XML 21 R11.htm IDEA: XBRL DOCUMENT
v3.23.3

Investment Securities | 9 Months Ended
--- | ---
Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract] |
Investment Securities | Investment Securities On January 1, 2023, the Company adopted ASC 326, which made changes to accounting for AFS debt securities whereby credit losses should be presented as an allowance, rather than as a write-down when management does not intend to sell and does not believe that it is more likely than not they will be required to sell prior to maturity. In addition, ASC 326 requires an ACL to be recorded on HTM debt securities measured at amortized cost. All securities information presented as of September 30, 2023 is in accordance with ASC 326. All securities information presented as of December 31, 2022 or a prior date is presented in accordance with previously applicable GAAP. For further discussion on the Corporation’s accounting policies and policy elections related to the accounting standard update refer to Note 2. The following table summarizes the activity in the ACL on HTM securities.
(Dollars in thousands) |  | Three Months Ended September 30, 2023 |  | Nine Months Ended September 30, 2023
Balance, beginning of period |  | $ | 163 |  |  | $ | — |
Other debt securities, provision for credit losses |  | (37) |  |  | 126 |
Balance, end of period |  | $ | 126 |  |  | $ | 126 |
The ACL for HTM securities was initially determined to be immaterial as of the date of adoption of ASC 326. Upon re-estimation in the third quarter of 2023, an ACL recovery of $37,000 was recorded based on the results of our evaluation at September 30, 2023. The provision for credit losses of $126,000 was recorded for the nine months ended September 30, 2023. The following tables provide information on the amortized cost and estimated fair values of debt securities.
(Dollars in thousands) |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
Available-for-sale securities: |  |  |  |  |  |  |  |
September 30, 2023 |  |  |  |  |  |  |  |
U.S. Government agencies |  | $ | 23,622 |  |  | $ | 4 |  |  | $ | 3,995 |  |  | $ | 19,631 |
Mortgage-backed-residential |  | 63,371 |  |  | — |  |  | 9,798 |  |  | 53,573 |
Other debt securities |  | 6,059 |  |  | 26 |  |  | 146 |  |  | 5,939 |
Total |  | $ | 93,052 |  |  | $ | 30 |  |  | $ | 13,939 |  |  | $ | 79,143 |
December 31, 2022 |  |  |  |  |  |  |  |
U.S. Government agencies |  | $ | 21,798 |  |  | $ | 5 |  |  | $ | 3,625 |  |  | $ | 18,178 |
Mortgage-backed-residential |  | 72,183 |  |  | 2 |  |  | 8,666 |  |  | 63,519 |
Other debt securities |  | 2,018 |  |  | — |  |  | 128 |  |  | 1,890 |
Total |  | $ | 95,999 |  |  | $ | 7 |  |  | $ | 12,419 |  |  | $ | 83,587 |
No AFS securities were sold from the Company’s legacy securities’ portfolios during the three and nine months ended September 30, 2023 and 2022. The Company sold virtually all of the AFS securities portfolio acquired from TCFC immediately after the legal merger with the proceeds of $430.0 million, and recognized gross losses of $2.2 million from the sale of securities.
