
	September 30, 2021
	Amortized		Gross Unrealized		Gross Unrealized		Estimated
AVAILABLE FOR SALE	Cost		Gains		Losses		Fair Value
Investment securities:
U.S. Treasury	$	42,806	$	741	$	—	$	43,547

State and political subdivisions	1,890,814		83,140		6,477		1,967,477
Corporate bonds and other	117,332		2,563		196		119,699

MBS: (1)
Residential	493,505		20,943		370		514,078
Commercial	105,780		2,800		277		108,303
Total	$	2,650,237	$	110,187	$	7,320	$	2,753,104




HELD TO MATURITY
Investment securities:
State and political subdivisions	$	788	$	3	$	—	$	791
MBS: (1)
Residential	40,128		2,616		—		42,744
Commercial	51,563		2,937		—		54,500
Total	$	92,479	$	5,556	$	—	$	98,035


	December 31, 2020
	Amortized		Gross Unrealized		Gross Unrealized		Estimated
AVAILABLE FOR SALE	Cost		Gains		Losses		Fair Value
Investment securities:


State and political subdivisions	$	1,475,030	$	105,601	$	37	$	1,580,594
Corporate bonds and other	77,224		1,053		22		78,255

MBS: (1)
Residential	771,409		38,674		73		810,010
Commercial	113,850		4,746		150		118,446
Total	$	2,437,513	$	150,074	$	282	$	2,587,305





HELD TO MATURITY
Investment securities:
State and political subdivisions	$	907	$	13	$	—	$	920
MBS: (1)
Residential	47,948		4,187		—		52,135
Commercial	60,143		5,000		—		65,143
Total	$	108,998	$	9,200	$	—	$	118,198

Investment securities and MBS with carrying values of $1.48 billion and $1.56 billion were pledged as of September 30, 2021 and December 31, 2020, respectively, to collateralize FHLB borrowings, borrowings from the FRDW, repurchase agreements and public fund deposits, for potential liquidity needs or other purposes as required by law.

The following tables represent the fair value and unrealized losses on AFS investment securities and MBS for which an allowance for credit losses has not been recorded as of September 30, 2021 and December 31, 2020, segregated by major security type and length of time in a continuous loss position (in thousands):


	September 30, 2021
	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
AVAILABLE FOR SALE
Investment securities:


State and political subdivisions	$	396,345	$	6,477	$	—	$	—	$	396,345	$	6,477
Corporate bonds and other	21,352		196		—		—		21,352		196

MBS:
Residential	15,790		370		—		—		15,790		370
Commercial	—		—		4,602		277		4,602		277
Total	$	433,487	$	7,043	$	4,602	$	277	$	438,089	$	7,320

	December 31, 2020
	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
AVAILABLE FOR SALE
Investment securities:


State and political subdivisions	$	17,305	$	37	$	—	$	—	$	17,305	$	37
Corporate bonds and other	11,562		22		—		—		11,562		22

MBS:
Residential	6,287		73		—		—		6,287		73
Commercial	4,744		150		—		—		4,744		150
Total	$	39,898	$	282	$	—	$	—	$	39,898	$	282

For those AFS debt securities in an unrealized loss position where management (i) has the intent to sell or (ii) where it will more-likely-than-not be required to sell the security before the recovery of its amortized cost basis, we write the security down to fair value with an adjustment to earnings. For those AFS debt securities in an unrealized loss position that do not meet either of these criteria, management assesses whether the decline in fair value has resulted from credit-related factors, using both qualitative and quantitative criteria. Determining the allowance under the credit loss method requires the use of a discounted cash flow method to assess the credit losses. Any credit-related impairment will be recognized in allowance for credit losses on the balance sheet with a corresponding adjustment to earnings. Noncredit-related impairment, the portion of the impairment relating to factors other than credit (such as changes in market interest rates), is recognized in other comprehensive income, net of tax.

Based on our consideration of the qualitative factors associated with each security type in our AFS portfolio, we did not recognize any unrealized losses in income on our AFS securities during the three and nine months ended September 30, 2021 or 2020. Our state and political subdivisions are highly rated municipal securities with a long history of no credit losses. Our AFS MBS are highly rated securities which are either explicitly or implicitly backed by the U.S. Government through its agencies which are highly rated by major ratings agencies and also have a long history of no credit losses. Our corporate bonds and other investment securities as of September 30, 2021 consist of highly rated investment grade bonds. Management does not intend to sell and it is likely we will not be required to sell those securities in an unrealized loss position prior to the anticipated recovery of the amortized cost basis. These unrealized losses on our investment and MBS are due to changes in interest rates and spreads and other market conditions impacted by COVID-19. As of September 30, 2021 and December 31, 2020, we did not have an allowance for credit losses on our AFS securities.

