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. As of March 31, 2023, the related remaining combined net unrealized losses of $141.0 million 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

March 31, 2023
U.S. Government agencies	$	451,052	$	—	$	451,052	$	—	$	(92,267)	$	358,785
Mortgage-backed securities	1,201,418		—		1,201,418		27		(103,863)		1,097,582
State and political subdivisions	1,860,332		(362)		1,859,970		189		(393,539)		1,466,620
Other securities	254,569		(1,526)		253,043		—		(27,054)		225,989
Total HTM	$	3,767,371	$	(1,888)	$	3,765,483	$	216	$	(616,723)	$	3,148,976

December 31, 2022
U.S. Government agencies	$	448,012	$	—	$	448,012	$	—	$	(102,558)	$	345,454
Mortgage-backed securities	1,190,781		—		1,190,781		227		(118,960)		1,072,048
State and political subdivisions	1,861,102		(110)		1,860,992		56		(446,198)		1,414,850
Other securities	261,199		(1,278)		259,921		—		(29,040)		230,881
Total HTM	$	3,761,094	$	(1,388)	$	3,759,706	$	283	$	(696,756)	$	3,063,233

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 March 31, 2023, HTM MBS consists of $146.5 million and $1.05 billion of commercial MBS and residential MBS, respectively. As of December 31, 2022, HTM MBS consists of $149.2 million and $1.04 billion 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

March 31, 2023
U.S. Treasury	$	2,264	$	—	$	—	$	(44)	$	2,220
U.S. Government agencies	188,141		—		73		(6,371)		181,843
Mortgage-backed securities	2,664,735		—		37		(231,242)		2,433,530
State and political subdivisions	1,060,198		—		272		(164,574)		895,896
Other securities	271,093		(5,800)		—		(22,826)		242,467
Total AFS	$	4,186,431	$	(5,800)	$	382	$	(425,057)	$	3,755,956

December 31, 2022
U.S. Treasury	$	2,257	$	—	$	—	$	(60)	$	2,197
U.S. Government agencies	191,498		—		103		(7,322)		184,279
Mortgage-backed securities	2,809,319		—		20		(266,437)		2,542,902
State and political subdivisions	1,056,124		—		250		(185,300)		871,074
Other securities	272,215		—		—		(19,813)		252,402
Total AFS	$	4,331,413	$	—	$	373	$	(478,932)	$	3,852,854

As of March 31, 2023, AFS MBS consists of $985.7 million and $1.45 billion of commercial MBS and residential MBS, respectively. As of December 31, 2022, AFS MBS consists of $1.07 billion and $1.47 billion of commercial MBS and residential MBS, respectively.

Accrued interest receivable on HTM and AFS securities at March 31, 2023 was $17.4 million and $16.7 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 March 31, 2023, 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	$	2,220	$	(44)	$	—	$	—	$	2,220	$	(44)
U.S. Government agencies	85,993		(2,409)		80,154		(3,962)		166,147		(6,371)
Mortgage-backed securities	442,923		(7,396)		1,980,733		(223,846)		2,423,656		(231,242)
State and political subdivisions	47,760		(2,572)		813,859		(162,002)		861,619		(164,574)
Other securities	83,075		(8,499)		146,131		(8,527)		229,206		(17,026)
Total AFS	$	661,971	$	(20,920)	$	3,020,877	$	(398,337)	$	3,682,848	$	(419,257)

As of March 31, 2023, the Company’s investment portfolio included $3.76 billion of AFS securities, of which $3.68 billion, or 98.1%, 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, the adequacy of the reserve for credit loss is determined quarterly based on methodology similar to the methodology for determining the loan allowance for credit losses. The methodology considers, but is not limited to: (i) issuer bond ratings, (ii) issuer geography, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) probability-weighted multiple scenario forecasts, and (v) the issuers’ size.

The following table details activity in the allowance for credit losses by investment security type for the three months ended March 31, 2023 on the Company’s HTM and AFS securities portfolios.


(In thousands)	State and Political Subdivisions		Other Securities		Total
Three Months Ended March 31, 2023
Held-to-maturity
Beginning balance, January 1, 2023	$	110	$	1,278	$	1,388
Provision for credit loss expense	252		248		500
Ending balance, March 31, 2023	$	362	$	1,526	$	1,888

Available-for-sale
Beginning balance, January 1, 2023	$	—	$	—	$	—
Provision for credit loss expense	—		12,800		12,800
Securities charged-off	—		(7,000)		(7,000)
Ending balance, March 31, 2023	$	—	$	5,800	$	5,800


(In thousands)	State and Political Subdivisions		Other Securities		Total
Three Months Ended March 31, 2022
Held-to-maturity
Beginning balance, January 1, 2022	$	1,197	$	82	$	1,279
Provision for credit loss expense	—		—		—
Recoveries	88		10		98
Ending balance, March 31, 2022	$	1,285	$	92	$	1,377

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, the provision for credit losses related to AFS securities recorded for the three months ended March 31, 2023 was $12.8 million, while no provision for credit losses related to AFS securities was recorded during the three months ended March 31, 2022. During the three months ended March 31, 2023, the Company charged-off $7.0 million directly related to one corporate bond which was deemed uncollectible in the period. The remaining allowance for credit loss on the AFS portfolio of $5.8 million at March 31, 2023 is related to outstanding exposure for two nonperforming corporate bonds.

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 March 31, 2023:


	State and Political Subdivisions
(In thousands)	Not Guaranteed or Pre-Refunded		Other Credit Enhancement or Insurance		Pre-Refunded		Total		Other Securities
Aaa/AAA	$	183,761	$	287,490	$	—	$	471,251	$	—
Aa/AA	633,064		525,076		—		1,158,140		—
A	47,706		171,293		—		218,999		101,586
Baa/BBB	—		3,387		—		3,387		152,983
Not Rated	8,555		—		—		8,555		—
Total	$	873,086	$	987,246	$	—	$	1,860,332	$	254,569

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 March 31,
(In thousands)	2023		2022
Taxable:
Held-to-maturity	$	11,013	$	1,912
Available-for-sale	21,791		16,236

Non-taxable:
Held-to-maturity	10,126		6,102
Available-for-sale	5,844		9,462
Total	$	48,774	$	33,712

The amortized cost and estimated fair value by maturity of securities as of March 31, 2023 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	$	2,413	$	2,413	$	12,552	$	12,376
After one through five years	6,455		6,332		184,643		178,272
After five through ten years	359,813		321,295		256,336		233,547
After ten years	2,197,272		1,721,354		1,067,885		897,951
Securities not due on a single maturity date	1,201,418		1,097,582		2,664,735		2,433,530
Other securities (no maturity)	—		—		280		280
Total	$	3,767,371	$	3,148,976	$	4,186,431	$	3,755,956

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $3.82 billion at March 31, 2023 and $3.96 billion at December 31, 2022.

There were no gross realized gains and no gross realized losses recorded from the call of securities during the three months ended March 31, 2023, as they were recognized at book value of the security. There were approximately $37,000 of gross realized gains and $91,000 of gross realized losses from the sale and calls of securities during the three months ended March 31, 2022. The income tax expense/benefit related to security gains/losses was 26.135% of the gross amounts in 2023 and 2022.

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.