Quarterly report pursuant to Section 13 or 15(d)

SECURITIES AND OTHER INVESTMENTS

v3.24.1.u1
SECURITIES AND OTHER INVESTMENTS
3 Months Ended
Mar. 31, 2024
Securities [Abstract]  
SECURITIES AND OTHER INVESTMENTS

2. SECURITIES AND OTHER INVESTMENTS

Available for Sale

The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities for the periods ended are as follows (dollars in thousands):

Amortized

Gross Unrealized

Estimated

    

Cost

    

Gains

    

(Losses)

    

Fair Value

March 31, 2024

 

  

 

  

 

  

  

U.S. government and agency securities

$

62,561

$

208

$

(33)

$

62,736

Obligations of states and political subdivisions

 

585,749

 

14

 

(123,913)

 

461,850

Corporate and other bonds (1)

 

267,621

 

83

 

(17,440)

 

250,264

Commercial MBS

 

 

Agency

231,296

 

160

 

(42,609)

188,847

Non-agency

58,243

 

 

(1,756)

56,487

Total commercial MBS

289,539

 

160

 

(44,365)

245,334

Residential MBS

Agency

1,322,392

 

350

 

(220,742)

1,102,000

Non-agency

83,437

 

213

 

(5,397)

78,253

Total residential MBS

1,405,829

 

563

 

(226,139)

1,180,253

Other securities

 

1,779

 

 

 

1,779

Total AFS securities

$

2,613,078

$

1,028

$

(411,890)

$

2,202,216

(1) Other bonds include asset-backed securities.

The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities for the periods ended are as follows (dollars in thousands):

Amortized

Gross Unrealized

Estimated

    

Cost

    

Gains

    

(Losses)

    

Fair Value

December 31, 2023

U.S. government and agency securities

$

62,367

$

1,023

$

(34)

$

63,356

Obligations of states and political subdivisions

586,865

 

33

 

(111,451)

 

475,447

Corporate and other bonds (1)

 

261,656

 

7

 

(19,774)

 

241,889

Commercial MBS

 

 

Agency

233,775

 

274

 

(41,181)

192,868

Non-agency

66,743

 

 

(1,965)

64,778

Total commercial MBS

300,518

 

274

 

(43,146)

257,646

Residential MBS

Agency

1,312,538

 

114

 

(205,635)

1,107,017

Non-agency

89,840

 

141

 

(5,827)

84,154

Total residential MBS

1,402,378

 

255

 

(211,462)

1,191,171

Other securities

 

1,752

 

 

 

1,752

Total AFS securities

$

2,615,536

$

1,592

$

(385,867)

$

2,231,261

(1) Other bonds include asset-backed securities.

The following table shows the gross unrealized losses and fair value of the Company’s AFS securities with unrealized losses, which are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position for the following periods ended (dollars in thousands).

Less than 12 months

More than 12 months

Total

  

Fair

  

Unrealized

  

Fair

  

Unrealized

  

Fair

  

Unrealized

Value

Losses

Value(2)

Losses

Value

Losses

March 31, 2024

 

 

 

 

 

 

U.S. government and agency securities

$

$

$

1,808

$

(33)

$

1,808

$

(33)

Obligations of states and political subdivisions

14,061

(2,301)

443,557

(121,612)

457,618

(123,913)

Corporate and other bonds(1)

 

78,546

 

(348)

 

144,239

 

(17,092)

 

222,785

 

(17,440)

Commercial MBS

 

Agency

35,287

(548)

140,475

(42,061)

175,762

(42,609)

Non-agency

14,536

(257)

41,951

(1,499)

56,487

(1,756)

Total commercial MBS

49,823

(805)

182,426

(43,560)

232,249

(44,365)

Residential MBS

Agency

43,155

(273)

974,263

(220,469)

1,017,418

(220,742)

Non-agency

16,963

(48)

35,832

(5,349)

52,795

(5,397)

Total residential MBS

60,118

(321)

1,010,095

(225,818)

1,070,213

(226,139)

Total AFS securities

$

202,548

$

(3,775)

$

1,782,125

$

(408,115)

$

1,984,673

$

(411,890)

December 31, 2023

 

  

 

  

 

  

 

  

 

  

 

  

U.S. government and agency securities

$

$

$

1,980

$

(34)

