SECURITIES

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

SECURITIES

The amortized cost, gross unrealized gains and losses and estimated fair value of securities at September 30, 2023 and December 31, 2022 are summarized as follows (in thousands):

	September 30, 2023
	Amortized Cost		Fair Value
Trading:
Corporate bonds	$	27,203	$	25,268
	$	27,203	$	25,268

	September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	35,342	$	—	$	(1,015)	$	—	$	34,327
Municipal bonds	166,902		—		(43,304)		—		123,598
Corporate bonds	106,015		—		(14,247)		(750)		91,018
Mortgage-backed or related securities	2,244,179		—		(424,727)		—		1,819,452
Asset-backed securities	222,534		207		(3,143)		—		219,598
	$	2,774,972	$	207	$	(486,436)	$	(750)	$	2,287,993

	September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	308	$	—	$	(8)	$	300	$	—
Municipal bonds	491,152		12		(95,444)		395,551		(169)
Corporate bonds	2,813		—		(27)		2,606		(180)
Mortgage-backed or related securities	588,232		—		(133,036)		455,196		—
	$	1,082,505	$	12	$	(228,515)	$	853,653	$	(349)

	December 31, 2022
	Amortized Cost		Fair Value
Trading:
Corporate bonds	$	27,203	$	28,694
	$	27,203	$	28,694

	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	56,344	$	8	$	(1,244)	$	55,108
Municipal bonds	301,449		530		(40,770)		261,209
Corporate bonds	133,334		—		(11,481)		121,853
Mortgage-backed or related securities	2,505,172		885		(366,721)		2,139,336
Asset-backed securities	222,478		40		(10,993)		211,525
	$	3,218,777	$	1,463	$	(431,209)	$	2,789,031

	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	312	$	—	$	(7)	$	305	$	—
Municipal bonds	503,117		109		(70,907)		432,319		(183)
Corporate bonds	2,961		—		(16)		2,945		(196)
Mortgage-backed or related securities	611,577		—		(104,966)		506,611		—
	$	1,117,967	$	109	$	(175,896)	$	942,180	$	(379)

Accrued interest receivable on held-to-maturity debt securities was $4.2 million and $4.8 million at September 30, 2023 and December 31, 2022, respectively, and was $11.0 million and $12.4 million on available-for-sale debt securities at September 30, 2023 and December 31, 2022, respectively. Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Statements of Financial Condition and is excluded from the calculation of the allowance for credit losses.

At September 30, 2023 and December 31, 2022, the gross unrealized losses and the fair value for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows (in thousands):

	September 30, 2023
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	—	$	—	$	34,327	$	(1,015)	$	34,327	$	(1,015)
Municipal bonds	24,409		(2,095)		99,189		(41,209)		123,598		(43,304)
Corporate bonds	5,715		(264)		88,682		(13,983)		94,397		(14,247)
Mortgage-backed or related securities	178,325		(4,816)		1,641,125		(419,911)		1,819,450		(424,727)
Asset-backed securities	114,512		(1,863)		85,345		(1,280)		199,857		(3,143)
	$	322,961	$	(9,038)	$	1,948,668	$	(477,398)	$	2,271,629	$	(486,436)

	December 31, 2022
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	33,407	$	(882)	$	16,732	$	(362)	$	50,139	$	(1,244)
Municipal bonds	188,920		(25,592)		33,907		(15,178)		222,827		(40,770)
Corporate bonds	108,187		(9,547)		13,066		(1,934)		121,253		(11,481)
Mortgage-backed or related securities	930,566		(90,537)		1,159,110		(276,184)		2,089,676		(366,721)
Asset-backed securities	201,437		(10,993)		—		—		201,437		(10,993)
	$	1,462,517	$	(137,551)	$	1,222,815	$	(293,658)	$	2,685,332	$	(431,209)

At September 30, 2023, there were 233 securities—available-for-sale with unrealized losses, compared to 298 at December 31, 2022. As of September 30, 2023, we had an allowance for credit losses of $750,000 related to the estimated credit loss on one security.  Management does not believe that any remaining individual unrealized loss as of September 30, 2023 or December 31, 2022 resulted from credit loss.  The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase.

