INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2024

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 March 31, 2024	Cost		Gains		Losses		Fair Value
Available-for-Sale Securities:
U.S. Government agency securities	$	67,998	$	—	$	(6,319)	$	61,679
U.S. State and Municipal securities		11,458		—		(1,870)		9,588
Residential MBS		451,171		653		(71,812)		380,012
Commercial MBS		46,266		—		(2,873)		43,393
Asset-backed securities		3,167		—		(50)		3,117
Total securities available-for-sale	$	580,060	$	653	$	(82,924)	$	497,789
Held-to-Maturity Securities:
U.S. Treasury securities	$	29,906	$	—	$	(1,330)	$	28,576
U.S. State and Municipal securities		15,507		—		(1,746)		13,761
Residential MBS		406,752		—		(62,921)		343,831
Commercial MBS		8,084		—		(1,072)		7,012
Total securities held-to-maturity	$	460,249	$	—	$	(67,069)	$	393,180
Equity Investments:
CRA Mutual Fund	$	2,425	$	—	$	(310)	$	2,115
Total equity investment securities	$	2,425	$	—	$	(310)	$	2,115

			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At December 31, 2023	Cost		Gains		Losses		Fair Value
Available-for-Sale Securities:
U.S. Government agency securities	$	67,997	$	—	$	(6,222)	$	61,775
U.S. State and Municipal securities		11,496		—		(1,797)		9,699
Residential MBS		419,331		1,198		(68,609)		351,920
Commercial MBS		36,879		71		(2,366)		34,584
Asset-backed securities		3,287		—		(58)		3,229
Total securities available-for-sale	$	538,990	$	1,269	$	(79,052)	$	461,207
Held-to-Maturity Securities:
U.S. Treasury securities	$	29,895	$	—	$	(1,412)	$	28,483
U.S. State and Municipal securities		15,569		—		(1,574)		13,995
Residential MBS		415,306		—		(60,556)		354,750
Commercial MBS		8,090		—		(1,066)		7,024
Total securities held-to-maturity	$	468,860	$	—	$	(64,608)	$	404,252
Equity Investments:
CRA Mutual Fund	$	2,410	$	—	$	(287)	$	2,123
Total equity investment securities	$	2,410	$	—	$	(287)	$	2,123

There were no proceeds from sales or calls of AFS securities for the three months ended March 31, 2024 and 2023.

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 March 31, 2024	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within 1 year	$	20,021	$	19,299	$	—	$	—
After 1 year through 5 years		17,969		16,289		72,958		67,179
After 5 years through 10 years		1,046		974		19,320		17,724
After 10 years		421,213		356,618		487,782		412,886
Total Securities	$	460,249	$	393,180	$	580,060	$	497,789

	Held-to-Maturity				Available-for-Sale
At December 31, 2023	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within 1 year	$	—	$	—	$	—	$	—
After 1 year through 5 years		37,984		35,507		65,822		60,757
After 5 years through 10 years		1,112		1,044		22,163		21,174
After 10 years		429,764		367,701		451,005		379,276
Total Securities	$	468,860	$	404,252	$	538,990	$	461,207

At March 31, 2024, there was $180.9 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $68.1 million was encumbered. At December 31, 2023, there was $845.7 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $60.0 million was encumbered.

At March 31, 2024 and December 31, 2023, 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 March 31, 2024 and December

31, 2023, all of the residential MBS and commercial MBS held by the Company were issued by U.S. Government-sponsored entities and agencies.

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 March 31, 2024	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Available-for-Sale Securities:
U.S. Government agency securities	$	—	$	—	$	61,679	$	(6,319)	$	61,679	$	(6,319)
U.S. State and Municipal securities		—		—		9,588		(1,870)		9,588		(1,870)
Residential MBS		51,236		(656)		281,826		(71,156)		333,062		(71,812)
Commercial MBS		30,291		(612)		13,102		(2,261)		43,393		(2,873)
Asset-backed securities		—		—		3,117		(50)		3,117		(50)
Total securities available-for-sale	$	81,527	$	(1,268)	$	369,312	$	(81,656)	$	450,839	$	(82,924)
Held-to-Maturity Securities:
U.S. Treasury securities	$	—	$	—	$	28,576	$	(1,330)	$	28,576	$	(1,330)
U.S. State and Municipal securities		—		—		13,761		(1,746)		13,761		(1,746)
Residential MBS		—		—		343,831		(62,921)		343,831		(62,921)
Commercial MBS		—		—		7,012		(1,072)		7,012		(1,072)
Total securities held-to-maturity	$	—	$	—	$	393,180	$	(67,069)	$	393,180	$	(67,069)

	Less than 12 Months				12 Months or More				Total
			Unrealized/				Unrealized/				Unrealized/
	Estimated		Unrecognized		Estimated		Unrecognized		Estimated		Unrecognized
At December 31, 2023	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Available-for-Sale Securities:
U.S. Government agency securities	$	—	$	—	$	61,775	$	(6,222)	$	61,775	$	(6,222)
U.S. State and Municipal securities		—		—		9,699		(1,797)		9,699		(1,797)
Residential MBS		—		—		292,970		(68,609)		292,970		(68,609)
Commercial MBS		10,873		(198)		13,322		(2,168)		24,195		(2,366)
Asset-backed securities		—		—		3,229		(58)		3,229		(58)
Total securities available-for-sale	$	10,873	$	(198)	$	380,995	$	(78,854)	$	391,868	$	(79,052)
Held-to-Maturity Securities:
U.S. Treasury securities	$	—	$	—	$	28,483	$	(1,412)	$	28,483	$	(1,412)
U.S. State and Municipal securities		—		—		13,995		(1,574)		13,995		(1,574)
Residential MBS		—		—		354,750		(60,556)		354,750		(60,556)
Commercial MBS		—		—		7,024		(1,066)		7,024		(1,066)
Total securities held-to-maturity	$	—	$	—	$	404,252	$	(64,608)	$	404,252	$	(64,608)

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. At March 31, 2024 and December 31, 2023, Obligations of U.S. State and Municipal securities were rated investment grade 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 March 31, 2024 and 2023.