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Investment Securities | 12 Months Ended
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Dec. 31, 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 December 31, 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 Company’s accounting policies and policy elections related to the accounting standard update refer to Note 1. The following table summarizes the activity in the ACL on HTM securities.
(Dollars in thousands) |  | Three Months Ended December 31, 2023 |  | Twelve Months Ended December 31, 2023
Balance, beginning of period |  | $ | 126 |  |  | $ | — |
Other debt securities, provision for credit losses |  | (32) |  |  | 94 |
Balance, end of period |  | $ | 94 |  |  | $ | 94 |
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 fourth quarter of 2023, a provision of $(32) thousand was recorded based on the results of our evaluation at December 31, 2023. A provision for credit losses of $94 thousand was recorded for the twelve months ended December 31, 2023. The following table provides information on the amortized cost and estimated fair values of investment securities at December 31, 2023 and December 31, 2022.
(Dollars in thousands) |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
Available-for-sale securities: |  |  |  |  |  |  |  |
December 31, 2023 |  |  |  |  |  |  |  |
U.S. Treasury and government agencies |  | $ | 23,472 |  |  | $ | 5 |  |  | $ | 3,002 |  |  | $ | 20,475 |
Mortgage-backed securities |  | 91,280 |  |  | 5 |  |  | 7,258 |  |  | 84,027 |
Other debt securities |  | 6,080 |  |  | 59 |  |  | 120 |  |  | 6,019 |
Total |  | $ | 120,832 |  |  | $ | 69 |  |  | $ | 10,380 |  |  | $ | 110,521 |
December 31, 2022 |  |  |  |  |  |  |  |
U.S. Treasury and government agencies |  | $ | 21,798 |  |  | $ | 5 |  |  | $ | 3,625 |  |  | $ | 18,178 |
Mortgage-backed securities |  | 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 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 $434.2 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
Held-to-maturity securities: |  |  |  |  |  |  |  |
December 31, 2023 |  |  |  |  |  |  |  |
U.S. Treasury and government agencies |  | $ | 143,442 |  |  | $ | — |  |  | $ | 10,377 |  |  | $ | 133,065 |
Mortgage-backed securities |  | 357,870 |  |  | — |  |  | 43,864 |  |  | 314,006 |
Obligations of states and political subdivisions |  | 1,470 |  |  | 57 |  |  | 19 |  |  | 1,508 |
Other debt securities |  | 10,500 |  |  | — |  |  | 1,249 |  |  | 9,251 |
Total |  | $ | 513,282 |  |  | $ | 57 |  |  | $ | 55,509 |  |  | $ | 457,830 |
December 31, 2022 |  |  |  |  |  |  |  |
U.S. Treasury and government agencies |  | $ | 148,097 |  |  | $ | — |  |  | $ | 13,601 |  |  | $ | 134,496 |
Mortgage-backed securities |  | 398,884 |  |  | — |  |  | 50,464 |  |  | 348,420 |
Obligations of 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 $5.7 million at December 31, 2023 and $1.2 million at December 31, 2022 are presented separately on the balance sheet. The fair value adjustment recorded through earnings totaled $54 thousand for 2023 and $(0.2) million for 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 December 31, 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 December 31, 2023.
