Securities

3 Months Ended

Mar. 31, 2022

3.	Securities

Securities available for sale consist of the following:

	Amortized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
March 31, 2022
U.S. agency	$	45,896	$	21	$	2,329	$	43,588
U.S. agency residential mortgage-backed		292,590		574		16,161		277,003
U.S. agency commercial mortgage-backed		22,663		-		1,072		21,591
Private label mortgage-backed		115,928		277		4,122		112,083
Other asset backed		281,822		414		3,080		279,156
Obligations of states and political subdivisions		550,439		842		31,203		520,078
Corporate		149,863		521		6,133		144,251
Trust preferred		1,976		-		91		1,885
Foreign government		500		2		-		502
Total	$	1,461,677	$	2,651	$	64,191	$	1,400,137

December 31, 2021
U.S. agency	$	34,634	$	152	$	112	$	34,674
U.S. agency residential mortgage-backed		309,907		1,952		3,874		307,985
U.S. agency commercial mortgage-backed		23,066		84		224		22,926
Private label mortgage-backed		102,480		807		672		102,615
Other asset backed		215,235		1,204		269		216,170
Obligations of states and political subdivisions		568,355		9,942		2,221		576,076
Corporate		148,707		2,446		1,194		149,959
Trust preferred		1,975		-		56		1,919
Foreign government		499		7		-		506
Total	$	1,404,858	$	16,594	$	8,622	$	1,412,830

Our investments’ gross unrealized losses and fair values aggregated by investment type and length of time that individual securities have been at a continuous unrealized loss position follows:

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)

March 31, 2022
U.S. agency	$	38,843	$	2,327	$	1,006	$	2	$	39,849	$	2,329
U.S. agency residential mortgage-backed		125,161		8,226		84,351		7,935		209,512		16,161
U.S. agency commercial mortgage-backed		20,971		1,028		598		44		21,569		1,072
Private label mortgage-backed		102,999		4,058		2,055		64		105,054		4,122
Other asset backed		212,965		3,060		979		20		213,944		3,080
Obligations of states and political subdivisions		417,842		28,911		30,159		2,292		448,001		31,203
Corporate		110,464		5,924		1,823		209		112,287		6,133
Trust preferred		-		-		1,885		91		1,885		91
Total	$	1,029,245	$	53,534	$	122,856	$	10,657	$	1,152,101	$	64,191

December 31, 2021
U.S. agency	$	11,986	$	109	$	1,286	$	3	$	13,272	$	112
U.S. agency residential mortgage-backed		171,398		3,555		19,024		319		190,422		3,874
U.S. agency commercial mortgage-backed		19,900		224		-		-		19,900		224
Private label mortgage-backed		64,408		640		2,180		32		66,588		672
Other asset backed		86,581		248		978		21		87,559		269
Obligations of states and political subdivisions		178,484		2,151		7,093		70		185,577		2,221
Corporate		75,166		1,150		1,050		44		76,216		1,194
Trust preferred		-		-		1,919		56		1,919		56
Total	$	607,923	$	8,077	$	33,530	$	545	$	641,453	$	8,622

Securities available for sale in unrealized loss positions are evaluated quarterly for impairment related to credit losses. For securities available for sale in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities available for sale that do not meet this criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, adverse conditions specifically related to the security and the issuer and the impact of changes in market interest rates on the market value of the security, among other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of applicable taxes. No ACL for securities available for sale was needed at March 31, 2022. Accrued interest receivable on securities available for sale totaled $6.1 million and $6.0 million at March 31, 2022 and December 31, 2021, respectively, and is excluded from the estimate of credit losses and is included in accrued income and other assets in the Condensed Consolidated Statements of Financial Condition.

U.S. agency, U.S. agency residential mortgage-backed and U.S. agency commercial mortgage-backed securities — at March 31, 2022, we had 41 U.S. agency, 167 U.S. agency residential mortgage-backed and 29 U.S. agency commercial mortgage-backed securities whose fair value is less than amortized cost. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. The unrealized losses are largely attributed to widening spreads to Treasury bonds and/or an increase in interest rates since acquisition.

Private label mortgage backed, other asset backed and corporate securities — at March 31, 2022, we had 90 private label mortgage backed, 121 other asset backed and 90 corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and/or an increase in interest rates since acquisition.

Obligations of states and political subdivisions — at March 31, 2022, we had 795 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to an increase in interest rates since acquisition.

Trust preferred securities — at March 31, 2022, we had two trust preferred securities whose fair value is less than amortized cost. Both of our trust preferred securities are single issue securities issued by a trust subsidiary of a bank holding company. The pricing of trust preferred securities has suffered from credit spread widening. One of the securities is rated by a major rating agency as investment grade while the other one is non-rated. The non-rated issue is a relatively small bank and was never rated. The issuer of this non-rated trust preferred security, which had a total amortized cost of $1.00 million and total fair value of $0.94 million as of March 31, 2022, continues to have satisfactory credit metrics and make interest payments.

At March 31, 2022 management does not intend to liquidate any of the securities discussed above and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses.

We recorded no credit related charges in our Condensed Consolidated Statements of Operations related to securities available for sale during the three month periods ended March 31, 2022 and 2021, respectively.

The amortized cost and fair value of securities available for sale at March 31, 2022, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	13,474	$	13,508
Maturing after one year but within five years		146,741		141,769
Maturing after five years but within ten years		263,941		248,638
Maturing after ten years		324,518		306,389
		748,674		710,304
U.S. agency residential mortgage-backed		292,590		277,003
U.S. agency commercial mortgage-backed		22,663		21,591
Private label mortgage-backed		115,928		112,083
Other asset backed		281,822		279,156
Total	$	1,461,677	$	1,400,137

The actual maturity may differ from the contractual maturity because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Gains and losses realized on the sale of securities available for sale are determined using the specific identification method and are recognized on a trade-date basis. A summary of proceeds from the sale of securities available for sale and gains and losses for the three month periods ending March 31, follows:

			Realized
	Proceeds		Gains		Losses
	(In thousands)
2022	$	4,395	$	70	$	-
2021		78,179		1,464		48

On April 1, 2022, we transferred certain available for sale securities with an amortized cost and unrealized loss at the date of transfer of $418.1 million and $26.4 million, respectively to held to maturity. The transfer was made at fair value, with the unrealized loss becoming part of the purchase discount which will be accreted over the remaining life of the securities. The other comprehensive loss component is separated from the remaining available for sale securities and is accreted over the remaining life of the securities transferred. We have the ability and intent to hold these securities until they mature, at which time we will receive full value for these securities.