Quarterly report [Sections 13 or 15(d)]

SECURITIES AND OTHER INVESTMENTS

v3.25.1
SECURITIES AND OTHER INVESTMENTS
3 Months Ended
Mar. 31, 2025
Securities [Abstract]  
SECURITIES AND OTHER INVESTMENTS

3. SECURITIES AND OTHER INVESTMENTS

Available for Sale

The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities as of March 31, 2025 are as follows (dollars in thousands):

Amortized

Gross Unrealized

Estimated

    

Cost

    

Gains

    

(Losses)

    

Fair Value

U.S. government and agency securities

$

65,428

$

680

$

(13)

$

66,095

Obligations of states and political subdivisions

 

593,973

 

125

 

(137,728)

 

456,370

Corporate and other bonds (1)

 

245,806

 

558

 

(7,534)

 

238,830

Commercial MBS

 

 

Agency

288,399

 

668

 

(41,610)

247,457

Non-agency

67,810

 

90

 

(1,923)

65,977

Total commercial MBS

356,209

 

758

 

(43,533)

313,434

Residential MBS

Agency

1,506,416

 

2,917

 

(195,677)

1,313,656

Non-agency

96,155

 

470

 

(3,060)

93,565

Total residential MBS

1,602,571

 

3,387

 

(198,737)

1,407,221

Other securities

 

1,885

 

 

 

1,885

Total AFS securities

$

2,865,872

$

5,508

$

(387,545)

$

2,483,835

(1) Other bonds include asset-backed securities.

The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities as of December 31, 2024 are as follows (dollars in thousands):

Amortized

Gross Unrealized

Estimated

    

Cost

    

Gains

    

(Losses)

    

Fair Value

U.S. government and agency securities

$

65,650

$

390

$

(27)

$

66,013

Obligations of states and political subdivisions

597,956

 

84

 

(129,703)

 

468,337

Corporate and other bonds (1)

 

253,526

 

505

 

(9,319)

 

244,712

Commercial MBS

 

 

Agency

285,949

 

348

 

(44,678)

241,619

Non-agency

61,552

 

4

 

(2,110)

59,446

Total commercial MBS

347,501

 

352

 

(46,788)

301,065

Residential MBS

Agency

1,478,648

 

1,375

 

(216,754)

1,263,269

Non-agency

99,622

 

672

 

(3,384)

96,910

Total residential MBS

1,578,270

 

2,047

 

(220,138)

1,360,179

Other securities

 

1,860

 

 

 

1,860

Total AFS securities

$

2,844,763

$

3,378

$

(405,975)

$

2,442,166

(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, 2025

 

 

 

 

 

 

U.S. government and agency securities

$

$

$

1,094

$

(13)

$

1,094

$

(13)

Obligations of states and political subdivisions

6,008

(377)

434,789

(137,351)

440,797

(137,728)

Corporate and other bonds (1)

 

195

 

(1)

 

152,758

 

(7,533)

 

152,953

 

(7,534)

Commercial MBS

 

Agency

15,166

(83)

161,498

(41,527)

176,664

(41,610)

Non-agency

19,316

(856)

20,262

(1,067)

39,578

(1,923)

Total commercial MBS

34,482

(939)

181,760

(42,594)

216,242

(43,533)

Residential MBS

Agency

108,671

(571)

886,146

(195,106)

994,817

(195,677)

Non-agency

23,135

(197)

26,443

(2,863)

49,578

(3,060)

Total residential MBS

131,806

(768)

912,589

(197,969)

1,044,395

(198,737)

Total AFS securities

$

172,491

$

(2,085)

$

1,682,990

$

(385,460)

$

1,855,481

$

(387,545)

December 31, 2024

 

  

 

  

 

  

 

  

 

  

 

  

U.S. government and agency securities

$

1,935

$

(2)

$

1,286

$

(25)

$

3,221

$

(27)

Obligations of states and political subdivisions

6,560

(322)

444,056

(129,381)

450,616

(129,703)

Corporate and other bonds (1)

 

8,620

 

(27)

 

145,655

 

(9,292)

 

154,275

 

(9,319)

Commercial MBS

 

Agency

31,291

(359)

160,880

(44,319)

192,171

(44,678)

Non-agency

24,864

(1,188)

21,110

(922)

45,974

(2,110)

Total commercial MBS

56,155

(1,547)

181,990

(45,241)

238,145

(46,788)

Residential MBS

Agency

104,477

(546)

895,714

(216,208)

1,000,191

(216,754)

Non-agency

6,067

(98)

27,851

(3,286)

33,918

(3,384)

Total residential MBS

110,544

(644)

923,565

(219,494)

1,034,109

(220,138)

Total AFS securities

$

183,814

$

(2,542)

$

1,696,552

$

(403,433)

$

1,880,366

$

(405,975)

(1) Other bonds include asset-backed securities.

(2) Comprised of 715 and 726 individual securities as of March 31, 2025 and December 31, 2024, respectively.