|  | December 31, 2023
|  | Investment Grade
(Dollars in thousands) |  | Aaa |  | Aa1 |  | A3 |  | Baa1 |  | Baa2 |  |  |  | NR |  | Total
U.S. Treasury and government agencies |  | $ | 140,761 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  |  |  | $ | 2,681 |  |  | $ | 143,442 |
Mortgage-backed securities |  | 357,870 |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 357,870 |
Obligations of states and political subdivisions |  | — |  |  | 1,470 |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 1,470 |
Other debt securities |  | — |  |  | — |  |  | 4,000 |  |  | 4,000 |  |  | 500 |  |  |  |  | 2,000 |  |  | 10,500 |
Total held-to-maturity securities |  | $ | 498,631 |  |  | $ | 1,470 |  |  | $ | 4,000 |  |  | $ | 4,000 |  |  | $ | 500 |  |  |  |  | $ | 4,681 |  |  | $ | 513,282 |
The following table provides 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 December 31, 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
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and government agencies |  | $ | 74 |  |  | $ | — |  |  | $ | 17,750 |  |  | $ | 3,002 |  |  | $ | 17,824 |  |  | $ | 3,002 |
Mortgage-backed securities |  | 24,405 |  |  | 150 |  |  | 52,864 |  |  | 7,108 |  |  | 77,269 |  |  | 7,258 |
Other debt securities |  | — |  |  | — |  |  | 1,890 |  |  | 120 |  |  | 1,890 |  |  | 120 |
Total |  | $ | 24,479 |  |  | $ | 150 |  |  | $ | 72,504 |  |  | $ | 10,230 |  |  | $ | 96,983 |  |  | $ | 10,380 |
|  | 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. Treasury and government agencies |  | $ | 1,165 |  |  | $ | 4 |  |  | $ | 16,585 |  |  | $ | 3,588 |  |  | $ | 17,750 |  |  | $ | 3,592 |
Mortgage-backed securities |  | 29,125 |  |  | 2,409 |  |  | 34,167 |  |  | 6,290 |  |  | 63,292 |  |  | 8,699 |
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. Treasury and government agencies |  | $ | 67,332 |  |  | $ | 2,786 |  |  | $ | 67,163 |  |  | $ | 10,815 |  |  | $ | 134,495 |  |  | $ | 13,601 |
Mortgage-backed securities |  | 148,771 |  |  | 9,402 |  |  | 199,649 |  |  | 41,062 |  |  | 348,420 |  |  | 50,464 |
Obligations of 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 115 AFS debt securities with a fair value below the amortized cost basis, with unrealized losses totaling $10.4 million as of December 31, 2023. The Company concluded that a credit loss does not exist in its AFS securities portfolio as of December 31, 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 December 31, 2023. All of the securities with unrealized losses in the portfolio have modest duration risk, low credit risk, and minimal losses when compared to total amortized cost. The unrealized losses on debt securities that exist are the result of market changes in interest rates since original purchase and are not related to credit concerns. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be at maturity for debt securities, the Company considers the unrealized losses to be temporary. There were a 115 available-for-sale securities and a 185 held to maturity securities in an unrealized loss position at December 31, 2023. There were 192 available-for-sale securities and a 116 held to maturity securities in an unrealized loss position at December 31, 2022. The following table provides information on the amortized cost and estimated fair values of investment securities by maturity date at December 31, 2023.
|  | Available for sale |  | Held to maturity
(Dollars in thousands) |  | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Due in one year or less |  | $ | 2,447 |  |  | $ | 2,449 |  |  | $ | 7,000 |  |  | $ | 6,927 |
Due after one year through five years |  | 16,491 |  |  | 15,439 |  |  | 119,768 |  |  | 113,227 |
Due after five years through ten years |  | 29,257 |  |  | 26,436 |  |  | 50,538 |  |  | 45,833 |
Due after ten years |  | 72,637 |  |  | 66,197 |  |  | 335,976 |  |  | 291,843 |
Total |  | $ | 120,832 |  |  | $ | 110,521 |  |  | $ | 513,282 |  |  | $ | 457,830 |
The maturity dates for debt securities are determined using contractual maturity dates. 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 December 31, 2023, the aggregate carrying value of pledged AFS and HTM pledged securities was $54.5 million and $185.9 million, respectively. The comparable amounts for December 31, 2022 were $72.1 million and $19.2 million, respectively. The following table sets forth the amortized cost and estimated fair values of securities which have been pledged as collateral for obligations to federal, state and local government agencies, and other purposes as required or permitted by law, or sold under agreements to repurchase at December 31, 2023 and 2022.
|  | 2023 |  | 2022
(Dollars in thousands) |  | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Pledged available-for-sale securities |  | $ | 62,290 |  |  | $ | 54,489 |  |  | $ | 83,288 |  |  | $ | 72,108 |
Pledged held-to-maturity securities |  | 185,876 |  |  | 167,649 |  |  | 19,158 |  |  | 16,305 |
There were no obligations of states or political subdivisions with carrying values, as to any issuer, exceeding 10% of stockholders’ equity at December 31, 2023 or 2022.

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