Annual report pursuant to Section 13 and 15(d)

SECURITIES AND OTHER INVESTMENTS

v3.24.0.1
SECURITIES AND OTHER INVESTMENTS
12 Months Ended
Dec. 31, 2023
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 as of December 31, are summarized as follows (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrealized

​

Estimated

​

    

Cost

    

Gains

    

(Losses)

    

Fair Value

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrealized

​

Estimated

​

    

Cost

    

Gains

    

(Losses)

    

Fair Value

2022

​

​

​

​

​

​

​

​

​

​

​

​

U.S. government and agency securities

​

$

70,196

​

$

—

​

$

(8,253)

​

$

61,943

Obligations of states and political subdivisions

​

​

959,999

​

 

137

​

 

(152,701)

​

 

807,435

Corporate and other bonds (1)

​

 

243,979

​

 

—

​

 

(17,599)

​

 

226,380

Commercial MBS

​

 

​

​

​

​

​

​

​

​

 

​

Agency

​

​

250,186

​

 

75

​

 

(39,268)

​

​

210,993

Non-agency

​

​

99,412

​

 

—

​

 

(4,244)

​

​

95,168

Total commercial MBS

​

​

349,598

​

 

75

​

 

(43,512)

​

​

306,161

Residential MBS

​

​

​

​

​

​

​

​

​

​

​

​

Agency

​

​

1,510,110

​

 

81

​

 

(233,961)

​

​

1,276,230

Non-agency

​

​

68,815

​

 

—

​

 

(6,812)

​

​

62,003

Total residential MBS

​

​

1,578,925

​

 

81

​

 

(240,773)

​

​

1,338,233

Other securities

​

 

1,664

​

 

—

​

 

—

​

 

1,664

Total AFS securities

​

$

3,204,361

​

$

293

​

$

(462,838)

​

$

2,741,816

(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. These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position (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

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)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2022

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

U.S. government and agency securities

​

$

2,594

​

$

(166)

​

$

59,269

​

$

(8,087)

​

$

61,863

​

$

(8,253)

Obligations of states and political subdivisions

​

​

588,668

​

​

(86,895)

​

​

187,375

​

​

(65,806)

​

​

776,043

​

​

(152,701)

Corporate and other bonds(1)

​

 

206,861

​

 

(15,019)

​

 

17,121

​

 

(2,580)

​

 

223,982

​

 

(17,599)

Commercial MBS

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Agency

​

​

73,362

​

​

(7,024)

​

​

127,193

​

​

(32,244)

​

​

200,555

​

​

(39,268)

Non-agency

​

​

66,618

​

​

(2,231)

​

​

28,550

​

​

(2,013)

​

​

95,168

​

​

(4,244)

Total commercial MBS

​

​

139,980

​

​

(9,255)

​

​

155,743

​

​

(34,257)

​

​

295,723

​

​

(43,512)

Residential MBS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Agency

​

​

328,590

​

​

(27,769)

​

​

929,581

​

​

(206,192)

​

​

1,258,171

​

​

(233,961)

Non-agency

​

​

18,939

​

​

(1,288)

​

​

43,064

​

​

(5,524)

​

​

62,003

​

​

(6,812)

Total residential MBS

​

​

347,529

​

​

(29,057)

​

​

972,645

​

​

(211,716)

​

​

1,320,174

​

​

(240,773)

Total AFS securities

​

$

1,285,632

​

$

(140,392)

​

$

1,392,153

​

$

(322,446)

​

$

2,677,785

​

$

(462,838)

​

(1) Other bonds include asset-backed securities.

(2) Comprised of 757 and 363 individual securities as of December 31, 2023 and December 31, 2022, respectively.

​

The Company has evaluated AFS securities in an unrealized loss position for credit related impairment at December 31, 2023 and 2022 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 December 31, 2023 and 2022, 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 December 31, 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.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2023

​

2022

​

    

Amortized

    

Estimated

    

Amortized

    

Estimated

​

​

Cost

​

Fair Value

​

Cost

​

Fair Value

Due in one year or less

​

$

52,427

​

$

51,936

​

$

42,447

​

$

41,735

Due after one year through five years

​

 

150,271

​

 

149,545

​

 

158,063

​

 

152,523

Due after five years through ten years

​

 

282,309

​

 

261,720

​

 

343,303

​

 

312,935

Due after ten years

​

 

2,130,529

​

 

1,768,060

​

 

2,660,548

​

 

2,234,623

Total AFS securities

​

$

2,615,536

​

$

2,231,261

​

$

3,204,361

​

$

2,741,816

​

Refer to Note 9 "Commitments and Contingencies" in this Form 10-K 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 December 31, 2023 and 2022.

