		52,003
Total AFS securities	$	1,694,806	$	14,497	$	21,942	$	1,687,361

There was no allowance for credit losses on AFS securities as of September 30, 2022 and December 31, 2021.

During the three and nine months ended September 30, 2022 and 2021 there were no gains or losses reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings.

The amortized cost, estimated fair value and unrealized gains and losses of HTM securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2022
Federal agency	$	100,000	$	-	$	21,179	$	78,821
Mortgage-backed:
Government-sponsored enterprises		254,889		-		40,946		213,943
U.S. government agency securities		18,403		4		573		17,834
Collateralized mortgage obligations:
Government-sponsored enterprises		203,213		-		14,608		188,605
U.S. government agency securities		67,940		1		9,071		58,870
State & municipal		285,096		2		29,071		256,027
Total HTM securities	$	929,541	$	7	$	115,448	$	814,100
As of December 31, 2021
Federal agency	$	100,000	$	-	$	4,365	$	95,635
Mortgage-backed:
Government-sponsored enterprises		161,462		2,232		1,319		162,375
U.S. government agency securities		9,112		514		-		9,626
Collateralized mortgage obligations:
Government-sponsored enterprises		94,342		1,932		129		96,145
U.S. government agency securities		44,473		336		674		44,135
State & municipal		323,821		5,026		1,503		327,344
Total HTM securities	$	733,210	$	10,040	$	7,990	$	735,260

At September 30, 2022 and December 31, 2021, all of the mortgaged-backed HTM securities were comprised of U.S. government agency and government-sponsored enterprises securities. There was no allowance for credit losses on HTM securities as of September 30, 2022 and December 31, 2021 because the expectation of nonrepayment of the amortized cost is zero, except for state & municipal securities, which such expected losses from nonrepayment are immaterial.

The Company recorded no gains from calls on HTM securities for the three months ended September 30, 2022. Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $14 thousand for the three months ended September 30, 2021. Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $4 thousand and $29 thousand for the nine months ended September 30, 2022 and 2021, respectively.

AFS and HTM securities with amortized costs totaling $1.74 billion at September 30, 2022 and $1.63 billion at December 31, 2021 were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at September 30, 2022 and December 31, 2021, AFS and HTM securities with an amortized cost of $126.2 million and $162.1 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following tables set forth information with regard to gains and (losses) on equity securities:

	Three Months Ended September 30,
(In thousands)	2022			2021
Net (losses) and gains recognized on equity securities	$	(148	)	$	(114	)
Less: Net (losses) and gains recognized on equity securities sold during the period		-			-
Unrealized (losses) and gains recognized on equity securities still held	$	(148	)	$	(114	)

	Nine Months Ended September 30,
(In thousands)	2022			2021
Net (losses) and gains recognized on equity securities	$	(918	)	$	539
Less: Net (losses) and gains recognized on equity securities sold during the period		-			-
Unrealized (losses) and gains recognized on equity securities still held	$	(918	)	$	539

As of September 30, 2022 and December 31, 2021, the carrying value of equity securities without readily determinable fair values was $1.0 million. The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of concern as of September 30, 2022 and 2021. There were no impairments, downward or upward adjustments recognized for equity securities without readily determinable fair values during the three and nine months ended September 30, 2022 and 2021.

The following table sets forth information with regard to contractual maturities of debt securities at September 30, 2022:

(In thousands)	Amortized Cost		Estimated Fair Value
AFS debt securities:
Within one year	$	1,644	$	1,636
From one to five years		253,118		233,059
From five to ten years		741,574		638,816
After ten years		782,153		682,990
Total AFS debt securities	$	1,778,489	$	1,556,501
HTM debt securities:
Within one year	$	56,687	$	56,676
From one to five years		77,429		74,329
From five to ten years		291,847		253,807
After ten years		503,578		429,288
Total HTM debt securities	$	929,541	$	814,100

Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives. Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Except for U.S. government securities and government-sponsored enterprises securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at September 30, 2022 and December 31, 2021.