The Company has evaluated AFS securities in an unrealized loss position for credit related impairment at March 31, 2025 and December 31, 2024 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 mortgage-backed securities (“MBS”) are issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association 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, 2025 and December 31, 2024, 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, 2025

December 31, 2024

    

Amortized

    

Estimated

    

Amortized

    

Estimated

Cost

Fair Value

Cost

Fair Value

Due in one year or less

$

20,877

$

20,790

$

35,954

$

35,808

Due after one year through five years

 

225,718

 

226,577

 

215,517

 

215,513

Due after five years through ten years

 

288,239

 

270,629

 

286,487

 

271,443

Due after ten years

 

2,331,038

 

1,965,839

 

2,306,805

 

1,919,402

Total AFS securities

$

2,865,872

$

2,483,835

$

2,844,763

$

2,442,166

Refer to Note 8 “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, 2025 and December 31, 2024.

Accrued interest receivable on AFS securities totaled $9.7 million and $10.1 million at March 31, 2025 and December 31, 2024, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2025 and 2024, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

Held to Maturity

The Company reports held to maturity (“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 accumulated other comprehensive income (loss) (“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 as of March 31, 2025 are as follows (dollars in thousands):

Carrying

Gross Unrealized

Estimated

    

Value

    

Gains

    

(Losses)

Fair Value

Obligations of states and political subdivisions

$

720,888

$

665

$

(37,312)

$

684,241

Corporate and other bonds (1)

3,087

(59)

3,028

Commercial MBS

 

Agency

26,671

(5,780)

20,891

Non-agency

16,824

102

(585)

16,341

Total commercial MBS

43,495

102

(6,365)

37,232

Residential MBS

Agency

37,373

(5,450)

31,923

Non-agency

16,216

(228)

15,988

Total residential MBS

53,589

(5,678)

47,911

Total HTM securities

$

821,059

$

767

$

(49,414)

$

772,412

(1) Other bonds include asset-backed securities.

The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securities as of December 31, 2024 are as follows (dollars in thousands):

Carrying

Gross Unrealized

Estimated

    

Value

    

Gains

    

(Losses)

    

Fair Value

Obligations of states and political subdivisions

$

697,683

$

715

$

(31,763)

$

666,635

Corporate and other bonds (1)

3,322

(82)

3,240

Commercial MBS

Agency

26,787

(6,185)

20,602

Non-agency

17,922

28

(659)

17,291

Total commercial MBS

44,709

28

(6,844)

37,893

Residential MBS

Agency

37,808

(6,288)

31,520

Non-agency

20,329

(282)

20,047

Total residential MBS

58,137

(6,570)

51,567

Total HTM securities

$

803,851

$

743

$

(45,259)

$

759,335

(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, 2025

Credit Rating:

 

 

AAA/AA/A

$

710,141

$

$

5,416

$

715,557

BBB/BB/B

1,139

1,139

Not Rated – Agency (1)

64,044

64,044

Not Rated – Non-Agency (2)

 

9,608

 

3,087

27,624

40,319

Total

$

720,888

$

3,087

$

97,084

$

821,059

December 31, 2024

Credit Rating:

 

 

AAA/AA/A

$

686,923

$

$

5,748

$

692,671

BBB/BB/B

1,144

1,144

Not Rated – Agency (1)

64,595

64,595

Not Rated – Non-Agency (2)

 

9,616

 

3,322

32,503

45,441

Total

$

697,683

$

3,322

$

102,846

$

803,851

(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, 2025

December 31, 2024

    

Carrying

    

Estimated

    

Carrying

    

Estimated

Value

Fair Value

Value

Fair Value

Due in one year or less

$

$

$

3,369

$

3,358

Due after one year through five years

 

18,744

 

19,041

 

18,293

 

18,547

Due after five years through ten years

 

142,875

 

135,547

 

115,243

 

109,358

Due after ten years

 

659,440

 

617,824

 

666,946

 

628,072

Total HTM securities

$

821,059

$

772,412

$

803,851

$

759,335

Refer to Note 8 “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, 2025 and December 31, 2024.

Accrued interest receivable on HTM securities totaled $6.8 million and $8.4 million at March 31, 2025 and December 31, 2024, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2025 and 2024, 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, 2025 and December 31, 2024, 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, 2025 and December 31, 2024.

Restricted Stock, at cost

The FHLB required the Bank to maintain stock in an amount equal to 4.75% of outstanding borrowings and a specific percentage of the member’s total assets at March 31, 2025 and December 31, 2024, respectively. The Federal Reserve Bank of Richmond (“FRB”) requires the Company to maintain stock with a par value equal to 6% of its outstanding capital. At March 31, 2025 and December 31, 2024, restricted stock consisted of FRB stock in the amount of $82.9 million for both periods, and FHLB stock in the amount of $17.4 million and $20.1 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):

    

2025

    

2024

Realized gains (losses): (1)

Gross realized gains

 

$

14

 

$

3

Gross realized losses

 

(116)

 

Net realized (losses) gains

 

$

(102)

 

$

3

Proceeds from sales of securities

 

$

41,366

 

$

61,943

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