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INVESTMENT SECURITIES
 9 Months Ended
Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
INVESTMENT SECURITIES
INVESTMENT SECURITIES

The following table summarizes the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of September 30, 2023 and December 31, 2022.

 Amortized
Cost		Gross Unrealized
Gains		Gross Unrealized
Losses		Fair
Value
Available for sale at September 30, 2023    
U.S. Treasury$1,737 $— $24 $1,713 
U.S. Government-sponsored agency securities114,414 — 20,829 93,585 
State and municipal1,217,293 — 244,237 973,056 
U.S. Government-sponsored mortgage-backed securities536,530 — 116,567 419,963 
Corporate obligations12,960 — 1,141 11,819 
Total available for sale$1,882,934 $— $382,798 $1,500,136 

 Amortized
Cost		Gross Unrealized
Gains		Gross Unrealized
Losses		Fair
Value
Available for sale at December 31, 2022    
U.S. Treasury$2,501 $— $42 $2,459 
U.S. Government-sponsored agency securities119,154 — 17,192 101,962 
State and municipal1,530,048 438 178,726 1,351,760 
U.S. Government-sponsored mortgage-backed securities608,630 1 100,358 508,273 
Corporate obligations13,014 — 807 12,207 
Total available for sale$2,273,347 $439 $297,125 $1,976,661 
The following table summarizes the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of September 30, 2023 and December 31, 2022.

Amortized
Cost		Allowance for Credit LossesNet Carrying AmountGross Unrealized
Gains		Gross Unrealized
Losses		Fair
Value
Held to maturity at September 30, 2023   
U.S. Government-sponsored agency securities$378,706 $— $378,706 $— $78,882 $299,824 
State and municipal1,107,325 245 1,107,080 14 258,536 848,803 
U.S. Government-sponsored mortgage-backed securities726,302 — 726,302 — 135,163 591,139 
Foreign investment1,500 — 1,500 — 41 1,459 
Total held to maturity$2,213,833 $245 $2,213,588 $14 $472,622 $1,741,225 


Amortized
Cost		Allowance for Credit LossesNet Carrying AmountGross Unrealized
Gains		Gross Unrealized
Losses		Fair
Value
Held to maturity at December 31, 2022    
U.S. Government-sponsored agency securities$392,246 $— $392,246 $— $69,147 $323,099 
State and municipal1,117,552 245 1,117,307 647 197,064 921,135 
U.S. Government-sponsored mortgage-backed securities776,074 — 776,074 — 113,915 662,159 
Foreign investment1,500 — 1,500 — 28 1,472 
Total held to maturity$2,287,372 $245 $2,287,127 $647 $380,154 $1,907,865 


Accrued interest on investment securities available for sale and held to maturity at September 30, 2023 and December 31, 2022 of $23.2 million and $29.5 million, respectively, are included in the Interest Receivable line on the Corporation's Consolidated Condensed Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available for sale and held to maturity securities presented above.

In determining the allowance for credit losses on investment securities available for sale that are in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it 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 the income statement. For investment securities available for sale that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to 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, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses is recognized in other comprehensive income. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities available for sale from the estimate of credit losses. Investment securities available for sale are charged off against the allowance or, in the absence of any allowance, written down through the income statement when deemed uncollectible or when either of the aforementioned criteria regarding intent or requirement to sell is met. The Corporation did not record an allowance for credit losses on its investment securities available for sale as the unrealized losses were attributable to changes in interest rates, not credit quality.

The allowance for credit losses on investment securities held to maturity is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the allowance when deemed uncollectible. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation measures expected credit losses on investment securities held to maturity on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and mortgage-backed securities, 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 securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) 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. Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have been insignificant. Furthermore, as of September 30, 2023, there were no past due principal and interest payments associated with these securities. At CECL adoption, an allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities. The balance of the allowance for credit losses remained unchanged at $245,000 as of September 30, 2023.
On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following table summarizes the amortized cost of investment securities held to maturity at September 30, 2023, aggregated by credit quality indicator.
Held to Maturity
State and municipalOtherTotal
Credit Rating:
Aaa$114,709 $70,585 $185,294 
Aa1153,408 — 153,408 
Aa2181,369 — 181,369 
Aa3133,499 — 133,499 
A1131,310 — 131,310 
A210,172 — 10,172 
A310,125 — 10,125 
Non-rated372,733 1,035,923 1,408,656 
Total$1,107,325 $1,106,508 $2,213,833 


