Investment Securities

3 Months Ended

Mar. 31, 2022

7. Investment Securities

The following is a summary of available-for-sale securities:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value
	(In Thousands)
At March 31, 2022
Available-for-Sale Securities:
Obligations of U.S. government corporations and agencies	$	174,400	$	3	$	(12,970	)	$	161,433
Mortgage-backed securities		215,800		114		(15,090	)		200,824
Collateralized mortgage obligations		326,650		—		(21,122	)		305,528
Asset-backed securities		216,998		487		(4,388	)		213,097
Corporate bonds		74,395		158		(1,834	)		72,719
Obligations of state and political subdivisions		290,408		1,577		(26,221	)		265,764
Total Available-for-Sale	$	1,298,651	$	2,339	$	(81,625	)	$	1,219,365


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value
	(In Thousands)
At December 31, 2021
Available-for-sale
Obligations of U.S. government corporations and agencies	$	174,644	$	984	$	(918	)	$	174,710
Mortgage-backed securities		208,281		851		(2,381	)		206,751
Collateralized mortgage obligations		264,541		363		(4,736	)		260,168
Asset-backed securities		221,545		610		(1,619	)		220,536
Corporate bonds		70,008		1,160		(275	)		70,893
Obligations of state and political subdivisions		272,334		5,898		(5,030	)		273,202
Total Available-for-Sale	$	1,211,353	$	9,866	$	(14,959	)	$	1,206,260

The amortized cost and fair value of the investment securities portfolio at March 31, 2022, are shown below by contractual maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. For purposes of the maturity table, mortgage-backed securities (“MBS”), CMOs and asset-backed securities (“ABS”), which are not due at a single maturity date, have not been allocated over the maturity groupings. These securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.


	Available-for-Sale
	Amortized Cost		Fair Value
	(In Thousands)
Due in one year or less	$	3,230	$	3,235
Due after one year through five years		43,732		42,536
Due after five years through ten years		205,366		195,580
Due after ten years		286,875		258,565
MBS/CMO/ABS		759,448		719,449
	$	1,298,651	$	1,219,365

Investment securities with a carrying amount of $555.0 million and $564.4 million at March 31, 2022 and December 31, 2021, respectively, were pledged as collateral on public deposits.

The following tables summarize Premier’s securities that were in an unrealized loss position at March 31, 2022, and December 31, 2021:


	Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Unrealized Loss
	(In Thousands)
At March 31, 2022
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	152,407	$	(11,201	)	$	8,503	$	(1,769	)	$	160,910	$	(12,970	)
Mortgage-backed securities		134,953		(9,319	)		61,098		(5,771	)		196,051		(15,090	)
Collateralized mortgage obligations		300,681		(20,737	)		4,847		(385	)		305,528		(21,122	)
Asset-backed securities		167,305		(4,255	)		15,634		(133	)		182,939		(4,388	)
Corporate bonds		60,809		(1,786	)		1,212		(48	)		62,021		(1,834	)
Obligations of state and political subdivisions		125,688		(13,129	)		73,619		(13,092	)		199,307		(26,221	)
Total available-for-sale	$	941,843	$	(60,427	)	$	164,913	$	(21,198	)	$	1,106,756	$	(81,625	)


	Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Unrealized Loss
	(In Thousands)
At December 31, 2021
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	73,810	$	(918	)	$	—	$	—		$	73,810	$	(918	)
Mortgage-backed securities-residential		167,379		(2,048	)		13,689		(333	)		181,068		(2,381	)
Collateralized mortgage obligations		222,134		(4,736	)		—		—			222,134		(4,736	)
Asset-backed securities		140,226		(1,589	)		2,705		(30	)		142,931		(1,619	)
Corporate bonds		24,173		(270	)		504		(5	)		24,677		(275	)
Obligations of state and political subdivisions		99,199		(3,355	)		34,548		(1,675	)		133,747		(5,030	)
Total available-for-sale	$	726,921	$	(12,916	)	$	51,446	$	(2,043	)	$	778,367	$	(14,959	)

The Company realized no gains from the sale of available-for-sale securities in the three month period ending March 31, 2022. For the three months ended March 31, 2021, the Company had $516,000 in realized gains from the sale of investment securities.

ASU 2016-13 makes targeted improvements to the accounting for credit losses on securities available- for-sale. The concept of other than-temporarily impaired has been replaced with the allowance for credit losses. Unlike securities held to maturity, securities available-for-sale are evaluated on an individual level and pooling of securities is not allowed.

Quarterly, the Company evaluates if any security has a fair value less than its amortized cost. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, the Company performs further analysis as outlined below:

•

Review the extent to which the fair value is less than the amortized cost and observe the security’s lowest credit rating as reported by third-party credit ratings companies.

•

Any securities that are downgraded by a third party ratings company above would be subjected to additional analysis that may include, but is not limited to: changes in market interest rates, changes in securities credit ratings, security type, service area economic factors, financial performance of the issuer/or obligor of the underlying issue and third-party guarantee.

•

If the Company determines that a credit loss exists, the credit portion of the allowance will be measured using a DCF analysis using the effective interest rate as of the security’s purchase date. The amount of credit loss the Company records will be limited to the amount by which the amortized cost exceeds the fair value. As of March 31, 2022, management had determined that no credit loss exists.

At March 31, 2022, and December 31, 2021, the Company held preferred and common stock of various bank holding companies totaling $13.4 million and $14.1 million, respectively. During the three months ended March 31, 2022, $643,000 of unrealized losses were recorded within gain (loss) on equity securities on the Consolidated Condensed Statements of Income. During the three months ended March 31, 2021, $1.6 million of unrealized gains were recorded within gain(loss) on equity securities on the Consolidated Condensed Statements of Income.