Securities

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

The amortized cost, estimated fair value, and allowance for securities credit losses of debt securities available-for-sale and held-to-maturity at September 30, 2024 and December 31, 2023 are as follows (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Allowance for Securities Credit Losses
At September 30, 2024
Debt securities available-for-sale:
U.S. government and agency obligations	$	60,860	$	12	$	(4,179)	$	56,693	$	—
Corporate debt securities	15,967		38		(795)		15,210		—
Asset-backed securities	251,986		294		(147)		252,133		—
Mortgage-backed securities (“MBS”):
Agency residential	489,515		1,427		(195)		490,747		—
Agency commercial	108,865		—		(11,895)		96,970		—
Total mortgage-backed securities	598,380		1,427		(12,090)		587,717		—
Total debt securities available-for-sale	$	927,193	$	1,771	$	(17,211)	$	911,753	$	—
Debt securities held-to-maturity:
State and municipal debt obligations	$	203,822	$	296	$	(10,668)	$	193,450	$	(34)
Corporate debt securities	66,721		508		(1,378)		65,851		(763)
Mortgage-backed securities:
Agency residential	703,899		2,299		(54,907)		651,291		—
Agency commercial	81,137		10		(3,435)		77,712		—
Non-agency commercial	20,454		—		(977)		19,477		(105)
Total mortgage-backed securities	805,490		2,309		(59,319)		748,480		(105)
Total debt securities held-to-maturity	$	1,076,033	$	3,113	$	(71,365)	$	1,007,781	$	(902)
Total debt securities	$	2,003,226	$	4,884	$	(88,576)	$	1,919,534	$	(902)
At December 31, 2023
Debt securities available-for-sale:
U.S. government and agency obligations	$	66,490	$	—	$	(5,796)	$	60,694	$	—
Corporate debt securities	10,096		11		(981)		9,126		—
Asset-backed securities	295,796		—		(4,252)		291,544		—
Mortgage-backed securities:
Agency residential	298,107		183		(97)		298,193		—
Agency commercial	109,590		—		(15,255)		94,335		—
Total mortgage-backed securities	407,697		183		(15,352)		392,528		—
Total debt securities available-for-sale	$	780,079	$	194	$	(26,381)	$	753,892	$	—
Debt securities held-to-maturity:
State and municipal debt obligations	$	222,009	$	251	$	(14,550)	$	207,710	$	(39)
Corporate debt securities	69,809		391		(3,941)		66,259		(987)
Mortgage-backed securities:
Agency residential	765,632		901		(70,040)		696,493		—
Agency commercial	82,734		10		(3,678)		79,066		—
Non-agency commercial	20,684		—		(1,774)		18,910		(107)
Total mortgage-backed securities	869,050		911		(75,492)		794,469		(107)
Total debt securities held-to-maturity	$	1,160,868	$	1,553	$	(93,983)	$	1,068,438	$	(1,133)
Total debt securities	$	1,940,947	$	1,747	$	(120,364)	$	1,822,330	$	(1,133)

The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Allowance for securities credit losses
Beginning balance	$	(958)	$	(964)	$	(1,133)	$	(1,128)

Benefit for credit losses	56		32		231		196



Total ending allowance balance	$	(902)	$	(932)	$	(902)	$	(932)

The Company monitors the credit quality of debt securities held-to-maturity on a quarterly basis through the use of internal credit analysis supplemented by external credit ratings. Credit ratings of BBB- or Baa3 or higher are considered investment grade. Where multiple ratings are available, the Company considers the lowest rating when determining the allowance for securities credit losses. Under this approach, the amortized cost of debt securities held-to-maturity at September 30, 2024, aggregated by credit quality indicator, are as follows (in thousands):



	Investment Grade		Non-Investment Grade/Non-rated		Total
As of September 30, 2024


State and municipal debt obligations	$	202,983	$	839	$	203,822
Corporate debt securities	52,730		13,991		66,721







Non-agency commercial MBS	20,454		—		20,454

Total debt securities held-to-maturity	$	276,167	$	14,830	$	290,997

There were no realized gains/losses and $106,000 of realized losses on sale of debt securities available-for-sale for the three and nine months ended September 30, 2024, respectively as compared to no realized gains/losses and $697,000 of realized losses for the corresponding prior year periods. These realized gains/losses on debt securities are presented within Other under Total other income of the Consolidated Statements of Income.

The amortized cost and estimated fair value of debt securities at September 30, 2024 by contractual maturity are shown below (in thousands):


September 30, 2024	Amortized Cost		Estimated Fair Value
Less than one year	$	32,613	$	32,323
Due after one year through five years	188,400		179,988
Due after five years through ten years	223,941		220,655
Due after ten years	154,402		150,371
	$	599,356	$	583,337

Actual maturities may differ from contractual maturities in instances where issuers have the right to call or prepay obligations with or without call or prepayment penalties. At September 30, 2024, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $81.6 million, $58.3 million, and $252.0 million, respectively, and an estimated fair value of $80.0 million, $57.4 million, and $252.1 million, respectively, were callable prior to the maturity date. Mortgage-backed securities are excluded from the above table since their effective lives are expected to be shorter than the contractual maturity date due to principal prepayments.

