XML 24 R14.htm IDEA: XBRL DOCUMENT v3.23.1
Investment Securities
 3 Months Ended
Mar. 31, 2023
Investments, Debt and Equity Securities [Abstract]  
Investment Securities

6. Investment Securities

Investment securities have been classified in the unaudited consolidated balance sheets according to management’s intent. The carrying amounts of securities and their approximate fair values were as follows:

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

 

(dollars in thousands)

 

Available for sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Sponsored
   Enterprise obligations

 

$

22,997

 

 

$

—

 

 

$

(2,959

)

 

$

20,038

 

 

$

22,997

 

 

$

—

 

 

$

(3,264

)

 

$

19,733

 

Mortgage-backed securities

 

 

154,190

 

 

 

5

 

 

 

(23,050

)

 

 

131,145

 

 

 

158,034

 

 

 

3

 

 

 

(25,354

)

 

 

132,683

 

Corporate debt securities

 

 

999

 

 

 

1

 

 

 

—

 

 

 

1,000

 

 

 

996

 

 

 

4

 

 

 

—

 

 

 

1,000

 

Total available for sale securities

 

$

178,186

 

 

$

6

 

 

$

(26,009

)

 

$

152,183

 

 

$

182,027

 

 

$

7

 

 

$

(28,618

)

 

$

153,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

$

3,988

 

 

$

8

 

 

$

(9

)

 

$

3,987

 

 

$

3,970

 

 

$

—

 

 

$

(18

)

 

$

3,952

 

Mortgage-backed securities

 

 

932,451

 

 

 

2

 

 

 

(143,633

)

 

 

788,820

 

 

 

951,372

 

 

 

4

 

 

 

(157,208

)

 

 

794,168

 

Corporate debt securities

 

 

250

 

 

 

—

 

 

 

(6

)

 

 

244

 

 

 

250

 

 

 

—

 

 

 

(6

)

 

 

244

 

Municipal securities

 

 

94,169

 

 

 

127

 

 

 

(8,024

)

 

 

86,272

 

 

 

96,405

 

 

 

88

 

 

 

(9,271

)

 

 

87,222

 

Total held to maturity securities

 

$

1,030,858

 

 

$

137

 

 

$

(151,672

)

 

$

879,323

 

 

$

1,051,997

 

 

$

92

 

 

$

(166,503

)

 

$

885,586

 

Total

 

$

1,209,044

 

 

$

143

 

 

$

(177,681

)

 

$

1,031,506

 

 

$

1,234,024

 

 

$

99

 

 

$

(195,121

)

 

$

1,039,002

 

All of the Company’s mortgage-backed securities have been issued by, or are collateralized by securities issued by, either the Government National Mortgage Association (“Ginnie Mae” or “GNMA”), the Federal National Mortgage Association (“Fannie Mae” or “FNMA”), or the Federal Home Loan Mortgage Corporation (“Freddie Mac” or “FHLMC”).

 

The following tables show the Company’s securities with gross unrealized losses for which an allowance for credit losses has not been recorded at March 31, 2023 or at December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous loss position:

 

 

 

March 31, 2023

 

 

 

Less than 12 months

 

 

12 months or longer

 

 

Total

 

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

 

(dollars in thousands)

 

Available for sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Sponsored Enterprise
   obligations

 

$

—

 

 

$

—

 

 

$

20,039

 

 

$

(2,959

)

 

$

20,039

 

 

$

(2,959

)

Mortgage-backed securities

 

 

1,807

 

 

 

(27

)

 

 

129,065

 

 

 

(23,023

)

 

 

130,872

 

 

 

(23,050

)

Total available for sale securities

 

$

1,807

 

 

$

(27

)

 

$

149,104

 

 

$

(25,982

)

 

$

150,911

 

 

$

(26,009

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

$

3,028

 

 

$

(9

)

 

$

—

 

 

$

—

 

 

$

3,028

 

 

$

(9

)

Mortgage-backed securities

 

 

57,244

 

 

 

(2,723

)

 

 

730,986

 

 

 

(140,910

)

 

 

788,230

 

 

 

(143,633

)

Corporate debt securities

 

 

244

 

 

 

(6

)

 

 

—

 

 

 

—

 

 

 

244

 

 

 

(6

)

Municipal securities

 

 

18,680

 

 

 

(128

)

 

 

38,239

 

 

 

(7,896

)

 

 

56,919

 

 

 

(8,024

)

Total held to maturity securities

 

$

79,196

 

 

$

(2,866

)

 

$

769,225

 

 

$

(148,806

)

 

$

848,421

 

 

