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INVESTMENT SECURITIES | 9 Months Ended
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Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract] |
INVESTMENT SECURITIES | 3. INVESTMENT SECURITIES The amortized cost, gross unrealized gains and losses, fair value and related ACL on HTM and AFS debt securities are as follows:
(dollars in thousands) | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | ACL
September 30, 2022 |  |  |  |  |  |  |  |  |
Held-to-maturity: |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 41,808 |  |  | $ | — |  |  | $ | (5,679) |  |  | $ | 36,129 |  |  | $ | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 621,019 |  |  | — |  |  | (66,268) |  |  | 554,751 |  |  | — |
Total held-to-maturity securities | $ | 662,827 |  |  | $ | — |  |  | $ | (71,947) |  |  | $ | 590,880 |  |  | $ | — |
Available-for-sale: |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 176,133 |  |  | $ | 11 |  |  | $ | (36,668) |  |  | $ | 139,476 |  |  | $ | — |
Corporate securities | 36,324 |  |  | — |  |  | (6,826) |  |  | 29,498 |  |  | — |
U.S. Treasury obligations and direct obligations of U.S. Government agencies | 29,666 |  |  | 15 |  |  | (2,173) |  |  | 27,508 |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 511,171 |  |  | — |  |  | (78,886) |  |  | 432,285 |  |  | — |
Residential - Non-government agencies | 10,088 |  |  | — |  |  | (1,155) |  |  | 8,933 |  |  | — |
Commercial - U.S. Government-sponsored entities | 55,012 |  |  | — |  |  | (7,550) |  |  | 47,462 |  |  | — |
Commercial - Non-government agencies | 1,542 |  |  | — |  |  | (23) |  |  | 1,519 |  |  | — |
Total available-for-sale securities | $ | 819,936 |  |  | $ | 26 |  |  | $ | (133,281) |  |  | $ | 686,681 |  |  | $ | — |
(dollars in thousands) | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | ACL
December 31, 2021 |  |  |  |  |  |  |  |  |
Available-for-sale: |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 235,521 |  |  | $ | 3,156 |  |  | $ | (1,849) |  |  | $ | 236,828 |  |  | $ | — |
Corporate securities | 41,687 |  |  | 24 |  |  | (1,065) |  |  | 40,646 |  |  | — |
U.S. Treasury obligations and direct obligations of U.S. Government agencies | 35,833 |  |  | 69 |  |  | (568) |  |  | 35,334 |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 1,213,910 |  |  | 4,899 |  |  | (19,993) |  |  | 1,198,816 |  |  | — |
Residential - Non-government agencies | 11,942 |  |  | 335 |  |  | (64) |  |  | 12,213 |  |  | — |
Commercial - U.S. Government-sponsored entities | 66,287 |  |  | 756 |  |  | (1,194) |  |  | 65,849 |  |  | — |
Commercial - Non-government agencies | 41,328 |  |  | 685 |  |  | — |  |  | 42,013 |  |  | — |
Total available-for-sale securities | $ | 1,646,508 |  |  | $ | 9,924 |  |  | $ | (24,733) |  |  | $ | 1,631,699 |  |  | $ | — |
In March 2022, the Company transferred 41 investment securities that were classified as AFS to HTM. The investment securities had an amortized cost basis of $361.8 million and a fair market value of $329.5 million. On the date of transfer, these securities had a total net unrealized loss of $32.3 million. There was no impact to net income as a result of the reclassification. In May 2022, the Company transferred 40 investment securities that were classified as AFS to HTM. The investment securities had an amortized cost basis of $400.9 million and a fair market value of $343.7 million. On the date of transfer, these securities had a total net unrealized loss of $57.2 million. There was no impact to net income as a result of the reclassification. These transfers were executed to mitigate the potential future impact to capital through accumulated other comprehensive loss in consideration of a rising interest rate environment and the impact of rising rates on the market value of the investment securities. The Company believes that it maintains sufficient liquidity for future business needs and it has the positive intent and ability to hold these securities to maturity. The amortized cost and estimated fair value of our HTM and AFS debt securities at September 30, 2022 are shown below by contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
| September 30, 2022
(dollars in thousands) | Amortized Cost |  | Fair Value
Held-to-maturity: |  |  |
Debt securities: |  |  |
Due after ten years | $ | 41,808 |  |  | $ | 36,129 |
Mortgage-backed securities: |  |  |
Residential - U.S. Government-sponsored entities | 621,019 |  |  | 554,751 |
Total held-to-maturity securities | $ | 662,827 |  |  | $ | 590,880 |
Available-for-sale: |  |  |
Debt securities: |  |  |
Due in one year or less | $ | 6,016 |  |  | $ | 5,992 |
Due after one year through five years | 19,268 |  |  | 18,786 |
Due after five years through ten years | 80,816 |  |  | 70,528 |
Due after ten years | 136,023 |  |  | 101,176 |
Mortgage-backed securities: |  |  |
Residential - U.S. Government-sponsored entities | 511,171 |  |  | 432,285 |
Residential - Non-government agencies | 10,088 |  |  | 8,933 |
Commercial - U.S. Government-sponsored entities | 55,012 |  |  | 47,462 |
Commercial - Non-government agencies | 1,542 |  |  | 1,519 |
Total available-for-sale securities | $ | 819,936 |  |  | $ | 686,681 |
During the three months ended June 30, 2022, the Company sold all of its shares of Visa Class B common stock. Details of the transaction will be discussed later in this footnote. The Company did not sell any other investment securities during the nine months ended September 30, 2022 and 2021. Investment securities with fair value of $445.4 million and $455.8 million at September 30, 2022 and December 31, 2021, respectively, were pledged to secure public funds on deposit and other short-term borrowings. At September 30, 2022 and December 31, 2021, there were no holdings of investment securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders' equity. There were a total of 256 and 153 debt securities which were in an unrealized loss position, without an ACL, at September 30, 2022 and December 31, 2021, respectively. Th e following tables summarize AFS debt securities which were in an unrealized loss position at September 30, 2022 and December 31, 2021, aggregated by major security type and length of time in a continuous unrealized loss position.