$

1,980

$

(34)

Obligations of states and political subdivisions

11,758

(2,090)

455,931

(109,361)

467,689

(111,451)

Corporate and other bonds(1)

 

89,450

 

(531)

 

144,155

 

(19,243)

 

233,605

 

(19,774)

Commercial MBS

 

Agency

35,665

(547)

143,657

(40,634)

179,322

(41,181)

Non-agency

64,778

(1,965)

64,778

(1,965)

Total commercial MBS

35,665

(547)

208,435

(42,599)

244,100

(43,146)

Residential MBS

Agency

59,707

(491)

1,011,809

(205,144)

1,071,516

(205,635)

Non-agency

9,022

(41)

40,085

(5,786)

49,107

(5,827)

Total residential MBS

68,729

(532)

1,051,894

(210,930)

1,120,623

(211,462)

Total AFS securities

$

205,602

$

(3,700)

$

1,862,395

$

(382,167)

$

2,067,997

$

(385,867)

(1) Other bonds include asset-backed securities.

(2) Comprised of 759 and 757 individual securities as of March 31, 2024 and December 31, 2023, respectively.

The Company has evaluated AFS securities in an unrealized loss position for credit related impairment at March 31, 2024 and December 31, 2023 and concluded no impairment existed based on several factors which included: (1) the majority of these securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the cost basis of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis.

Additionally, the majority of the Company’s MBS are issued by FNMA, FHLMC, and GNMA and do not have credit risk given the implicit and explicit government guarantees associated with these agencies. In addition, the non-agency mortgage-backed and asset-backed securities generally received a 20% simplified supervisory formula approach rating. The Company’s AFS investment portfolio is generally highly-rated or agency backed. At March 31, 2024 and December 31, 2023, all AFS securities were current with no securities past due or on non-accrual and no ACL was held against the Company’s AFS securities portfolio.

The following table presents the amortized cost and estimated fair value of AFS securities as of the periods ended, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

March 31, 2024

December 31, 2023

    

Amortized

    

Estimated

    

Amortized

    

Estimated

Cost

Fair Value

Cost

Fair Value

Due in one year or less

$

35,082

$

34,745

$

52,427

$

51,936

Due after one year through five years

 

168,601

 

167,029

 

150,271

 

149,545

Due after five years through ten years

 

253,073

 

234,773

 

282,309

 

261,720

Due after ten years

 

2,156,321

 

1,765,668

 

2,130,529

 

1,768,060

Total AFS securities

$

2,613,078

$

2,202,216

$

2,615,536

$

2,231,261

Refer to Note 7 “Commitments and Contingencies” within this Item 1 of this Quarterly Report for information regarding the estimated fair value of AFS securities that were pledged to secure public deposits, repurchase agreements, and for other purposes as permitted or required by law as of March 31, 2024 and December 31, 2023.

Accrued interest receivable on AFS securities totaled $9.1 million and $9.5 million at March 31, 2024 and December 31, 2023, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2024 and 2023, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

Held to Maturity

The Company reports HTM securities on the Company’s Consolidated Balance Sheets at carrying value. Carrying value is amortized cost, which includes any unamortized unrealized gains and losses recognized in AOCI prior to reclassifying the securities from AFS securities to HTM securities. The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securities for the periods ended are as follows (dollars in thousands):

Carrying

Gross Unrealized

Estimated

    

Value

    

Gains

    

(Losses)

Fair Value

March 31, 2024

  

 

  

 

  

  

Obligations of states and political subdivisions

$

695,952

$

2,851

$

(27,308)

$

671,495

Corporate and other bonds(1)

4,230

(182)

4,048

Commercial MBS

 

Agency

27,377

(5,819)

21,558

Non-agency

23,437

14

(493)

22,958

Total commercial MBS

50,814

14

(6,312)

44,516

Residential MBS

Agency

39,928

(6,365)

33,563

Non-agency

38,004

121

(402)

37,723

Total residential MBS

77,932

121

(6,767)

71,286

Total HTM securities

$

828,928

$

2,986

$

(40,569)

$

791,345

(1) Other bonds include asset-backed securities.

