Securities

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

The fair value of securities is as follows:


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
U.S. Treasury and federal agencies	$	294,329	—		$	(27,150)	$	267,179
State and municipal	505,006		140		(71,602)		433,544
Federal agency collateralized mortgage obligations	33,011		—		(1,796)		31,215
Federal agency mortgage–backed pools	220,963		—		(30,307)		190,656

Corporate notes	84,393		195		(9,624)		74,964
Total available for sale investment securities	$	1,137,702	$	335	$	(140,479)	$	997,558
Held to maturity
U.S. Treasury and federal agencies	$	295,250	$	—	$	(49,237)	$	246,013
State and municipal	1,127,669		374		(192,458)		935,585
Federal agency collateralized mortgage obligations	56,564		—		(8,865)		47,699
Federal agency mortgage–backed pools	343,953		—		(56,714)		287,239
Private labeled mortgage–backed pools	35,466		—		(5,493)		29,973
Corporate notes	163,846		—		(29,046)		134,800
Total held to maturity investment securities	$	2,022,748	$	374	$	(341,813)	$	1,681,309


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
U.S. Treasury and federal agencies	$	118,595	$	82	$	(1,698)	$	116,979
State and municipal	632,652		12,802		(5,708)		639,746
Federal agency collateralized mortgage obligations	60,600		989		(12)		61,577
Federal agency mortgage–backed pools	257,185		1,914		(1,408)		257,691

Corporate notes	84,579		1,013		(773)		84,819
Total available for sale investment securities	$	1,153,611	$	16,800	$	(9,599)	$	1,160,812
Held to maturity
U.S. Treasury and federal agencies	$	195,429	$	12	$	(1,215)	$	194,226
State and municipal	862,461		20,719		(4,263)		878,917
Federal agency collateralized mortgage obligations	48,482		3		(1,020)		47,465
Federal agency mortgage–backed pools	247,937		209		(4,010)		244,136
Private labeled mortgage–backed pools	40,447		—		(442)		40,005
Corporate notes	157,687		11		(2,456)		155,242
Total held to maturity investment securities	$	1,552,443	$	20,954	$	(13,406)	$	1,559,991

The Company elected to transfer 793 AFS securities with an aggregate fair value of $120.9 million to a classification of HTM on March 31, 2022. In accordance with FASB ASC 320–10–55–24, the transfer from AFS to HTM must be recorded at the fair value of the AFS securities at the time of transfer. The net unrealized holding loss of $814,000, net of tax, at the date of transfer was retained in accumulated other comprehensive income (loss), with the associated pre–tax amount retained in the carrying value of the HTM securities. Such amounts will be accreted to

comprehensive income over the remaining life of the securities. The fair value of the transferred AFS securities became the book value of the HTM securities at March 31, 2022.

The Company elected to transfer 475 AFS securities with an aggregate fair value of $490.2 million to a classification of HTM on December 31, 2021. In accordance with FASB ASC 320–10–55–24, the transfer from AFS to HTM must be recorded at the fair value of the AFS securities at the time of transfer. The net unrealized holding gain of $5.9 million, net of tax, at the date of transfer was retained in accumulated other comprehensive income (loss), with the associated pre–tax amount retained in the carrying value of the HTM securities. Such amounts will be amortized to comprehensive income over the remaining life of the securities. The fair value of the transferred AFS securities became the book value of the HTM securities at December 31, 2021.

The amortized cost and fair value of securities available for sale and held to maturity at December 31, 2022 and December 31, 2021, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	December 31, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale
Within one year	$	1,535	$	1,512	$	22,980	$	22,984
One to five years	340,212		312,137		156,677		156,397
Five to ten years	238,045		204,282		315,630		316,125
After ten years	303,936		257,756		340,539		346,038
	883,728		775,687		835,826		841,544
Federal agency collateralized mortgage obligations	33,011		31,215		60,600		61,577
Federal agency mortgage–backed pools	220,963		190,656		257,185		257,691

