INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2023

INVESTMENT SECURITIES

INVESTMENT SECURITIES

NOTE 4 — INVESTMENT SECURITIES

The following tables summarize the amortized cost and fair value of AFS and HTM debt securities and equity investments and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses recognized in earnings (in thousands):

			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At June 30, 2023	Cost		Gains		Losses		Fair Value
Available-for-Sale Securities:
U.S. Government agency securities	$	67,997	$	—	$	(8,234)	$	59,763
U.S. State and Municipal securities		11,573		—		(2,075)		9,498
Residential MBS		393,397		242		(74,578)		319,061
Commercial MBS		37,015		—		(2,640)		34,375
Asset-backed securities		3,504		—		(133)		3,371
Total securities available-for-sale	$	513,486	$	242	$	(87,660)	$	426,068
Held-to-Maturity Securities:
U.S. Treasury securities	$	54,738	$	7	$	(2,118)	$	52,627
U.S. State and Municipal securities		15,693		—		(2,122)		13,571
Residential MBS		437,082		—		(67,577)		369,505
Commercial MBS		8,100		—		(1,370)		6,730
Total securities held-to-maturity	$	515,613	$	7	$	(73,187)	$	442,433
Equity Investments:
CRA Mutual Fund	$	2,383	$	—	$	(317)	$	2,066
Total equity investment securities	$	2,383	$	—	$	(317)	$	2,066

			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At December 31, 2022	Cost		Gains		Losses		Fair Value
Available-for-Sale Securities:
U.S. Government agency securities	$	67,996	$	—	$	(8,624)	$	59,372
U.S. State and Municipal securities		11,649		—		(2,437)		9,212
Residential MBS		413,998		279		(75,729)		338,548
Commercial MBS		37,069		10		(2,229)		34,850
Asset-backed securities		3,953		—		(188)		3,765
Total securities available-for-sale	$	534,665	$	289	$	(89,207)	$	445,747
Held-to-Maturity Securities:
U.S. Treasury securities	$	29,852	$	—	$	(2,223)	$	27,629
U.S. State and Municipal securities		15,814		—		(2,609)		13,205
Residential MBS		456,648		—		(67,027)		389,621
Commercial MBS		8,111		—		(1,276)		6,835
Total securities held-to-maturity	$	510,425	$	—	$	(73,135)	$	437,290
Equity Investments:
CRA Mutual Fund	$	2,358	$	—	$	(310)	$	2,048
Total equity investment securities	$	2,358	$	—	$	(310)	$	2,048

There were no proceeds from sales and calls of AFS securities for the three and six months ended June 30, 2023 and 2022.

The tables below summarize, by contractual maturity, the amortized cost and fair value of debt securities. The tables do not include the effect of principal repayments or scheduled principal amortization. Equity securities, primarily investments in mutual funds, have been excluded from the table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):

	Held-to-Maturity				Available-for-Sale
At June 30, 2023	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within 1 year	$	24,865	$	24,872	$	—	$	—
After 1 year through 5 years		29,874		27,756		66,000		59,006
After 5 years through 10 years		9,345		7,880		23,371		21,822
After 10 years		451,529		381,925		424,115		345,240
Total Securities	$	515,613	$	442,433	$	513,486	$	426,068

	Held-to-Maturity				Available-for-Sale
At December 31, 2022	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within 1 year	$	—	$	—	$	—	$	—
After 1 year through 5 years		29,852		27,630		54,736		48,959
After 5 years through 10 years		9,505		8,130		36,043		32,872
After 10 years		471,068		401,530		443,886		363,916
Total Securities	$	510,425	$	437,290	$	534,665	$	445,747

At June 30, 2023 and December 31, 2022, the carrying value of securities pledged to support borrowing capacity from the FRB was $941.7 million and $25.0 million, respectively.

