Investment Securities

12 Months Ended

Dec. 31, 2022

(4.) INVESTMENT SECURITIES

The amortized cost and fair value of investment securities are summarized below (in thousands).


	Amortized Cost			Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2022
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	24,535		$	-	$	3,420	$	21,115
Mortgage-backed securities:
Federal National Mortgage Association		545,797			-		76,193		469,604
Federal Home Loan Mortgage Corporation		410,829			-		68,608		342,221
Government National Mortgage Association		112,202			1		18,037		94,166
Collateralized mortgage obligations:
Federal National Mortgage Association		12,175			-		2,603		9,572
Federal Home Loan Mortgage Corporation		21,519			-		4,163		17,356
Privately issued		-			337		-		337
Total mortgage-backed securities		1,102,522			338		169,604		933,256
Total available for sale securities	$	1,127,057		$	338	$	173,024	$	954,371
Securities held to maturity:
U.S. Government agencies and government sponsored enterprises	$	16,363		$	-	$	848	$	15,515
State and political subdivisions		97,583			24		7,172		90,435
Mortgage-backed securities:
Federal National Mortgage Association		8,332			-		582		7,750
Federal Home Loan Mortgage Corporation		7,959			-		1,396		6,563
Government National Mortgage Association		22,541			-		2,116		20,425
Collateralized mortgage obligations:
Federal National Mortgage Association		14,268			-		1,119		13,149
Federal Home Loan Mortgage Corporation		17,712			-		1,253		16,459
Government National Mortgage Association		4,222			-		330		3,892
Total mortgage-backed securities		75,034			-		6,796		68,238
Total held to maturity securities		188,980		$	24	$	14,816	$	174,188
Allowance for credit losses – securities		(5	)
Total held to maturity securities, net	$	188,975

December 31, 2021
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	15,793		$	195	$	97	$	15,891
Mortgage-backed securities:
Federal National Mortgage Association		576,163			6,565		5,242		577,486
Federal Home Loan Mortgage Corporation		430,010			952		6,435		424,527
Government National Mortgage Association		122,266			298		2,082		120,482
Collateralized mortgage obligations:
Federal National Mortgage Association		15,346			26		433		14,939
Federal Home Loan Mortgage Corporation		25,257			-		477		24,780
Privately issued		-			410		-		410
Total mortgage-backed securities		1,169,042			8,251		14,669		1,162,624
Total available for sale securities	$	1,184,835		$	8,446	$	14,766	$	1,178,515

(4.) INVESTMENT SECURITIES (Continued)


	Amortized Cost			Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2021 (continued)
Securities held to maturity:
State and political subdivisions	$	111,399		$	2,412	$	300	$	113,511
Mortgage-backed securities:
Federal National Mortgage Association		9,275			411		-		9,686
Federal Home Loan Mortgage Corporation		8,706			137		144		8,699
Government National Mortgage Association		27,400			706		2		28,104
Collateralized mortgage obligations:
Federal National Mortgage Association		19,485			368		3		19,850
Federal Home Loan Mortgage Corporation		23,840			565		-		24,405
Government National Mortgage Association		5,481			84		-		5,565
Total mortgage-backed securities		94,187			2,271		149		96,309
Total held to maturity securities		205,586		$	4,683	$	449	$	209,820
Allowance for credit losses – securities		(5	)
Total held to maturity securities, net	$	205,581

The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities disclosed throughout this footnote. For AFS debt securities, AIR totaled $2.1 million as of December 31, 2022 and December 31, 2021. For HTM debt securities, AIR totaled $695 thousand and $696 thousand as of December 31, 2022 and December 31, 2021, respectively. AIR is included in other assets on the Company’s consolidated statements of financial condition.

For the years ended December 31, 2022 and 2021, credit loss (credit) expense for HTM investment securities was a credit of less than $1 thousand and $2 thousand, respectively.

Investment securities with a total fair value of $850.4 million and $637.6 million at December 31, 2022 and 2021, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

Interest and dividends on securities for the years ended December 31 are summarized as follows (in thousands):


	2022		2021		2020
Taxable interest and dividends	$	22,498	$	16,736	$	14,186
Tax-exempt interest and dividends		2,043		2,355		3,278
Total interest and dividends on securities	$	24,541	$	19,091	$	17,464

Sales of securities available for sale for the years ended December 31 were as follows (in thousands):


	2022		2021		2020
Proceeds from sales	$	6,252	$	51,891	$	107,098
Gross realized gains		-		251		1,642
Gross realized losses		15		180		43

(4.) INVESTMENT SECURITIES (Continued)

The scheduled maturities of securities available for sale and securities held to maturity at December 31, 2022 are shown below (in thousands). Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.


