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Securities

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

a) Debt Securities

Debt securities available for sale

Amortized cost, allowance for credit losses and approximate fair values of debt securities available for sale are summarized as follows:


	March 31, 2023
	Amortized Cost		Gross Unrealized				Allowance for Credit Losses		Estimated Fair Value
(in thousands)			Gains		Losses
U.S. government-sponsored enterprise debt securities (1) (2)	$	470,468	$	1,492	$	(36,971)	$	—	$	434,989
Corporate debt securities (2)	296,813		—		(28,546)		—		268,267
U.S. government agency debt securities (1) (2)	370,791		58		(38,678)		—		332,171

Collateralized loan obligations	5,000		—		(155)		—		4,845
Municipal bonds (1)	1,732		—		(59)		—		1,673
U.S. treasury securities	3,930		8		—		—		3,938

Total debt securities available for sale (3)	$	1,148,734	$	1,558	$	(104,409)	$	—	$	1,045,883

__________________

(1)Includes residential mortgage-backed securities. As of March 31, 2023, we had total residential-mortgage backed securities, included as part of total debt securities available for sale, with amortized cost of $735.2 million and fair value of $668.8 million.

(2)Includes commercial mortgage-backed securities. As of March 31, 2023, we had total commercial mortgage-backed securities, included as part of total debt securities available for sale, with amortized cost of $89.3 million and fair value of $80.5 million.

(3)Excludes accrued interest receivable of $6.1 million as of March 31, 2023, which is included as part of accrued interest receivable and other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in the three months ended March 31, 2023.


	December 31, 2022
	Amortized Cost		Gross Unrealized				Allowance for Credit Losses		Estimated Fair Value
(in thousands)			Gains		Losses
U.S. government sponsored enterprise debt securities (1) (2)	$	480,359	$	981	$	(43,666)	$	—	$	437,674
Corporate debt securities (2)	306,898		1		(26,199)		—		280,700
U.S. government agency debt securities (1) (2)	373,593		42		(42,814)		—		330,821

U.S. treasury securities	1,997		—		(1)		—		1,996
Municipal bonds (1)	1,731		—		(75)		—		1,656
Collateralized loan obligations	5,000		—		(226)		—		4,774
Total debt securities available for sale (3)	$	1,169,578	$	1,024	$	(112,981)	$	—	$	1,057,621

__________________

(1)Includes residential mortgage-backed securities. As of December 31, 2022, we had total residential-mortgage backed securities, included as part of total debt securities available for sale, with amortized cost of $743.0 million and fair value of $666.5 million.

(2)Includes commercial mortgage-backed securities. As of December 31, 2022, we had total commercial mortgage-backed securities, included as part of total debt securities available for sale, with amortized cost of $91.0 million and fair value of $80.9 million.

(3)Excludes accrued interest receivable of $5.6 million as of December 31, 2022, which is included as part of accrued interest receivable and other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in 2022.

The Company had investments in foreign corporate debt securities available for sale, primarily in Canada, of $10.1 million and $9.7 million at March 31, 2023 and December 31, 2022, respectively. At March 31, 2023 and December 31, 2022, the Company had no foreign sovereign or foreign government agency debt securities available for sale. Investments in foreign corporate debt securities available for sale are denominated in U.S. Dollars.

In the three months ended March 31, 2023 and 2022, proceeds from sales, redemptions and calls, gross realized gains, and gross realized losses of debt securities available for sale were as follows:


	Three Months Ended March 31,
(in thousands)	2023		2022
Proceeds from sales, redemptions and calls of debt securities available for sale	$	475	$	14,013

Gross realized gains	$	—	$	49
Gross realized losses	(9,525)		—
Realized (loss) gain, net	$	(9,525)	$	49

The Company’s investment in debt securities available for sale with unrealized losses aggregated by the length of time that individual securities have been in a continuous unrealized loss position, are summarized below:


	March 31, 2023
	Less Than 12 Months					12 Months or More					Total
(in thousands, except securities count)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government-sponsored enterprise debt securities	124	$	142,583	$	(5,626)	221	$	237,784	$	(31,345)	$	380,367	$	(36,971)
Corporate debt securities	19	67,865		(5,189)		45	200,402		(23,357)		268,267		(28,546)
U.S. government agency debt securities	62	14,368		(69)		130	310,416		(38,609)		324,784		(38,678)
Municipal bonds	1	733		(25)		2	940		(34)		1,673		(59)


