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Investments | 3 Months Ended
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Mar. 31, 2023
Investments, Debt and Equity Securities [Abstract] |
Investments | Investments The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at March 31, 2023 and December 31, 2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses (in thousands):
|  | March 31, 2023
Available-for-Sale Securities |  | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Credit Losses | Estimated Fair Value
Debt securities: |  |  |  |  |  |
U.S. Treasury securities |  | $ | 9,990 |  | $ | — |  | $ | (1,111) |  | $ | — |  | $ | 8,879 |
U.S. Government agencies |  | 106 |  | — |  | (8) |  | — |  | 98 |
Obligations of states and political subdivisions |  | 200,915 |  | — |  | (22,864) |  | — |  | 178,051 |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 99,307 |  | 4 |  | (6,680) |  | — |  | 92,631 |
Private label mortgage and asset backed securities |  | 406,197 |  | 11 |  | (54,343) |  | — |  | 351,865 |
Total available-for-sale |  | $ | 716,515 |  | $ | 15 |  | $ | (85,006) |  | $ | — |  | $ | 631,524 |
|  | March 31, 2023
Held-to-Maturity Securities |  | Amortized Cost | Gross Unrecognized Gains | Gross Unrecognized Losses | Estimated Fair Value | Allowance for Credit Losses
Debt securities: |  |  |  |  |  |
Obligations of states and political subdivisions |  | $ | 192,028 |  | $ | 68 |  | $ | (17,529) |  | $ | 174,567 |  | $ | — |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 10,511 |  | — |  | (1,559) |  | 8,952 |  | — |
Private label mortgage and asset backed securities |  | 55,981 |  | — |  | (5,919) |  | 50,062 |  | 260 |
Corporate debt securities |  | 46,008 |  | — |  | (2,956) |  | 43,052 |  | 424 |
Total held-to-maturity |  | $ | 304,528 |  | $ | 68 |  | $ | (27,963) |  | $ | 276,633 |  | $ | 684 |
|  | December 31, 2022
Available-for-Sale Securities |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
Debt securities: |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 9,990 |  |  | $ | — |  |  | $ | (1,283) |  |  | $ | 8,707 |
U.S. Government agencies |  | 107 |  |  | — |  |  | (9) |  |  | 98 |
Obligations of states and political subdivisions |  | 201,638 |  |  | — |  |  | (26,653) |  |  | 174,985 |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 117,292 |  |  | 4 |  |  | (7,803) |  |  | 109,493 |
Private label mortgage and asset backed securities |  | 411,441 |  |  | 14 |  |  | (55,913) |  |  | 355,542 |
Total available-for-sale |  | $ | 740,468 |  |  | $ | 18 |  |  | $ | (91,661) |  |  | $ | 648,825 |
|  | December 31, 2022
Held-to-Maturity Securities |  | Amortized Cost |  | Gross Unrecognized Gains |  | Gross Unrecognized Losses |  | Estimated Fair Value
Debt securities: |  |  |  |  |  |  |  |
Obligations of states and political subdivisions |  | 192,004 |  |  | 67 |  |  | (23,166) |  |  | $ | 168,905 |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 10,430 |  |  | — |  |  | (1,762) |  |  | 8,668 |
Private label mortgage and asset backed securities |  | 56,691 |  |  | — |  |  | (5,931) |  |  | 50,760 |
Corporate debt securities |  | 45,982 |  |  | — |  |  | (3,066) |  |  | 42,916 |
Total held-to-maturity |  | $ | 305,107 |  |  | $ | 67 |  |  | $ | (33,925) |  |  | $ | 271,249 |
Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended March 31, 2023 and 2022 are shown below (in thousands):
|  |  |  | For the Three Months Ended March 31,
Available-for-Sale Securities |  |  |  |  |  | 2023 |  | 2022
Proceeds from sales or calls |  |  |  |  |  | $ | 12,066 |  |  | $ | 132,991 |
Gross realized gains from sales or calls |  |  |  |  |  | — |  |  | 206 |
Gross realized losses from sales or calls |  |  |  |  |  | (219) |  |  | — |
The provision for income taxes includes a $(44,000) and $61,000 income tax (benefit)/expense from unrealized net losses and gains on securities realized through security sales for the three months ended March 31, 2023 and 2022. The amortized cost and estimated fair value of available-for-sale and held-to maturity investment securities at March 31, 2023 by contractual maturity is shown below (in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
