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SECURITIES | 12 Months Ended
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Dec. 31, 2023
Investments, Debt and Equity Securities [Abstract] |
SECURITIES | SECURITIES Debt securities purchased with the intent and ability to hold to their maturity are classified as held-to-maturity securities. All other investment securities are classified as available-for-sale securities. Available-for-Sale Securities Information related to the amortized cost, fair value and allowance for credit losses of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 is provided in the tables below.
(dollars in thousands) | Amortized Cost |  | Gross Unrealized Gain |  | Gross Unrealized Losses |  | Allowance for Credit Losses |  | Fair Value
2023 |  |  |  |  |  |  |  |  |
U.S. government sponsored agencies | $ | 146,692 |  |  | $ | 0 |  |  | $ | (27,213) |  |  | $ | 0 |  |  | $ | 119,479 |
Mortgage-backed securities: residential | 522,275 |  |  | 118 |  |  | (74,551) |  |  | 0 |  |  | 447,842 |
State and municipal securities | 557,352 |  |  | 65 |  |  | (73,010) |  |  | 0 |  |  | 484,407 |
Total | $ | 1,226,319 |  |  | $ | 183 |  |  | $ | (174,774) |  |  | $ | 0 |  |  | $ | 1,051,728 |
2022 |  |  |  |  |  |  |  |  |
U.S. Treasury securities | $ | 3,057 |  |  | $ | 0 |  |  | $ | (23) |  |  | $ | 0 |  |  | $ | 3,034 |
U.S. government sponsored agencies | 156,184 |  |  | 0 |  |  | (29,223) |  |  | 0 |  |  | 126,961 |
Mortgage-backed securities: residential | 578,175 |  |  | 67 |  |  | (85,934) |  |  | 0 |  |  | 492,308 |
State and municipal securities | 663,367 |  |  | 157 |  |  | (100,299) |  |  | 0 |  |  | 563,225 |
Total | $ | 1,400,783 |  |  | $ | 224 |  |  | $ | (215,479) |  |  | $ | 0 |  |  | $ | 1,185,528 |
Held-to-Maturity Securities Information related to the amortized cost, fair value and allowance for credit losses of securities held-to-maturity and the related gross gains and unrealized gains and losses at December 31, 2023 and 2022 is presented in the table below.
(dollars in thousands) |  | Amortized Cost |  | Gross Unrealized Gain |  | Gross Unrealized Losses |  | Allowance for Credit Losses |  | Fair Value
2023 |  |  |  |  |  |  |  |  |  |
State and municipal securities |  | $ | 129,918 |  |  | $ | 0 |  |  | $ | (10,703) |  |  | $ | 0 |  |  | $ | 119,215 |
2022 |  |  |  |  |  |  |  |  |  |
State and municipal securities |  | $ | 128,242 |  |  | $ | 0 |  |  | $ | (17,213) |  |  | $ | 0 |  |  | $ | 111,029 |
NOTE 2 – SECURITIES (continued) On April 1, 2022, the Company elected to transfer securities from available-for-sale to held-to-maturity as an overall balance sheet management strategy. The fair value of securities transferred was $127.0 million from available-for-sale to held-to-maturity. The unrealized loss on the securities transferred from available-for-sale to held-to-maturity was $24.4 million ($19.3 million, net of tax) based on the fair value of the securities on the transfer date and was $20.9 million ($16.5 million, net of tax) at December 31, 2023. The Company has the current intent and ability to hold the transferred securities until maturity. Any net unrealized gain or loss on the transferred securities included in accumulated other comprehensive income (loss) at the time of the transfer will be amortized over the remaining life of the underlying security as an adjustment to the yield on those securities. No securities were transferred from available-for-sale to held-to-maturity during the year ended December 31, 2023. Information regarding the fair value and amortized cost of available-for-sale and held-to-maturity debt securities by maturity as of December 31, 2023 is presented on the next page. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without prepayment penalty.
|  | Available-for-Sale |  | Held-to-Maturity
(dollars in thousands) |  | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Due in one year or less |  | $ | 1,190 |  |  | $ | 1,191 |  |  | $ | 0 |  |  | $ | 0 |
Due after one year through five years |  | 8,011 |  |  | 7,421 |  |  | 0 |  |  | 0 |
Due after five years through ten years |  | 40,627 |  |  | 38,730 |  |  | 0 |  |  | 0 |
Due after ten years |  | 654,216 |  |  | 556,544 |  |  | 129,918 |  |  | 119,215 |
|  | 704,044 |  |  | 603,886 |  |  | 129,918 |  |  | 119,215 |
Mortgage-backed securities |  | 522,275 |  |  | 447,842 |  |  | 0 |  |  | 0 |
Total debt securities |  | $ | 1,226,319 |  |  | $ | 1,051,728 |  |  | $ | 129,918 |  |  | $ | 119,215 |
Security proceeds, gross gains and gross losses for 2023, 2022 and 2021 were as follows:
(dollars in thousands) | 2023 |  | 2022 |  | 2021
Sales of securities available-for-sale |  |  |  |  |
Proceeds | $ | 105,175 |  |  | $ | 25,332 |  |  | $ | 13,964 |
Gross gains | 439 |  |  | 140 |  |  | 797 |
Gross losses | (464) |  |  | (119) |  |  | 0 |
Number of securities | 115 |  |  | 30 |  |  | 9 |
In accordance with ASU No. 2017-8, purchase premiums for callable securities are amortized to the earliest call date and premiums on non-callable securities as well as discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date. Securities with fair values of $792.0 million and $298.2 million were pledged as of December 31, 2023 and 2022, respectively, as collateral for borrowings from the FHLB and Federal Reserve Bank and for other purposes as permitted or required by law. NOTE 2 – SECURITIES (continued) Unrealized Loss Analysis on Available-for-Sale and Held-to-Maturity Securities Information regarding available-for-sale securities securities with unrealized losses as of December 31, 2023 and 2022 is presented below. The tables distribute the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.
