SECURITIES AVAILABLE FOR SALE, HELD TO MATURITY, AND MARKETABLE EQUITY SECURITIES

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE, HELD TO MATURITY, AND MARKETABLE EQUITY SECURITIES

SECURITIES AVAILABLE FOR SALE, HELD TO MATURITY, AND MARKETABLE

EQUITY SECURITIES

The following is a summary of securities available for sale, held to maturity, and marketable equity securities:


(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance
September 30, 2022
Securities available for sale
U.S Treasuries	$	19,997	$	3	$	—	$	20,000
Municipal bonds and obligations	66,399		21		(5,854)		60,566		—
Agency collateralized mortgage obligations	656,132		—		(98,619)		557,513		—
Agency mortgage-backed securities	660,065		1		(106,329)		553,737		—
Agency commercial mortgage-backed securities	270,609		—		(35,033)		235,576		—
Corporate bonds	45,269		83		(2,451)		42,901		—
Other bonds and obligations	655		67		(66)		656		—
Total securities available for sale	1,719,126		175		(248,352)		1,470,949		—

Securities held to maturity
Municipal bonds and obligations	267,821		299		(36,446)		231,674		67
Agency collateralized mortgage obligations	132,931		—		(19,965)		112,966		—
Agency mortgage-backed securities	52,175		—		(10,333)		41,842		—
Agency commercial mortgage-backed securities	137,177		—		(22,659)		114,518		—
Tax advantaged economic development bonds	2,235		5		(142)		2,098		28
Other bonds and obligations	164		—		—		164		—
Total securities held to maturity	592,503		304		(89,545)		503,262		95

Marketable equity securities	15,035		—		(2,245)		12,790		—
Total	$	2,326,664	$	479	$	(340,142)	$	1,987,001	$	95


(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance
December 31, 2021
Securities available for sale
U.S Treasuries	$	59,972	$	1	$	—	$	59,973	$	—
Municipal bonds and obligations	71,822		5,355		—		77,177		—
Agency collateralized mortgage obligations	693,782		5,566		(11,012)		688,336		—
Agency mortgage-backed securities	711,154		2,347		(7,642)		705,859		—
Agency commercial mortgage-backed securities	300,259		3,949		(3,628)		300,580		—
Corporate bonds	44,824		950		(114)		45,660		—


Total securities available for sale	1,881,813		18,168		(22,396)		1,877,585		—

Securities held to maturity
Municipal bonds and obligations	281,515		16,151		(693)		296,973		70
Agency collateralized mortgage obligations	149,195		3,203		(3,513)		148,885		—
Agency mortgage-backed securities	57,327		95		(1,498)		55,924		—
Agency commercial mortgage-backed securities	145,573		266		(3,289)		142,550		—
Tax advantaged economic development bonds	2,728		26		(15)		2,739		35
Other bonds and obligations	165		—		—		165		—
Total securities held to maturity	636,503		19,741		(9,008)		647,236		105

Marketable equity securities	15,689		67		(303)		15,453		—
Total	$	2,534,005	$	37,976	$	(31,707)	$	2,540,274	$	105

The following table summarizes the activity in the allowance for credit losses for debt securities held to maturity by security type for the three and nine months ended September 30, 2022 and 2021:


(In thousands)	Municipal bonds and obligations		Tax advantaged economic development bonds		Total
Balance at June 30, 2022	$	66	$	28	$	94
Provision for credit losses	1		—		1
Balance at September 30, 2022	$	67	$	28	$	95


(In thousands)	Municipal bonds and obligations		Tax advantaged economic development bonds		Total
Balance at June 30, 2021	$	90	$	40	$	130
(Benefit)/provision for credit losses	(3)		(2)		(5)
Balance at September 30, 2021	$	87	$	38	$	125


(In thousands)	Municipal bonds and obligations		Tax advantaged economic development bonds		Total
Balance at December 31, 2021	$	70	$	35	$	105
(Benefit)/provision for credit losses	(3)		(7)		(10)
Balance at September 30, 2022	$	67	$	28	$	95


(In thousands)	Municipal bonds and obligations		Tax advantaged economic development bonds		Total
Balance at December 31, 2020	$	64	$	40	$	104
Provision/(benefit) for credit losses	23		(2)		21
Balance at September 30, 2021	$	87	$	38	$	125

Credit Quality Information

The Company monitors the credit quality of held to maturity securities through credit ratings from various rating agencies. Credit ratings express opinions about the credit quality of a security and are utilized by the Company to make informed decisions. Investment grade securities are rated BBB-/Baa3 or higher and generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade are considered to have distinctively higher credit risk than investment grade securities. For securities without credit ratings, the Company utilizes other financial information indicating the financial health of the underlying municipality, agency, or organization.

As of September 30, 2022, none of the Company's investment securities were delinquent or in non-accrual status.

The amortized cost and estimated fair value of available for sale (“AFS”) and held to maturity (“HTM”) securities segregated by contractual maturity at September 30, 2022 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.