Accrued interest receivable on AFS securities totaled $9.5 million and $14.2 million at December 31, 2023 and 2022, respectively. For the years ended December 31, 2023, 2022, and 2021, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

Held to Maturity

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Carrying

​

Gross Unrealized

​

Estimated

​

    

Value

    

Gains

    

(Losses)

​

Fair Value

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Carrying

​

Gross Unrealized

​

Estimated

​

    

Value

    

Gains

    

(Losses)

    

Fair Value

2022

​

 

  

​

 

  

​

 

  

​

 

  

U.S. government and agency securities

​

$

687

​

$

—

​

$

(56)

​

$

631

Obligations of states and political subdivisions

​

​

705,990

​

​

2,218

​

​

(35,957)

​

​

672,251

Corporate and other bonds(1)

​

​

5,159

​

​

—

​

​

(10)

​

​

5,149

Commercial MBS

​

​

​

​

​

​

​

​

​

​

​

​

Agency

​

​

29,025

​

​

—

​

​

(4,873)

​

​

24,152

Non-agency

​

​

13,736

​

​

—

​

​

(126)

​

​

13,610

Total commercial MBS

​

​

42,761

​

​

—

​

​

(4,999)

​

​

37,762

Residential MBS

​

​

​

​

​

​

​

​

​

​

​

​

Agency

​

​

42,699

​

​

—

​

​

(6,427)

​

​

36,272

Non-agency

​

​

50,436

​

​

—

​

​

(614)

​

​

49,822

Total residential MBS

​

​

93,135

​

​

—

​

​

(7,041)

​

​

86,094

Total HTM securities

​

$

847,732

​

$

2,218

​

$

(48,063)

​

$

801,887

(1) Other bonds include asset-backed securities.

.

​

The following table presents the amortized cost of HTM securities as of December 31, by security type and credit rating (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

U.S. Government and Agency

    

Obligations of states and political

    

Corporate and other

    

Mortgage-backed

    

Total HTM

​

​

securities

​

subdivisions

​

bonds

​

securities

​

securities

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

2022

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Credit Rating:

​

 

​

​

 

​

​

 

​

​

​

​

​

​

​

AAA/AA/A

​

$

—

​

$

704,803

​

$

—

​

$

2,702

​

$

707,505

BBB/BB/B

​

​

—

​

​

1,187

​

​

—

​

​

—

​

​

1,187

Not Rated – Agency(1)

​

​

687

​

​

—

​

​

—

​

​

71,725

​

​

72,412

Not Rated – Non-Agency(2)

​

​

—

​

 

—

​

 

5,159

​

​

61,469

​

​

66,628

Total

​

$

687

​

$

705,990

​

$

5,159

​

$

135,896

​

$

847,732

​

(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 December 31, 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.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2023

​

2022

​

    

Carrying

    

Estimated

    

Carrying

    

Estimated

​

​

Value

​

Fair Value

​

Value

​

Fair Value

Due in one year or less

​

$

3,065

​

$

3,058

​

$

2,010

​

$

2,006

Due after one year through five years

​

 

34,093

​

 

34,613

​

 

35,044

​

 

35,014

Due after five years through ten years

​

 

45,919

​

 

45,263

​

 

19,941

​

 

20,239

Due after ten years

​

 

754,301

​

 

725,140

​

 

790,737

​

 

744,628

Total HTM securities

​

$

837,378

​

$

808,074

​

$

847,732

​

$

801,887

​

Refer to Note 9 “Commitments and Contingencies” in this Form 10-K 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 December 31, 2023 and December 31, 2022.

Accrued interest receivable on HTM securities totaled $8.4 million and $8.6 million at December 31, 2023 and 2022, respectively. For the years ended December 31, 2023, 2022, and 2021, 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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022.

​

Restricted Stock, at cost

The FHLB required the Bank to maintain stock in an amount equal to 4.25% and 3.75% of outstanding borrowings and a specific percentage of the member’s total assets at December 31, 2023 and 2022, respectively. The FRB requires the Company to maintain stock with a par value equal to 6% of its outstanding capital. At December 31, 2023 and 2022, restricted stock consists of FRB stock in the amount of $67.0 million, respectively, and FHLB stock in the amount of $48.4 million and $53.2 million, respectively.

Tax Equity Investments

For the years ended December 31, 2023 and 2022, the Company recognized amortization of $4.8 million and $4.1 million, respectively, and tax credits and tax savings of $5.7 million and $4.9 million, respectively, associated with these investments within “Income tax expense” on the Company’s Consolidated Statements of Income. The carrying value of the Company’s investments in these tax equity investments was $64.3 million and $51.0 million at December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, the Company’s recorded liability totaled $39.5 million and $27.8 million, respectively, for the related unfunded commitments, which are expected to be paid throughout the years 2023 - 2037.

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 years ended December 31, (dollars in thousands):

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​

​

​

​

​

​

​

​

​

​

​

    

2023

    

2022

    

2021

Realized gains (losses)(1):

​

​

​

​

​

​

​

​

​

Gross realized gains

 

$

1,355

 

$

—

 

$

147

Gross realized losses

​

 

(42,344)

​

 

(3)

​

 

(60)

Net realized (losses) gains

 

$

(40,989)

 

$

(3)

 

$

87

Proceeds from sales of securities

 

$

899,872

 

$

40,686

 

$

45,436

​

​

​

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