The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded, segregated according to the length of time the securities had been in a continuous unrealized loss position:

	Less Than 12 Months							12 Months or Longer							Total
(In thousands)	Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions
As of September 30, 2022
AFS securities:
U.S. treasury	$	120,622	$	(11,978	)		8	$	-	$	-			-	$	120,622	$	(11,978	)		8
Federal agency		-		-			-		204,790		(43,637	)		16		204,790		(43,637	)		16
State & municipal		19,439		(2,716	)		16		64,376		(11,595	)		52		83,815		(14,311	)		68
Mortgage-backed		245,801		(22,675	)		160		236,256		(45,684	)		24		482,057		(68,359	)		184
Collateralized mortgage obligations		381,916		(37,494	)		96		223,569		(40,671	)		26		605,485		(78,165	)		122
Corporate		53,379		(5,601	)		17		-		-			-		53,379		(5,601	)		17
Total securities with unrealized losses	$	821,157	$	(80,464	)		297	$	728,991	$	(141,587	)		118	$	1,550,148	$	(222,051	)		415

HTM securities:
Federal agency	$	-	$	-			-	$	78,821	$	(21,179	)		4	$	78,821	$	(21,179	)		4
Mortgage-backed		159,823		(24,108	)		25		71,827		(17,411	)		9		231,650		(41,519	)		34
Collateralized mortgage obligation		204,362		(13,975	)		47		42,467		(9,704	)		6		246,829		(23,679	)		53
State & municipal		154,286		(17,017	)		189		40,517		(12,054	)		42		194,803		(29,071	)		231
Total securities with unrealized losses	$	518,471	$	(55,100	)		261	$	233,632	$	(60,348	)		61	$	752,103	$	(115,448	)		322

As of December 31, 2021
AFS securities:
U.S. treasury	$	49,105	$	(6	)		2	$	-	$	-			-	$	49,105	$	(6	)		2
Federal agency		41,618		(1,846	)		4		198,313		(6,677	)		12		239,931		(8,523	)		16
State & municipal		87,515		(1,559	)		61		-		-			-		87,515		(1,559	)		61
Mortgage-backed		281,217		(4,319	)		24		39,491		(1,525	)		6		320,708		(5,844	)		30
Collateralized mortgage obligations		341,673		(5,495	)		34		15,774		(502	)		4		357,447		(5,997	)		38
Corporate		9,987		(13	)		2		-		-			-		9,987		(13	)		2
Total securities with unrealized losses	$	811,115	$	(13,238	)		127	$	253,578	$	(8,704	)		22	$	1,064,693	$	(21,942	)		149

HTM securities:
Federal agency	$	-	$	-			-	$	95,635	$	(4,365	)		4	$	95,635	$	(4,365	)		4
Mortgage-backed		103,789		(1,319	)		10		-		-			-		103,789		(1,319	)		10
Collateralized mortgage obligations		54,612		(803	)		6		-		-			-		54,612		(803	)		6
State & municipal		52,783		(1,189	)		40		8,950		(314	)		10		61,733		(1,503	)		50
Total securities with unrealized losses	$	211,184	$	(3,311	)		56	$	104,585	$	(4,679	)		14	$	315,769	$	(7,990	)		70

The Company does not believe the AFS securities that were in an unrealized loss position as of September 30, 2022 and December 31, 2021, which consisted of 415 and 149 individual securities, respectively, represented a credit loss impairment. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. As of September 30, 2022 and December 31, 2021, the majority of the AFS securities in an unrealized loss position consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises that carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk free” and have a long history of zero credit losses. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity. The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities. AIR on AFS debt securities totaled $4.3 million at September 30, 2022 and $3.9 million at December 31, 2021 and is excluded from the estimate of credit losses and reported in the financial statement line for other assets.

None of the Bank’s HTM debt securities were past due or on nonaccrual status as of September 30, 2022 and December 31, 2021. There was no accrued interest reversed against interest income for the three and nine months ended September 30, 2022 or the year ended December 31, 2021 as all securities remained on accrual status. In addition, there were no collateral-dependent HTM debt securities as of September 30, 2022 and December 31, 2021. As of September 30, 2022 and December 31, 2021, 69% and 56%, respectively, of the Company’s HTM debt securities were issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit losses. Therefore, the Company did not record an allowance for credit losses for these securities as of September 30, 2022 and December 31, 2021. The remaining HTM debt securities at September 30, 2022 and December 31, 2021 were comprised of state and municipal obligations with bond ratings of A to AAA. Utilizing the Current Expected Credit Losses (“CECL”) approach, the Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no allowance for credit loss was recorded as of September 30, 2022 and December 31, 2021. AIR on HTM debt securities totaled $3.3 million at September 30, 2022 and $2.7 million at December 31, 2021 and is excluded from the estimate of credit losses and reported in the other assets financial statement line.