$

(151,672

)

Total

 

$

81,003

 

 

$

(2,893

)

 

$

918,329

 

 

$

(174,788

)

 

$

999,332

 

 

$

(177,681

)

 

 

 

 

December 31, 2022

 

 

 

Less than 12 months

 

 

12 months or longer

 

 

Total

 

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

 

(dollars in thousands)

 

Available for sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Sponsored Enterprise
   obligations

 

$

10,722

 

 

$

(2,278

)

 

$

9,012

 

 

$

(986

)

 

$

19,734

 

 

$

(3,264

)

Mortgage-backed securities

 

 

41,832

 

 

 

(3,097

)

 

 

90,545

 

 

 

(22,257

)

 

 

132,377

 

 

 

(25,354

)

Total available for sale securities

 

$

52,554

 

 

$

(5,375

)

 

$

99,557

 

 

$

(23,243

)

 

$

152,111

 

 

$

(28,618

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

$

3,952

 

 

$

(18

)

 

$

—

 

 

$

—

 

 

$

3,952

 

 

$

(18

)

Mortgage-backed securities

 

 

230,708

 

 

 

(22,362

)

 

 

562,835

 

 

 

(134,846

)

 

 

793,543

 

 

 

(157,208

)

Corporate debt securities

 

 

243

 

 

 

(6

)

 

 

—

 

 

 

—

 

 

 

243

 

 

 

(6

)

Municipal securities

 

 

51,969

 

 

 

(4,388

)

 

 

13,714

 

 

 

(4,883

)

 

 

65,683

 

 

 

(9,271

)

Total held to maturity securities

 

$

286,872

 

 

$

(26,774

)

 

$

576,549

 

 

$

(139,729

)

 

$

863,421

 

 

$

(166,503

)

Total

 

$

339,426

 

 

$

(32,149

)

 

$

676,106

 

 

$

(162,972

)

 

$

1,015,532

 

 

$

(195,121

)

As of March 31, 2023, 408 debt securities had gross unrealized losses, with an aggregate depreciation of 15.1% from the Company’s amortized cost basis. The largest unrealized dollar loss of any single security was $1.8 million, or 20.4% of its amortized cost. The largest unrealized loss percentage of any single security was 32.8% of its amortized cost, or $771,000.

The Company believes that the nature and duration of unrealized losses on its debt security positions are primarily a function of interest rate movements and changes in investment spreads and does not consider full repayment of principal on the reported debt obligations to be at risk. Since nearly all of these securities are rated “investment grade” and (a) the Company does not intend to sell these securities before recovery and (b) it is more likely than not that the Company will not be required to sell these securities before recovery, the Company does not expect to suffer a credit loss as of March 31, 2023.

U.S. Government obligations with an amortized cost of $9.1 million and a fair value of $8.1 million were pledged as collateral for repurchase agreements at March 31, 2023. U.S. Government obligations with an amortized cost of $9.1 million and a fair value of $8.0 million were pledged as collateral for repurchase agreements at December 31, 2022.

 

The amortized cost and fair value of debt securities, aggregated by the earlier of call date or contractual maturity, are shown below. Maturities of mortgage-backed securities do not take into consideration scheduled amortization or prepayments. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

 

March 31, 2023

 

 

 

Within One Year

 

 

After One, But
Within Five Years

 

 

After Five, But
Within Ten Years

 

 

After Ten Years

 

 

Total

 

 

 

Amortized
Cost

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Fair
Value

 

 

 

(dollars in thousands)

 

Available for sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Sponsored Enterprise obligations

 

$

—

 

 

$

—

 

 

$

9,997

 

 

$

9,179

 

 

$

5,000

 

 

$

4,447

 

 

$

8,000

 

 

$

6,412

 

 

$

22,997

 

 

$

20,038

 

Mortgage-backed securities

 

 

—

 

 

 

—

 

 

 

13,535

 

 

 

12,773

 

 

 

37,614

 

 

 

31,790

 

 

 

103,041

 

 

 

86,582

 

 

 

154,190

 

 

 

131,145

 

Corporate debt securities

 

 

999

 

 

 

1,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

999

 

 

 

1,000

 

Total available for sale securities

 

$

999

 

 

$

1,000

 

 

$

23,532

 

 

$

21,952

 

 

$

42,614

 

 

$

36,237

 

 

$

111,041

 

 

$

92,994

 

 

$

178,186

 

 

$

152,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

$

991

 

 

$

988

 

 

$

2,997

 

 

$

2,999

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

3,988

 

 

$

3,987

 

Mortgage-backed securities

 

 

—

 

