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v3.22.2.2

Investments | 9 Months Ended
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Sep. 30, 2022
Investments [Abstract] |
Investments | Note 4. Investments Available for Sale (AFS) Securities The amortized cost and estimated fair value of AFS securities as of September 30, 2022 and December 31, 2021 are as follows:
(Dollars in thousands) |  |  |  |  | Gross |  | Gross |  |  |
|  | Amortized |  | unrealized |  | unrealized |  | Fair
September 30, 2022 |  | cost |  | gains |  | losses |  | value
U.S. Treasury |  | $ | 92,305 |  | $ | — |  | $ | (12,396) |  | $ | 79,909
Municipal |  |  | 203,370 |  |  | 24 |  |  | (34,133) |  |  | 169,261
Corporate |  |  | 26,311 |  |  | — |  |  | (1,689) |  |  | 24,622
Agency mortgage & asset-backed |  |  | 169,537 |  |  | 38 |  |  | (12,555) |  |  | 157,020
Non-Agency mortgage & asset-backed |  |  | 65,471 |  |  | 2 |  |  | (4,253) |  |  | 61,220
Total |  | $ | 556,994 |  | $ | 64 |  | $ | (65,026) |  | $ | 492,032
(Dollars in thousands) |  |  |  |  | Gross |  | Gross |  |  |
|  | Amortized |  | unrealized |  | unrealized |  | Fair
December 31, 2021 |  | cost |  | gains |  | losses |  | value
U.S. Treasury |  | $ | 84,896 |  | $ | 88 |  | $ | (698) |  | $ | 84,286
Municipal |  |  | 206,501 |  |  | 7,148 |  |  | (1,422) |  |  | 212,227
Corporate |  |  | 24,794 |  |  | 333 |  |  | (188) |  |  | 24,939
Agency mortgage & asset-backed |  |  | 178,614 |  |  | 1,157 |  |  | (2,086) |  |  | 177,685
Non-Agency mortgage & asset-backed |  |  | 30,912 |  |  | 34 |  |  | (272) |  |  | 30,674
Total |  | $ | 525,717 |  | $ | 8,760 |  | $ | (4,666) |  | $ | 529,811
At September 30, 2022 and December 31, 2021, the fair value of debt securities pledged to secure public funds and trust deposits totaled $222.7 million and $160.3 million, respectively. The Bank has no investment in a single issuer that exceeds 10% of shareholders’ equity, except for securities issued by the U.S. Treasury and U.S. government sponsored entities. The amortized cost and estimated fair value of debt securities at September 30, 2022, by contractual maturity are shown below. Actual maturities may differ from contractual maturities because of prepayment or call options embedded in the securities. Securities not due at a single maturity date are presented separately.
(Dollars in thousands) |  | Amortized ‎cost |  | Fair ‎value
Due in one year or less |  | $ | 3,971 |  | $ | 3,942
Due after one year through five years |  |  | 14,689 |  |  | 14,121
Due after five years through ten years |  |  | 150,057 |  |  | 130,188
Due after ten years |  |  | 153,269 |  |  | 125,541
|  |  | 321,986 |  |  | 273,792
Mortgage & asset-backed |  |  | 235,008 |  |  | 218,240
|  | $ | 556,994 |  | $ | 492,032
The composition of the net realized gains (losses) on debt securities for the three and nine months ended are as follows:
|  | For the Three Months Ended |  | For the Nine Months Ended
|  | September 30, |  | September 30,
(Dollars in thousands) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Proceeds |  | $ | 1,000 |  | $ | — |  | $ | 1,082 |  | $ | 16,060
Gross gains realized |  |  | — |  |  | — |  |  | — |  |  | 169
Gross losses realized |  |  | (15) |  |  | — |  |  | (34) |  |  | (78)
Net (losses) gains realized |  | $ | (15) |  | $ | — |  | $ | (34) |  | $ | 91
Tax benefit (provision) on net (losses) gains realized |  | $ | 3 |  | $ | — |  | $ | 7 |  | $ | (19)
Impairment: The debt securities portfolio contained 599 securities with $475.4 million of temporarily impaired fair value and $65.0 million in unrealized losses at September 30, 2022. The total unrealized loss position has increased $60.1 million since year-end 2021 due to an increase in market interest rates. For securities with an unrealized loss, Management applies a systematic methodology in order to perform an assessment of the potential for other-than-temporary impairment. In the case of debt securities, investments considered for other-than-temporary impairment: (1) had a specified maturity or repricing date; (2) were generally expected to be redeemed at par; and (3) were expected to achieve a recovery in market value within a reasonable period of time. In addition, the