
	September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Available-for-Sale
U.S. Treasuries and government agencies	$	197,310	$	—	$	24,328	$	172,982
Obligations of states and municipalities	536,885		7		107,413		429,479
Residential mortgage backed - agency	47,494		—		5,658		41,836
Residential mortgage backed - non-agency	307,763		4		25,659		282,108
Commercial mortgage backed - agency	36,874		20		1,355		35,539
Commercial mortgage backed - non-agency	181,844		—		8,500		173,344
Asset-backed	82,811		11		1,650		81,172
Other	9,500		—		1,565		7,935
Total	$	1,400,481	$	42	$	176,128	$	1,224,395


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Available-for-Sale
U.S. Treasuries and government agencies	$	198,154	$	—	$	23,161	$	174,993
Obligations of states and municipalities	550,590		12		96,695		453,907
Residential mortgage backed - agency	57,883		14		4,836		53,061
Residential mortgage backed - non-agency	365,983		2		26,690		339,295
Commercial mortgage backed - agency	61,810		75		1,952		59,933
Commercial mortgage backed - non-agency	191,709		10		8,420		183,299
Asset-backed	101,791		49		3,214		98,626
Other	9,500		—		857		8,643
Total	$	1,537,420	$	162	$	165,825	$	1,371,757

At September 30, 2023, and December 31, 2022, AFS securities with amortized costs of $831.0 million and $637.1 million, respectively, and with estimated fair values of $709.3 million and $552.5 million, respectively, were pledged to serve as collateral for secured borrowings, derivative exposures, or to secure public deposits as required or permitted by law.

The maturities of AFS securities at September 30, 2023, were as follows (in thousands): (Expected maturities of securities not due at a single maturity date are based on average life at estimated prepayment speed. Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay some obligations with or without call or prepayment penalties).


	September 30, 2023
	Amortized Cost
	One Year or Less		One to Five Years		Five to Ten Years		After Ten Years		Total
Securities Available-for-Sale
U.S. Treasuries and government agencies	$	29,802	$	78,123	$	89,385	$	—	$	197,310
Obligations of states and municipalities	370		15,989		234,600		285,926		536,885
Residential mortgage backed - agency	42		808		46,644		—		47,494
Residential mortgage backed - non-agency	72,280		137,888		95,182		2,413		307,763
Commercial mortgage backed - agency	165		19,531		17,178		—		36,874
Commercial mortgage backed - non-agency	13,613		163,088		5,143		—		181,844
Asset-backed	8,247		41,248		33,316		—		82,811
Other	—		—		9,500		—		9,500
Total	$	124,519	$	456,675	$	530,948	$	288,339	$	1,400,481


	September 30, 2023
	Fair Value
	One Year or Less		One to Five Years		Five to Ten Years		After Ten Years		Total
Securities Available-for-Sale
U.S. Treasuries and government agencies	$	29,203	$	67,674	$	76,105	$	—	$	172,982
Obligations of states and municipalities	370		14,290		195,558		219,261		429,479
Residential mortgage backed - agency	42		778		41,016		—		41,836
Residential mortgage backed - non-agency	69,814		129,486		80,461		2,347		282,108
Commercial mortgage backed - agency	165		18,990		16,384		—		35,539
Commercial mortgage backed - non-agency	13,220		156,187		3,937		—		173,344
Asset-backed	8,178		40,695		32,299		—		81,172
Other	—		—		7,935		—		7,935
Total	$	120,992	$	428,100	$	453,695	$	221,608	$	1,224,395

The following table shows the gross unrealized losses and fair value of the Company’s securities with unrealized losses 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.


	September 30, 2023
	Less Than Twelve Months				More Than Twelve Months
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Unrealized Losses
Securities Available-for-Sale
U.S. Treasuries and government agencies	$	—	$	—	$	172,982	$	24,328	$	24,328
Obligations of states and municipalities	1,708		125		424,139		107,288		107,413
Residential mortgage backed - agency	37		1		41,798		5,657		5,658
Residential mortgage backed - non-agency	12,875		542		268,477		25,117		25,659
Commercial mortgage backed - agency	249		2		34,725		1,353		1,355
Commercial mortgage backed - non-agency	13,671		103		158,968		8,397		8,500
Asset-backed	13,080		47		58,198		1,603		1,650
Other	6,252		1,249		1,683		316		1,565
Total	$	47,872	$	2,069	$	1,160,970	$	174,059	$	176,128


	December 31, 2022
	Less Than Twelve Months				More Than Twelve Months
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Unrealized Losses
Securities Available-for-Sale
U.S. Treasuries and government agencies	$	28,399	$	1,131	$	146,594	$	22,030	$	23,161
Obligations of states and municipalities	128,373		12,378		320,287		84,317		96,695
Residential mortgage backed - agency	7,258		26		41,975		4,810		4,836
Residential mortgage backed - non-agency	204,866		11,822		134,056		14,868		26,690
Commercial mortgage backed - agency	23,026		562		34,847		1,390		1,952
Commercial mortgage backed - non-agency	144,193		6,171		23,374		2,249		8,420
Asset-backed	43,472		815		50,088		2,399		3,214
Other	6,877		623		1,766		234		857
Total	$	586,464	$	33,528	$	752,987	$	132,297	$	165,825