|  | March 31, 2023
Available-for-Sale Securities |  | Amortized Cost |  | Estimated Fair Value
Within one year |  | $ | — |  |  | $ | — |
After one year through five years |  | 9,990 |  |  | 8,879 |
After five years through ten years |  | 35,853 |  |  | 30,451 |
After ten years |  | 165,062 |  |  | 147,600 |
|  | 210,905 |  |  | 186,930 |
Investment securities not due at a single maturity date: |  |  |  |
U.S. Government agencies |  | 106 |  |  | 98 |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 99,307 |  |  | 92,631 |
Private label mortgage and asset backed securities |  | 406,197 |  |  | 351,865 |
Total available-for-sale |  | $ | 716,515 |  |  | $ | 631,524 |
|  | March 31, 2023
Held-to-Maturity Securities |  | Amortized Cost |  | Estimated Fair Value
Within one year |  | $ | — |  |  | $ | — |
After one year through five years |  | 133 |  |  | 131 |
After five years through ten years |  | 57,832 |  |  | 52,986 |
After ten years |  | 134,063 |  |  | 121,450 |
|  | 192,028 |  |  | 174,567 |
Investment securities not due at a single maturity date: |  |  |  |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 10,511 |  |  | 8,952 |
Private label mortgage and asset backed securities |  | 55,981 |  |  | 50,062 |
Corporate debt securities |  | 46,008 |  |  | 43,052 |
Total held-to-maturity |  | $ | 304,528 |  |  | $ | 276,633 |
At March 31, 2023 there were eight issuers of private label mortgage securities in which the Company had holdings of securities in amounts greater than 10% of shareholders’ equity. Investments with these issuers were in senior tranches and/or were rated “AAA” or higher and there were no credit issues identified. The following table summarizes the Company’s AFS debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):
|  | March 31, 2023
|  | 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 |  | $ | — |  |  | $ | — |  |  | $ | 8,879 |  |  | $ | (1,111) |  |  | $ | 8,879 |  |  | $ | (1,111) |
U.S. Government agencies |  | — |  |  | — |  |  | 98 |  |  | (8) |  |  | 98 |  |  | (8) |
Obligations of states and political subdivisions |  | — |  |  | — |  |  | 178,051 |  |  | (22,864) |  |  | 178,051 |  |  | (22,864) |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 1,123 |  |  | (20) |  |  | 91,267 |  |  | (6,660) |  |  | 92,390 |  |  | (6,680) |
Private label mortgage and asset backed securities |  | 3,500 |  |  | (542) |  |  | 348,311 |  |  | (53,801) |  |  | 351,811 |  |  | (54,343) |
Total available-for-sale |  | $ | 4,623 |  |  | $ | (562) |  |  | $ | 626,606 |  |  | $ | (84,444) |  |  | $ | 631,229 |  |  | $ | (85,006) |
|  | December 31, 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 |  | $ | — |  |  | $ | — |  |  | $ | 8,707 |  |  | $ | (1,283) |  |  | $ | 8,707 |  |  | $ | (1,283) |
U.S. Government agencies |  | — |  |  | — |  |  | 98 |  |  | (9) |  |  | 98 |  |  | (9) |
Obligations of states and political subdivisions |  | 90,808 |  |  | (12,208) |  |  | 84,177 |  |  | (14,445) |  |  | 174,985 |  |  | (26,653) |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 20,825 |  |  | (1,058) |  |  | 88,520 |  |  | (6,745) |  |  | 109,345 |  |  | (7,803) |
Private label mortgage and asset backed securities |  | 126,284 |  |  | (14,529) |  |  | 229,152 |  |  | (41,384) |  |  | 355,436 |  |  | (55,913) |
Total available-for-sale |  | $ | 237,917 |  |  | $ | (27,795) |  |  | $ | 410,654 |  |  | $ | (63,866) |  |  | $ | 648,571 |  |  | $ | (91,661) |