Collateralized loan obligations	1	4,845		(155)		—	—		—		4,845		(155)
	207	$	230,394	$	(11,064)	398	$	749,542	$	(93,345)	$	979,936	$	(104,409)


	December 31, 2022
	Less Than 12 Months					12 Months or More					Total
(in thousands, except securities count)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government sponsored enterprise debt securities	250	$	292,595	$	(22,315)	108	$	96,986	$	(21,351)	$	389,581	$	(43,666)
Corporate debt securities	50	203,516		(13,374)		14	72,190		(12,825)		275,706		(26,199)
U.S. government agency debt securities	92	88,056		(4,976)		104	240,668		(37,838)		328,724		(42,814)
Municipal bonds	3	1,656		(75)		—	—		—		1,656		(75)
U.S. treasury securities	1	1,996		(1)		—	—		—		1,996		(1)
Collateralized Loan Obligations	1	4,774		(226)		—	—		—		4,774		(226)



	397	$	592,593	$	(40,967)	226	$	409,844	$	(72,014)	$	1,002,437	$	(112,981)

At March 31, 2023 and December 31, 2022, the Company held certain debt securities issued or guaranteed by the U.S. government and U.S. government-sponsored entities and agencies. The Company does not intend to sell these debt securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The Company evaluates these securities for credit losses by reviewing current market conditions, the extent and nature of changes in fair value, credit ratings, default and delinquency rates and current analysts’ evaluations. The Company believes the decline in fair value on these debt securities is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. As a result, the Company did not record an allowance for credit losses on these securities as of March 31, 2023 and December 31, 2022.

Investments in corporate debt available for sale as of March 31, 2023 include securities considered “investment-grade-quality” primarily issued by financial institutions with a fair value of $260.2 million ($258.8 million at December 31, 2022), which had total unrealized losses of $27.6 million at that date ($24.1 million at December 31, 2022); and securities considered “non-investment-grade-quality” from issuers in the technology industry, with a fair value of $8.0 million ($16.9 million at December 31, 2022), which had total unrealized losses of $1.0 million at that date ($2.1 million at December 31, 2022). As of March 31, 2023 and December 31, 2022 , our corporate debt securities available for sale issued by financial institutions were primarily “investment-grade-quality”, and had a fair value $192.2 million and $206.3 million, respectively, and unrealized losses of $20.7 million and $16.6 million, respectively. The Company does not intend to sell these investments and it is more likely than not that it will not be required to sell these investments before their anticipated recovery. The Company evaluates corporate debt securities for credit losses by reviewing various qualitative and quantitative factors such as current market conditions, the extent and nature of changes in fair value, credit ratings, default and delinquency rates, and current analysts’ evaluations. The Company believes the decline in fair value on these debt securities is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. As a result, the Company did not record an allowance for credit losses on these securities as of March 31, 2023 and December 31, 2022.

At December 31, 2022, the Bank had one corporate debt security held for sale (the “Signature Bond”) issued by Signature Bank, N.A. (“Signature”) with a fair value $9.1 million and unrealized loss of $0.9 million. At December 31, 2022, the Signature Bond was in an unrealized loss position for less one than year. On March 12, 2023, Signature was closed by the New York State Department of Financial Services, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. The FDIC, as receiver, announced that shareholders and certain unsecured debt holders will not be protected. On March 27, 2023, the Bank sold the Signature Bond in an open market transaction and realized a pretax loss on sale of approximately $9.5 million which is recorded in the consolidated statement of comprehensive income for the three months ended March 31, 2023.

Debt securities held to maturity

Amortized cost and approximate fair values of debt securities held to maturity are summarized as follows:


	March 31, 2023
	Amortized Cost		Gross Unrealized				Estimated Fair Value		Allowance for Credit Losses
(in thousands)			Gains		Losses
U.S. government agency debt securities (1)	$	67,859	$	362	$	(7,310)	$	60,911	$	—
U.S. government sponsored enterprise debt securities(1) (2)	171,399		—		(13,922)		157,477		—
Total debt securities held to maturity (3)	$	239,258	$	362	$	(21,232)	$	218,388	$	—

__________________

(1)Includes residential mortgage-backed securities. As of March 31, 2023, we had total residential mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $211.3 million and fair value of $191.8 million.