	Amortized Cost		Fair Value
Debt securities available for sale:
Due in one year or less	$	5,002	$	4,987
Due from one to five years		86,837		80,444
Due after five years through ten years		146,066		128,243
Due after ten years		889,152		740,697
Total available for sale securities	$	1,127,057	$	954,371
Debt securities held to maturity:
Due in one year or less	$	33,764	$	33,583
Due from one to five years		42,826		41,768
Due after five years through ten years		37,043		34,285
Due after ten years		75,347		64,552
Total held to maturity securities	$	188,980	$	174,188

Unrealized losses on investment securities for which an allowance for credit losses has not been recorded and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31 are summarized as follows (in thousands):


	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2022
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	-	$	-	$	21,115	$	3,420	$	21,115	$	3,420
Mortgage-backed securities:
Federal National Mortgage Association		154,006		14,708		315,598		61,485		469,604		76,193
Federal Home Loan Mortgage Corporation		28,493		2,199		313,728		66,409		342,221		68,608
Government National Mortgage Association		10,301		921		83,841		17,116		94,142		18,037
Collateralized mortgage obligations:
Federal National Mortgage Association		1,000		94		8,572		2,509		9,572		2,603
Federal Home Loan Mortgage Corporation		-		-		17,356		4,163		17,356		4,163
Total mortgage-backed securities		193,800		17,922		739,095		151,682		932,895		169,604
Total available for sale securities		193,800		17,922		760,210		155,102		954,010		173,024
Total temporarily impaired securities	$	193,800	$	17,922	$	760,210	$	155,102	$	954,010	$	173,024
December 31, 2021
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	9,438	$	97	$	-	$	-	$	9,438	$	97
Mortgage-backed securities:
Federal National Mortgage Association		333,489		3,597		61,249		1,645		394,738		5,242
Federal Home Loan Mortgage Corporation		283,965		3,353		110,931		3,082		394,896		6,435
Government National Mortgage Association		108,448		2,082		-		-		108,448		2,082
Collateralized mortgage obligations:
Federal National Mortgage Association		13,364		433		-		-		13,364		433
Federal Home Loan Mortgage Corporation		24,780		477		-		-		24,780		477
Total mortgage-backed securities		764,046		9,942		172,180		4,727		936,226		14,669
Total available for sale securities		773,484		10,039		172,180		4,727		945,664		14,766
Total temporarily impaired securities	$	773,484	$	10,039	$	172,180	$	4,727	$	945,664	$	14,766

(4.) INVESTMENT SECURITIES (Continued)

The total number of available for sale securities positions, for which an allowance for credit losses has not been recorded, in the investment portfolio in an unrealized loss position at December 31, 2022 was 226 compared to 116 at December 31, 2021. At December 31, 2022, the Company had a position in 127 investment securities with a fair value of $760.2 million and a total unrealized loss of $155.1 million that has been in a continuous unrealized loss position for more than 12 months. At December 31, 2022, there were a total of 99 securities positions in the Company’s investment portfolio with a fair value of $193.8 million and a total unrealized loss of $17.9 million that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2021, the Company had a position in 28 investment securities with a fair value of $172.2 million and a total unrealized loss of $4.7 million that has been in a continuous unrealized loss position for more than 12 months. At December 31, 2021, there were a total of 88 securities positions in the Company’s investment portfolio with a fair value of $773.5 million and a total unrealized loss of $10.0 million that had been in a continuous unrealized loss position for less than 12 months. The unrealized loss on investment securities was predominantly caused by changes in market interest rates subsequent to purchase. The fair value of most of the investment securities in the Company’s portfolio fluctuates as market interest rates change.

Securities Available for Sale

As of December 31, 2022, no allowance for credit losses has been recognized on available for sale securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality. This is based upon our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our available for sale securities and in consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. Furthermore, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

Securities Held to Maturity

The Company’s HTM investment securities include debt securities that are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. In addition, the Company’s HTM investment securities include debt securities that are issued by state and local government agencies, or municipal bonds.

The Company monitors the credit quality of our municipal bonds through the use of a credit rating agency or by ratings that are derived by an internal scoring model. The scoring methodology for the internally derived ratings is based on a series of financial ratios for the municipality being reviewed as compared to typical industry figures. This information is used to determine the financial strengths and weaknesses of the municipality, which is indicated with a numeric rating. This number is then converted into a letter rating to better match the system used by the credit rating agencies. As of December 31, 2022, $90.6 million of our municipal bonds were rated as an equivalent to Standard & Poor’s A/AA/AAA, with $6.9 million internally rated to be the equivalent of Standard & Poor’s A/AA/AAA rating. Additionally, no municipal bonds were rated below investment grade. As of December 31, 2021, $105.6 million of our municipal bonds were rated as an equivalent to Standard & Poor’s A/AA/AAA, with $5.8 million internally rated to be the equivalent of Standard & Poor’s A/AA/AAA rating. Additionally, as of December 31, 2021, no municipal bonds were rated below investment grade.

As of December 31, 2022, the Company had no past due or nonaccrual held to maturity investment securities.