Securities

3 Months Ended

Mar. 31, 2023

Securities [Abstract]

Securities

Note 4. Securities

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 accumulated other comprehensive income (loss). 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 Small Business Administration (“SBA”) securities. Premiums on callable securities are amortized to their earliest call date.

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.

The amortized cost, gross unrealized gains and losses and fair value of securities AFS and HTM are summarized as follows (in thousands):

	March 31, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	241,002	$	—	$	(14,496)	$	226,506
U.S. Government-sponsored enterprises (GSEs)		63,723		1,783		(28)		65,478
Municipal securities		19,022		94		(412)		18,704
Other debt securities		32,952		—		(2,396)		30,556
Mortgage-backed securities (GSEs)		240,767		34		(21,627)		219,174
Total	$	597,466	$	1,911	$	(38,959)	$	560,418

	March 31, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,243	$	—	$	(4,178)	$	146,065
U.S. Government-sponsored enterprises (GSEs)		50,240		—		(6,983)		43,257
Municipal securities		53,455		—		(6,657)		46,798
Mortgage-backed securities (GSEs)		30,838		—		(3,786)		27,052
Total	$	284,776	$	—	$	(21,604)	$	263,172

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	241,506	$	—	$	(17,853)	$	223,653
U.S. Government-sponsored enterprises (GSEs)		1,593		—		(18)		1,575
Municipal securities		19,210		17		(616)		18,611
Other debt securities		32,959		—		(2,408)		30,551
Mortgage-backed securities (GSEs)		233,948		6		(24,451)		209,503
Total	$	529,216	$	23	$	(45,346)	$	483,893

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,295	$	—	$	(5,613)	$	144,682
U.S. Government-sponsored enterprises (GSEs)		50,539		—		(8,037)		42,502
Municipal securities		53,694		—		(7,550)		46,144
Mortgage-backed securities (GSEs)		31,421		—		(4,136)		27,285
Total	$	285,949	$	—	$	(25,336)	$	260,613

At March 31, 2023 and December 31, 2022, securities with a carrying value totaling approximately $349.1 million and $304.8 million, respectively, were pledged to secure public funds and securities sold under agreements to repurchase.

The amortized cost and estimated fair value of securities at March 31, 2023 by contractual maturity for non-mortgage backed securities are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2023
	Amortized		Fair
Available-for-sale:	Cost		Value
Due in one year or less	$	110,981	$	108,256
Due from one year to five years		111,416		103,219
Due from five years to ten years		123,988		119,631
Due after ten years		10,314		10,138
		356,699		341,244
Mortgage-backed securities		240,767		219,174
Total	$	597,466	$	560,418
Held-to-maturity:
Due in one year or less	$	99,946	$	97,148
Due from one year to five years		50,297		48,916
Due from five years to ten years		37,828		33,309
Due after ten years		65,867		56,747
		253,938		236,120
Mortgage-backed securities		30,838		27,052
Total	$	284,776	$	263,172

The following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities AFS and HTM have been in a continuous unrealized loss position (in thousands):

	March 31, 2023
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	3,955	$	(34)	1	$	222,553	$	(14,462)	19	$	226,508	$	(14,496)	20
U.S. Government-sponsored enterprises (GSEs)		8,225		(24)	3		286		(4)	2		8,511		(28)	5
Municipal securities		5,455		(96)	6		8,086		(316)	15		13,541		(412)	21
Other debt securities		13,895		(989)	9		16,660		(1,407)	17		30,555		(2,396)	26
Mortgage-backed securities (GSEs)		51,558		(1,086)	44		164,308		(20,541)	71		215,866		(21,627)	115
Total	$	83,088	$	(2,229)	63	$	411,893	$	(36,730)	124	$	494,981	$	(38,959)	187
	March 31, 2023
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	—	$	—	—	$	146,064	$	(4,178)	4	$	146,064	$	(4,178)	4
U.S. Government-sponsored enterprises (GSEs)		—		—	—		43,257		(6,983)	13		43,257		(6,983)	13
Municipal securities		250		(20)	1		46,549		(6,637)	34		46,799		(6,657)	35
Mortgage-backed securities (GSEs)		—		—	—		27,052		(3,786)	5		27,052		(3,786)	5
Total	$	250	$	(20)	1	$	262,922	$	(21,584)	56	$	263,172	$	(21,604)	57

	December 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	134,414	$	(7,610)	9	$	89,239	$	(10,243)	11	$	223,653	$	(17,853)	20
U.S. Government-sponsored enterprises (GSEs)		1,266		(14)	1		309		(4)	2		1,575		(18)	3
Municipal securities		13,146		(616)	20		—		—	—		13,146		(616)	20
Other debt securities		25,044		(1,866)	20		5,506		(542)	6		30,550		(2,408)	26
Mortgage-backed securities (GSEs)		111,598		(8,968)	86		96,285		(15,483)	28		207,883		(24,451)	114
Total	$	285,468	$	(19,074)	136	$	191,339	$	(26,272)	47	$	476,807	$	(45,346)	183
	December 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	144,683	$	(5,613)	4	$	—	$	—	—	$	144,683	$	(5,613)	4
U.S. Government-sponsored enterprises (GSEs)	$	13,048	$	(2,503)	3	$	29,451	$	(5,534)	10	$	42,499	$	(8,037)	13
Municipal securities		40,770		(6,387)	28		5,375		(1,163)	7		46,145		(7,550)	35
Mortgage-backed securities (GSEs)		—		—	—		27,285		(4,136)	5		27,285		(4,136)	5
Total	$	198,501	$	(14,503)	35	$	62,111	$	(10,833)	22	$	260,612	$	(25,336)	57

The Company reviews the securities portfolio on a quarterly basis to monitor its exposure to other-than-temporary impairment. A determination as to whether a security’s decline in fair value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Company may consider in the other-than-temporary impairment analysis include the length of time and extent to which the security has been in an unrealized loss position, changes in security ratings, financial condition and near-term prospects of the issuer, as well as security and industry specific economic conditions.

Based on this evaluation, the Company concluded that any unrealized losses at March 31, 2023, represented a temporary impairment, as these unrealized losses are primarily attributable to changes in interest rates and current market conditions, and not credit deterioration of the issuers. As of March 31, 2023, the Company does not intend, and will not be required, to sell any of the securities, and expects to recover the entire amortized cost of all of the securities.

Allowance for Credit Losses

The Company adopted ASU 2016-13 on January 1, 2023, and based on the analysis of the underlying risk characteristics of its AFS and HTM portfolios, including credit ratings and other qualitative factors, there was no provision for credit losses related to AFS or HTM securities recorded during the three months ended March 31, 2023, because ACL was deemed immaterial.  

Other Investments:

Our other investments consist of restricted non-marketable equity securities that have no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of March 31, 2023, the Company determined that there was no impairment on its other investment securities.

The following is the amortized cost and carrying value of other investments (in thousands):

	March 31,		December 31,
	2023		2022
Federal Reserve Bank stock	$	9,792	$	9,783
Federal Home Loan Bank stock		3,917		5,397
First National Bankers Bank stock		350		350
Total	$	14,059	$	15,530