Bank considers whether it intends to sell these securities or whether it will be forced to sell these securities before the earlier of amortized cost recovery or maturity. The municipal bond portfolio, which has the largest unrealized loss, is well diversified geographically (201 issuers) and is comprised primarily of general obligation bonds (64%). Many municipal bonds have credit enhancements in the form of private bond insurance or other credit support. The largest geographic municipal bond exposure is in the states of Texas (14%), California (11%), Pennsylvania (11%), and Michigan (10%). The average rating of the municipal portfolio from Moody’s is AA. No municipal bonds are rated below investment grade. The impairment identified on debt securities and subject to assessment at September 30, 2022, was deemed to be temporary and required no further adjustments to the financial statements, unless otherwise noted. The following table reflects temporary impairment in the AFS portfolio, aggregated by investment category, length of time that individual securities have been in a continuous unrealized loss position and the number of securities in each category as of September 30, 2022 and December 31, 2021:
| September 30, 2022
| Less than 12 months |  | 12 months or more |  | Total
| Fair |  | Unrealized |  |  |  | Fair |  | Unrealized |  |  |  | Fair |  | Unrealized |  |
(Dollars in thousands) | Value |  | Losses |  | Count |  | Value |  | Losses |  | Count |  | Value |  | Losses |  | Count
U.S. Treasury | $ | 16,836 |  | $ | (1,864) |  | 11 |  | $ | 63,073 |  | $ | (10,532) |  | 19 |  | $ | 79,909 |  | $ | (12,396) |  | 30
Municipal |  | 132,404 |  |  | (22,568) |  | 167 |  |  | 34,527 |  |  | (11,565) |  | 49 |  |  | 166,931 |  |  | (34,133) |  | 216
Corporate |  | 15,560 |  |  | (1,053) |  | 31 |  |  | 7,412 |  |  | (636) |  | 15 |  |  | 22,972 |  |  | (1,689) |  | 46
Agency mortgage & asset-backed |  | 67,183 |  |  | (3,158) |  | 158 |  |  | 80,796 |  |  | (9,397) |  | 89 |  |  | 147,979 |  |  | (12,555) |  | 247
Non-Agency mortgage & asset-backed |  | 45,802 |  |  | (2,962) |  | 47 |  |  | 11,762 |  |  | (1,291) |  | 13 |  |  | 57,564 |  |  | (4,253) |  | 60
Total temporarily impaired | $ | 277,785 |  | $ | (31,605) |  | 414 |  | $ | 197,570 |  | $ | (33,421) |  | 185 |  | $ | 475,355 |  | $ | (65,026) |  | 599
| December 31, 2021
| Less than 12 months |  | 12 months or more |  | Total
| Fair |  | Unrealized |  |  |  | Fair |  | Unrealized |  |  |  | Fair |  | Unrealized |  |
(Dollars in thousands) | Value |  | Losses |  | Count |  | Value |  | Losses |  | Count |  | Value |  | Losses |  | Count
U.S. Treasury | $ | 76,383 |  | $ | (698) |  | 21 |  | $ | — |  | $ | — |  | — |  | $ | 76,383 |  | $ | (698) |  | 21
Municipal |  | 38,997 |  |  | (910) |  | 44 |  |  | 15,404 |  |  | (512) |  | 16 |  |  | 54,401 |  |  | (1,422) |  | 60
Corporate |  | 8,954 |  |  | (132) |  | 17 |  |  | 1,694 |  |  | (56) |  | 3 |  |  | 10,648 |  |  | (188) |  | 20
Agency mortgage & asset-backed |  | 96,923 |  |  | (1,669) |  | 94 |  |  | 15,991 |  |  | (417) |  | 18 |  |  | 112,914 |  |  | (2,086) |  | 112
Non-Agency mortgage & asset-backed |  | 15,215 |  |  | (215) |  | 11 |  |  | 1,964 |  |  | (57) |  | 3 |  |  | 17,179 |  |  | (272) |  | 14
Total temporarily impaired | $ | 236,472 |  | $ | (3,624) |  | 187 |  | $ | 35,053 |  | $ | (1,042) |  | 40 |  | $ | 271,525 |  | $ | (4,666) |  | 227
The following table represents the cumulative credit losses on debt securities recognized in earnings for:
|  | Nine Months Ended
(Dollars in thousands) |  | September 30,
|  | 2022 |  | 2021
Balance of cumulative credit-related OTTI at January 1 |  | $ | 257 |  | $ | 272
Decreases for previously recognized credit losses on securities that paid off or sold |  |  | (257) |  |  | (15)
Balance of credit-related OTTI at September 30 |  | $ | — |  | $ | 257
Equity Securities at Fair Value The Corporation owns one equity investment with a readily determinable fair value. At September 30, 2022 and December 31, 2021, this investment was reported at fair value of $435 thousand and $481 thousand, respectively, with changes in value reported through income.

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