(2)Includes commercial mortgage-backed securities. As of March 31, 2023, we had total commercial mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $28.0 million and fair value of $26.6 million.

(3)Excludes accrued interest receivable of $0.7 million as of March 31, 2023, which is included as part of accrued interest receivable and other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in the three months ended March 31, 2023.


	December 31, 2022
	Amortized Cost		Gross Unrealized				Estimated Fair Value		Allowance for Credit Losses
(in thousands)			Gains		Losses
U.S. government agency debt securities (1)	$	68,556	$	109	$	(7,778)	$	60,887	$	—
U.S. government sponsored enterprise debt securities (1) (2)	173,545		—		(16,823)		156,722		—
Total debt securities held to maturity (3)	$	242,101	$	109	$	(24,601)	$	217,609	$	—

__________________

(1)Includes residential mortgage-backed securities. As of December 31, 2022,we had total residential mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $213.9 million and fair value of $191.4 million.

(2)Includes commercial mortgage-backed securities. As of December 31, 2022, includes total commercial mortgage-backed securities with amortized cost of $28.2 million and fair value of $26.2 million.

(3)Excludes accrued interest receivable of $0.8 million as of December 31, 2022, which is included as part of accrued interest receivable and other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in 2022.

The Company’s investment in debt securities held to maturity with unrealized losses aggregated by length of time that individual securities have been in a continuous unrealized loss position, are summarized below:


	March 31, 2023
	Less Than 12 Months					12 Months or More					Total
(in thousands)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government agency debt securities	—	$	—	$	—	12	$	50,558	$	(7,310)	$	50,558	$	(7,310)
U.S. government sponsored enterprise debt securities	24	119,865		(5,635)		10	37,612		(8,287)		157,477		(13,922)
	24	$	119,865	$	(5,635)	22	$	88,170	$	(15,597)	$	208,035	$	(21,232)


	December 31, 2022
	Less Than 12 Months					12 Months or More					Total
(in thousands)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government agency debt securities	—	$	—	$	—	12	$	50,755	$	(7,778)	$	50,755	$	(7,778)
U.S. government sponsored enterprise debt securities	31	142,033		(9,085)		3	14,689		(7,738)		156,722		(16,823)
	31	$	142,033	$	(9,085)	15	$	65,444	$	(15,516)	$	207,477	$	(24,601)

Beginning January 1, 2022, the Company evaluates all debt securities held to maturity quarterly to determine if any securities in an unrealized loss position require an ACL. The Company considers that all debt securities held to maturity issued or sponsored by the U.S. government are considered to be risk-free as they have the backing of the government. The Company believes there are not current expected credit losses on these securities and, therefore, did not record an ACL on any of its debt securities held to maturity as of March 31, 2023 and December 31, 2022. The Company monitors the credit quality of held to maturity securities through the use of credit ratings. Credit ratings are monitored by the Company on at least a quarterly basis. As of March 31, 2023 and December 31, 2022, all debt securities held to maturity held by the Company were rated investment grade or higher.

Contractual maturities

Contractual maturities of debt securities at March 31, 2023 are as follows:


	Available for Sale				Held to Maturity
(in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within 1 year	$	11,199	$	11,195	$	—	$	—
After 1 year through 5 years	109,477		104,004		6,521		4,076
After 5 years through 10 years	239,698		216,047		13,023		12,495
After 10 years	788,360		714,637		219,714		201,817

	$	1,148,734	$	1,045,883	$	239,258	$	218,388

b) Equity securities with readily available fair value not held for trading

As of March 31, 2023, the Company had no equity securities with readily available fair value not held for trading. As of December 31, 2022, the Company had equity securities with readily available fair value not held for trading with an original cost of $12.7 million, and fair value of $11.4 million, respectively. These equity securities have no stated maturities. The Company recognized net unrealized gains of $0.7 million in the three months ended March 31, 2022, related to the change in market value of these equity securities. In the three months ended March 31, 2023, the Company sold all of its equity securities with readily available fair value not held for trading, with a total fair value of $11.2 million at the time of sale, and recognized a net loss of $0.2 million in connection with this transaction.

c) Securities Pledged

As of March 31, 2023 and December 31, 2022, the Company had $557.6 million and $314.5 million, respectively, in securities pledged as collateral. These securities were pledged to secure advances from the Federal Home Loan Bank, public funds and for other purposes as permitted by law.