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Securities
 9 Months Ended
Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
Securities Securities
Securities available for sale (“AFS”) consist of the following:
Amortized
Cost		Unrealized
GainsLossesFair Value
(In thousands)
September 30, 2023
U.S. agency$10,572 $5 $1,074 $9,503 
U.S. agency residential mortgage-backed92,717 1 12,036 80,682 
U.S. agency commercial mortgage-backed13,891 — 1,734 12,157 
Private label mortgage-backed95,160 248 8,746 86,662 
Other asset backed138,036 7 2,755 135,288 
Obligations of states and political subdivisions339,656 2 53,930 285,728 
Corporate82,013 — 8,335 73,678 
Trust preferred982 — 39 943 
Total$773,027 $263 $88,649 $684,641 
   
December 31, 2022   
U.S. agency$13,191 $10 $1,100 $12,101 
U.S. agency residential mortgage-backed100,700 19 10,261 90,458 
U.S. agency commercial mortgage-backed15,047 — 1,594 13,453 
Private label mortgage-backed102,196 245 8,596 93,845 
Other asset backed200,755 — 6,030 194,725 
Obligations of states and political subdivisions346,187 55 50,565 295,677 
Corporate87,308 — 9,151 78,157 
Trust preferred979 — 48 931 
Total$866,363 $329 $87,345 $779,347 
Securities held to maturity (“HTM”) consist of the following:
Carrying
Value		Transferred
Unrealized
Loss (1)		ACLAmortized
Cost		UnrealizedFair Value
GainsLosses
(In thousands)
September 30, 2023
U.S. agency$26,665 $1,689 $— $28,354 $— $5,871 $22,483 
U.S. agency residential mortgage-backed110,883 9,972 — 120,855 — 28,690 92,165 
U.S. agency commercial mortgage-backed4,537 176 — 4,713 — 560 4,153 
Private label mortgage-backed7,286 331 4 7,621 — 958 6,663 
Obligations of states and political subdivisions162,945 7,300 33 170,278 22 26,454 143,846 
Corporate45,636 882 114 46,632 19 7,762 38,889 
Trust preferred947 49 4 1,000 — — 1,000 
Total$358,899 $20,399 $155 $379,453 $41 $70,295 $309,199 
December 31, 2022
U.S. agency$27,634 $1,839 $— $29,473 $— $5,066 $24,407 
U.S. agency residential mortgage-backed117,650 10,845 — 128,495 — 25,239 103,256 
U.S. agency commercial mortgage-backed4,798 228 — 5,026 — 596 4,430 
Private label mortgage-backed7,242 416 1 7,659 — 997 6,662 
Obligations of states and political subdivisions168,134 8,555 39 176,728 11 25,591 151,148 
Corporate48,418 1,130 123 49,671 — 5,156 44,515 
Trust preferred942 53 5 1,000 — — 1,000 
Total$374,818 $23,066 $168 $398,052 $11 $62,645 $335,418 
(1)Represents the remaining unrealized loss to be accreted on securities that were transferred from AFS to HTM on April 1, 2022.
On April 1, 2022, we transferred certain securities AFS with an amortized cost and unrealized loss at the date of transfer of $418.1 million and $26.5 million, respectively to HTM. The transfer was made at fair value, with the unrealized loss becoming part of the purchase discount which will be accreted over the remaining life of the securities. The other comprehensive loss component is separated from the remaining available for sale securities and is accreted over the remaining life of the securities transferred. We have the ability and intent to hold these securities until they mature, at which time we expect to receive full value for these securities.
