Investment Securities

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Investments Securities

Investment Securities

The following table shows the amortized cost, the estimated fair value and the allowance for credit losses of the held-to-maturity securities and available-for-sale securities at March 31, 2023 and December 31, 2022, by contractual maturity within each type:

	At March 31, 2023
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Securities Held-to-Maturity
Residential mortgage-backed securities:
After 1 year to 5 years	$	2,554	$	—	$	(87)			$	2,467
After 5 years to 10 years	7,531		—		(398)		—		7,133
Over 10 years	141,262		—		(17,715)		—		123,547
	151,347		—		(18,200)		—		133,147
Total	$	151,347	$	—	$	(18,200)	$	—	$	133,147
Securities Available-for-Sale
State and political subdivisions:
Within 1 year	$	1,030	$	1	$	—	$	—	$	1,031
After 1 year to 5 years	1,297		—		(31)		—		1,266
	2,327		1		(31)		—		2,297
Residential mortgage-backed securities:
After 1 year to 5 years	784		—		(29)		—		755
After 5 years to 10 years	15,617		—		(1,194)		—		14,423
Over 10 years	301,712		32		(36,128)		—		265,616
	318,113		32		(37,351)		—		280,794
Collateralized mortgage obligations:
After 5 years to 10 years	305		—		(18)		—		287
Over 10 years	2,199		—		(215)		—		1,984
	2,504		—		(233)		—		2,271
Corporate bonds:
Within 1 year	1,500		—		(1)		(1)		1,498
After 1 year to 5 years	29,674		4		(1,163)		(200)		28,315
After 5 years to 10 years	60,000		—		(6,288)		(1,231)		52,481
	91,174		4		(7,452)		(1,432)		82,294
Total	$	414,118	$	37	$	(45,067)	$	(1,432)	$	367,656

	At December 31, 2022
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Securities Held-to-Maturity
Residential mortgage-backed securities:
After 1 year to 5 years	$	1,654	$	—	$	(70)	$	—	$	1,584
After 5 years to 10 years	6,076		—		(342)		—		5,734
Over 10 years	146,997		—		(20,247)		—		126,750
	154,727		—		(20,659)		—		134,068
Total	$	154,727	$	—	$	(20,659)	$	—	$	134,068
Securities Available-for-Sale
State and political subdivisions:
After 1 year to 5 years	$	2,327	$	—	$	(42)	$	—	$	2,285
	2,327		—		(42)		—		2,285
Residential mortgage-backed securities:
After 1 year to 5 years	864		—		(37)		—		827
After 5 years to 10 years	10,399		—		(815)		—		9,584
Over 10 years	294,261		7		(41,291)		—		252,977
	305,524		7		(42,143)		—		263,388
Collateralized mortgage obligations:
After 5 years to 10 years	324		—		(22)		—		302
Over 10 years	2,257		—		(237)		—		2,020
	2,581		—		(259)		—		2,322
Corporate bonds:
Within 1 year	1,000		—		—		—		1,000
After 1 year to 5 years	30,679		3		(1,516)		(152)		29,014
After 5 years to 10 years	60,000		—		(6,765)		(988)		52,247
	91,679		3		(8,281)		(1,140)		82,261
Total	$	402,111	$	10	$	(50,725)	$	(1,140)	$	350,256

Gross unrealized gains and losses on available-for-sale securities are recognized in accumulated other comprehensive income (loss) and changes in the allowance for credit loss are recorded in provision for credit loss expense. Expected maturities may differ from contractual maturities because debt issuers may have the right to call or prepay obligations without call or prepayment penalties and mortgage-backed securities typically prepay at a rate faster than contractually due.

Securities with a carrying value of $327.8 million and $429.4 million at March 31, 2023 and December 31, 2022, respectively, were pledged to secure public funds deposits and other contractual obligations. There were no pledged securities to secure credit derivatives and interest rate swaps at March 31, 2023 or December 31, 2022. See Note 11, "Derivative Instruments and Hedging Activities" for additional information.

The following table presents information related to sales of securities available-for-sale during the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(Dollars in thousands)	2023		2022
Securities available-for-sale:
Proceeds from sales	$	—	$	1,530
Gross realized gains on sales	—		30
Tax expense related to net realized gains on sales	—		6

At March 31, 2023 and December 31, 2022, there were no reportable investments in any single issuer representing more than 10% of shareholders’ equity.

The following table shows the fair value of securities that were in an unrealized loss position for which an allowance for credit losses has not been recorded at March 31, 2023 and December 31, 2022, by the length of time those securities were in a continuous loss position.

	Less than Twelve Months				Twelve Months or Longer				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At March 31, 2023
Securities Held-to-Maturity
Residential mortgage-backed securities	$	22,966	$	(862)	$	110,181	$	(17,338)	$	133,147	$	(18,200)
Total	$	22,966	$	(862)	$	110,181	$	(17,338)	$	133,147	$	(18,200)
Securities Available-for-Sale
State and political subdivisions	$	—	$	—	$	1,267	$	(31)	$	1,267	$	(31)
Residential mortgage-backed securities	84,540		(4,885)		190,747		(32,466)		275,287		(37,351)
Collateralized mortgage obligations	—		—		2,271		(233)		2,271		(233)
Total	$	84,540	$	(4,885)	$	194,285	$	(32,730)	$	278,825	$	(37,615)
At December 31, 2022
Securities Held-to-Maturity
Residential mortgage-backed securities	$	65,044	$	(5,894)	$	69,024	$	(14,765)	$	134,068	$	(20,659)
Total	$	65,044	$	(5,894)	$	69,024	$	(14,765)	$	134,068	$	(20,659)
Securities Available-for-Sale
State and political subdivisions	$	1,255	$	(42)	$	—	$	—	$	1,255	$	(42)
Residential mortgage-backed securities	128,831		(13,843)		133,902		(28,300)		262,733		(42,143)
Collateralized mortgage obligations	302		(22)		2,020		(237)		2,322		(259)
Corporate bonds	500		(1)		—		—		500		(1)
Total	$	130,888	$	(13,908)	$	135,922	$	(28,537)	$	266,810	$	(42,445)

At March 31, 2023, the fair value of held-to-maturity securities in an unrealized loss position for which an allowance for credit losses has not been recorded was $133.1 million, including unrealized losses of $18.2 million. These holdings were comprised of 84 federal agency mortgage-backed securities, which are U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The Corporation did not recognize any credit losses on held-to-maturity debt securities for the three months ended March 31, 2023.

At March 31, 2023, the fair value of available-for-sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded was $278.8 million, including unrealized losses of $37.6 million. These holdings were comprised of (1) 109 federal agency mortgage-backed securities, which are U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses, (2) two collateralized mortgage obligation bonds, (3) one state and political subdivisions bond and (4) one investment grade corporate bond. The Corporation does not intend to sell the securities in an unrealized loss position and is unlikely to be required to sell these securities before a recovery of fair value, which may be maturity. The Corporation concluded that the decline in fair value of these securities was not indicative of a credit loss. Accrued interest receivable on available-for-sale debt securities totaled $1.2 million at March 31, 2023 and is included within Accrued interest receivable and other assets on the condensed consolidated balance sheet. This amount is excluded from the estimate of expected credit losses.

The table below presents a rollforward by major security type for the three months ended March 31, 2023 and March 31, 2022 of the allowance for credit losses on securities available-for-sale.

(Dollars in thousands)	Corporate Bonds
Three months ended March 31, 2023
Securities Available-for-Sale
Beginning balance	$	(1,140)
Change in securities for which a previous expected credit loss was recognized	(292)
Ending balance	$	(1,432)
Three months ended March 31, 2022
Securities Available-for-Sale
Beginning balance	$	(929)
Additions for securities for which no previous expected credit losses were recognized	(45)
Change in securities for which a previous expected credit loss was recognized	(301)
Ending balance	$	(1,275)

At March 31, 2023, the fair value of available-for-sale securities in an unrealized loss position for which an allowance for credit losses has been recorded was $81.3 million, including unrealized losses of $8.9 million, and allowance for credit losses of $1.4 million. These holdings were comprised of 39 investment grade corporate bonds which fluctuate in value based on changes in market conditions. For these securities, fluctuations were primarily due to changes in the interest rate environment. The Corporation does not have the intent to sell these securities and it is not likely that it will be required to sell the securities before their anticipated recovery. The underlying issuers continue to make timely principal and interest payments on the securities.

The Corporation recognized a $69 thousand net loss and a $1 thousand net gain on equity securities during the three months ended March 31, 2023 and 2022, respectively, in other noninterest income. There were no sales of equity securities during the three months ended March 31, 2023 or 2022.