	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value

Within 1 year	$	20,441	$	20,444	$	1,711	$	1,710
Over 1 year to 5 years	9,392		9,224		2,326		2,313
Over 5 years to 10 years	48,894		46,318		23,841		23,500
Over 10 years	53,593		48,137		242,342		206,413
Total bonds and obligations	132,320		124,123		270,220		233,936


Mortgage-backed securities	1,586,806		1,346,826		322,283		269,326
Total	$	1,719,126	$	1,470,949	$	592,503	$	503,262

During the three and nine months ended September 30, 2022, purchases of AFS securities totaled $41.4 million and $428.1 million, respectively. During the three months ended September 30, 2022, there were no sales of AFS securities. During the nine months ended September 30, 2022, sales of AFS securities totaled $150 million. During the three and nine months ended September 30, 2021, purchases of AFS securities totaled $160.0 million and $429.0 million, respectively. During the three and nine months ended September 30, 2021, there were no sales of AFS securities. During the three months ended September 30, 2022, there were no gross gains or gross losses. During the nine months ended September 30, 2022, gross gains totaled $6 thousand and there were no gross losses. During the three and nine months ended September 30, 2021, there were no gross gains or losses on AFS securities. These gains and losses are included in gain/(loss) on securities, net on the consolidated statements of income.

Securities available for sale and held to maturity with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:


	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
September 30, 2022

Securities available for sale
U.S Treasuries	$	—	$	—	$	—	$	—	$	—	$	—
Municipal bonds and obligations	5,854		52,279		—		—		5,854		52,279
Agency collateralized mortgage obligations	26,129		293,758		72,490		263,754		98,619		557,512
Agency mortgage-backed securities	48,764		314,987		57,565		238,651		106,329		553,638
Agency commercial mortgage-backed securities	19,323		154,763		15,710		80,799		35,033		235,562
Corporate bonds	1,627		34,126		824		7,851		2,451		41,977

Other bonds and obligations	—		—		66		295		66		295



Total securities available for sale	$	101,697	$	849,913	$	146,655	$	591,350	$	248,352	$	1,441,263

Securities held to maturity
Municipal bonds and obligations	$	22,075	$	166,539	$	14,371	$	23,286	$	36,446	$	189,825
Agency collateralized mortgage obligations	2,537		52,558		17,428		60,408		19,965		112,966
Agency mortgage-backed securities	340		2,410		9,993		39,432		10,333		41,842
Agency commercial mortgage-backed securities	4,156		25,094		18,503		89,423		22,659		114,517
Tax advantaged economic development bonds	1		213		141		1,023		142		1,236
Total securities held to maturity	29,109		246,814		60,436		213,572		89,545		460,386

Total	$	130,806	$	1,096,727	$	207,091	$	804,922	$	337,897	$	1,901,649

December 31, 2021

Securities available for sale

Agency collateralized mortgage obligations	$	9,626	$	375,132	$	1,386	$	27,025	$	11,012	$	402,157
Agency mortgage-backed securities	3,179		222,887		4,463		175,941		7,642		398,828
Agency commercial mortgage-backed securities	1,609		103,354		2,019		49,313		3,628		152,667
Corporate bonds	114		11,115		—		—		114		11,115





Total securities available for sale	$	14,528	$	712,488	$	7,868	$	252,279	$	22,396	$	964,767

Securities held to maturity
Municipal bonds and obligations	$	693	$	36,981	$	—	$	—	$	693	$	36,981
Agency collateralized mortgage obligations	1,808		49,308		1,705		36,212		3,513		85,520
Agency mortgage-backed securities	839		26,656		659		26,025		1,498		52,681
Agency commercial mortgage-backed securities	1,255		80,406		2,034		51,654		3,289		132,060
Tax advantaged economic development bonds	15		1,255		—		—		15		1,255
Total securities held to maturity	4,610		194,606		4,398		113,891		9,008		308,497
Total	$	19,138	$	907,094	$	12,266	$	366,170	$	31,404	$	1,273,264

Debt Securities

The Company expects to recover its amortized cost basis on all debt securities in its AFS and HTM portfolios. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of September 30, 2022, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the basis for the conclusion that the debt securities in an unrealized loss position within the Company’s AFS and HTM portfolios were not other-than-temporarily impaired at September 30, 2022:

AFS municipal bonds and obligations

At September 30, 2022, 76 of the 95 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 10.1% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

AFS collateralized mortgage obligations

At September 30, 2022, 245 of the 248 securities in the Company’s portfolio of AFS collateralized mortgage obligations were in unrealized loss positions. Aggregate unrealized losses represented 15.0% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”) guarantee the contractual cash flows of all of the Company’s collateralized mortgage obligations. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS commercial and residential mortgage-backed securities

At September 30, 2022, 136 of the 139 securities in the Company’s portfolio of AFS mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 15.2% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company’s mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS corporate bonds

At September 30, 2022, 14 of the 15 securities in the Company’s portfolio of AFS corporate bonds were in unrealized loss positions. Aggregate unrealized losses represents 5.5% of the amortized cost of the bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

AFS other bonds and obligations

At September 30, 2022, 2 of the 3 securities in the Company’s portfolio of AFS other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represents 18.3% of the amortized cost of the bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

HTM municipal bonds and obligations

At September 30, 2022, 148 of the 192 securities in the Company’s portfolio of HTM municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 16.1% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

HTM collateralized mortgage obligations

At September 30, 2022, 13 of the 13 securities in the Company’s portfolio of HTM collateralized mortgage obligations were in unrealized loss positions. Aggregate unrealized losses represented 15.0% of the amortized cost of the securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company's collateralized residential mortgage obligations. The securities are investment grade rated, and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM commercial and residential mortgage-backed securities

At September 30, 2022, 17 of the 17 securities in the Company’s portfolio of HTM mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 17.4% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of the Company’s mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM tax-advantaged economic development bonds

At September 30, 2022, 2 of the 3 securities in the Company’s portfolio of tax-advantaged economic development bonds was in unrealized loss positions. Aggregate unrealized losses represented 10.3% of the amortized cost of the security in unrealized loss positions. The Company believes that more likely than not all the principal outstanding will be collected. All securities are performing.