Our investments' gross unrealized losses and fair values for securities AFS aggregated by investment type and length of time that individual securities have been at a continuous unrealized loss position follows:
Less Than Twelve MonthsTwelve Months or MoreTotal
Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses
(In thousands)
September 30, 2023
U.S. agency$251 $— $8,558 $1,074 $8,809 $1,074 
U.S. agency residential mortgage-backed1,481 16 78,989 12,020 80,470 12,036 
U.S. agency commercial mortgage-backed— — 12,157 1,734 12,157 1,734 
Private label mortgage-backed2,933 222 83,029 8,524 85,962 8,746 
Other asset backed6,307 92 126,706 2,663 133,013 2,755 
Obligations of states and political subdivisions1,693 7 284,034 53,923 285,727 53,930 
Corporate— — 73,678 8,335 73,678 8,335 
Trust preferred— — 942 39 942 39 
Total$12,665 $337 $668,093 $88,312 $680,758 $88,649 
December 31, 2022
U.S. agency$8,244 $799 $2,587 $301 $10,831 $1,100 
U.S. agency residential mortgage-backed33,784 1,920 54,793 8,341 88,577 10,261 
U.S. agency commercial mortgage-backed1,609 73 11,844 1,521 13,453 1,594 
Private label mortgage-backed39,954 2,582 53,346 6,014 93,300 8,596 
Other asset backed110,859 2,657 83,802 3,373 194,661 6,030 
Obligations of states and political subdivisions56,455 10,216 231,705 40,349 288,160 50,565 
Corporate24,876 1,737 51,293 7,414 76,169 9,151 
Trust preferred— — 931 48 931 48 
Total$275,781 $19,984 $490,301 $67,361 $766,082 $87,345 
Securities AFS in unrealized loss positions are evaluated quarterly for impairment related to credit losses. For securities AFS in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities AFS that do not meet this criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, adverse conditions specifically related to the security and the issuer and the impact of changes in market interest rates on the market value of the security, among other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of applicable taxes. No ACL for securities AFS was needed at September 30, 2023 and December 31, 2022. Accrued interest receivable on securities AFS totaled $4.2 million and $4.7 million at September 30, 2023 and December 31, 2022,
respectively, and is excluded from the estimate of credit losses and is included in accrued income and other assets in the Condensed Consolidated Statements of Financial Condition.
U.S. agency, U.S. agency residential mortgage-backed and U.S. agency commercial mortgage-backed securities — at September 30, 2023, we had 33 U.S. agency, 175 U.S. agency residential mortgage-backed and 12 U.S. agency commercial mortgage-backed securities whose fair value is less than amortized cost. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. The unrealized losses are largely attributed to widening spreads to Treasury bonds and/or an increase in interest rates since acquisition.
Private label mortgage backed, other asset backed and corporate securities — at September 30, 2023, we had 89 private label mortgage backed, 112 other asset backed, and 80 corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and/or an increase in interest rates since acquisition.
Obligations of states and political subdivisions — at September 30, 2023, we had 334 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to an increase in interest rates since acquisition.
Trust preferred securities — at September 30, 2023, we had one trust preferred security whose fair value is less than amortized cost. This trust preferred security is a single issue security issued by a trust subsidiary of a bank holding company. The pricing of trust preferred securities has suffered from credit spread widening. This security is rated by a major rating agency as investment grade.
At September 30, 2023 management does not intend to liquidate any of the securities discussed above and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses.
We recorded no credit related charges in our Condensed Consolidated Statements of Operations related to securities AFS during the three and nine month periods ended September 30, 2023 and 2022, respectively.
The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of securities HTM to present the net amount expected to be collected. Securities HTM are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in our Condensed Consolidated Statements of Operations in provision for credit losses. We measure expected credit losses on securities HTM on a collective basis by major security type with each type sharing similar risk characteristics, and we consider historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Accrued interest receivable on securities HTM totaled $1.9 million and $1.8 million at September 30, 2023 and December 31, 2022, respectively and is excluded from the estimate of credit losses and is included in accrued income and other assets in the Condensed Consolidated Statements of Financial Condition. With regard to U.S. Government-sponsored agency and mortgage-backed securities (residential and commercial), all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to obligations of states and political subdivisions, private label-mortgage-backed, corporate and trust preferred securities HTM, we consider (1) issuer bond ratings, (2) long-term historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. During the first quarter of 2023, one corporate security (Signature Bank) defaulted resulting in a $3.0 million provision for credit losses and a corresponding full charge-off. Despite this lone security loss, the long-term historical loss rates associated with securities having similar grades as those in our portfolio have been insignificant. Furthermore, as of September 30, 2023 and December 31, 2022, there were no past due principal and interest payments associated with these securities. At those same dates an allowance for credit losses of $155,000 and $168,000, respectively was recorded on non U.S. agency securities HTM based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities.