The estimated fair value and unrealized losses for debt securities available-for-sale and held-to-maturity at September 30, 2024 and December 31, 2023, segregated by the duration of the unrealized losses, are as follows (in thousands):


	Less than 12 months				12 months or longer				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
At September 30, 2024
Debt securities available-for-sale:
U.S. government and agency obligations	$	2,103	$	(6)	$	50,871	$	(4,173)	$	52,974	$	(4,179)
Corporate debt securities	4,788		(54)		5,988		(741)		10,776		(795)
Asset-backed securities	42,325		(40)		89,004		(107)		131,329		(147)
MBS:
Agency residential	143,284		(195)		—		—		143,284		(195)
Agency commercial	—		—		96,970		(11,895)		96,970		(11,895)
Total MBS	143,284		(195)		96,970		(11,895)		240,254		(12,090)
Total debt securities available-for-sale	192,500		(295)		242,833		(16,916)		435,333		(17,211)
Debt securities held-to-maturity:


State and municipal debt obligations	5,041		(361)		175,161		(10,307)		180,202		(10,668)
Corporate debt securities	—		—		38,713		(1,378)		38,713		(1,378)

MBS:
Agency residential	—		—		514,518		(54,907)		514,518		(54,907)
Agency commercial	1,276		(10)		73,251		(3,425)		74,527		(3,435)
Non-agency commercial	—		—		19,477		(977)		19,477		(977)
Total MBS	1,276		(10)		607,246		(59,309)		608,522		(59,319)
Total debt securities held-to-maturity	6,317		(371)		821,120		(70,994)		827,437		(71,365)
Total debt securities	$	198,817	$	(666)	$	1,063,953	$	(87,910)	$	1,262,770	$	(88,576)
At December 31, 2023
Debt securities available-for-sale:
U.S. government and agency obligations	$	833	$	(2)	$	59,861	$	(5,794)	$	60,694	$	(5,796)
Corporate debt securities	1,543		(165)		6,116		(816)		7,659		(981)
Asset-backed securities	—		—		291,544		(4,252)		291,544		(4,252)
MBS:
Agency residential	169,000		(97)		—		—		169,000		(97)
Agency commercial	—		—		94,335		(15,255)		94,335		(15,255)
Total MBS	169,000		(97)		94,335		(15,255)		263,335		(15,352)
Total debt securities available-for-sale	171,376		(264)		451,856		(26,117)		623,232		(26,381)
Debt securities held-to-maturity:


State and municipal debt obligations	6,671		(23)		191,511		(14,527)		198,182		(14,550)
Corporate debt securities	3,084		(473)		58,386		(3,468)		61,470		(3,941)

MBS:
Agency residential	95,776		(693)		525,751		(69,347)		621,527		(70,040)
Agency commercial	18,902		(370)		55,051		(3,308)		73,953		(3,678)
Non-agency commercial	—		—		18,910		(1,774)		18,910		(1,774)
Total MBS	114,678		(1,063)		599,712		(74,429)		714,390		(75,492)
Total debt securities held-to-maturity	124,433		(1,559)		849,609		(92,424)		974,042		(93,983)
Total debt securities	$	295,809	$	(1,823)	$	1,301,465	$	(118,541)	$	1,597,274	$	(120,364)

The Company concluded that no debt securities were impaired at September 30, 2024 based on consideration of several factors. The Company noted that each issuer made all contractually due payments when required. There were no defaults on principal or interest payments, and no interest payments were deferred. Based on management’s analysis of each individual security, the issuers appear to have the ability to meet debt service requirements over the life of the security. Furthermore, the net unrealized losses were primarily due to changes in the general credit and interest rate environment and not credit quality. Additionally, the Company has not utilized securities sales as a source of liquidity and the Company’s liquidity plans include adequate sources of liquidity outside securities sales.

Equity Investments

At September 30, 2024 and December 31, 2023, the Company held equity investments of $95.7 million and $100.2 million, respectively. The equity investments are primarily comprised of select financial services institutions’ preferred stocks, investments in other financial institutions and funds.

The realized and unrealized gains or losses on equity securities for the three and nine months ended September 30, 2024 and 2023 are shown in the table below (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net gain (loss) on equity investments	$	1,420	$	1,452	$	4,230	$	(5,908)
Less: Net losses recognized on equity investments sold	—		—		—		(5,462)
Unrealized gains (losses) recognized on equity investments still held	$	1,420	$	1,452	$	4,230	$	(446)