| Less than 12 months |  | 12 months or more |  | Total
(dollars in thousands) | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
2023 |  |  |  |  |  |  |  |  |  |  |
U.S. government sponsored agencies | $ | 0 |  |  | $ | 0 |  |  | $ | 119,479 |  |  | $ | 27,213 |  |  | $ | 119,479 |  |  | $ | 27,213 |
Mortgage-backed securities: residential | 52 |  |  | 0 |  |  | 442,765 |  |  | 74,551 |  |  | 442,817 |  |  | 74,551 |
State and municipal securities | 31,345 |  |  | 440 |  |  | 440,446 |  |  | 72,570 |  |  | 471,791 |  |  | 73,010 |
Total temporarily impaired | $ | 31,397 |  |  | $ | 440 |  |  | $ | 1,002,690 |  |  | $ | 174,334 |  |  | $ | 1,034,087 |  |  | $ | 174,774 |
2022 |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities | $ | 3,034 |  |  | $ | 23 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 3,034 |  |  | $ | 23 |
U.S. government sponsored agencies | 8,420 |  |  | 1,350 |  |  | 118,541 |  |  | 27,873 |  |  | 126,961 |  |  | 29,223 |
Mortgage-backed securities: residential | 165,897 |  |  | 18,637 |  |  | 323,727 |  |  | 67,297 |  |  | 489,624 |  |  | 85,934 |
State and municipal securities | 277,967 |  |  | 33,405 |  |  | 244,436 |  |  | 66,894 |  |  | 522,403 |  |  | 100,299 |
Total temporarily impaired | $ | 455,318 |  |  | $ | 53,415 |  |  | $ | 686,704 |  |  | $ | 162,064 |  |  | $ | 1,142,022 |  |  | $ | 215,479 |
Information regarding held-to-maturity securities with unrealized losses as of December 31, 2023 and 2022 is presented below. The table divides the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.
|  | Less than 12 months |  | 12 months or more |  | Total
(dollars in thousands) |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
2023 |  |  |  |  |  |  |  |  |  |  |  |
State and municipal securities |  | $ | 0 |  |  | $ | 0 |  |  | $ | 119,215 |  |  | $ | 10,703 |  |  | $ | 119,215 |  |  | $ | 10,703 |
2022 |  |  |  |  |  |  |  |  |  |  |  |
State and municipal securities |  | $ | 0 |  |  | $ | 0 |  |  | $ | 111,029 |  |  | $ | 17,213 |  |  | $ | 111,029 |  |  | $ | 17,213 |
NOTE 2 – SECURITIES (continued) The number of securities with unrealized losses as of December 31, 2023 and 2022 is presented below.
| Available-for-Sale |  | Held-to-Maturity
| Less than 12 months |  | 12 months or more |  | Total |  | Less than 12 months |  | 12 months or more |  | Total
2023 |  |  |  |  |  |  |  |  |  |  |
U.S. government sponsored agencies | 0 |  |  | 17 |  |  | 17 |  |  | 0 |  |  | 0 |  |  | 0 |
Mortgage-backed securities: residential | 1 |  |  | 126 |  |  | 127 |  |  | 0 |  |  | 0 |  |  | 0 |
State and municipal securities | 40 |  |  | 370 |  |  | 410 |  |  | 0 |  |  | 41 |  |  | 41 |
Total temporarily impaired | 41 |  |  | 513 |  |  | 554 |  |  | 0 |  |  | 41 |  |  | 41 |
2022 |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities | 7 |  |  | 0 |  |  | 7 |  |  | 0 |  |  | 0 |  |  | 0 |
U.S. government sponsored agencies | 1 |  |  | 16 |  |  | 17 |  |  | 0 |  |  | 0 |  |  | 0 |
Mortgage-backed securities: residential | 95 |  |  | 41 |  |  | 136 |  |  | 0 |  |  | 0 |  |  | 0 |
State and municipal securities | 269 |  |  | 223 |  |  | 492 |  |  | 0 |  |  | 41 |  |  | 41 |
Total temporarily impaired | 372 |  |  | 280 |  |  | 652 |  |  | 0 |  |  | 41 |  |  | 41 |
Available-for-sale and held-to-maturity debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available-for-sale debt securities in an unrealized loss position, management first assesses whether it intends to sell, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the consolidated income statement. For available-for-sale debt securities that do not meet the criteria and for held-to-maturity securities, management evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this assessment indicates that a credit loss exists, management compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. For available-for-sale debt securities, any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss), net of applicable taxes. No allowance for credit losses for available-for-sale or held-to-maturity securities was recorded at December 31, 2023 or 2022. Accrued interest receivable on available-for-sale and held-to-maturity debt securities totaled $7.6 million and $8.9 million at December 31, 2023 and 2022, respectively, and is excluded from the estimate of credit losses. Ninety-nine percent of the securities are backed by the U.S. government, government agencies, government sponsored agencies or are rated above investment grade with a long history of no credit losses, except for certain non-local or local municipal securities, which are not rated. The U.S. government sponsored agencies and mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses. State and municipal securities credit losses are benchmarked against highly rated municipal securities of similar duration, as published by Moody's, resulting in an immaterial allowance for credit losses.

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