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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2024

INVESTMENT SECURITIES

INVESTMENT SECURITIES

NOTE 4 — INVESTMENT SECURITIES

The following tables summarize the amortized cost and fair value of AFS and HTM debt securities and equity investments and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses recognized in earnings (in thousands):


					Gross			Gross
					Unrealized/			Unrealized/
		Amortized			Unrecognized			Unrecognized
At September 30, 2024		Cost			Gains			Losses			Fair Value
Available-for-Sale Securities:
U.S. Government agency securities		$	67,998		$	—		$	(4,141)		$	63,857
U.S. State and Municipal securities			11,381			—			(1,573)			9,808
Residential MBS			445,617			2,880			(58,673)			389,824
Commercial MBS			46,162			577			(1,970)			44,769
Asset-backed securities			2,789			—			(81)			2,708
Total securities available-for-sale		$	573,947		$	3,457		$	(66,438)		$	510,966

Held-to-Maturity Securities:
U.S. Treasury securities		$	29,927		$	—		$	(617)		$	29,310
U.S. State and Municipal securities			15,383			—			(1,535)			13,848
Residential MBS			385,062			—			(49,293)			335,769
Commercial MBS			8,073			—			(797)			7,276
Total securities held-to-maturity		$	438,445		$	—		$	(52,242)		$	386,203

Equity Investments:
CRA Mutual Fund		$	5,464		$	—		$	(251)		$	5,213
Total equity investment securities		$	5,464		$	—		$	(251)		$	5,213


					Gross			Gross
					Unrealized/			Unrealized/
		Amortized			Unrecognized			Unrecognized
At December 31, 2023		Cost			Gains			Losses			Fair Value
Available-for-Sale Securities:
U.S. Government agency securities		$	67,997		$	—		$	(6,222)		$	61,775
U.S. State and Municipal securities			11,496			—			(1,797)			9,699
Residential MBS			419,331			1,198			(68,609)			351,920
Commercial MBS			36,879			71			(2,366)			34,584
Asset-backed securities			3,287			—			(58)			3,229
Total securities available-for-sale		$	538,990		$	1,269		$	(79,052)		$	461,207

Held-to-Maturity Securities:
U.S. Treasury securities		$	29,895		$	—		$	(1,412)		$	28,483
U.S. State and Municipal securities			15,569			—			(1,574)			13,995
Residential MBS			415,306			—			(60,556)			354,750
Commercial MBS			8,090			—			(1,066)			7,024
Total securities held-to-maturity		$	468,860		$	—		$	(64,608)		$	404,252

Equity Investments:
CRA Mutual Fund		$	2,410		$	—		$	(287)		$	2,123
Total equity investment securities		$	2,410		$	—		$	(287)		$	2,123

There were no proceeds from sales or calls of AFS securities for the three and nine months ended September 30, 2024 and 2023.

The tables below summarize, by contractual maturity, the amortized cost and fair value of debt securities. The tables do not include the effect of principal repayments or scheduled principal amortization. Equity securities, primarily investments in mutual funds, have been excluded from the table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):


		Held-to-Maturity						Available-for-Sale
At September 30, 2024		Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due within 1 year		$	20,009		$	19,730		$	27,999		$	27,097
After 1 year through 5 years			17,991			16,857			44,315			41,771
After 5 years through 10 years			918			877			18,956			18,030
After 10 years			399,527			348,739			482,677			424,068
Total Securities		$	438,445		$	386,203		$	573,947		$	510,966


		Held-to-Maturity						Available-for-Sale
At December 31, 2023		Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due within 1 year		$	—		$	—		$	—		$	—
After 1 year through 5 years			37,984			35,507			65,822			60,757
After 5 years through 10 years			1,112			1,044			22,163			21,174
After 10 years			429,764			367,701			451,005			379,276
Total Securities		$	468,860		$	404,252		$	538,990		$	461,207

At September 30, 2024, there was $782.6 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $172.7 million was encumbered. At December 31, 2023, there was $845.7 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $60.0 million was encumbered.

At September 30, 2024 and December 31, 2023, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity. At September 30, 2024 and

December 31, 2023, all of the residential MBS and commercial MBS held by the Company were issued by U.S. Government-sponsored entities and agencies.

Debt securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):


		Less than 12 Months						12 Months or More						Total
					Unrealized/						Unrealized/						Unrealized/
		Estimated			Unrecognized			Estimated			Unrecognized			Estimated			Unrecognized
At September 30, 2024		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
Available-for-Sale Securities:
U.S. Government agency securities		$	—		$	—		$	63,857		$	(4,141)		$	63,857		$	(4,141)
U.S. State and Municipal securities			—			—			9,808			(1,573)			9,808			(1,573)
Residential MBS			—			—			276,164			(58,673)			276,164			(58,673)
Commercial MBS			—			—			24,227			(1,970)			24,227			(1,970)
Asset-backed securities			—			—			2,708			(81)			2,708			(81)
Total securities available-for-sale		$	—		$	—		$	376,764		$	(66,438)		$	376,764		$	(66,438)

Held-to-Maturity Securities:
U.S. Treasury securities		$	—		$	—		$	29,310		$	(617)		$	29,310		$	(617)
U.S. State and Municipal securities			—			—			13,848			(1,535)			13,848			(1,535)
Residential MBS			—			—			335,769			(49,293)			335,769			(49,293)
Commercial MBS			—			—			7,276			(797)			7,276			(797)
Total securities held-to-maturity		$	—		$	—		$	386,203		$	(52,242)		$	386,203		$	(52,242)


		Less than 12 Months						12 Months or More						Total
					Unrealized/						Unrealized/						Unrealized/
		Estimated			Unrecognized			Estimated			Unrecognized			Estimated			Unrecognized
At December 31, 2023		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
Available-for-Sale Securities:
U.S. Government agency securities		$	—		$	—		$	61,775		$	(6,222)		$	61,775		$	(6,222)
U.S. State and Municipal securities			—			—			9,699			(1,797)			9,699			(1,797)
Residential MBS			—			—			292,970			(68,609)			292,970			(68,609)
Commercial MBS			10,873			(198)			13,322			(2,168)			24,195			(2,366)
Asset-backed securities			—			—			3,229			(58)			3,229			(58)
Total securities available-for-sale		$	10,873		$	(198)		$	380,995		$	(78,854)		$	391,868		$	(79,052)

Held-to-Maturity Securities:
U.S. Treasury securities		$	—		$	—		$	28,483		$	(1,412)		$	28,483		$	(1,412)
U.S. State and Municipal securities			—			—			13,995			(1,574)			13,995			(1,574)
Residential MBS			—			—			354,750			(60,556)			354,750			(60,556)
Commercial MBS			—			—			7,024			(1,066)			7,024			(1,066)
Total securities held-to-maturity		$	—		$	—		$	404,252		$	(64,608)		$	404,252		$	(64,608)

Except for U.S. State and Municipal securities, the Company has a zero loss expectation for its HTM securities portfolio, and therefore has no ACL related to these securities. At September 30, 2024 and December 31, 2023, obligations of U.S. State and Municipal securities were rated investment grade and the associated ACL was immaterial.

AFS securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. The unrealized losses on AFS securities are primarily due to the changes in market interest rates subsequent to purchase. In addition, the Company does not intend, nor would it be required, to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, no ACL was recognized during the three and nine months ended September 30, 2024.