| 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.
|