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Investments | 9 Months Ended
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Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract] |
Investments | Investments The investment portfolio consists primarily of U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label mortgage and asset backed securities (PLMABS), corporate debt securities, and obligations of states and political subdivisions securities. As of September 30, 2022, $177,503,000 of these securities were held as collateral for borrowing arrangements, public funds, and for other purposes. The fair value of the available-for-sale investment portfolio reflected a net unrealized loss of $(104,377,000) at September 30, 2022 compared to an unrealized gain of $10,835,000 at December 31, 2021. The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands):
|  | September 30, 2022
Available-for-Sale Securities |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
Debt securities: |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 9,989 |  |  | $ | — |  |  | $ | (1,441) |  |  | $ | 8,548 |
U.S. Government agencies |  | 344 |  |  | — |  |  | (11) |  |  | 333 |
Obligations of states and political subdivisions |  | 219,720 |  |  | 28 |  |  | (37,150) |  |  | 182,598 |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 123,093 |  |  | 3 |  |  | (7,756) |  |  | 115,340 |
Private label mortgage and asset backed securities |  | 419,531 |  |  | 137 |  |  | (58,187) |  |  | 361,481 |
Total available-for-sale |  | $ | 772,677 |  |  | $ | 168 |  |  | $ | (104,545) |  |  | $ | 668,300 |
|  | September 30, 2022
Held-to-Maturity Securities |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
Debt securities: |  |  |  |  |  |  |  |
Obligations of states and political subdivisions |  | $ | 191,975 |  |  | $ | 25 |  |  | $ | (28,121) |  |  | $ | 163,879 |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 10,350 |  |  | — |  |  | (1,317) |  |  | 9,033 |
Private label mortgage and asset backed securities |  | 57,201 |  |  | — |  |  | (6,033) |  |  | 51,168 |
Corporate debt securities |  | 45,956 |  |  | — |  |  | (2,593) |  |  | 43,363 |
Total held-to-maturity |  | $ | 305,482 |  |  | $ | 25 |  |  | $ | (38,064) |  |  | $ | 267,443 |
|  | December 31, 2021
Available-for-Sale Securities |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
Debt securities: |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 9,988 |  |  | $ | — |  |  | $ | (63) |  |  | $ | 9,925 |
U.S. Government agencies |  | 373 |  |  | 6 |  |  | — |  |  | 379 |
Obligations of states and political subdivisions |  | 512,952 |  |  | 16,703 |  |  | (3,188) |  |  | 526,467 |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 213,471 |  |  | 2,245 |  |  | (1,277) |  |  | 214,439 |
Private label mortgage and asset backed securities |  | 317,089 |  |  | 824 |  |  | (4,693) |  |  | 313,220 |
Corporate debt securities |  | 44,500 |  |  | 595 |  |  | (317) |  |  | 44,778 |
Total available-for-sale |  | $ | 1,098,373 |  |  | $ | 20,373 |  |  | $ | (9,538) |  |  | $ | 1,109,208 |
Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended September 30, 2022 and 2021 are shown below (in thousands):
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
Available-for-Sale Securities |  | 2022 |  | 2021 |  | 2022 |  | 2021
Proceeds from sales or calls |  | $ | 275 |  |  | $ | 10,170 |  |  | $ | 235,645 |  |  | $ | 10,760 |
Gross realized gains from sales or calls |  | — |  |  | 117 |  |  | 5,123 |  |  | 117 |
Gross realized losses from sales or calls |  | (14) |  |  | — |  |  | (5,900) |  |  | (79) |
During the second quarter of 2022, the Company designated certain securities previously classified as available-for-sale to the held-to-maturity classification. The securities designated consisted of obligations of states and political subdivision securities, U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label mortgage and asset backed securities, and corporate debt securities with a total carrying value of $306.7 million at April 1, 2022. At the time of re-designation the securities included $25.3 million of pretax unrealized losses in other comprehensive income which is being amortized over the remaining life of the securities in a manner consistent with the amortization of a premium or discount. As market interest rates or risks associated with an available-for-sale security’s issuer continue to change and impact the actual or perceived values of investment securities, the Company may determine that selling these securities and using proceeds to purchase securities that fit with the Company’s current risk profile is appropriate and beneficial to the Company. The provision for income taxes includes a $(230,000) and $11,000 income (benefit) tax impact from unrealized net losses and gains on securities realized through security sales for the nine months ended September 30, 2022 and 2021. Investment securities, aggregated by investment category, with unrealized losses as of the dates indicated are summarized and classified according to the duration of the loss period as follows (in thousands):
|  | September 30, 2022
|  | Less than 12 Months |  | 12 Months or More |  | Total
|  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized
Available-for-Sale Securities |  | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | — |  |  | $ | — |  |  | $ | 8,548 |  |  | $ | (1,441) |  |  | $ | 8,548 |  |  | $ | (1,441) |
U.S. Government agencies |  | 333 |  |  | (11) |  |  | — |  |  | — |  |  | 333 |  |  | (11) |
Obligations of states and political subdivisions |  | 165,535 |  |  | (32,830) |  |  | 17,063 |  |  | (4,320) |  |  | 182,598 |  |  | (37,150) |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 66,164 |  |  | (3,371) |  |  | 49,176 |  |  | (4,385) |  |  | 115,340 |  |  | (7,756) |
Private label mortgage and asset backed securities |  | 202,786 |  |  | (26,135) |  |  | 158,695 |  |  | (32,052) |  |  | 361,481 |  |  | (58,187) |