The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securities for the periods ended are as follows (dollars in thousands):

Carrying

Gross Unrealized

Estimated

    

Value

    

Gains

    

(Losses)

    

Fair Value

December 31, 2023

 

  

 

  

 

  

 

  

Obligations of states and political subdivisions

699,189

6,175

(23,464)

681,900

Corporate and other bonds(1)

4,349

(100)

4,249

Commercial MBS

Agency

27,477

(5,570)

21,907

Non-agency

24,503

37

(449)

24,091

Total commercial MBS

51,980

37

(6,019)

45,998

Residential MBS

Agency

40,562

(5,713)

34,849

Non-agency

41,298

122

(342)

41,078

Total residential MBS

81,860

122

(6,055)

75,927

Total HTM securities

$

837,378

$

6,334

$

(35,638)

$

808,074

(1) Other bonds include asset-backed securities.

The following table presents the amortized cost of HTM securities as of the periods ended, by security type and credit rating (dollars in thousands):

    

Obligations of states and political

    

Corporate and other

    

Mortgage-backed

    

Total HTM

subdivisions

bonds

securities

securities

March 31, 2024

Credit Rating:

 

 

AAA/AA/A

$

685,273

$

$

9,186

$

694,459

BBB/BB/B

1,160

1,160

Not Rated – Agency(1)

67,305

67,305

Not Rated – Non-Agency(2)

 

9,519

 

4,230

52,255

66,004

Total

$

695,952

$

4,230

$

128,746

$

828,928

December 31, 2023

Credit Rating:

 

 

AAA/AA/A

$

688,499

$

$

9,720

$

698,219

BBB/BB/B

1,166

1,166

Not Rated – Agency(1)

68,039

68,039

Not Rated – Non-Agency(2)

 

9,524

 

4,349

56,081

69,954

Total

$

699,189

$

4,349

$

133,840

$

837,378

(1) Generally considered not to have credit risk given the government guarantees associated with these agencies.

(2) Non-agency mortgage-backed and asset-backed securities have limited credit risk, supported by most receiving a 20% simplified supervisory formula approach rating.

The following table presents the amortized cost and estimated fair value of HTM securities as of the periods ended, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

March 31, 2024

December 31, 2023

    

Carrying

    

Estimated

    

Carrying

    

Estimated

Value

Fair Value

Value

Fair Value

Due in one year or less

$

1,048

$

1,042

$

3,065

$

3,058

Due after one year through five years

 

31,730

 

32,080

 

34,093

 

34,613

Due after five years through ten years

 

67,865

 

66,426

 

45,919

 

45,263

Due after ten years

 

728,285

 

691,797

 

754,301

 

725,140

Total HTM securities

$

828,928

$

791,345

$

837,378

$

808,074

Refer to Note 7 Commitments and Contingencies within this Item 1 of this Quarterly Report for information regarding the estimated fair value of HTM securities that were pledged to secure public deposits as permitted or required by law as of March 31, 2024 and December 31, 2023.

Accrued interest receivable on HTM securities totaled $6.7 million and $8.4 million at March 31, 2024 and December 31, 2023, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2024 and 2023, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

The Company’s HTM investment portfolio primarily consists of highly-rated municipal securities. At March 31, 2024 and December 31, 2023, the Company’s HTM securities were all current, with no securities past due or on non-accrual. The Company’s HTM securities ACL was immaterial at March 31, 2024 and December 31, 2023.

Restricted Stock, at cost

The FHLB required the Bank to maintain stock in an amount equal to 4.25% of outstanding borrowings and a specific percentage of the member’s total assets at March 31, 2024 and December 31, 2023, respectively. The FRB requires the Company to maintain stock with a par value equal to 6% of its outstanding capital. At March 31, 2024 and December 31, 2023, restricted stock consists of FRB stock in the amount of $67.0 million, respectively, and FHLB stock in the amount of $43.2 million and $48.4 million, respectively.

Realized Gains and Losses

The following table presents the gross realized gains and losses on and the proceeds from the sale of securities during the three months ended March 31, (dollars in thousands):

    

    

2024

2023

Realized gains (losses)(1):

 

  

 

  

Gross realized gains

$

3

$

1,346

Gross realized losses

 

 

(14,746)

Net realized gains (losses)

$

3

$

(13,400)

Proceeds from sales of securities

$

61,943

$

558,466

(1) Includes gains (losses) on sales and calls of securities.