At June 30, 2023, debt securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

	Less than 12 Months				12 Months or More				Total
			Unrealized/				Unrealized/				Unrealized/
	Estimated		Unrecognized		Estimated		Unrecognized		Estimated		Unrecognized
At June 30, 2023	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Available-for-Sale Securities:
U.S. Government agency securities	$	—	$	—	$	59,763	$	(8,234)	$	59,763	$	(8,234)
U.S. State and Municipal securities		—		—		9,498		(2,075)		9,498		(2,075)
Residential MBS		—		—		306,686		(74,578)		306,686		(74,578)
Commercial MBS		23,378		(442)		10,997		(2,198)		34,375		(2,640)
Asset-backed securities		—		—		3,371		(133)		3,371		(133)
Total securities available-for-sale	$	23,378	$	(442)	$	390,315	$	(87,218)	$	413,693	$	(87,660)
Held-to-Maturity Securities:
U.S. Treasury securities	$	—	$	—	$	27,756	$	(2,118)	$	27,756	$	(2,118)
U.S. State and Municipal securities		—		—		13,571		(2,122)		13,571		(2,122)
Residential MBS		49,536		(2,863)		319,969		(64,714)		369,505		(67,577)
Commercial MBS		—		—		6,730		(1,370)		6,730		(1,370)
Total securities held-to-maturity	$	49,536	$	(2,863)	$	368,026	$	(70,324)	$	417,562	$	(73,187)

At June 30, 2023 and December 31, 2022, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity. At June 30, 2023 and December 31, 2022, all of the residential MBS and commercial MBS held by the Company were issued by U.S. Government-sponsored entities and agencies. Except for U.S. State and Municipal securities, the Company has a zero loss expectation for its HTM securities portfolio, and therefore has no ACL related to these securities. Obligations of U.S. State and Municipal securities were rated investment grade at June 30, 2023 and the associated ACL was immaterial.

AFS securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. The unrealized losses on AFS securities are primarily due to the changes in market interest rates subsequent to purchase. In addition, the Company does not intend nor would it be required to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, no ACL was recognized during the three months ended June 30, 2023.

At December 31, 2022, debt securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

	Less than 12 Months				12 Months or More				Total
			Unrealized/				Unrealized/				Unrealized/
	Estimated		Unrecognized		Estimated		Unrecognized		Estimated		Unrecognized
At December 31, 2022	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Available-for-Sale Securities:
U.S. Government agency securities	$	—	$	—	$	59,372	$	(8,624)	$	59,372	$	(8,624)
U.S. State and Municipal securities		2,546		(527)		6,666		(1,910)		9,212		(2,437)
Residential MBS		19,576		(1,654)		305,936		(74,075)		325,512		(75,729)
Commercial MBS		13,406		(198)		11,386		(2,031)		24,792		(2,229)
Asset-backed securities		—		—		3,765		(188)		3,765		(188)
Total securities available-for-sale	$	35,528	$	(2,379)	$	387,125	$	(86,828)	$	422,653	$	(89,207)
Held-to-Maturity Securities:
U.S. Treasury securities	$	18,683	$	(1,365)	$	8,946	$	(858)	$	27,629	$	(2,223)
Residential MBS		162,960		(19,625)		226,661		(47,402)		389,621		(67,027)
Commercial MBS		—		—		6,835		(1,276)		6,835		(1,276)
U.S. State and Municipal securities		13,205		(2,609)		—		—		13,205		(2,609)
Total securities held-to-maturity	$	194,848	$	(23,599)	$	242,442	$	(49,536)	$	437,290	$	(73,135)

Prior to the adoption of ASU No. 2016-13 on January 1, 2023, the Company evaluated these securities for OTTI. The Company did not consider these securities to be OTTI at December 31, 2022 since the decline in market value was attributable to changes in interest rates and not to changes in credit quality. In addition, the Company did not intend to sell and did not believe that it is more likely than not that it would be required to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, no impairment loss was recognized during the year ended December 31, 2022.