Held-to-maturity securities (“HTM”), which include any security for which the Company has both the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the security’s estimated life. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date.

Available-for-sale securities (“AFS”), which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders’ equity, further discussed below. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date.

During the quarters ended June 30, 2022 and September 30, 2021, the Company transferred, at fair value, $1.99 billion and $500.8 million, respectively, of securities from the available-for-sale portfolio to the held-to-maturity portfolio. The related remaining net unrealized losses of $148.3 million and net unrealized gains of $738,000, respectively, in accumulated other comprehensive income (loss) will be amortized over the remaining life of the securities. No gains or losses on these securities were recognized at the time of transfer.


(In thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
Held-to-maturity

September 30, 2022
U.S. Government agencies	$	447,400	$	—	$	447,400	$	—	$	(97,871)	$	349,529
Mortgage-backed securities	1,214,882		—		1,214,882		1,069		(131,437)		1,084,514
State and political subdivisions	1,865,310		(107)		1,865,203		60		(540,980)		1,324,283
Other securities	260,868		(1,277)		259,591		—		(33,877)		225,714
Total HTM	$	3,788,460	$	(1,384)	$	3,787,076	$	1,129	$	(804,165)	$	2,984,040

December 31, 2021
U.S. Government agencies	$	232,609	$	—	$	232,609	$	—	$	(7,914)	$	224,695
Mortgage-backed securities	70,342		—		70,342		232		(1,425)		69,149
State and political subdivisions	1,210,248		(1,197)		1,209,051		6,166		(8,462)		1,206,755
Other securities	17,301		(82)		17,219		—		(440)		16,779
Total HTM	$	1,530,500	$	(1,279)	$	1,529,221	$	6,398	$	(18,241)	$	1,517,378

Mortgage-backed securities (“MBS”) are commercial MBS, secured by commercial properties, and residential MBS, generally secured by single-family residential properties. All mortgage-backed securities included in the table above were issued by U.S. government agencies or corporations. As of September 30, 2022, HTM MBS consists of $150.0 million and $1.06 billion of commercial MBS and residential MBS, respectively. As of December 31, 2021, HTM MBS consists of $4.9 million and $65.5 million of commercial MBS and residential MBS, respectively.


(In thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
Available-for-sale

September 30, 2022
U.S. Treasury	$	2,250	$	—	$	—	$	(59)	$	2,191
U.S. Government agencies	195,369		—		145		(7,454)		188,060
Mortgage-backed securities	2,959,882		—		5		(289,539)		2,670,348
State and political subdivisions	1,054,356		—		244		(232,091)		822,509
Other securities	272,274		—		1		(17,840)		254,435
Total AFS	$	4,484,131	$	—	$	395	$	(546,983)	$	3,937,543

December 31, 2021
U.S. Treasury	$	300	$	—	$	—	$	—	$	300
U.S. Government agencies	374,754		—		495		(10,608)		364,641
Mortgage-backed securities	4,485,548		—		6,307		(43,239)		4,448,616
State and political subdivisions	1,791,097		—		30,556		(1,995)		1,819,658
Other securities	479,162		—		6,647		(5,479)		480,330
Total AFS	$	7,130,861	$	—	$	44,005	$	(61,321)	$	7,113,545

As of September 30, 2022, AFS MBS consists of $1.17 billion and $1.50 billion of commercial MBS and residential MBS, respectively. As of December 31, 2021, AFS MBS consists of $1.53 billion and $2.92 billion of commercial MBS and residential MBS, respectively.

Accrued interest receivable on HTM and AFS securities at September 30, 2022 was $17.7 million and $16.2 million, respectively, and is included in interest receivable on the consolidated balance sheets. The Company has made the election to exclude all accrued interest receivable from securities from the estimate of credit losses.

The following table summarizes the Company’s AFS investments in an unrealized loss position for which an allowance for credit loss has not been recorded as of September 30, 2022, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:


	Less Than 12 Months				12 Months or More				Total
(In thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
Available-for-sale
U.S. Treasury	$	2,191	$	(59)	$	—	$	—	$	2,191	$	(59)
U.S. Government agencies	116,968		(5,120)		53,942		(2,334)		170,910		(7,454)
Mortgage-backed securities	1,115,220		(73,690)		1,545,776		(215,849)		2,660,996		(289,539)
State and political subdivisions	536,510		(79,426)		259,147		(152,665)		795,657		(232,091)
Other securities	212,701		(14,259)		36,243		(3,581)		248,944		(17,840)
Total AFS	$	1,983,590	$	(172,554)	$	1,895,108	$	(374,429)	$	3,878,698	$	(546,983)

As of September 30, 2022, the Company’s investment portfolio included $3.94 billion of AFS securities, of which $3.88 billion, or 98.5%, were in an unrealized loss position that were not deemed to have credit losses. A portion of the unrealized losses were related to the Company’s MBS, which are issued and guaranteed by U.S. government-sponsored entities and agencies, and the Company’s state and political subdivision securities, specifically investments in insured fixed rate municipal bonds for which the issuers continue to make timely principal and interest payments under the contractual terms of the securities.

Furthermore, the decline in fair value for each of the above AFS securities is attributable to the rates for those investments yielding less than current market rates. Management does not believe any of the securities are impaired due to reasons of credit quality. Management believes the declines in fair value for the securities are temporary. Management does not have the intent to sell the securities, and management believes it is more likely than not the Company will not have to sell the securities before recovery of their amortized cost basis.

All MBS held by the Company are issued by U.S. government-sponsored entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, highly rated by major rating agencies and have a long history of no credit losses. Accordingly, no allowance for credit losses has been recorded for these securities.

