Securities

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

The book values and approximate fair values of investment securities at September 30, 2022 and December 31, 2021 are summarized as follows:


($ in thousands)	September 30, 2022					December 31, 2021
	Amortized Cost		Fair Value	Unrealized		Amortized Cost	Fair Value	Unrealized
				Gains	(Losses)			Gains	(Losses)
Securities available for sale:
U.S. Treasuries	$	174,328	168,723	—	(5,605)	—	—	—	—
Government-sponsored enterprise securities	71,956		57,429	—	(14,527)	71,951	69,179	—	(2,772)
Mortgage-backed securities	2,512,221		2,068,769	7	(443,459)	2,545,150	2,514,805	9,489	(39,834)
Corporate bonds	44,350		43,294	—	(1,056)	45,380	46,430	1,106	(56)
Total available for sale	$	2,802,855	2,338,215	7	(464,647)	2,662,481	2,630,414	10,595	(42,662)

Securities held to maturity:
Mortgage-backed securities	$	16,092	14,891	—	(1,201)	20,260	20,845	585	—
State and local governments	528,101		403,708	—	(124,393)	493,565	490,854	2,955	(5,666)
Total held to maturity	$	544,193	418,599	—	(125,594)	513,825	511,699	3,540	(5,666)

All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises ("GSE"), except for private mortgage-backed securities with a fair value of $0.8 million and $0.9 million as of September 30, 2022 and December 31, 2021, respectively.

The following table presents information regarding all securities with unrealized losses at September 30, 2022:


	Securities in an Unrealized Loss Position for Less than 12 Months			Securities in an Unrealized Loss Position for More than 12 Months		Total
($ in thousands)	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
U.S. Treasuries	$	168,723	5,605	—	—	168,723	5,605
Government-sponsored enterprise securities	1,519		424	55,910	14,103	57,429	14,527
Mortgage-backed securities	770,879		145,469	1,308,825	299,191	2,079,704	444,660
Corporate bonds	40,633		966	910	90	41,543	1,056
State and local governments	252,833		70,679	149,289	53,714	402,122	124,393
Total unrealized loss position	$	1,234,587	223,143	1,514,934	367,098	2,749,521	590,241

The following table presents information regarding all securities with unrealized losses at December 31, 2021:


	Securities in an Unrealized Loss Position for Less than 12 Months			Securities in an Unrealized Loss Position for More than 12 Months		Total
($ in thousands)	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Government-sponsored enterprise securities	$	21,436	522	47,743	2,250	69,179	2,772
Mortgage-backed securities	1,773,022		25,977	404,484	13,857	2,177,506	39,834
Corporate bonds	999		1	945	55	1,944	56
State and local governments	228,279		3,797	34,398	1,869	262,677	5,666
Total unrealized loss position	$	2,023,736	30,297	487,570	18,031	2,511,306	48,328

As of September 30, 2022, the Company's securities portfolio held 669 securities of which 641 securities were in an unrealized loss position. As of December 31, 2021, the Company's securities portfolio held 648 securities of which 371 securities were in an unrealized loss position. In the above tables, all of the securities that were in an unrealized loss position at September 30, 2022 and December 31, 2021 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns. In arriving at this conclusion, the Company reviewed third-party credit ratings and considered the severity of the impairment. The state and local government investments are comprised almost entirely of highly-rated municipal bonds issued by state and local governments throughout the nation. The Company has no significant concentrations of bond holdings from one state or local government entity. Nearly all of our mortgage-backed securities were issued by FHLMC, FNMA, GNMA, or the SBA, each of which is a government agency or GSE and guarantees the repayment of the securities. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost.

At September 30, 2022 and December 31, 2021, the Company determined that expected credit losses associated with held to maturity debt securities were insignificant.

The book values and approximate fair values of investment securities at September 30, 2022, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Securities Available for Sale			Securities Held to Maturity
($ in thousands)	Amortized Cost		Fair Value	Amortized Cost	Fair Value
Due within one year	$	25,086	25,002	435	435
Due after one year but within five years	176,842		171,210	997	869
Due after five years but within ten years	87,706		72,324	58,625	47,494
Due after ten years	1,000		910	468,044	354,910
Mortgage-backed securities	2,512,221		2,068,769	16,092	14,891
Total securities	$	2,802,855	2,338,215	544,193	418,599

At September 30, 2022 and December 31, 2021, investment securities with carrying values of $731.7 million and $951.4 million, respectively, were pledged as collateral for public deposits.

At September 30, 2022 and December 31, 2021, there were no holdings of securities of any one issuer, other than U.S. Government and its agencies or GSEs, in an amount greater than 10% of shareholders' equity.

Included in “Other assets” in the Consolidated Balance Sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank of Richmond (“Federal Reserve”) stock totaling $36.2 million and $22.3 million at September 30, 2022 and December 31, 2021, respectively. These investments do not have readily determinable fair values. The FHLB stock had a cost and fair value of $11.3 million and $4.6 million at September 30, 2022 and December 31, 2021, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system. The Federal Reserve stock had a cost and fair value of $24.9 million and $17.8 million at September 30, 2022 and December 31, 2021, respectively, and is a

requirement for Federal Reserve member bank qualification. Periodically, both the FHLB and Federal Reserve recalculate the Company’s required level of holdings, and the Company either buys more stock or redeems a portion of the stock at cost. The Company determined that neither stock was impaired at either period end.

The Company owns 12,356 Class B shares of Visa, Inc. (“Visa”) stock that were received upon Visa’s initial public offering. These shares are expected to convert into Class A Visa shares subsequent to the settlement of certain litigation against Visa, to which the Company is not a party. The Class B shares have transfer restrictions, and the conversion rate into Class A shares is periodically adjusted as Visa settles litigation. The conversion rate at September 30, 2022 was approximately 1.61, which means the Company would have received approximately 19,843 Class A shares if the stock had converted on that date. This Class B stock does not have a readily determinable fair value and is carried at zero. If a readily determinable fair value becomes available for the Class B shares, or upon their conversion to Class A shares, the Company will adjust the carrying value of the stock to its market value with a credit to earnings.