Securities

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Available for Sale Debt Securities

The following tables present the amortized cost, gross unrealized holding gains, gross unrealized holding losses, ACL on securities and fair value of securities by major security type and class of security:


(Dollars in thousands)
June 30, 2023	Amortized Cost	Unrealized Gains	Unrealized Losses	ACL	Fair Value
Available for Sale Debt Securities:
Obligations of U.S. government-sponsored enterprises	$250,952	$—	($29,926)	$—	$221,026
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	916,912	129	(135,857)	—	781,184


Individual name issuer trust preferred debt securities	9,394	—	(897)	—	8,497

Corporate bonds	13,176	—	(1,425)	—	11,751
Total available for sale debt securities	$1,190,434	$129	($168,105)	$—	$1,022,458


(Dollars in thousands)
December 31, 2022	Amortized Cost	Unrealized Gains	Unrealized Losses	ACL	Fair Value
Available for Sale Debt Securities:
Obligations of U.S. government-sponsored enterprises	$231,203	$1	($31,622)	$—	$199,582
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	912,581	269	(138,748)	—	774,102

Individual name issuer trust preferred debt securities	9,387	—	(627)	—	8,760

Corporate bonds	13,169	—	(1,685)	—	11,484
Total available for sale debt securities	$1,166,340	$270	($172,682)	$—	$993,928

Accrued interest receivable on available for sale debt securities totaled $3.6 million and $3.1 million, respectively, as of June 30, 2023 and December 31, 2022.

As of June 30, 2023 and December 31, 2022, securities with a fair value of $285.2 million and $294.8 million, respectively, were pledged as collateral for FHLB borrowings, potential borrowings with the FRBB, certain public deposits and for other purposes. See Note 9 for additional disclosure on FHLB borrowings.

The schedule of maturities of available for sale debt securities is presented below. Mortgage-backed securities are included based on weighted average maturities, adjusted for anticipated prepayments. All other debt securities are included based on contractual maturities. Actual maturities may differ from amounts presented because certain issuers have the right to call or

prepay obligations with or without call or prepayment penalties.


(Dollars in thousands)
June 30, 2023	Amortized Cost	Fair Value
Due in one year or less	$105,625	$90,019
Due after one year to five years	499,632	431,034
Due after five years to ten years	335,086	288,019
Due after ten years	250,091	213,386
Total debt securities	$1,190,434	$1,022,458

Included in the above table are debt securities with an amortized cost balance of $273.0 million and a fair value of $240.8 million at June 30, 2023 that are callable at the discretion of the issuers. Final maturities of the callable securities range from 1 year to 14 years, with call features ranging from 1 month to 13 months.

Assessment of Available for Sale Debt Securities for Impairment

Management assesses the decline in fair value of investment securities on a regular basis. Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, a structural change in an investment, volatility of earnings of a specific issuer, or deterioration in credit quality of the issuer. Management evaluates both qualitative and quantitative factors to assess whether an impairment exists.

The following tables summarize available for sale debt securities in an unrealized loss position, for which an ACL on securities has not been recorded, segregated by length of time that the securities have been in a continuous unrealized loss position:


(Dollars in thousands)	Less than 12 Months			12 Months or Longer			Total
June 30, 2023	#	Fair Value	Unrealized Losses	#	Fair Value	Unrealized Losses	#	Fair Value	Unrealized Losses
Obligations of U.S. government-sponsored enterprises	4	$48,871	($1,129)	19	$172,155	($28,797)	23	$221,026	($29,926)
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	53	172,349	(7,955)	123	596,901	(127,902)	176	769,250	(135,857)
Individual name issuer trust preferred debt securities	—	—	—	3	8,497	(897)	3	8,497	(897)
Corporate bonds	—	—	—	4	11,751	(1,425)	4	11,751	(1,425)
Total	57	$221,220	($9,084)	149	$789,304	($159,021)	206	$1,010,524	($168,105)


(Dollars in thousands)	Less than 12 Months			12 Months or Longer			Total
December 31, 2022	#	Fair Value	Unrealized Losses	#	Fair Value	Unrealized Losses	#	Fair Value	Unrealized Losses
Obligations of U.S. government-sponsored enterprises	4	$20,115	($638)	18	$169,466	($30,984)	22	$189,581	($31,622)
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	95	288,777	(24,960)	66	471,355	(113,788)	161	760,132	(138,748)
Individual name issuer trust preferred debt securities	—	—	—	3	8,760	(627)	3	8,760	(627)
Corporate bonds	—	—	—	4	11,484	(1,685)	4	11,484	(1,685)
Total	99	$308,892	($25,598)	91	$661,065	($147,084)	190	$969,957	($172,682)

There were no debt securities on nonaccrual status at June 30, 2023 and 2022 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three and six months ended June 30, 2023 and 2022.

As of June 30, 2023, the Corporation does not intend to sell these debt securities and has determined that it is more-likely-than-not that the Corporation would not be required to sell each security before the recovery of its amortized cost basis. In addition, management does not believe that any of these debt securities are impaired due to reasons of credit quality. As further described below, management believes the unrealized losses on these debt securities are primarily attributable to changes in the investment spreads and interest rates. As a result, there was no ACL recorded at both June 30, 2023 and December 31, 2022.

Obligations of U.S. Government Agency and U.S. Government-Sponsored Enterprise Securities, including Mortgage-Backed Securities

The contractual cash flows for 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 issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at June 30, 2023. Additionally, the Corporation utilizes a zero credit loss estimate for these securities.

Individual Name Issuer Trust Preferred Debt Securities

These securities in an unrealized loss position at June 30, 2023 included three trust preferred securities issued by three individual companies in the banking sector. Management reviewed the collectability of these securities taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings, including ratings in effect as of the reporting period date, as well as credit rating changes between the reporting period date and the filing date of this report, and other information. As of June 30, 2023, there was one individual name issuer trust preferred debt security with an amortized cost of $2.0 million and unrealized losses of $278 thousand that was rated below investment grade by S&P. We noted no downgrades to below investment grade between June 30, 2023 and the filing date of this report. Based on the information available through the filing date of this report, all individual name issuer trust preferred debt securities continue to accrue interest and make payments as expected with no payment deferrals or defaults on the part of the issuers.

Corporate Bonds

These securities in an unrealized loss position at June 30, 2023 included four corporate bond holdings issued by three individual companies in the financial services industry. Management reviewed the collectability of these securities taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings, including ratings in effect as of the reporting period date, as well as credit rating changes between the reporting period date and the filing date of this report, and other information. As of June 30, 2023, there was one corporate bond debt security with an amortized cost of $2.0 million and unrealized losses of $122 thousand that was rated below investment grade by S&P. We noted no downgrades to below investment grade between June 30, 2023 and the filing date of this report. Based on the information available through the filing date of this report, all corporate bond debt securities continue to accrue interest and make payments as expected with no payment deferrals or defaults on the part of the issuers.