Regarding securities issued by state and political subdivisions and other HTM securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) internal forecasts, and (v) whether or not such securities provide insurance or other credit enhancement or are pre-refunded by the issuers.

The following table details activity in the allowance for credit losses by investment security type for the three and nine months ended September 30, 2022 on the Company’s HTM securities portfolio.


(In thousands)	State and Political Subdivisions		Other Securities		Total
Three Months Ended September 30, 2022
Held-to-maturity
Beginning balance, July 1, 2022	$	103	$	1,278	$	1,381
Provision for credit loss expense	—		—		—
Net increase (decrease) in allowance on previously impaired securities	3		(3)		—
Recoveries	1		2		3
Ending balance, September 30, 2022	$	107	$	1,277	$	1,384

Nine Months Ended September 30, 2022
Held-to-maturity
Beginning balance, January 1, 2022	$	1,197	$	82	$	1,279
Provision for credit loss expense	—		—		—
Net increase (decrease) in allowance on previously impaired securities	(1,180)		1,180		—
Recoveries	90		15		105
Ending balance, September 30, 2022	$	107	$	1,277	$	1,384

Activity in the allowance for credit losses by investment security type for the three and nine months ended September 30, 2021 on the Company’s HTM and AFS securities portfolio was as follows:


(In thousands)	State and Political Subdivisions		Other Securities		Total
Three Months Ended September 30, 2021
Held-to-maturity
Beginning balance, July 1, 2021	$	871	$	261	$	1,132
Provision for credit loss expense	325		(325)		—
Recoveries	—		147		147
Ending balance, September 30, 2021	$	1,196	$	83	$	1,279

Nine Months Ended September 30, 2021
Held-to-maturity
Beginning balance, January 1, 2021	$	2,307	$	608	$	2,915
Provision for credit loss expense	(1,111)		(72)		(1,183)
Securities charged-off	—		(600)		(600)
Recoveries	—		147		147
Ending balance, September 30, 2021	$	1,196	$	83	$	1,279

Available-for-sale
Beginning balance, January 1, 2021	$	217	$	95	$	312
Reduction due to sales	—		(11)		(11)
Net decrease in allowance on previously impaired securities	(217)		(84)		(301)
Ending balance, September 30, 2021	$	—	$	—	$	—

Based upon the Company’s analysis of the underlying risk characteristics of its AFS portfolio, including credit ratings and other qualitative factors, as previously discussed, there was no provision for credit losses related to AFS securities recorded for the three and nine months ended September 30, 2022. There was no provision for credit losses related to AFS securities recorded in the three month period ended September 30, 2021 and it was reduced by $312,000 during the nine months ended September 30, 2021.

The following table summarizes bond ratings for the Company’s HTM portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of September 30, 2022:


	State and Political Subdivisions
(In thousands)	Not Guaranteed or Pre-Refunded		Other Credit Enhancement or Insurance		Pre-Refunded		Total		Other Securities
Aaa/AAA	$	187,185	$	280,768	$	—	$	467,953	$	—
Aa/AA	671,239		502,057		—		1,173,296		—
A	45,493		157,441		—		202,934		172,861
Baa/BBB	—		5,937		—		5,937		53,500
Not Rated	8,321		6,869		—		15,190		34,507
Total	$	912,238	$	953,072	$	—	$	1,865,310	$	260,868

Historical loss rates associated with securities having similar grades as those in the Company’s portfolio have generally not been significant. Pre-refunded securities, if any, have been defeased by the issuer and are fully secured by cash and/or U.S. Treasury securities held in escrow for payment to holders when the underlying call dates of the securities are reached. Securities with other credit enhancement or insurance continue to make timely principal and interest payments under the contractual terms of the securities. Accordingly, no allowance for credit losses has been recorded for these securities as there is no current expectation of credit losses related to these securities.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2022		2021		2022		2021
Taxable:
Held-to-maturity	$	10,679	$	1,127	$	23,169	$	2,477
Available-for-sale	14,169		15,949		41,622		39,313

Non-taxable:
Held-to-maturity	10,181		4,853		26,371		9,887
Available-for-sale	5,925		8,788		21,352		27,741
Total	$	40,954	$	30,717	$	112,514	$	79,418

The amortized cost and estimated fair value by maturity of securities as of September 30, 2022 are shown in the following table. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. Accordingly, actual maturities may differ from contractual maturities.


	Held-to-Maturity				Available-for-Sale
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	4,519	$	4,519	$	3,165	$	3,142
After one through five years	7,671		7,449		184,193		177,833
After five through ten years	327,461		284,166		268,732		248,862
After ten years	2,233,927		1,603,392		1,067,671		836,869
Securities not due on a single maturity date	1,214,882		1,084,514		2,959,882		2,670,348
Other securities (no maturity)	—		—		488		489
Total	$	3,788,460	$	2,984,040	$	4,484,131	$	3,937,543

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $3.93 billion at September 30, 2022 and $3.88 billion at December 31, 2021.

There were approximately $8,000 of gross realized gains and $30,000 of gross realized losses from the sale and calls of securities during the three months ended September 30, 2022, and approximately $45,000 of gross realized gains and $271,000 of gross realized losses from the sale and call of securities during the nine months ended September 30, 2022. There were approximately $5.3 million of gross realized gains and $24,500 of gross realized losses from the sale of securities during the three months ended September 30, 2021, and approximately $15.9 million of gross realized gains and $63,600 of gross realized losses from the sale of securities during the nine months ended September 30, 2021. The income tax expense/benefit related to security gains/losses was 26.135% of the gross amounts in 2022 and 2021.

The Company has entered into various fair value hedging transactions to mitigate the impact of changing interest rates on the fair value of AFS securities. See Note 23: Derivative Instruments for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.