There were no sales of securities—trading during the nine months ended September 30, 2023 or 2022. There were no securities—trading in a nonaccrual status at September 30, 2023 or December 31, 2022.  Net unrealized holding losses of $3.4 million were recognized during the nine months ended September 30, 2023, compared to $1.4 million of net unrealized holding gains recognized during the nine months ended September 30, 2022.

The following table presents gross gains and losses on sales and partial calls of securities available-for-sale (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Available-for-Sale:
Gross Gains	$	—	$	6	$	377	$	522
Gross Losses	(2,657)		—		(14,813)		(49)
Balance, end of the period	$	(2,657)	$	6	$	(14,436)	$	473

There were no securities—available-for-sale in a nonaccrual status at September 30, 2023 or December 31, 2022.

The following table presents the amortized cost and estimated fair value of securities at September 30, 2023, by contractual maturity and does not reflect any required periodic payments (in thousands). Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.

	September 30, 2023
	Trading				Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing within one year	$	—	$	—	$	—	$	—	$	17,239	$	16,820
Maturing after one year through five years	—		—		169,465		151,453		19,702		18,871
Maturing after five years through ten years	—		—		385,977		334,298		25,857		24,234
Maturing after ten years	27,203		25,268		2,219,530		1,802,242		1,019,707		793,728
	$	27,203	$	25,268	$	2,774,972	$	2,287,993	$	1,082,505	$	853,653

The following table presents, as of September 30, 2023, investment securities which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):

	September 30, 2023
	Carrying Value		Amortized Cost		Fair Value
Purpose or beneficiary:
State and local governments public deposits	$	251,566	$	268,603	$	214,868
Federal Reserve	116,703		116,704		93,257
Interest rate swap counterparties	974		974		755
Repurchase transaction accounts	269,808		269,808		206,692
Other	2,347		2,347		2,077
Total pledged securities	$	641,398	$	658,436	$	517,649

The Company monitors the credit quality of held-to-maturity debt securities through the use of credit ratings which are reviewed and updated quarterly. The Company’s non-rated held-to-maturity debt securities are primarily United States government sponsored enterprise debentures carrying minimal to no credit risk. The non-rated corporate bonds primarily consist of Community Reinvestment Act related bonds secured by loan instruments from low to moderate income borrowers. The remaining non-rated held-to-maturity debt securities balance is comprised of local municipal debt from within the Company’s geographic footprint and is monitored through quarterly or annual financial review. This municipal debt is predominately essential service or unlimited general obligation backed debt. The following tables summarize the amortized cost of held-to-maturity debt securities by credit rating at September 30, 2023 and December 31, 2022 (in thousands):

	September 30, 2023
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	481,496	$	500	$	16,518	$	498,514
Not Rated	308		9,656		2,313		571,714		583,991
	$	308	$	491,152	$	2,813	$	588,232	$	1,082,505

	December 31, 2022
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	492,105	$	500	$	16,681	$	509,286
Not Rated	312		11,012		2,461		594,896		608,681
	$	312	$	503,117	$	2,961	$	611,577	$	1,117,967

The following tables present the activity in the allowance for credit losses for securities available-for-sale by major type for the three and nine months ended September 30, 2023 (in thousands). We had no allowance for credit losses for securities available-for-sale during three and nine months ended September 30, 2022.

	For the Three Months Ended September 30, 2023
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities available-for-sale
Beginning balance	$	—	$	—	$	2,000	$	—	$	2,000
(Recapture) provision for credit losses	—		—		(1,250)		—		(1,250)
Ending balance	$	—	$	—	$	750	$	—	$	750
	For the Nine Months Ended September 30, 2023
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities available-for-sale
Beginning balance	$	—	$	—	$	—	$	—	$	—
Provision for credit losses	—		—		750		—		750
Ending balance	$	—	$	—	$	750	$	—	$	750