Securities |
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Securities | Securities Available for Sale Securities The amortized cost, gross unrealized gains and losses, and fair value of AFS securities as of June 30, 2022 and December 31, 2021 were as follows:
The Company did not record a provision for credit losses on any AFS securities for the three and six months ended June 30, 2022. Accrued interest receivable on AFS securities totaled $14.2 million and $14.3 million as of June 30, 2022 and December 31, 2021, respectively, and is included within other assets on the consolidated balance sheets. The Company did not record any write-offs of accrued interest income on AFS securities during the three and six months ended June 30, 2022. No securities held by the Company were delinquent on contractual payments as of June 30, 2022, nor were any securities placed on non-accrual status for the period then ended. There were no gross realized gains from sales of AFS securities during the three months ended June 30, 2022. There were less than $0.1 million in gross realized gains from sales of AFS securities during the three months ended June 30, 2021. Gross realized gains from sales of AFS securities during the six months ended June 30, 2022 and 2021 were $1.0 million and $1.2 million, respectively. Gross realized losses from sales of AFS securities during the three and six months ended June 30, 2022 were $0.1 million and $3.3 million, respectively. The Company had no significant gross realized losses from sales of AFS securities during the three and six months ended June 30, 2021. There was no OTTI recorded during the six months ended June 30, 2021. Prior to the Company’s adoption of ASU 2016-13, management prepared an estimate of the Company’s expected cash flows for AFS investment securities that potentially may be deemed to have been an OTTI. This estimate began with the contractual cash flows of the security which was then reduced by an estimate of probable credit losses associated with the security. When estimating the extent of probable losses on the securities, management considered the credit quality and the ability to pay of the underlying issuers. Indicators of diminished credit quality of the issuers included defaults, interest deferrals, or “payments in kind.” Management also considered those factors listed in the “Investments – Debt and Equity Securities” topic of the FASB ASC when estimating the ultimate realizability of the cash flows for each individual security. The resulting estimate of expected cash flows after considering credit was then subject to a present value computation using a discount rate equal to the current yield used to accrete the beneficial interest or the effective interest rate implicit in the security at the date of acquisition. If the present value of the estimated expected cash flows was less than the current amortized cost basis, an OTTI was considered to have occurred and the security was written down to the fair value indicated by the cash flow analysis. As part of the analysis, management considered whether it intended to sell the security or whether it was more than likely that it would be required to sell the security before the expected recovery of its amortized cost basis. Information pertaining to AFS securities with gross unrealized losses as of June 30, 2022, for which the Company did not recognize a provision for credit losses under CECL, and as of December 31, 2021, for which the Company did not deem to be OTTI under its prior methodology, aggregated by investment category and length of time that individual securities had been in a continuous loss position, follows:
The Company does not intend to sell these investments and has determined based upon available evidence that it is more likely than not that the Company will not be required to sell each security before the expected recovery of its amortized cost basis. As a result, the Company did not recognize an ACL on these investments as of June 30, 2022. As it relates to AFS securities with gross unrealized losses as of December 31, 2021, the Company did not consider these investments to be OTTI under its prior methodology. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, and volatility of earnings. As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the tables above by category are as follows as of June 30, 2022 and December 31, 2021: •Government-sponsored residential mortgage-backed securities – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. government or one of its agencies. •Government-sponsored commercial mortgage-backed securities – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. government or one of its agencies. •U.S. Agency bonds – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. government or one of its agencies. •U.S. Treasury securities – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. government or one of its agencies. •State and municipal bonds and obligations – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. •Other debt securities – This securities portfolio consists of three foreign debt securities which are performing in accordance with the terms of the respective contractual agreements. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Held to Maturity Securities The amortized cost, gross unrealized gains and losses, and fair value of HTM securities as of June 30, 2022 were as follows:
The Company held no HTM securities as of December 31, 2021. The Company did not record a provision for estimated credit losses on any HTM securities for the three and six months ended June 30, 2022. The accrued interest receivable on HTM securities totaled $1.0 million as of June 30, 2022 and is included within other assets on the consolidated balance sheets. The Company did not record any write-offs of accrued interest receivable on HTM securities during the three and six months ended June 30, 2022. No securities held by the Company were delinquent on contractual payments as of June 30, 2022, nor were any securities placed on non-accrual status for the period then ended. Available for Sale and Held to Maturity Securities Contractual Maturity The amortized cost and estimated fair value of AFS securities by contractual maturities as of June 30, 2022 and December 31, 2021 and amortized cost and estimated fair value of HTM securities by contractual maturities as of June 30, 2022 are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties. The scheduled contractual maturities of AFS and HTM securities as of the dates indicated were as follows:
Securities Pledged as Collateral As of June 30, 2022 and December 31, 2021, securities with a carrying value of $481.7 million and $2.2 billion, respectively, were pledged to secure public deposits and for other purposes required by law. As of June 30, 2022 and December 31, 2021, deposits with associated pledged collateral included cash accounts from the Company’s wealth management division (“Eastern Wealth Management”) and municipal deposit accounts. At June 30, 2022 and December 31, 2021, the carrying value of securities pledged as collateral with respect to municipal deposit accounts acquired from Century Bancorp, Inc. (“Century”) was approximately $453.7 million and $2.1 billion, respectively. During the first and second quarter of 2022, the Company eliminated certain pledging arrangements acquired from Century which resulted in the decrease in securities pledged at June 30, 2022 compared to December 31, 2021.
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