 

 

—

 

 

 

24,918

 

 

 

23,644

 

 

 

51,677

 

 

 

44,611

 

 

 

855,856

 

 

 

720,565

 

 

 

932,451

 

 

 

788,820

 

Corporate debt securities

 

 

—

 

 

 

—

 

 

 

250

 

 

 

244

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

250

 

 

 

244

 

Municipal securities

 

 

6,088

 

 

 

6,096

 

 

 

19,850

 

 

 

19,840

 

 

 

26,888

 

 

 

26,603

 

 

 

41,343

 

 

 

33,733

 

 

 

94,169

 

 

 

86,272

 

Total held to maturity securities

 

$

7,079

 

 

$

7,084

 

 

$

48,015

 

 

$

46,727

 

 

$

78,565

 

 

$

71,214

 

 

$

897,199

 

 

$

754,298

 

 

$

1,030,858

 

 

$

879,323

 

Total

 

$

8,078

 

 

$

8,084

 

 

$

71,547

 

 

$

68,679

 

 

$

121,179

 

 

$

107,451

 

 

$

1,008,240

 

 

$

847,292

 

 

$

1,209,044

 

 

$

1,031,506

 

There were no sales of investment securities during the three months ended March 31, 2023 or March 31, 2022.

 

The Company monitors the credit quality of certain debt securities through the use of credit ratings among other factors on a quarterly basis. Credit ratings are opinions about the credit quality of a security and are utilized by the Company to make informed decisions. Investment grade securities are rated BBB-/Baa3 or higher and are generally considered to be of low risk. At March 31, 2023 and December 31, 2022 respectively, the Company’s debt securities portfolio did not contain any securities below investment grade, as reported by major credit rating agencies. At March 31, 2023 and December 31, 2022, respectively, none of the Company's investment securities were delinquent or in non-accrual status.

 

The following tables summarize the credit rating of the Company’s debt securities portfolio at March 31, 2023 and December 31, 2022.

 

 

 

March 31, 2023

 

 

 

Mortgage-backed Securities (1)

 

 

Corporate Debt Securities

 

 

Municipal Securities

 

 

U.S. GSE Obligations

 

 

U.S. Treasury Notes

 

 

Total

 

 

 

(dollars in thousands)

 

Available for sale securities, at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAA/AA/A

 

$

131,145

 

 

$

—

 

 

$

—

 

 

$

20,038

 

 

$

—

 

 

$

151,183

 

BBB/BB/B

 

 

—

 

 

 

1,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,000

 

Total available for sale securities

 

$

131,145

 

 

$

1,000

 

 

$

—

 

 

$

20,038

 

 

$

—

 

 

$

152,183

 

Held to maturity securities, at amortized cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAA/AA/A

 

$

932,451

 

 

$

250

 

 

$

94,169

 

 

$

—

 

 

$

3,988

 

 

$

1,030,858

 

Total held to maturity securities

 

$

932,451

 

 

$

250

 

 

$

94,169

 

 

$

—

 

 

$

3,988

 

 

$

1,030,858

 

 

 

 

December 31, 2022

 

 

 

Mortgage-backed Securities (1)

 

 

Corporate Debt Securities

 

 

Municipal Securities

 

 

U.S. GSE Obligations

 

 

U.S. Treasury Notes

 

 

Total

 

 

 

(dollars in thousands)

 

Available for sale securities, at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAA/AA/A

 

$

132,683

 

 

$

—

 

 

$

—

 

 

$

19,733

 

 

$

—

 

 

$

152,416

 

BBB/BB/B

 

 

—

 

 

 

1,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,000

 

Total available for sale securities

 

$

132,683

 

 

$

1,000

 

 

$

—

 

 

$

19,733

 

 

$

—

 

 

$

153,416

 

Held to maturity securities, at amortized cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAA/AA/A

 

$

951,372

 

 

$

250

 

 

$

96,405

 

 

$

—

 

 

$

3,970

 

 

$

1,051,997

 

Total held to maturity securities

 

$

951,372

 

 

$

250

 

 

$

96,405

 

 

$

—

 

 

$

3,970

 

 

$

1,051,997

 

 

 

(1)
Includes agency mortgage-backed pass-through securities and collateralized mortgage obligations issued by U.S. Government Sponsored Enterprises (“GSEs”) and U.S. government agencies, such as FNMA, FHLMC, and GNMA that are not rated by Moody’s or Standard & Poor's. Each security contains a guarantee by the issuing U.S. GSE or agency and therefore carries an implicit guarantee of the U.S. government. These have been categorized as AAA/AA/A.