Securities

3 Months Ended

Mar. 31, 2024

4.	Securities

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

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
As of March 31, 2024
U.S. treasury	$	133,442	$	-	$	(8,759	)	$	124,683
Federal agency		248,375		-		(35,071	)		213,304
State & municipal		96,054		1		(10,022	)		86,033
Mortgage-backed:
Government-sponsored enterprises		387,479		3		(45,461	)		342,021
U.S. government agency securities		71,036		10		(7,520	)		63,526
Collateralized mortgage obligations:
Government-sponsored enterprises		452,853		49		(50,135	)		402,767
U.S. government agency securities		170,293		-		(26,034	)		144,259
Corporate		48,451		-		(6,573	)		41,878
Total AFS securities	$	1,607,983	$	63	$	(189,575	)	$	1,418,471
As of December 31, 2023
U.S. treasury	$	133,302	$	-	$	(8,278	)	$	125,024
Federal agency		248,384		-		(33,644	)		214,740
State & municipal		96,251		11		(9,956	)		86,306
Mortgage-backed:
Government-sponsored enterprises		399,532		7		(44,264	)		355,275
U.S. government agency securities		74,281		14		(7,302	)		66,993
Collateralized mortgage obligations:
Government-sponsored enterprises		452,715		15		(48,257	)		404,473
U.S. government agency securities		162,171		-		(25,100	)		137,071
Corporate		48,442		-		(7,466	)		40,976
Total AFS securities	$	1,615,078	$	47	$	(184,267	)	$	1,430,858

There was no allowance for credit losses on AFS securities as of March 31, 2024 and December 31, 2023.

During the three months ended March 31, 2023, the Company incurred a $5.0 million loss on the write-off of an AFS corporate debt security from a subordinated debt investment of a financial institution that failed. The $5.0 million loss was reclassified out of AOCI and into earnings in net securities gains (losses) in the unaudited interim consolidated statements of income. During the three months ended March 31, 2024 the Company sold the previously written-off security and recognized a gain of $2.3 million into earnings in net securities gains (losses) in the unaudited interim consolidated statements of income. During the three months ended March 31, 2024, there were no gains or losses reclassified out of AOCI and into earnings.

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

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
As of March 31, 2024
Federal agency	$	100,000	$	-	$	(18,440	)	$	81,560
Mortgage-backed:
Government-sponsored enterprises		224,344		-		(34,187	)		190,157
U.S. government agency securities		16,742		2		(736	)		16,008
Collateralized mortgage obligations:
Government-sponsored enterprises		182,813		-		(13,466	)		169,347
U.S. government agency securities		63,137		-		(11,206	)		51,931
State & municipal		303,827		99		(19,610	)		284,316
Total HTM securities	$	890,863	$	101	$	(97,645	)	$	793,319
As of December 31, 2023
Federal agency	$	100,000	$	-	$	(17,784	)	$	82,216
Mortgage-backed:
Government-sponsored enterprises		228,720		-		(31,613	)		197,107
U.S. government agency securities		17,086		3		(566	)		16,523
Collateralized mortgage obligations:
Government-sponsored enterprises		187,457		57		(12,021	)		175,493
U.S. government agency securities		63,878		-		(10,908	)		52,970
State & municipal		308,126		211		(18,122	)		290,215
Total HTM securities	$	905,267	$	271	$	(91,014	)	$	814,524

At March 31, 2024 and December 31, 2023, all of the mortgaged-backed HTM securities were comprised of U.S. government agency and government-sponsored enterprises securities.

The Company recorded no gains from calls on HTM securities for the three months ended March 31, 2024 and 2023.

AFS and HTM securities with amortized costs totaling $1.99 billion at March 31, 2024 and $2.03 billion at December 31, 2023 were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at March 31, 2024 and December 31, 2023, AFS and HTM securities with an amortized cost of $159.3 million and $177.2 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

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

	Three Months Ended March 31,
(In thousands)	2024				2023
Net (losses) and gains recognized on equity securities		$	(101	)		$	2
Less: Net (losses) and gains recognized on equity securities sold during the period			-				-
Unrealized (losses) and gains recognized on equity securities still held		$	(101	)		$	2

As of March 31, 2024 and December 31, 2023, 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 March 31, 2024 and 2023. There were no impairments, or downward or upward adjustments recognized for equity securities without readily determinable fair values during the three months ended March 31, 2024 and 2023.

The following table sets forth information with regard to contractual maturities of debt securities at March 31, 2024:

(In thousands)	Amortized Cost		Estimated Fair Value
AFS debt securities:
Within one year	$	50,294	$	49,553
From one to five years		567,513		508,211
From five to ten years		314,839		277,648
After ten years		675,337		583,059
Total AFS debt securities	$	1,607,983	$	1,418,471
HTM debt securities:
Within one year	$	98,660	$	98,460
From one to five years		125,141		119,411
From five to ten years		242,973		210,783
After ten years		424,089		364,665
Total HTM debt securities	$	890,863	$	793,319

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 March 31, 2024 and December 31, 2023.