On a quarterly basis, we monitor the credit quality of securities HTM through the use of credit ratings. The carrying value of securities HTM aggregated by credit quality follow:
Private
Label
Mortgage-
Backed		Obligations
of States
and Political
Subdivisions		CorporateTrust
Preferred		Carrying
Value
Total
(In thousands)
September 30, 2023
Credit rating:
AAA$7,286 $36,665 $— $— $43,951 
AA— 102,378 — — 102,378 
A— 3,957 6,917 — 10,874 
BBB— 974 33,864 — 34,838 
BB
— — 1,938 — 1,938 
Non-rated— 18,971 2,917 947 22,835 
Total$7,286 $162,945 $45,636 $947 $216,814 
December 31, 2022
Credit rating:
AAA$7,242 $32,876 $— $— $40,118 
AA— 110,033 — — 110,033 
A— 3,917 6,900 — 10,817 
BBB— 1,167 38,621 — 39,788 
Non-rated— 20,141 2,897 942 23,980 
Total$7,242 $168,134 $48,418 $942 $224,736 
An analysis of the allowance for credit losses by security HTM type for the three months ended September 30 follows:
Private
Label
Mortgage-
Backed		Obligations
of States
and Political
Subdivisions		CorporateTrust
Preferred		Total
(In thousands)
2023
Balance at beginning of period$1 $39 $116 $4 $160 
Additions (deductions)   
Provision for credit losses3 (6)(2)— (5)
Recoveries credited to the allowance— — — — — 
Securities HTM charged against the allowance— — — — — 
Balance at end of period$4 $33 $114 $4 $155 
2022
Balance at beginning of period$2 $30 $121 $5 $158 
Additions (deductions)
Provision for credit losses(1)9 2 — 10 
Recoveries credited to the allowance— — — — — 
Securities HTM charged against the allowance— — — — — 
Balance at end of period$1 $39 $123 $5 $168 
An analysis of the allowance for credit losses by security HTM type for the nine months ended September 30 follows:
Private
Label
Mortgage-
Backed		Obligations
of States
and Political
Subdivisions		CorporateTrust
Preferred		Total
(In thousands)
2023
Balance at beginning of period$1 $39 $123 $5 $168 
Additions (deductions)
Provision for credit losses3 (6)2,991 (1)2,987 
Recoveries credited to the allowance— — — — — 
Securities HTM charged against the allowance— — (3,000)— (3,000)
Balance at end of period$4 $33 $114 $4 $155 
2022
Balance at beginning of period$— $— $— $— $— 
Additions (deductions)
Provision for credit losses1 39 123 5 168 
Recoveries credited to the allowance— — — — — 
Securities HTM charged against the allowance— — — — — 
Balance at end of period$1 $39 $123 $5 $168 
The amortized cost and fair value of securities AFS and securities HTM at September 30, 2023, by contractual maturity, follow:
Securities AFSSecurities HTM
Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
(In thousands)
Maturing within one year$9,213 $9,105 $5,202 $5,164 
Maturing after one year but within five years150,302 134,803 53,499 47,992 
Maturing after five years but within ten years73,062 61,767 102,566 84,807 
Maturing after ten years200,646 164,177 84,997 68,255 
433,223 369,852 246,264 206,218 
U.S. agency residential mortgage-backed92,717 80,682 120,855 92,165 
U.S. agency commercial mortgage-backed13,891 12,157 4,713 4,153 
Private label mortgage-backed95,160 86,662 7,621 6,663 
Other asset backed138,036 135,288 — — 
Total$773,027 $684,641 $379,453 $309,199 
The actual maturity may differ from the contractual maturity because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Gains and losses realized on the sale of securities AFS are determined using the specific identification method and are recognized on a trade-date basis. A summary of proceeds from the sale of securities AFS and gains and losses for the nine month periods ending September 30, follows:
Realized
ProceedsGainsLosses
(In thousands)
2023$278 $— $222 
202270,523 164 439