Investment Securities

12 Months Ended

Dec. 31, 2024

(2.) 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, 2024
Securities available for sale:
Mortgage-backed securities:
Federal National Mortgage Association	$	287,416		$	1	$	9,447	$	277,970
Federal Home Loan Mortgage Corporation		350,495			206		25,355		325,346
Government National Mortgage Association		216,392			84		23,210		193,266
Collateralized mortgage obligations:
Federal National Mortgage Association		14,720			-		1,320		13,400
Federal Home Loan Mortgage Corporation		20,357			136		2,732		17,761
Government National Mortgage Association		74,677			3		404		74,276
Privately issued		-			365		-		365
Total mortgage-backed securities		964,057			795		62,468		902,384
Other debt securities		8,663			69		11		8,721
Total available for sale securities	$	972,720		$	864	$	62,479	$	911,105
Securities held to maturity:
U.S. Government agencies and government sponsored enterprises	$	16,663		$	-	$	512	$	16,151
State and political subdivisions		45,333			26		5,192		40,167
Mortgage-backed securities:
Federal National Mortgage Association		5,120			-		580		4,540
Federal Home Loan Mortgage Corporation		7,365			-		1,367		5,998
Government National Mortgage Association		18,410			-		2,217		16,193
Collateralized mortgage obligations:
Federal National Mortgage Association		8,777			-		658		8,119
Federal Home Loan Mortgage Corporation		11,309			-		727		10,582
Government National Mortgage Association		3,026			-		220		2,806
Total mortgage-backed securities		54,007			-		5,769		48,238
Total held to maturity securities		116,003		$	26	$	11,473	$	104,556
Allowance for credit losses–securities		(2	)
Total held to maturity securities, net	$	116,001

(2.) INVESTMENT SECURITIES (Continued)


	Amortized Cost			Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2023
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	24,535		$	-	$	2,724	$	21,811
Mortgage-backed securities:
Federal National Mortgage Association		449,418			-		61,219		388,199
Federal Home Loan Mortgage Corporation		402,399			488		59,665		343,222
Government National Mortgage Association		126,417			252		21,409		105,260
Collateralized mortgage obligations:
Federal National Mortgage Association		10,954			-		2,343		8,611
Federal Home Loan Mortgage Corporation		19,766			-		4,186		15,580
Government National Mortgage Association		4,501			221		-		4,722
Privately issued		-			325		-		325
Total mortgage-backed securities		1,013,455			1,286		148,822		865,919
Total available for sale securities	$	1,037,990		$	1,286	$	151,546	$	887,730
Securities held to maturity:
U.S. Government agencies and government sponsored enterprises	$	16,513		$	-	$	530	$	15,983
State and political subdivisions		68,854			34		5,106		63,782
Mortgage-backed securities:
Federal National Mortgage Association		5,729			-		467		5,262
Federal Home Loan Mortgage Corporation		7,648			-		1,269		6,379
Government National Mortgage Association		20,223			-		1,703		18,520
Collateralized mortgage obligations:
Federal National Mortgage Association		11,432			-		851		10,581
Federal Home Loan Mortgage Corporation		14,196			-		968		13,228
Government National Mortgage Association		3,565			-		270		3,295
Total mortgage-backed securities		62,793			-		5,528		57,265
Total held to maturity securities		148,160		$	34	$	11,164	$	137,030
Allowance for credit losses–securities		(4	)
Total held to maturity securities, net	$	148,156

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 $3.4 million and $2.1 million as of December 31, 2024 and December 31, 2023, respectively. For HTM debt securities, AIR totaled $456 thousand and $571 thousand as of December 31, 2024 and December 31, 2023, respectively. AIR is included in other assets on the Company’s consolidated statements of financial condition.

For the years ended December 31, 2024, 2023 and 2022, credit loss (credit) expense for HTM investment securities was a credit of $2 thousand, $1 thousand and less than $1 thousand, respectively.

