Investment Securities

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Investment securities at March 31, 2024 and at December 31, 2023, were as follows:


Debt securities AFS (In thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
March 31, 2024:
Obligations of states and political subdivisions	$	219,886	$	392	$	13,752	$	206,526
U.S. Government sponsored entities' asset-backed securities	672,462		13		69,466		603,009
Collateralized loan obligations	420,041		320		1,364		418,997
Corporate debt securities	22,584		1		2,330		20,255
Total	$	1,334,973	$	726	$	86,912	$	1,248,787


Debt securities AFS (In thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
December 31, 2023:
Obligations of states and political subdivisions	$	251,531	$	1,173	$	11,520	$	241,184
U.S. Government sponsored entities' asset-backed securities	703,645		23		68,193		635,475
Collateralized loan obligations	443,112		31		4,857		438,286
Corporate debt securities	20,482		—		2,585		17,897
Total	$	1,418,770	$	1,227	$	87,155	$	1,332,842

Investment securities in an unrealized loss position at March 31, 2024, were as follows:


	Unrealized loss position for less than 12 months				Unrealized loss position for 12 months or longer				Total
(In thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Debt securities AFS:
Obligations of states and political subdivisions	$	37,808	$	276	$	131,395	$	13,476	$	169,203	$	13,752
U.S. Government sponsored entities' asset-backed securities	—		—		601,810		69,466		601,810		69,466
Collateralized loan obligations	34,873		25		254,721		1,339		289,594		1,364
Corporate debt securities	3,001		40		15,360		2,290		18,361		2,330
Total	$	75,682	$	341	$	1,003,286	$	86,571	$	1,078,968	$	86,912

Investment securities in an unrealized loss position at December 31, 2023, were as follows:


	Unrealized loss position for less than 12 months				Unrealized loss position for 12 months or longer				Total
(In thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Debt securities AFS:
Obligations of states and political subdivisions	$	46,685	$	420	$	103,993	$	11,100	$	150,678	$	11,520
U.S. Government sponsored entities' asset-backed securities	—		—		634,261		68,193		634,261		68,193
Collateralized loan obligations	—		—		404,019		4,857		404,019		4,857
Corporate debt securities	9,530		702		8,367		1,883		17,897		2,585
Total	$	56,215	$	1,122	$	1,150,640	$	86,033	$	1,206,855	$	87,155

At March 31, 2024, Park’s debt securities portfolio consisted of $1.2 billion of securities, $1.1 billion of which were in an unrealized loss position with aggregate unrealized losses of $86.9 million. Of the $1.1 billion of securities in an unrealized loss position, $1.0 billion were in an unrealized loss position for 12 months or longer. Of the $86.9 million in unrealized losses, $69.5 million were related to Park's "U.S. Government sponsored entities' asset-backed securities" portfolio. For non-agency debt securities, Park verified that the current credit ratings remain above investment grade. On a quarterly basis, management reviews the credit profile of each non-agency debt security and assesses whether any impairment to the contractually obligated cash flow is likely to occur. Based on these reviews, management has concluded that the underlying creditworthiness for each security remains sufficient to maintain required payment obligations and, therefore, unrealized losses have not been recognized into net income. Management does not intend to sell, and it is not more likely than not that management would be required to sell, the securities prior to their anticipated recovery in respect of the unrealized losses. Management believes the value will recover as the securities approach maturity or market interest rates change.

There was no allowance for credit losses recorded for debt securities AFS at either March 31, 2024 or December 31, 2023. Additionally, for the three months ended March 31, 2024 and 2023, there were no credit-related investment impairment losses recognized.

The amortized cost and estimated fair value of investments in debt securities AFS at March 31, 2024, are shown in the following table by contractual maturity, except for asset-backed securities and collateral loan obligations, which are shown as a single total due to the unpredictability of the timing of principal repayments. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.


(In thousands)	Amortized cost		Fair value		Tax equivalent yield (1)
Debt Securities AFS
Obligations of state and political subdivisions:
Due one through five years	$	1,505	$	1,503	3.15	%
Due five through ten years	87,545		85,731		3.26	%
Due over ten years	130,836		119,292		3.14	%
Total (1)	$	219,886	$	206,526	3.19	%

U.S. Government sponsored entities' asset-backed securities	$	672,462	$	603,009	1.83	%

Collateralized loan obligations	$	420,041	$	418,997	7.23	%

Corporate debt securities
Due one through five years	$	2,834	$	2,795	9.21	%
Due five through ten years	19,750		17,460		4.10	%
Total	$	22,584	$	20,255	4.74	%

(1) The tax equivalent yield for certain obligations of state and political subdivisions includes the effect of a taxable equivalent adjustment using a 21% federal corporate income tax rate.

During the three-month period ended March 31, 2024, Park sold certain AFS debt securities with a book value of $31.2 million at a gross loss of $398,000. There were no sales of debt securities AFS during the three-month period ended March 31, 2023.

Investment securities having a fair value of $762.1 million and $602.0 million at March 31, 2024 and December 31, 2023, respectively, were pledged to collateralize government and public fund deposits, to secure repurchase agreements and as collateral for FHLB advance borrowings.