(Dollars in thousands) |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Allowance for Credit Losses
Held-to-maturity securities: |  |  |  |  |  |  |  |  |  |
September 30, 2023 |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  | $ | 143,494 |  |  | $ | — |  |  | $ | 14,873 |  |  | $ | 128,621 |  |  | $ | — |
Mortgage-backed-residential |  | 367,712 |  |  | — |  |  | 61,177 |  |  | 306,535 |  |  | — |
States and political subdivisions |  | 1,471 |  |  | 2 |  |  | 68 |  |  | 1,405 |  |  | — |
Other debt securities |  | 10,500 |  |  | — |  |  | 1,409 |  |  | 9,091 |  |  | 126 |
Total |  | $ | 523,177 |  |  | $ | 2 |  |  | $ | 77,527 |  |  | $ | 445,652 |  |  | $ | 126 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  | $ | 148,097 |  |  | $ | — |  |  | $ | 13,601 |  |  | $ | 134,496 |  |  | $ | — |
Mortgage-backed-residential |  | 398,884 |  |  | — |  |  | 50,464 |  |  | 348,420 |  |  | — |
States and political subdivisions |  | 1,474 |  |  | 35 |  |  | 28 |  |  | 1,481 |  |  | — |
Other debt securities |  | 11,000 |  |  | — |  |  | 770 |  |  | 10,230 |  |  | — |
Total |  | $ | 559,455 |  |  | $ | 35 |  |  | $ | 64,863 |  |  | $ | 494,627 |  |  | $ | — |
Equity securities with an aggregate fair value of $5.4 million at September 30, 2023 and $1.2 million at December 31, 2022 are presented separately on the balance sheet. The fair value adjustment recorded through earnings totaled $0.3 million for the nine months ended September 30, 2023 and $0.1 million for the nine months ended September 30, 2022, respectively. Credit Quality Information The Company monitors the credit quality of HTM securities through credit ratings provided by Standard & Poor’s Rating Services and Moody’s Investor Services. Credit ratings express opinions about the credit quality of a security, and are updated at each quarter end. Investment grade securities are rated BBB- or higher by S&P and Baa3 or higher by Moody’s and are generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade, which are labeled as speculative grade by the rating agencies, are considered to have distinctively higher credit risk than investment grade securities. There were no speculative grade HTM securities at September 30, 2023 or December 31, 2022. HTM securities that are not rated are agency mortgage-backed securities sponsored by U.S. government agencies, as well as direct obligations of the agencies, with the remainder being sub-debt of other banks. The following table shows the amortized cost of HTM securities based on their lowest publicly available credit rating as of September 30, 2023.
|  | September 30, 2023
|  | Investment Grade
(Dollars in thousands) |  | Aaa |  | Aa1 |  | A3 |  | Baa1 |  | Baa2 |  |  |  | NR |  | Total
U.S. Government agencies |  | $ | 143,494 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  |  |  | $ | — |  |  | $ | 143,494 |
Mortgage-backed-residential |  | 367,712 |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 367,712 |
States and political subdivisions |  | — |  |  | 1,471 |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 1,471 |
Other debt securities |  | — |  |  | — |  |  | 4,000 |  |  | 4,000 |  |  | 500 |  |  |  |  | 2,000 |  |  | 10,500 |
Total Held-to Maturity Securities |  | $ | 511,206 |  |  | $ | 1,471 |  |  | $ | 4,000 |  |  | $ | 4,000 |  |  | $ | 500 |  |  |  |  | $ | 2,000 |  |  | $ | 523,177 |
The following tables provide information about gross unrealized losses and fair value by length of time that the individual securities have been in a continuous unrealized loss position at September 30, 2023 and December 31, 2022.