Investment securities with a total fair value of $828.8 million and $845.2 million at December 31, 2024 and 2023, 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):


	2024		2023		2022
Taxable interest and dividends	$	24,314	$	22,048	$	22,498
Tax-exempt interest and dividends		1,105		1,575		2,043
Total interest and dividends on securities	$	25,419	$	23,623	$	24,541

(2.) INVESTMENT SECURITIES (Continued)

On December 13, 2024, the company completed a public, underwritten common stock offering, further discussed in Note 14, Shareholders’ Equity. A portion of the proceeds from the stock offering was used to fund losses on the sale of sales of $653.5 million of available for sale securities for a pre-tax loss of $100.2 million. The Company used the net proceeds from the sale of the securities to purchase higher-yielding agency wrapped investments with a face value of $642.6 million. Sales of securities available for sale for the years ended December 31 were as follows (in thousands):


	2024		2023		2022
Proceeds from sales	$	606,321	$	50,515	$	6,252
Gross realized gains		638		-		-
Gross realized losses		100,693		3,576		15

The scheduled maturities of securities available for sale and securities held to maturity at December 31, 2024 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	$	8	$	8
Due from one to five years		13		13
Due after five years through ten years		32,382		32,095
Due after ten years		940,317		878,989
Total available for sale securities	$	972,720	$	911,105
Debt securities held to maturity:
Due in one year or less	$	16,353	$	16,272
Due from one to five years		22,454		21,531
Due after five years through ten years		20,815		18,831
Due after ten years		56,381		47,922
Total held to maturity securities	$	116,003	$	104,556

(2.) INVESTMENT SECURITIES (Continued)

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, 2024
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	-	$	-	$	-	$	-	$	-	$	-
Mortgage-backed securities:
Federal National Mortgage Association		258,197		3,525		19,732		5,922		277,929		9,447
Federal Home Loan Mortgage Corporation		228,956		2,941		75,647		22,414		304,603		25,355
Government National Mortgage Association		113,772		2,120		69,935		21,090		183,707		23,210
Collateralized mortgage obligations:
Federal National Mortgage Association		9,742		16		3,658		1,304		13,400		1,320
Federal Home Loan Mortgage Corporation		2,411		29		7,655		2,703		10,066		2,732
Government National Mortgage Association		64,493		404		-		-		64,493		404
Total mortgage-backed securities		677,571		9,035		176,627		53,433		854,198		62,468
Other debt securities		3,652		11		-		-		3,652		11
Total available for sale securities		681,223		9,046		176,627		53,433		857,850		62,479
Total temporarily impaired securities	$	681,223	$	9,046	$	176,627	$	53,433	$	857,850	$	62,479

December 31, 2023
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	-	$	-	$	21,811	$	2,724	$	21,811	$	2,724
Mortgage-backed securities:
Federal National Mortgage Association		8		-		388,191		61,219		388,199		61,219
Federal Home Loan Mortgage Corporation		-		-		314,854		59,665		314,854		59,665
Government National Mortgage Association		-		-		86,475		21,409		86,475		21,409
Collateralized mortgage obligations:
Federal National Mortgage Association		-		-		8,611		2,343		8,611		2,343
Federal Home Loan Mortgage Corporation		-		-		15,580		4,186		15,580		4,186
Total mortgage-backed securities		8		-		813,711		148,822		813,719		148,822
Total available for sale securities		8		-		835,522		151,546		835,530		151,546
Total temporarily impaired securities	$	8	$	-	$	835,522	$	151,546	$	835,530	$	151,546

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, 2024 was 76 compared to 201 at December 31, 2023. At December 31, 2024, the Company had a position in 39 investment securities with a fair value of $176.6 million and a total unrealized loss of $53.4 million that has been in a continuous unrealized loss position for more than 12 months. At December 31, 2024, there were a total of 37 securities positions in the Company’s investment portfolio with a fair value of $681.2 million and a total unrealized loss of $9.0 million that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2023, the Company had a position in 198 investment securities with a fair value of $835.5 million and a total unrealized loss of $151.5 million that has been in a continuous unrealized loss position for more than 12 months. At December 31, 2023, there were a total of three securities positions in the Company’s investment portfolio with a fair value of $8 thousand and a total unrealized loss of less than $1 thousand 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.

(2.) INVESTMENT SECURITIES (Continued)

Securities Available for Sale

As of December 31, 2024, 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, the Company expects to recover the amortized cost basis of its investments and more than likely will not need to sell before the recovery period for operating purposes, with no impairment identified. As the portfolio is managed from a liquidity, earnings, and risk standpoint, sales from the AFS portfolio may be warranted based upon prevailing market factors. 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, 2024, $41.9 million of our municipal bonds were rated as an equivalent to Standard & Poor’s A/AA/AAA, with $3.4 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, 2023, $64.6 million of our municipal bonds were rated as an equivalent to Standard & Poor’s A/AA/AAA, with $4.2 million internally rated to be the equivalent of Standard & Poor’s A/AA/AAA rating. Additionally, as of December 31, 2023, no municipal bonds were rated below investment grade.

As of December 31, 2024, the Company had no past due or nonaccrual held to maturity investment securities.