As of March 31, 2023, the Company had a total of 183 AFS debt securities in a gross unrealized loss position with no credit impairment, consisting of 6 U.S. Treasury securities and U.S. Government agencies, 43 obligations of states and political subdivisions, 50 U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations, and 84 private label mortgage and asset backed securities. Allowance for Credit Losses on Available-for-Sale Debt Securities Each reporting period, the Company assesses each AFS debt security that is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis results from a credit loss or other factors. The Company did not record an ACL on any available for sale securities at March 31, 2023 or upon adoption of ASU 2016-13 on January 1, 2023. As of both dates, the Company considers the unrealized losses across the classes of major security-type to be related to fluctuations in market conditions, primarily interest rates, and not reflective of a deterioration in credit value. The gross unrealized losses presented in the preceding tables were primarily attributable to interest rate increases and liquidity and were mainly comprised of the following: •Obligations of States and Political Subdivisions: The unrealized losses on investments in obligations of states and political subdivisions are caused by increases in required yields by investors in these types of securities. It is expected that the securities would not be settled at a price less than the amortized cost of the investment. •U.S. Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations: 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. •Private Label Mortgage and Asset Backed Securities: The Company has invested exclusively in AA and AAA tranches of various private label mortgage and asset backed securities. Each purchase is subject to a credit and structure review prior to their purchase. Ratings are reviewed on a quarterly basis in addition to other metrics provided through third-party services. Following review of the financial metrics and ratings, management concluded that the unrealized loss position of the private label mortgage and asset backed securities related exclusively to the fluctuation in market conditions and were not reflective of any credit concerns with the tranches comprising the Company’s investments. As of March 31, 2023 and December 31, 2022, the Company had the intent to hold the AFS debt securities with unrealized losses through the anticipated recovery period and it was more-than-likely-than-not that the Company would not be required to sell these securities. Accordingly, there was no allowance for credit losses as of March 31, 2023 and December 31, 2022 provided against these securities. Allowance for Credit Losses on Held-to-Maturity Debt Securities The Company separately evaluates its HTM debt securities for any credit losses based on probability of default and loss given default utilizing historical industry data based on investment category, while also considering reasonable and supportable forecasts. The probability of default and loss given default are incorporated into the present value of expected cash flows and compared against amortized cost. The Company recorded an ACL on January 1, 2023 for held-to-maturity debt securities within the corporate bond and private label mortgage securities of $545,000 and $231,000, respectively. The allowance for credit losses on HTM securities was $684,000 at March 31, 2023. The Company monitors credit quality of debt securities held-to-maturity through the use of credit ratings. The Company monitors the credit ratings on a quarterly basis. There were no HTM securities on nonaccrual or past due over 89 days and still on accrual. The following table summarizes the amortized cost of debt securities held-to-maturity at the dates indicated, aggregated by credit quality indicator. U.S. Government sponsored agencies are not included in the below tables as credit ratings are not applicable.
|  | March 31, 2023 |  |
Debt Securities Held-to-Maturity |  | AAA/AA/A | BBB/BB/B | Unrated |  |  |  |
Obligations of states and political subdivisions |  | $ | 192,028 |  | $ | — |  | $ | — |  |  |  |  |
Private label mortgage and asset backed securities |  | 46,706 |  | — |  | 9,275 |  |  |  |  |
Corporate debt securities |  | — |  | — |  | 46,008 |  |  |  |  |
Total debt securities held-to-maturity |  | $ | 238,734 |  | $ | — |  | $ | 65,794 |  |  |  |  |

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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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