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Investment Securities
 9 Months Ended
Sep. 30, 2022
Marketable Securities [Abstract]  
Investment Securities

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 September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-Sale Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of U.S. government corporations and agencies

 

$

173,907

 

 

$

—

 

 

$

(29,882

)

 

$

144,025

 

Mortgage-backed securities

 

 

204,655

 

 

 

 

 

 

(35,547

)

 

 

169,108

 

Collateralized mortgage obligations

 

 

306,623

 

 

 

—

 

 

 

(49,568

)

 

 

257,055

 

Asset-backed securities

 

 

206,505

 

 

 

557

 

 

 

(8,514

)

 

 

198,548

 

Corporate bonds

 

 

73,659

 

 

 

 

 

 

(6,237

)

 

 

67,422

 

Obligations of state and political subdivisions

 

 

286,213

 

 

 

32

 

 

 

(58,690

)

 

 

227,555

 

Total Available-for-Sale

 

$

1,251,562

 

 

$

589

 

 

$

(188,438

)

 

$

1,063,713

 

 

 

 

 

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 September 30, 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, MBS, CMOs and 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

 

$

3,238

 

 

$

3,239

 

Due after one year through five years

 

 

49,077

 

 

 

45,193

 

Due after five years through ten years

 

 

233,374

 

 

 

202,166

 

Due after ten years

 

 

248,090

 

 

 

188,403

 

MBS/CMO/ABS

 

 

717,783

 

 

 

624,712

 

 

 

$

1,251,562

 

 

$

1,063,713

 

 

Investment securities with a carrying amount of $736.1 million and $564.4 million at September 30, 2022 and December 31, 2021, respectively, were pledged as collateral.

The following tables summarize Premier’s securities that were in an unrealized loss position at September 30, 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 September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of U.S. government corporations and agencies

 

$

99,589

 

 

$

(19,180

)

 

$

44,436

 

 

$

(10,702

)

 

$

144,025

 

 

$

(29,882

)

Mortgage-backed securities

 

 

48,282

 

 

 

(5,761

)

 

 

120,826

 

 

 

(29,786

)

 

 

169,108

 

 

 

(35,547

)

Collateralized mortgage obligations

 

 

111,746

 

 

 

(14,355

)

 

 

145,309

 

 

 

(35,213

)

 

 

257,055

 

 

 

(49,568

)

Asset-backed securities

 

 

82,184

 

 

 

(1,816

)

 

 

81,491

 

 

 

(6,698

)

 

 

163,675

 

 

 

(8,514

)

Corporate bonds

 

 

57,170

 

 

 

(4,946

)

 

 

10,252

 

 

 

(1,291

)

 

 

67,422

 

 

 

(6,237

)

Obligations of state and political subdivisions

 

 

128,802

 

 

 

(19,309

)

 

 

89,875

 

 

 

(39,381

)

 

 

218,677

 

 

 

(58,690

)

Total available-for-sale

 

$

527,773

 

 

$

(65,367

)

 

$

492,189

 

 

$

(123,071

)

 

$

1,019,962

 

 

$

(188,438

)

 

 

 

 

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 and nine months ended September 30, 2022. For the three and nine months ended September 30, 2021, the Company had $233,000 and $2.2 million in realized gains from the sale of investment securities.

 

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 security that has a loss rate greater than 3%, credit rating below investment grade or not rated by a third-party credit ratings company 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 September 30, 2022, management determined that no credit loss exists and that the unrealized losses are due to the increased interest rate environment.

 

At September 30, 2022, and December 31, 2021, the Company held preferred and common stock of various bank holding companies totaling $15.3 million and $14.1 million, respectively. During the three and nine months ended September 30, 2022, an unrealized gain of $43,000 and a $1.8 million unrealized loss were recorded within gain (loss) on equity securities on the Consolidated Condensed Statements of Income. During the three and nine months ended September 30, 2021, $20,000 and $822,000 of unrealized gains were recorded within gain (loss) on equity securities on the Consolidated Condensed Statements of Income.