Total available for sale investment securities	$	1,137,702	$	997,558	$	1,153,611	$	1,160,812
Held to maturity
Within one year	$	32,610	$	32,382	$	5,222	$	5,265
One to five years	222,443		209,854		65,739		66,982
Five to ten years	324,967		280,618		273,720		275,308
After ten years	1,006,745		793,544		870,896		880,830
	1,586,765		1,316,398		1,215,577		1,228,385
Federal agency collateralized mortgage obligations	56,564		47,699		48,482		47,465
Federal agency mortgage–backed pools	343,953		287,239		247,937		244,136
Private labeled mortgage–backed pools	35,466		29,973		40,447		40,005
Total held to maturity investment securities	$	2,022,748	$	1,681,309	$	1,552,443	$	1,559,991

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	December 31, 2022
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment Securities
U.S. Treasury and federal agencies	$	217,357	$	(16,692)	$	295,585	$	(59,695)	$	512,942	$	(76,387)
State and municipal	533,871		(45,881)		757,061		(218,179)		1,290,932		(264,060)
Federal agency collateralized mortgage obligations	40,301		(2,881)		38,613		(7,780)		78,914		(10,661)
Federal agency mortgage–backed pools	49,633		(3,211)		428,243		(83,810)		477,876		(87,021)
Private labeled mortgage–backed pools	—		—		29,973		(5,493)		29,973		(5,493)
Corporate notes	38,906		(6,787)		169,921		(31,883)		208,827		(38,670)
Total securities	$	880,068	$	(75,452)	$	1,719,396	$	(406,840)	$	2,599,464	$	(482,292)


	December 31, 2021
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment Securities
U.S. Treasury and federal agencies	$	268,732	$	(2,483)	$	15,820	$	(430)	$	284,552	$	(2,913)
State and municipal	539,882		(9,389)		19,461		(582)		559,343		(9,971)
Federal agency collateralized mortgage obligations	56,027		(1,032)		—		—		56,027		(1,032)
Federal agency mortgage–backed pools	406,540		(5,418)		—		—		406,540		(5,418)
Private labeled mortgage–backed pools	40,005		(442)		—		—		40,005		(442)
Corporate notes	189,500		(3,229)		—		—		189,500		(3,229)
Total securities	$	1,500,686	$	(21,993)	$	35,281	$	(1,012)	$	1,535,967	$	(23,005)

Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. As of December 31, 2022 and 2021, the Company had 2,828 and 1,129 securities, respectively, with market values below their cost basis. The total fair value of these investments at December 31, 2022 and 2021 was $2.6 billion and $1.5 billion, which is approximately 86% and 57%, respectively, of the Company's available for sale and held to maturity securities portfolio. These declines resulted primarily from fluctuations in market interest rates after purchase. Management believes the declines in fair value for these securities are temporary.

No allowance for credit losses for available for sale debt securities or held to maturity securities was needed at December 31, 2022 and December 31, 2021. Accrued interest receivable on available for sale debt securities and held to maturity securities totaled $17.8 million and $14.6 million at December 31, 2022 and December 31, 2021, respectively, and is excluded from the estimate of credit losses.

The U.S. government sponsored entities and agencies and mortgage–backed 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. Therefore, for those securities, we do not record expected credit losses.

Information regarding security proceeds, gross gains and gross losses are presented below.


	Year Ended December 31
	2022		2021		2020
Sales of securities available for sale
Proceeds	$	—	$	27,514	$	77,213
Gross gains	—		914		4,372
Gross losses	—		—		(75)

The tax effect of the proceeds from the sale of securities available for sale was $0, $192,000 and $902,000 for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company pledges securities to secure retail and corporate repurchase agreements to the Federal Reserve for borrowing availability and as settlements for the fair value of swap agreements. At December 31, 2022, the Company had pledged $160.5 million of fair value or $186.4 million of amortized cost, in securities as collateral for $137.9 million in repurchase agreements, $405.2 million of fair value or $439.2 million of amortized cost, in securities as collateral for borrowing availability at the Federal Reserve with $244.0 million current outstanding borrowings and $24.8 million of fair value or $27.1 million of amortized cost, in securities as collateral for $43.8 million in settlements on the fair value of swap agreements.