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 March 31, 2024
AFS securities:
U.S. treasury	$	-	$	-			-	$	124,683	$	(8,759	)		8	$	124,683	$	(8,759	)		8
Federal agency		-		-			-		213,304		(35,071	)		16		213,304		(35,071	)		16
State & municipal		-		-			-		85,266		(10,022	)		66		85,266		(10,022	)		66
Mortgage-backed		136		(1	)		9		404,618		(52,980	)		158		404,754		(52,981	)		167
Collateralized mortgage obligations		11,033		(59	)		2		523,989		(76,110	)		120		535,022		(76,169	)		122
Corporate		1,459		(2	)		1		40,419		(6,571	)		14		41,878		(6,573	)		15
Total securities with unrealized losses	$	12,628	$	(62	)		12	$	1,392,279	$	(189,513	)		382	$	1,404,907	$	(189,575	)		394

HTM securities:
Federal agency	$	-	$	-			-	$	81,560	$	(18,440	)		4	$	81,560	$	(18,440	)		4
Mortgage-backed		11,905		(489	)		1		194,181		(34,434	)		33		206,086		(34,923	)		34
Collateralized mortgage obligation		8,189		(58	)		1		213,088		(24,614	)		52		221,277		(24,672	)		53
State & municipal		4,423		(13	)		4		181,355		(19,597	)		205		185,778		(19,610	)		209
Total securities with unrealized losses	$	24,517	$	(560	)		6	$	670,184	$	(97,085	)		294	$	694,701	$	(97,645	)		300

As of December 31, 2023
AFS securities:
U.S. treasury	$	-	$	-			-	$	125,024	$	(8,278	)		8	$	125,024	$	(8,278	)		8
Federal agency		-		-			-		214,740		(33,644	)		16		214,740		(33,644	)		16
State & municipal		-		-			-		85,528		(9,956	)		66		85,528		(9,956	)		66
Mortgage-backed		53		(1	)		7		421,259		(51,565	)		156		421,312		(51,566	)		163
Collateralized mortgage obligations		1,333		(6	)		2		536,678		(73,351	)		118		538,011		(73,357	)		120
Corporate		1,379		(75	)		1		39,597		(7,391	)		14		40,976		(7,466	)		15
Total securities with unrealized losses	$	2,765	$	(82	)		10	$	1,422,826	$	(184,185	)		378	$	1,425,591	$	(184,267	)		388

HTM securities:
Federal agency	$	-	$	-			-	$	82,216	$	(17,784	)		4	$	82,216	$	(17,784	)		4
Mortgage-backed		12,221		(365	)		1		201,320		(31,814	)		33		213,541		(32,179	)		34
Collateralized mortgage obligations		-		-			-		219,820		(22,929	)		54		219,820		(22,929	)		54
State & municipal		14,422		(127	)		21		171,904		(17,995	)		189		186,326		(18,122	)		210
Total securities with unrealized losses	$	26,643	$	(492	)		22	$	675,260	$	(90,522	)		280	$	701,903	$	(91,014	)		302

The Company does not believe the AFS securities that were in an unrealized loss position as of March 31, 2024 and December 31, 2023, which consisted of 394 and 388 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 March 31, 2024 and December 31, 2023, 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 AIR from the amortized cost basis of debt securities. AIR on AFS debt securities totaled $3.9 million at March 31, 2024 and December 31, 2023, and is excluded from the estimate of credit losses and reported in the other assets financial statement line.

None of the Bank’s HTM debt securities were past due or on nonaccrual status as of March 31, 2024 and December 31, 2023. There was no accrued interest reversed against interest income for the three months ended March 31, 2024 or the year ended December 31, 2023 as all securities remained in accrual status. In addition, there were no collateral-dependent HTM debt securities as of March 31, 2024 and December 31, 2023. There was no allowance for credit losses on HTM securities as of March 31, 2024 and December 31, 2023. As of March 31, 2024 and December 31, 2023, 66% 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, which 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 March 31, 2024 and December 31, 2023. The remaining HTM debt securities at March 31, 2024 and December 31, 2023 were comprised of state and municipal obligations generally with bond ratings of A to AAA. Utilizing the CECL methodology, 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 March 31, 2024 and December 31, 2023. AIR on HTM debt securities totaled $5.1 million at March 31, 2024 and $4.7 million at December 31, 2023 and is excluded from the estimate of credit losses and reported in the other assets financial statement line.