SECURITIES

9 Months Ended

Sep. 30, 2023

SECURITIES

SECURITIES

6.SECURITIES

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

	September 30, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Securities available-for-sale:
Agency notes	$	10,000	$	—	$	(857)	$	9,143
Treasury securities		246,135		—		(16,262)		229,873
Corporate securities		169,549		—		(28,462)		141,087
Pass-through mortgage-backed securities ("MBS") issued by government sponsored entities ("GSEs")		239,509		—		(33,306)		206,203
Agency collateralized mortgage obligations ("CMOs")		311,632		21		(56,011)		255,642
State and municipal obligations		30,845		—		(2,914)		27,931
Total securities available-for-sale	$	1,007,670	$	21	$	(137,812)	$	869,879
	September 30, 2023
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
(In thousands)	Cost		Gains		Losses		Value
Securities held-to-maturity:
Agency notes	$	89,461	$	—	$	(15,305)	$	74,156
Corporate securities		9,000		—		(1,945)		7,055
Pass-through MBS issued by GSEs		283,258		—		(53,777)		229,481
Agency CMOs		218,572		—		(33,278)		185,294
Total securities held-to-maturity	$	600,291	$	—	$	(104,305)	$	495,986

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Securities available-for-sale:
Treasury securities	$	246,899	$	—	$	(19,643)	$	227,256
Corporate securities		183,791		57		(17,075)		166,773
Pass-through MBS issued by GSEs		272,774		—		(31,534)		241,240
Agency CMOs		331,394		2		(50,057)		281,339
State and municipal obligations		37,000		—		(3,021)		33,979
Total securities available-for-sale	$	1,071,858	$	59	$	(121,330)	$	950,587
	December 31, 2022
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
(In thousands)	Cost		Gains		Losses		Value
Securities held-to-maturity:
Agency notes	$	89,157	$	—	$	(14,095)	$	75,062
Corporate securities		9,000		—		(553)		8,447
Pass-through MBS issued by GSEs		278,281		—		(40,960)		237,321
Agency CMOs		209,360		—		(24,431)		184,929
Total securities held-to-maturity	$	585,798	$	—	$	(80,039)	$	505,759

There were no transfers to or from securities held-to-maturity during the three or nine months ended September 30, 2023. During the nine months ended September 30, 2022, the Company transferred securities with an amortized cost of $400.0 million from available-for-sale to held-to-maturity. The transfers occurred at fair value totaling $372.2 million. The related

unrealized losses of $27.8 million were converted to a discount that is being accreted through interest income on a level-yield method over the term of the securities, while the unrealized losses recorded in other comprehensive income are amortized out of other comprehensive income through interest income on a level-yield method over the remaining term of securities, with no net change to interest income. No gain or loss was recorded at the time of transfer. There were no transfers of securities held-to-maturity to securities available-for-sale during the three or nine months ended September 30, 2022.

The carrying amount of securities pledged at September 30, 2023 and December 31, 2022 was $470.0 million and $631.4 million, respectively.

At September 30, 2023 and December 31, 2022, 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.  

	September 30, 2023
	Amortized		Fair
(In thousands)	Cost		Value
Available-for-sale
Within one year	$	83,132	$	80,015
One to five years		206,284		188,885
Five to ten years		167,113		139,134
Beyond ten years		—		—
Pass-through MBS issued by GSEs and agency CMO		551,141		461,845
Total	$	1,007,670	$	869,879
Held-to-maturity
Within one year	$	—	$	—
One to five years		19,772		17,743
Five to ten years		78,689		63,468
Beyond ten years		—		—
Pass-through MBS issued by GSEs and agency CMO		501,830		414,775
Total	$	600,291	$	495,986

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Securities available-for-sale
Proceeds	$	—	$	—	$	77,804	$	—
Gross gains		—		—		130		—
Tax expense on gains		—		—		39		—
Gross losses		—		—		1,577		—
Tax benefit on losses		—		—		467		—

There were no sales of securities held-to-maturity during the three or nine months ended September 30, 2023 and 2022.  

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

	September 30, 2023
	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	$	—	$	—	$	9,143	$	857	$	9,143	$	857
Treasury securities		—		—		229,873		16,262		229,873		16,262
Corporate securities		19,118		2,248		121,969		26,214		141,087		28,462
Pass-through MBS issued by GSEs		904		12		205,299		33,294		206,203		33,306
Agency CMOs		2,427		41		248,193		55,970		250,620		56,011
State and municipal obligations		1,713		137		26,218		2,777		27,931		2,914

	December 31, 2022
	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:
Treasury securities	$	—	$	—	$	227,256	$	19,643	$	227,256	$	19,643
Corporate securities		110,707		8,494		50,116		8,581		160,823		17,075
Pass-through MBS issued by GSEs		50,813		2,010		190,427		29,524		241,240		31,534
Agency CMOs		55,924		3,454		220,413		46,603		276,337		50,057
State and municipal obligations		10,848		174		22,681		2,847		33,529		3,021

As of September 30, 2023, 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, given the high-quality composition of the Company’s held-to-maturity portfolio, the Company did not record an allowance for credit losses on the held-to-maturity portfolio. 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 $3.3 million and $5.4 million at September 30, 2023 and December 31, 2022, respectively, 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 September 30, 2023, 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. Substantially all of 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 quality of the issuer. Substantially all of 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.