Total available-for-sale |  | $ | 434,818 |  |  | $ | (62,347) |  |  | $ | 233,482 |  |  | $ | (42,198) |  |  | $ | 668,300 |  |  | $ | (104,545) |
|  | September 30, 2022
|  | Less than 12 Months |  | 12 Months or More |  | Total
|  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized
Held-to-Maturity Securities |  | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |
Obligations of states and political subdivisions |  | $ | 87,855 |  |  | $ | (15,353) |  |  | $ | 76,024 |  |  | $ | (12,768) |  |  | $ | 163,879 |  |  | $ | (28,121) |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | — |  |  | — |  |  | 9,033 |  |  | (1,317) |  |  | 9,033 |  |  | (1,317) |
Private label mortgage and asset backed securities |  | 35,419 |  |  | (4,702) |  |  | 15,749 |  |  | (1,331) |  |  | 51,168 |  |  | (6,033) |
Corporate debt securities |  | 26,916 |  |  | (1,501) |  |  | 16,447 |  |  | (1,092) |  |  | 43,363 |  |  | (2,593) |
Total held-to-maturity |  | $ | 150,190 |  |  | $ | (21,556) |  |  | $ | 117,253 |  |  | $ | (16,508) |  |  | $ | 267,443 |  |  | $ | (38,064) |
|  | December 31, 2021
|  | Less than 12 Months |  | 12 Months or More |  | Total
|  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized
Available-for-Sale Securities |  | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury securities |  | $ | 9,925 |  |  | $ | (63) |  |  | $ | — |  |  | $ | — |  |  | $ | 9,925 |  |  | $ | (63) |
Obligations of states and political subdivisions |  | 143,336 |  |  | (2,896) |  |  | 6,336 |  |  | (292) |  |  | 149,672 |  |  | (3,188) |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 91,385 |  |  | (905) |  |  | 40,365 |  |  | (372) |  |  | 131,750 |  |  | (1,277) |
Private label mortgage and asset backed securities |  | 230,987 |  |  | (3,661) |  |  | 28,908 |  |  | (1,032) |  |  | 259,895 |  |  | (4,693) |
Corporate debt securities |  | 21,183 |  |  | (317) |  |  | — |  |  | — |  |  | 21,183 |  |  | (317) |
Total available-for-sale |  | $ | 496,816 |  |  | $ | (7,842) |  |  | $ | 75,609 |  |  | $ | (1,696) |  |  | $ | 572,425 |  |  | $ | (9,538) |
The Company periodically evaluates each investment security for other-than-temporary impairment, relying primarily on industry analyst reports, observation of market conditions, and interest rate fluctuations. The portion of the impairment that is attributable to a shortage in the present value of expected future cash flows relative to the amortized cost should be recorded as a current period charge to earnings. The discount rate in this analysis is the original yield expected at time of purchase. As of September 30, 2022, the Company performed an analysis of the investment portfolio to determine whether any of the investments held in the portfolio had an other-than-temporary impairment (OTTI). The Company evaluated all individual available-for-sale investment securities with an unrealized loss at September 30, 2022 and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at September 30, 2022 greater than 10% of the recorded book value on that date, or which had an unrealized loss of more than $75,000. The Company also analyzed any securities that may have been downgraded by credit rating agencies. For those investment securities that met the evaluation criteria, management obtained and reviewed the most recently published national credit ratings for those investment securities. There were no OTTI losses recorded during the nine months ended September 30, 2022. U.S. Treasury Securities At September 30, 2022, the Company held one U.S. Treasury security which was in a loss position for more than 12 months. The unrealized losses on the Company’s investments in U.S. Treasury securities were caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022. U.S. Government Agencies At September 30, 2022, the Company held one U.S. Government agency security which was in a loss position for less than 12 months. Obligations of States and Political Subdivisions At September 30, 2022, the Company held 97 obligations of states and political subdivision securities of which 73 were in a loss position for less than 12 months and 22 have been in a loss position for more than 12 months. The unrealized losses on the Company’s investments in obligations of states and political subdivision securities were caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022. U.S. Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations At September 30, 2022, the Company held 85 U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations of which 49 were in a loss position for less than 12 months and 15 have been in a loss position for more than 12 months. The unrealized losses on the Company’s investments in U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations were caused by interest rate changes. The contractual cash flows of those investments are guaranteed or supported by an agency or sponsored entity of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability to hold and does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022. Private Label Mortgage and Asset Backed Securities At September 30, 2022, the Company had a total of 97 Private Label Mortgage and Asset Backed Securities (PLMABS). 48 of the PLMABS securities were in a loss position for less than 12 months and 45 have been in loss for more than 12 months at September 30, 2022. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell, those investments until a recovery of fair value, which may be the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022. The Company continues to monitor these securities for indications that declines in value, if any, may be other-than-temporary. Corporate Debt Securities At September 30, 2022, the Company held 13 corporate debt securities of which 8 were in a loss position for less than 12 months and 5 have been in a loss position for more than 12 months. The unrealized loss on the Company’s investments in corporate debt security was caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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