INVESTMENT AND MORTGAGE-BACKED SECURITIES

12 Months Ended

Dec. 31, 2021

INVESTMENT AND MORTGAGE-BACKED SECURITIES

INVESTMENT AND MORTGAGE-BACKED SECURITIES

4. SECURITIES

The following tables summarize the major categories of securities as of the dates indicated:

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Securities available-for-sale:
Agency notes	$	82,476	$	—	$	(2,222)	$	80,254
Treasury securities		247,916		—		(3,147)		244,769
Corporate securities		148,430		4,354		(754)		152,030
Pass-through mortgage-backed securities ("MBS") issued by government sponsored entities ("GSEs")		528,749		4,271		(6,566)		526,454
Agency collateralized mortgage obligations ("CMOs")		527,348		2,705		(8,795)		521,258
State and municipal obligations		39,175		73		(302)		38,946
Total securities available-for-sale	$	1,574,094	$	11,403	$	(21,786)	$	1,563,711
	December 31, 2021
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
(In thousands)	Cost		Gains		Losses		Value
Securities held-to-maturity:
Pass-through MBS issued by GSEs	$	118,382	$	59	$	(1,141)	$	117,300
Agency CMOs		60,927		—		(873)		60,054
Total securities held-to-maturity	$	179,309	$	59	$	(2,014)	$	177,354

	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Securities available-for-sale:
Agency notes	$	47,500	$	12	$	(91)	$	47,421
Corporate securities		62,021		2,440		—		64,461
Pass-through MBS issued by GSEs		135,842		7,672		(31)		143,483
Agency CMOs		274,898		8,674		(76)		283,496
Total securities available-for-sale	$	520,261	$	18,798	$	(198)	$	538,861

As a result of the Merger, the Company acquired $652.0 million of securities available-for-sale on the Merger Date.

As of December 31, 2020, there were no securities held-to-maturity.

The Company transferred $140.4 million of securities available-for-sale to securities held-to-maturity during the year ended December 31, 2021. There were no transfers from securities held-to-maturity during the year ended December 31, 2021. There were no transfers to or from securities held-to-maturity during years ended December 31, 2020 and 2019.

The carrying amount of securities pledged at December 31, 2021 and 2020 was $726.4 million and $99.4 million, respectively.

At December 31, 2021 and 2020, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

The amortized cost and fair value of securities are shown by contractual maturity.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Securities not due at a single maturity date are shown separately.  

	December 31, 2021
	Amortized		Fair
(In thousands)	Cost		Value
Available-for-sale
Within one year	$	852	$	858
One to five years		281,148		277,877
Five to ten years		222,851		224,137
Beyond ten years		13,145		13,127
Pass-through MBS issued by GSEs and agency CMO		1,056,098		1,047,712
Total	$	1,574,094	$	1,563,711
Held-to-maturity
Pass-through MBS issued by GSEs and agency CMO	$	179,309	$	177,354
Total	$	179,309	$	177,354

The following table presents the information related to sales of securities available-for-sale for the periods indicated:

	Year Ended December 31,
(In thousands)	2021		2020		2019
Securities available-for-sale
Proceeds	$	138,077	$	94,252	$	148,857
Gross gains		1,327		4,592		551
Tax expense on gains		421		1,444		175
Gross losses		120		—		520
Tax benefit on losses		38		—		166

Marketable equity securities were fully liquidated in connection with the termination of the BMP.  Prior to termination, the Company held marketable equity securities as the underlying mutual fund investments of the BMP, held in a rabbi trust.

A summary of the sales of marketable equity securities is listed below for the periods indicated:

	Year Ended December 31,
(In thousands)	2021		2020		2019
Proceeds:
Marketable equity securities	$	6,101	$	546	$	570

The remaining gain or loss on securities shown in the consolidated statements of income was due to market valuation changes.  Net gains on marketable equity securities of $131 thousand, $361 thousand and $531 thousand were recognized for the years ended December 31, 2021, 2020 and 2019, respectively.

There were no sales of securities held-to-maturity during the years ended December 31, 2021, 2020, and 2019.

The following table summarizes the gross unrealized losses and fair value of securities aggregated by investment category and the length of time the securities were in a continuous unrealized loss position for the periods indicated:

	December 31, 2021
	Less than 12				12 Consecutive
	Consecutive Months				Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
Securities available-for-sale:
Agency notes	$	58,607	$	1,369	$	21,647	$	853	$	80,254	$	2,222
Treasury securities		244,769		3,147		—		—		244,769		3,147
Corporate securities		37,620		754		—		—		37,620		754
Pass-through MBS issued by GSEs		422,634		6,333		4,748		233		427,382		6,566
Agency CMOs		349,879		8,672		3,182		123		353,061		8,795
State and municipal obligations		18,887		302		—		—		18,887		302
Securities held-to-maturity
Pass-through MBS issued by GSEs	$	97,328	$	1,141	$	—	$	—	$	97,328	$	1,141
Agency CMOs		60,054		873		—		—		60,054		873

	December 31, 2020
	Less than 12				12 Consecutive
	Consecutive Months				Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
Securities available-for-sale:
Agency notes	$	22,409	$	91	$	—	$	—	$	22,409	$	91
Pass-through MBS issued by GSEs		5,007		31		—		—		5,007		31
Agency CMOs		6,563		30		4,954		46		11,517		76

As of December 31, 2021, none of the Company’s available-for-sale debt securities were in an unrealized loss position due to credit and therefore no allowance for credit losses on available-for-sale debt securities was required. Additionally, the calculated allowance for credit losses on held-to-maturity securities was inconsequential given the high-quality composition of the Company’s held-to-maturity portfolio and therefore no allowance for credit losses was recorded. With respect to certain classes of debt securities, primarily U.S. Treasuries and securities issued by Government Sponsored Entities, the Company considers the history of credit losses, current conditions and reasonable and supportable forecasts, which may indicate that the expectation that nonpayment of the amortized cost basis is or continues to be zero, even if the U.S. government were to technically default.  Accrued interest receivable on securities totaling $4.4 million at December 31, 2021 was included in other assets in the consolidated balance sheet and excluded from the amortized cost and estimated fair value totals in the table above.

Management evaluates available-for-sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2021, substantially all of the securities in an unrealized loss position had a fixed interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. The following major security types held by the Company are all issued by U.S. government entities and agencies and therefore either explicitly or implicitly guaranteed by the U.S. government; Agency Notes, Treasury Securities, Pass-through MBS issued by GSEs, Agency Collateralized Mortgage Obligations.  The corporate bonds within the portfolio have maintained an investment grade rating by either Kroll, Egan-Jones, Fitch, Moody’s or Standard and Poor’s. None of the unrealized losses are related to credit losses. The state and municipal obligations within the portfolio have all maintained an investment grade rating by either Moody’s or Standard and Poor’s.  The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The issuers continue to make timely principal and interest payments on the debt. The fair value is expected to recover as the securities approach maturity.