The Company is required to conduct an impairment evaluation on AFS securities to determine whether the Company has the intent to sell the security or it is more likely than not that it will be required to sell the security before recovery. If these situations apply, the guidance requires the Company to reduce the security's amortized cost basis down to its fair value through earnings. The Company also evaluates the unrealized losses on AFS securities to determine if a security's decline in fair value below its amortized cost basis is due to credit factors. The evaluation is based upon factors such as the creditworthiness of the underlying borrowers, performance of the underlying collateral, if applicable, and the level of credit support in the security structure. Management also evaluates other factors and circumstances that may be indicative of a decline in the fair value of the security due to a credit factor.

This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost and near-term prospects of the issuer. If this assessment indicates that a credit loss exists, the present value of the expected cash flows of the security is compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost, an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis under the CECL standard, and declines due to non-credit factors are recorded in accumulated other comprehensive income (“AOCI”), net of taxes. If a credit loss is recognized in earnings, subsequent improvements to the expectation of collectability will be recognized through the ACL. If the fair value of the security increases above its amortized cost, the unrealized gain will be recorded in accumulated other comprehensive income, net of taxes, in the consolidated statements of financial condition. Prior to implementation of the CECL standard, unrealized losses caused by a credit event would require the direct write-down of the AFS security through the other-than-temporary impairment approach.

The Company did not record an ACL on the AFS securities at September 30, 2023. The Company considers the unrealized losses on the AFS securities to be related to fluctuations in market conditions, primarily interest rates, and not reflective of deterioration in credit. The Company had 403 securities in an unrealized loss position as of September 30, 2023. The Company has evaluated AFS securities in an unrealized loss position for credit-related impairment at September 30, 2023, and concluded no impairment existed based on a combination of factors, which included: (1) the securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the par value of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis. As such, there was no ACL on AFS securities at September 30, 2023.

At September 30, 2023, the unrealized losses associated with 12 U.S. Treasuries and Government Agency securities, 16 Residential Mortgage Backed – Agency securities, and 17 Commercial Mortgage Backed – Agency securities were generally driven by changes in interest rates and not due to credit losses given the explicit or implicit guarantees provided

At September 30, 2023, the unrealized losses associated with 203 State and Municipal securities were primarily caused by changes in interest rates and not the credit quality of the securities. These securities are investment grade and were generally underwritten in accordance with our own investment standards prior to the decision to purchase, without relying on a bond insurer’s guarantee in making the investment decision. These securities will continue to be monitored as part of our ongoing impairment analysis but are expected to perform, even if the rating agencies reduce the credit rating of the bond insurers. As a result, we expect to recover the entire amortized cost basis of these securities. Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at September 30, 2023.

At September 30, 2023, the unrealized losses associated with 96 Residential Mortgage Backed – Non-Agency securities and 33 Commercial Mortgage Backed – Non-Agency securities were generally driven by changes in interest rates, credit spreads, and projected collateral losses. We assess for credit impairment by estimating the present value of expected cash flows. The key assumptions for determining expected cash flows include default rates, loss severities, and/or prepayment rates. Based on our assessment of the expected credit losses and the credit enhancement level of the securities, we expect to recover the entire amortized cost of these securities. Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at September 30, 2023.

At September 30, 2023, the unrealized losses associated with 23 Asset-Backed securities were generally driven by changes in interest rates, credit spreads, and projected collateral losses. We assess for credit impairment by estimating the present value of expected cash flows. The key assumptions for determining expected cash flows include default rates, loss severities, and/or prepayment rates. Based on our assessment of the expected credit losses and the credit enhancement level of the securities, we expect to recover the entire amortized cost of these securities. Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at September 30, 2023.

At September 30, 2023, the unrealized losses associated with 3 securities were primarily driven by interest rates and not the credit quality of the securities. These investments were underwritten in accordance with our own investment standards prior to the decision to purchase, without relying on a bond insurer’s guarantee in making the investment decision. Based on our assessment of the expected credit losses, we expect to recover the entire amortized cost basis of the securities. Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at September 30, 2023.

The Company’s investment in Federal Home Loan Bank (“FHLB”) stock totaled $7.2 million and $16.4 million at September 30, 2023, and December 31, 2022, respectively. FHLB stock is generally viewed as a long-term investment and as a restricted investment security, which is carried at cost, because there is no market for the stock other than the FHLB or member institutions. Therefore, when evaluating FHLB stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Company does not consider this investment to be impaired at September 30, 2023, and no impairment has been recognized. FHLB stock is included in a separate line item Restricted stock, at cost on the Consolidated Balance Sheets and is not part of the Company’s AFS securities portfolio. The Company’s Restricted stock line item on the Consolidated Balance Sheets also includes an investment in Community Bankers’ Bank, totaling $50 thousand at both September 30, 2023, and December 31, 2022, which is carried at cost and is not impaired at September 30, 2023.