|  | Less than 12 Months |  | More than 12 Months |  | Total
(Dollars in thousands) |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  | $ | 596 |  |  | $ | 1 |  |  | $ | 16,352 |  |  | $ | 3,994 |  |  | $ | 16,948 |  |  | $ | 3,995 |
Mortgage-backed-residential |  | 433 |  |  | 4 |  |  | 53,140 |  |  | 9,794 |  |  | 53,573 |  |  | 9,798 |
Other debt securities |  | — |  |  | — |  |  | 1,866 |  |  | 146 |  |  | 1,866 |  |  | 146 |
Total |  | $ | 1,029 |  |  | $ | 5 |  |  | $ | 71,358 |  |  | $ | 13,934 |  |  | $ | 72,387 |  |  | $ | 13,939 |
|  | Less than 12 Months |  | More than 12 Months |  | Total
(Dollars in thousands) |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  | $ | 1,165 |  |  | $ | 4 |  |  | $ | 16,585 |  |  | $ | 3,621 |  |  | $ | 17,750 |  |  | $ | 3,625 |
Mortgage-backed-residential |  | 29,125 |  |  | 2,409 |  |  | 34,167 |  |  | 6,257 |  |  | 63,292 |  |  | 8,666 |
Other debt securities |  | 1,890 |  |  | 128 |  |  | — |  |  | — |  |  | 1,890 |  |  | 128 |
Total |  | $ | 32,180 |  |  | $ | 2,541 |  |  | $ | 50,752 |  |  | $ | 9,878 |  |  | $ | 82,932 |  |  | $ | 12,419 |
Held-to-maturity securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  | $ | 67,332 |  |  | $ | 2,786 |  |  | $ | 67,163 |  |  | $ | 10,815 |  |  | $ | 134,495 |  |  | $ | 13,601 |
Mortgage-backed-residential |  | 148,771 |  |  | 9,402 |  |  | 199,649 |  |  | 41,062 |  |  | 348,420 |  |  | 50,464 |
States and political subdivisions |  | 780 |  |  | 28 |  |  | — |  |  | — |  |  | 780 |  |  | 28 |
Other debt securities |  | 8,091 |  |  | 409 |  |  | 2,139 |  |  | 361 |  |  | 10,230 |  |  | 770 |
Total |  | $ | 224,974 |  |  | $ | 12,625 |  |  | $ | 268,951 |  |  | $ | 52,238 |  |  | $ | 493,925 |  |  | $ | 64,863 |
There were 116 AFS debt securities with a fair value below the amortized cost basis, totaling $13.9 million of aggregate fair value as of September 30, 2023. The Company concluded that a credit loss does not exist in its AFS securities portfolio as of September 30, 2023, and no impairment loss has been recognized based on the fact that (1) changes in fair value were caused primarily by fluctuations in interest rates, (2) securities with unrealized losses had generally high credit quality, (3) the Company intends to hold these investments in debt securities to maturity and it is more-likely-than-not the Company will not be required to sell these investments before a recovery of its investment, and (4) issuers have continued to make timely payments of principal and interest. Additionally, the Company’s mortgage-back securities are issued by either U.S. government agencies or U.S. government sponsored enterprises. Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments. All HTM and AFS securities were current with no securities past due or on nonaccrual as of September 30, 2023. The Company has securities which have been pledged as collateral for obligations to federal, state, and local government agencies, and other purpose as required or permitted by law, or sold under agreements to repurchase. At September 30, 2023, the carrying value of pledged AFS securities was $53.3 million and $180.7 million of pledged HTM securities. The comparable amounts for December 31, 2022 were $72.1 million and $19.2 million, respectively. The following table provides information on the amortized cost and estimated fair values of investment securities by maturity date at September 30, 2023.
|  | Available for sale |  | Held to maturity
(Dollars in thousands) |  | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Due in one year or less |  | $ | 2,478 |  |  | $ | 2,479 |  |  | $ | 7,000 |  |  | $ | 6,873 |
Due after one year through five years |  | 16,520 |  |  | 15,113 |  |  | 119,922 |  |  | 110,186 |
Due after five years through ten years |  | 31,108 |  |  | 27,144 |  |  | 52,517 |  |  | 45,947 |
Due after ten years |  | 42,946 |  |  | 34,407 |  |  | 343,738 |  |  | 282,646 |
Total |  | $ | 93,052 |  |  | $ | 79,143 |  |  | $ | 523,177 |  |  | $ | 445,652 |
The maturity dates for debt securities are determined using contractual maturity dates.

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsDebtAndEquitySecuritiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//320/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 320 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481800/320-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6B -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-6B Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6B -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-6B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) -Publisher SEC Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 946 -SubTopic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//946-320/tableOfContent Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 940 -SubTopic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//940-320/tableOfContent Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 942 -SubTopic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//942-320/tableOfContent + Details
Name: | us-gaap_InvestmentsInDebtAndMarketableEquitySecuritiesAndCertainTradingAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration