XML 21 R10.htm IDEA: XBRL DOCUMENT v3.23.3
INVESTMENTS
 9 Months Ended
Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
INVESTMENTS NOTE 2 – INVESTMENTS

The amortized cost and fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are listed below.

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Allowance
for Credit
Losses

 

 

Fair
Value

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored entities

 

$

122,665

 

 

$

—

 

 

$

(17,079

)

 

$

—

 

 

$

105,586

 

U.S. Treasury securities

 

 

259,253

 

 

 

—

 

 

 

(25,341

)

 

 

—

 

 

 

233,912

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored residential mortgage-backed securities

 

 

512,980

 

 

 

—

 

 

 

(70,559

)

 

 

—

 

 

 

442,421

 

Private label residential mortgage-backed securities

 

 

173,876

 

 

 

—

 

 

 

(29,041

)

 

 

—

 

 

 

144,835

 

Corporate

 

 

56,702

 

 

 

—

 

 

 

(7,001

)

 

 

—

 

 

 

49,701

 

Small Business Administration loan pools

 

 

10,953

 

 

 

—

 

 

 

(805

)

 

 

—

 

 

 

10,148

 

State and political subdivisions

 

 

84,261

 

 

 

—

 

 

 

(13,855

)

 

 

—

 

 

 

70,406

 

 

 

$

1,220,690

 

 

$

—

 

 

$

(163,681

)

 

$

—

 

 

$

1,057,009

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Allowance
for Credit
Losses

 

 

Fair
Value

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored entities

 

$

123,196

 

 

$

—

 

 

$

(16,790

)

 

$

—

 

 

$

106,406

 

U.S. Treasury securities

 

 

257,690

 

 

 

—

 

 

 

(25,532

)

 

 

—

 

 

 

232,158

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored residential mortgage-backed securities

 

 

560,776

 

 

 

—

 

 

 

(62,170

)

 

 

—

 

 

 

498,606

 

Private label residential mortgage-backed securities

 

 

190,889

 

 

 

17

 

 

 

(27,346

)

 

 

—

 

 

 

163,560

 

Corporate

 

 

56,642

 

 

 

—

 

 

 

(4,268

)

 

 

—

 

 

 

52,374

 

Small Business Administration loan pools

 

 

12,915

 

 

 

—

 

 

 

(734

)

 

 

—

 

 

 

12,181

 

State and political subdivisions

 

 

130,311

 

 

 

55

 

 

 

(11,261

)

 

 

—

 

 

 

119,105

 

 

 

$

1,332,419

 

 

$

72

 

 

$

(148,101

)

 

$

—

 

 

$

1,184,390

 

 

The amortized cost and fair value of held-to-maturity securities and the related gross unrecognized gains and losses are listed in the following tables.

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Allowance
for Credit
Losses

 

 

Fair
Value

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored residential mortgage-backed securities

 

$

1,097

 

 

$

—

 

 

$

(54

)

 

$

—

 

 

$

1,043

 

State and political subdivisions

 

 

1,115

 

 

 

—

 

 

 

(34

)

 

 

—

 

 

 

1,081

 

 

 

$

2,212

 

 

$

—

 

 

$

(88

)

 

$

—

 

 

$

2,124

 

 

 

 

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Allowance
for Credit
Losses

 

 

Fair
Value

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored residential mortgage-backed securities

 

$

1,108

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

1,108

 

State and political subdivisions

 

 

840

 

 

 

25

 

 

 

—

 

 

 

—

 

 

 

865

 

 

 

$

1,948

 

 

$

25

 

 

$

—

 

 

$

—

 

 

$

1,973

 

 

The fair value and amortized cost of debt securities at September 30, 2023, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

 

 

Available-for-Sale

 

 

Held-to-Maturity

 

 

 

Amortized
Cost

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Fair
Value

 

Within one year

 

$

24,412

 

 

$

23,413

 

 

$

—

 

 

$

—

 

One to five years

 

 

329,915

 

 

 

297,279

 

 

 

—

 

 

 

—

 

Five to ten years

 

 

135,136

 

 

 

114,431

 

 

 

—

 

 

 

—

 

After ten years

 

 

44,371

 

 

 

34,630

 

 

 

1,115

 

 

 

1,081

 

Mortgage-backed securities

 

 

686,856

 

 

 

587,256

 

 

 

1,097

 

 

 

1,043

 

Total debt securities

 

$

1,220,690

 

 

$

1,057,009

 

 

$

2,212

 

 

$

2,124

 

The following table shows the carrying value of securities pledged as collateral to secure public deposits, borrowings from the Federal Reserve Bank and retail repurchase obligations at September 30, 2023, and December 31, 2022.

 

 

September 30, 2023

 

 

December 31, 2022

 

Public fund deposits

 

$

777,425

 

 

$

820,751

 

Federal Reserve Bank borrowings

 

 

147,642

 

 

 

33,235

 

Retail repurchase agreements

 

 

44,873

 

 

 

55,289

 

Total securities pledged

 

$

969,940

 

 

$

909,275

 

 

The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2023, and December 31, 2022.

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Fair
Value

 

 

Unrealized
Loss

 

 

Fair
Value

 

 

Unrealized
Loss

 

 

Fair
Value

 

 

Unrealized
Loss

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored entities

 

$

—

 

 

$

—

 

 

$

105,586

 

 

$

(17,079

)

 

$

105,586

 

 

$

(17,079

)

U.S. Treasury securities

 

 

1,019

 

 

 

—

 

 

 

232,893

 

 

 

(25,341

)

 

 

233,912

 

 

 

(25,341

)

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored residential mortgage-backed securities

 

 

152

 

 

 

(6

)

 

 

442,269

 

 

 

(70,553

)

 

 

442,421

 

 

 

(70,559

)

Private label residential mortgage-backed securities

 

 

—

 

 

 

—

 

 

 

144,835

 

 

 

(29,041

)

 

 

144,835

 

 

 

(29,041

)

Corporate

 

 

—

 

 

 

—

 

 

 

49,701

 

 

 

(7,001

)

 

 

49,701

 

 

 

(7,001

)

Small Business Administration loan pools

 

 

5,706

 

 

 

(2

)

 

 

4,442

 

 

 

(803

)

 

 

10,148

 

 

 

(805

)

State and political subdivisions

 

 

11,890

 

 

 

(929

)

 

 

58,214

 

 

 

(12,926

)

 

 

70,104

 

 

 

(13,855

)

Total temporarily impaired securities

 

$

18,767

 

 

$

(937

)

 

$

1,037,940

 

 

$

(162,744

)

 

$

1,056,707

 

 

$

(163,681

)

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored entities

 

$

3,936

 

 

$

(913

)

 

$

102,470

 

 

$

(15,877

)

 

$

106,406

 

 

$

(16,790

)

U.S. Treasury securities

 

 

92,896

 

 

 

(6,866

)

 

 

139,262

 

 

 

(18,666

)

 

 

232,158

 

 

 

(25,532

)

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored residential mortgage-backed securities

 

 

203,416

 

 

 

(15,511

)

 

 

295,190

 

 

 

(46,659

)

 

 

498,606

 

 

 

(62,170

)

Private label residential mortgage-backed securities

 

 

43,610

 

 

 

(7,227

)

 

 

116,410

 

 

 

(20,119

)

 

 

160,020

 

 

 

(27,346

)

Corporate

 

 

48,199

 

 

 

(3,443

)

 

 

4,175

 

 

 

(825

)

 

 

52,374

 

 

 

(4,268

)

Small Business Administration loan pools

 

 

7,676

 

 

 

(60

)

 

 

4,505

 

 

 

(674

)

 

 

12,181

 

 

 

(734

)

State and political subdivisions

 

 

88,713

 

 

 

(5,463

)

 

 

19,671

 

 

 

(5,798

)

 

 

108,384

 

 

 

(11,261

)

Total temporarily impaired securities

 

$

488,446

 

 

$

(39,483

)

 

$

681,683

 

 

$

(108,618

)

 

$

1,170,129

 

 

$

(148,101

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Fair
Value

 

 

Unrealized
Loss

 

 

Fair
Value

 

 

Unrealized
Loss

 

 

Fair
Value

 

 

Unrealized
Loss

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed (issued by government-sponsored entities)

 

$

1,043

 

 

$

(54

)

 

$

—

 

 

$

—

 

 

$

1,043

 

 

$

(54

)

State and political subdivisions

 

 

1,081

 

 

 

(34

)

 

 

—

 

 

 

—

 

 

 

1,081

 

 

 

(34

)

Total temporarily impaired securities

 

$

2,124

 

 

$

(88

)

 

$

—

 

 

$

—

 

 

$

2,124

 

 

$

(88

)

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed (issued by government-sponsored entities)

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

State and political subdivisions

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total temporarily impaired securities

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

The tables above present unrealized losses on available-for-sale and held-to-maturity securities since the date of purchase, independent of the impact associated with changes in cost basis upon transfer from the available-for-sale designation to the held-to-maturity designation. As of September 30, 2023, the Company held 498 available-for-sale and four held-to-maturity securities in an unrealized loss position.

Unrealized losses on securities have not been recognized into income because the security issuers are of high credit quality, management does not intend to sell and it is more likely than not that the Company will not be required to sell the securities prior to their anticipated recovery. The decline in fair value is largely due to changes in interest rates and the fair value is expected to recover as the securities approach maturity.

The Company's available-for-sale and held-to-maturity investments that carry some form of credit risk are the investments in private label residential mortgage-backed securities, corporate securities and state and political subdivisions securities.

All private label residential mortgage-backed securities held by the Company are senior in the capital structure, carry substantial credit enhancement and are 20% risk weighted by the Simplified Supervisory Formula Approach ("SSFA"). At September 30, 2023, the Company does not anticipate any credit losses in the private label residential mortgage-backed securities portfolio.

The Company's corporate debt exposure consists of 14 separate positions in U.S. financial institutions, all of which the Company has determined to be investment grade. Substantially all of the positions are subordinated debt issued by bank holding companies. The Company periodically reviews financial data of the issuers to ensure their continued investment grade status. At September 30, 2023, the Company does not anticipate any credit losses in the corporate debt securities portfolio.

The Company's portfolio of state and political subdivisions securities is comprised of 132 positions of which 88% of the positions are rated "A" or better by a Nationally Recognized Statistical Ratings Organization ("NRSRO"), and 73% of the overall portfolio is made up of general obligation bonds. The Company periodically reviews financial data of the entities and regularly monitors credit ratings changes of the entities. At September 30, 2023, the Company does not anticipate any credit losses in the state and political subdivisions securities portfolio.

The proceeds from sales and the associated gains and losses on available-for-sale securities reclassified from other comprehensive income to income are listed below.

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Proceeds

 

$

—

 

 

$

—

 

 

$

49,258

 

 

$

3,265

 

Gross gain

 

 

—

 

 

 

—

 

 

 

—

 

 

 

115

 

Gross losses

 

 

—

 

 

 

—

 

 

 

1,330

 

 

 

36

 

Income tax expense on net realized gains

 

 

—

 

 

 

—

 

 

 

(325

)

 

 

20

 

The Company also invests in several other investments, including investments in stocks and partnerships, which are included in other assets. The following table shows the various investment balances and method of accounting at September 30, 2023, and December 31, 2022.

 

 

September 30, 2023

 

 

December 31, 2022

 

Investments in stocks

 

 

 

 

 

 

Accounted for at fair value through net income

 

$

609

 

 

$

570

 

Accounted for at amortized cost assessed for impairment

 

 

1,397

 

 

 

1,398

 

Total investments in stocks

 

 

2,006

 

 

 

1,968

 

Investments in partnerships

 

 

 

 

 

 

Accounted for under the equity method

 

 

2,213

 

 

 

1,816

 

Accounted for under the hypothetical liquidation book value

 

 

3,346

 

 

 

980

 

Accounted for under proportional amortization

 

 

27,228

 

 

 

19,794

 

Total investments in partnerships

 

 

32,787

 

 

 

22,590

 

Total other investments

 

$

34,793

 

 

$

24,558

 

 

 

The following table discloses the financial statement impact of tax credit investments for the three month period ended September 30, 2023.

 

 

Income Tax Credits Recognized During Period (a)

 

 

Other Income Tax Benefits (a)

 

 

Total Tax Benefits

 

 

Investment Amortization Included in Income Tax Expense

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Investments and tax credit structures:

 

 

 

 

 

 

 

 

 

 

 

 

Included in proportional amortization

 

$

(2,950

)

 

$

(274

)

 

$

(3,224

)

 

$

2,805

 

Not included in proportional amortization

 

$

(945

)

 

$

(186

)

 

$

(1,131

)

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Reported in income tax expense on statements of income and reported in net change in other assets on statements of cash flows.

 

 

The following table discloses the financial statement impact of tax credit investments for the nine month period ended September 30, 2023.

 

 

Income Tax Credits Recognized During Period (a)

 

 

Other Income Tax Benefits (a)

 

 

Total Tax Benefits

 

 

Investment Amortization Included in Income Tax Expense

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Investments and tax credit structures:

 

 

 

 

 

 

 

 

 

 

 

 

Included in proportional amortization

 

$

(8,901

)

 

$

(1,247

)

 

$

(10,148

)

 

$

8,966

 

Not included in proportional amortization

 

$

(2,617

)

 

$

(641

)

 

$

(3,258

)

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Reported in income tax expense on statements of income and reported in net change in other assets on statements of cash flows.

 

Contingent contributions for investment tax credit structures not subject to proportional amortization were zero for the nine month period ended September 30, 2023.