We assess the likelihood of default and the potential amount of default when assessing our HTM securities for credit losses. We utilize term structures and, due to no prior loss exposure on our state and political subdivision securities, we currently apply a third-party average loss given default rate to model our securities. Due to a small number of HTM municipal securities in our portfolio as of September 30, 2021 and 2020, we elected to use the specific identification method to model these securities which aligns with our third-party fair value measurement process. The model determined any expected credit loss over the life of these securities to be remote. Management further evaluated the remote expectation of loss along with the qualitative factors

associated with these securities and concluded that, due to the securities being highly rated municipals with a long history of no credit losses, no credit loss should be recognized for these securities for the three and nine months ended September 30, 2021 or 2020.

From time to time, we have transferred securities from AFS to HTM due to overall balance sheet strategies. The remaining net unamortized, unrealized loss on the transferred securities included in AOCI in the accompanying balance sheets totaled $1.7 million ($1.4 million, net of tax) at September 30, 2021 and $2.9 million ($2.3 million, net of tax) at December 31, 2020. Any net unrealized gain or loss on the transferred securities included in AOCI at the time of transfer will be amortized over the remaining life of the underlying security as an adjustment to the yield on those securities. Securities transferred with losses included in AOCI continue to be included in management’s assessment for impairment for each individual security. There were no securities transferred from AFS to HTM during the nine months ended September 30, 2021 or the year ended December 31, 2020.

The accrued interest receivable on our debt securities is excluded from the credit loss estimate and is included in interest receivable on our consolidated balance sheets. As of September 30, 2021, accrued interest receivable on AFS and HTM debt securities totaled $15.5 million and $240,000, respectively. As of December 31, 2020, accrued interest receivable on AFS and HTM debt securities totaled $22.0 million and $298,000, respectively. No HTM debt securities were past-due or on nonaccrual status as of September 30, 2021 or December 31, 2020.

There was a $3.4 million net realized gain from the AFS securities portfolio for the nine months ended September 30, 2021, which consisted of $3.5 million in realized gains and $71,000 in realized losses. There was a $8.3 million net realized gain from the AFS securities portfolio for the nine months ended September 30, 2020, which consisted of $8.4 million in realized gains and $89,000 in realized losses. There were no sales from the HTM portfolio during the nine months ended September 30, 2021 or 2020. We calculate realized gains and losses on sales of securities under the specific identification method.

Expected maturities on our securities may differ from contractual maturities because issuers may have the right to call or prepay obligations. MBS are presented in total by category since MBS are typically issued with stated principal amounts and are backed by pools of mortgages that have loans with varying maturities. The characteristics of the underlying pool of mortgages, such as fixed-rate or adjustable-rate, as well as prepayment risk, are passed on to the security holder. The term of a mortgage-backed pass-through security thus approximates the term of the underlying mortgages and can vary significantly due to prepayments.


	September 30, 2021
	Amortized Cost		Fair Value
AVAILABLE FOR SALE
Investment securities:
Due in one year or less	$	4,495	$	4,532
Due after one year through five years	26,705		27,841
Due after five years through ten years	175,953		180,006
Due after ten years	1,843,799		1,918,344
	2,050,952		2,130,723
MBS:	599,285		622,381
Total	$	2,650,237	$	2,753,104


	September 30, 2021
	Amortized Cost		Fair Value
HELD TO MATURITY
Investment securities:
Due in one year or less	$	120	$	120
Due after one year through five years	529		531
Due after five years through ten years	139		140
Due after ten years	—		—
	788		791
MBS:	91,691		97,244
Total	$	92,479	$	98,035

Equity investments on our consolidated balance sheets include Community Reinvestment Act funds with a readily determinable fair value as well as equity investments without readily determinable fair values. At September 30, 2021 and December 31, 2020, we had equity investments recorded in our consolidated balance sheets of $11.8 million and $11.9 million, respectively.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net (losses) gains recognized during the period on equity investments	$	(28)	$	(232)	$	(118)	$	(178)
Less: Net gains recognized during the period on equity investments sold during the period	—		—		—		—
Unrealized (losses) gains recognized during the reporting period on equity investments held at the reporting date	$	(28)	$	(232)	$	(118)	$	(178)

Our FHLB stock, which has limited marketability, is carried at cost and is assessed quarterly for other-than-temporary impairment. Based upon evaluation by management at September 30, 2021, our FHLB stock was not impaired and thus was not considered to be other-than-temporarily impaired.