| Less Than 12 Months |  | 12 Months or Longer |  | Total
(dollars in thousands) | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
September 30, 2022 |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 102,107 |  |  | $ | (22,280) |  |  | $ | 33,382 |  |  | $ | (14,388) |  |  | $ | 135,489 |  |  | $ | (36,668) |
Corporate securities | 4,257 |  |  | (762) |  |  | 25,241 |  |  | (6,064) |  |  | 29,498 |  |  | (6,826) |
U.S. Treasury obligations and direct obligations of U.S Government agencies | 6,448 |  |  | (93) |  |  | 16,037 |  |  | (2,080) |  |  | 22,485 |  |  | (2,173) |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 224,937 |  |  | (30,730) |  |  | 207,348 |  |  | (48,156) |  |  | 432,285 |  |  | (78,886) |
Residential - Non-government agencies | 8,198 |  |  | (906) |  |  | 735 |  |  | (249) |  |  | 8,933 |  |  | (1,155) |
Commercial - U.S. Government-sponsored entities | 29,489 |  |  | (2,137) |  |  | 17,972 |  |  | (5,413) |  |  | 47,461 |  |  | (7,550) |
Commercial - Non-government agencies | 1,519 |  |  | (23) |  |  | — |  |  | — |  |  | 1,519 |  |  | (23) |
Total temporarily impaired securities | $ | 376,955 |  |  | $ | (56,931) |  |  | $ | 300,715 |  |  | $ | (76,350) |  |  | $ | 677,670 |  |  | $ | (133,281) |
| Less Than 12 Months |  | 12 Months or Longer |  | Total
(dollars in thousands) | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 79,360 |  |  | $ | (1,252) |  |  | $ | 10,864 |  |  | $ | (597) |  |  | $ | 90,224 |  |  | $ | (1,849) |
Corporate securities | 8,633 |  |  | (235) |  |  | 21,960 |  |  | (830) |  |  | 30,593 |  |  | (1,065) |
U.S. Treasury obligations and direct obligations of U.S Government agencies | 16,103 |  |  | (415) |  |  | 10,891 |  |  | (153) |  |  | 26,994 |  |  | (568) |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 926,570 |  |  | (15,883) |  |  | 114,747 |  |  | (4,110) |  |  | 1,041,317 |  |  | (19,993) |
Residential - Non-government agencies | — |  |  | — |  |  | 938 |  |  | (64) |  |  | 938 |  |  | (64) |
Commercial - U.S. Government-sponsored entities | 6,313 |  |  | (205) |  |  | 16,281 |  |  | (989) |  |  | 22,594 |  |  | (1,194) |
Total temporarily impaired securities | $ | 1,036,979 |  |  | $ | (17,990) |  |  | $ | 175,681 |  |  | $ | (6,743) |  |  | $ | 1,212,660 |  |  | $ | (24,733) |
Investment securities in an unrealized loss position are evaluated on at least a quarterly basis, and include evaluating the changes in the investment securities' ratings issued by rating agencies and changes in the financial condition of the issuer. For mortgage-related securities, delinquency and loss information with respect to the underlying collateral, changes in levels of subordination for the Company's particular position within the repayment structure, and remaining credit enhancement as compared to projected credit losses of the security are also evaluated. The Company has evaluated its AFS investment securities that are in an unrealized loss position and has determined that the unrealized losses on the Company's investment securities are unrelated to credit quality and are primarily attributable to changes in interest rates and volatility in the financial markets since purchase. All of the investment securities in an unrealized loss position continue to be rated investment grade by one or more major rating agencies. Because the Company does not intend to sell the AFS securities that are in an unrealized loss position and it is not more likely than not that we will be required to sell these securities before recovery of its amortized cost basis, which may be at maturity, the Company has not recorded an ACL on these securities and the unrealized losses on these securities have not been recognized into income. Visa Class B Common Stock During the three months ended June 30, 2022, the Company sold its 34,631 shares of Class B common stock of Visa, Inc. ("Visa") and received net proceeds of $8.5 million. As of September 30, 2022, the Company no longer owns any shares of Class B common stock of Visa. The Company received these shares in 2008 as part of Visa's initial public offering ("IPO"). These shares were transferable only under limited circumstances until they can be converted into shares of the publicly traded Class A common stock. This conversion will not occur until the resolution of certain litigation, which is indemnified by Visa members. Since its IPO, Visa has funded a litigation reserve to settle these litigation claims. At its discretion, Visa may continue to increase the litigation reserve based upon a change in the conversion ratio of each member bank’s restricted Class B common stock to unrestricted Class A common stock. Due to the existing transfer restriction and the uncertainty of the outcome of the Visa litigation, the Company determined that the Visa Class B common stock did not have a readily determinable fair value and chose to carry the shares on the Company's consolidated balance sheets at zero cost basis. As a result, the entire net proceeds of $8.5 million were recognized as a pre-tax gain and included in net gain on sales of investment securities in the Company's consolidated statements of income.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI https://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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