Note 7 - Investment Securities |
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] |
7. Investment Securities
The following tables set forth the amortized cost, gross unrealized gains, gross unrealized losses, and fair value of securities available-for-sale ("AFS") as of September 30, 2024, and December 31, 2023
As of September 30, 2024, and December 31, 2023, the amortized cost of AFS securities excluded accrued interest receivables of $4.5 million and $5.5 million, respectively, which are included in accrued interest receivable on the Consolidated Balance Sheets. For the Company’s accounting policy related to AFS securities accrued interest receivable, see Note 1 - Summary of Significant Accounting Policies – Securities Available for Sale – Allowance for Credit Losses on Available for Sale Securities to the Consolidated Financial Statements in the Company’s 2023 Form 10-K.
The amortized cost and fair value of securities AFS as of September 30, 2024, by contractual maturities, are set forth in the tables below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or repayment penalties.
Equity Securities - The Company recognized an unrealized net gain of $4.3 million for the three months ended September 30, 2024, due to an increase in fair value of equity investments with readily determinable fair values compared to a net loss of $6.2 million for the three months ended September 30, 2023. The Company recognized a net loss of $6.2 million for the nine months ended September 30, 2024, due to a decrease in fair value of equity investments with readily determinable fair values compared to a net gain of $9.3 million for the nine months ended September 30, 2023. Equity securities were $35.7 million and $40.4 million as of September 30, 2024, and December 31, 2023, respectively.
The following tables set forth the gross unrealized losses and related fair value of the Company’s investment portfolio, aggregated by investment category and the length of time that individual security has been in a continuous unrealized loss position, as of September 30, 2024, and December 31, 2023:
As of September 30, 2024, the Company had a total of 177 AFS securities in a gross unrealized loss position with no credit impairment, consisting primarily of 149 mortgage-backed securities, and 18 Corporate debt securities, collateralized mortgage obligations and U.S. government agency securities. In comparison, as of December 31, 2023, the Company has a total of 192 AFS securities in a gross unrealized loss position with no credit impairment, consisting primarily of 154 mortgage-backed securities, 24 Corporate debt securities, U.S. treasury security, five collateralized mortgage obligations and U.S. government agency securities.
In March 2023, the Company recorded a $3.0 million write-off of its holdings of securities AFS from the failed Signature Bank. During the nine months ended September 30, 2024, the Company sold that security for $1.4 million.
Allowance for Credit Losses
The AFS securities that were in an unrealized loss position at September 30, 2024, were evaluated to determine whether the decline in fair value below the amortized cost basis resulted from a credit loss or other factors. For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 1 - Summary of Significant Accounting Policies - Allowance for Credit Losses on Available for Sale Securities to the Consolidated Financial Statements in the Company’s 2023 Form 10-K.
The Company concluded the unrealized losses were primarily attributed to yield curve movement, together with widened liquidity spreads and credit spreads. The issuers have not, to the Company’s knowledge, established any cause for default on these securities. The Company expects to recover the amortized cost basis of its securities and has no present intent to sell and will not be required to sell securities AFS that have declined below their cost before their anticipated recovery. Accordingly, no allowance for credit losses was recorded as of September 30, 2024, against these securities, and there was no provision for credit losses recognized for the three and nine months ended September 30, 2024.
AFS securities having a carrying value of $18.4 million and $134.2 million as of September 30, 2024, and December 31, 2023, respectively, were pledged to secure public deposits and other borrowings.
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