The following tables summarize, as of September 30, 2023 and December 31, 2022, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position.
Less than 12 Months12 Months or LongerTotal
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
Investment securities available for sale at September 30, 2023
U.S. Treasury$397 $1 $1,316 $23 $1,713 $24 
U.S. Government-sponsored agency securities796 3 92,789 20,826 93,585 20,829 
State and municipal86,964 10,369 886,092 233,868 973,056 244,237 
U.S. Government-sponsored mortgage-backed securities11,273 453 408,686 116,114 419,959 116,567 
Corporate obligations— — 11,788 1,141 11,788 1,141 
Total investment securities available for sale$99,430 $10,826 $1,400,671 $371,972 $1,500,101 $382,798 

 
Less than 12 Months12 Months or LongerTotal
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
Investment securities available for sale at December 31, 2022
U.S. Treasury$2,459 $42 $— $— $2,459 $42 
U.S. Government-sponsored agency securities48,940 4,973 53,022 12,219 101,962 17,192 
State and municipal1,177,104 150,096 108,652 28,630 1,285,756 178,726 
U.S. Government-sponsored mortgage-backed securities182,700 16,910 325,455 83,448 508,155 100,358 
Corporate obligations12,176 807 — — 12,176 807 
Total investment securities available for sale$1,423,379 $172,828 $487,129 $124,297 $1,910,508 $297,125 
The following table summarizes investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and the number of securities in the portfolio as of the dates indicated.

Gross
Unrealized
Losses		Number of Securities
Investment securities available for sale at September 30, 2023
U.S. Treasury$24 3
U.S. Government-sponsored agency securities20,829 16
State and municipal244,237 743
U.S. Government-sponsored mortgage-backed securities116,567 164
Corporate obligations1,141 10
Total investment securities available for sale$382,798 936 

Gross
Unrealized
Losses		Number of Securities
Investment securities available for sale at December 31, 2022
U.S. Treasury$42 5
U.S. Government-sponsored agency securities17,192 16
State and municipal178,726 946
U.S. Government-sponsored mortgage-backed securities100,358 177
Corporate obligations807 10
Total investment securities available for sale$297,125 1,154 


The unrealized losses in the Corporation’s investment portfolio were the result of changes in interest rates and not credit quality. As a result, the Corporation expects to recover the amortized cost basis over the term of the securities. The Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.

Certain investment securities available for sale are reported in the financial statements at an amount less than their historical cost as indicated in the table below.
September 30, 2023December 31, 2022
Investments available for sale reported at less than historical cost:  
Historical cost$1,882,899 $2,207,633 
Fair value1,500,101 1,910,508 
Gross unrealized losses$382,798 $297,125 
Percent of the Corporation's investments available for sale99.99 %96.65 %

In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level 1 and Level 2 in the fair value hierarchy.  The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs.  From these discussions, the Corporation’s management is comfortable that the classifications are proper.  The Corporation has gained trust in the data for two reasons:  (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or losses resulting from the sale of certain securities has proven the data to be accurate over time.   Fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.
The amortized cost and fair value of investment securities available for sale and held to maturity at September 30, 2023 and December 31, 2022, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately.
 Available for SaleHeld to Maturity
 Amortized CostFair ValueAmortized CostFair Value
Maturity Distribution at September 30, 2023    
Due in one year or less$3,403 $3,356 $9,422 $9,397 
Due after one through five years27,736 25,266 116,894 106,277 
Due after five through ten years127,442 110,668 134,603 117,134 
Due after ten years1,187,823 940,883 1,226,612 917,278 
 1,346,404 1,080,173 1,487,531 1,150,086 
U.S. Government-sponsored mortgage-backed securities536,530 419,963 726,302 591,139 
Total investment securities$1,882,934 $1,500,136 $2,213,833 $1,741,225 

Available for SaleHeld to Maturity
Amortized CostFair ValueAmortized CostFair Value
Maturity Distribution at December 31, 2022    
Due in one year or less$2,822 $2,809 $13,697 $13,749 
Due after one through five years11,694 11,265 80,697 76,453 
Due after five through ten years169,729 161,211 147,078 135,027 
Due after ten years1,480,472 1,293,103 1,269,826 1,020,477 
 1,664,717 1,468,388 1,511,298 1,245,706 
U.S. Government-sponsored mortgage-backed securities608,630 508,273 776,074 662,159 
Total investment securities$2,273,347 $1,976,661 $2,287,372 $1,907,865 


Securities with a carrying value of approximately $1.7 billion and $941.3 million were pledged at September 30, 2023 and December 31, 2022, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law. Pledged securities increased from December 31, 2022 as a result of the Corporation pledging additional securities to the Discount Window at the Federal Reserve Bank to be used as an alternative funding source, if needed.

The book value of securities pledged and available under agreements to repurchase amounted to $187.3 million at September 30, 2023 and $196.7 million at December 31, 2022.

Gross gains and losses on the sales and redemptions of investment securities available for sale for the three and nine months ended September 30, 2023 and 2022 are shown below.
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Sales and redemptions of investment securities available for sale:    
Gross gains$— $495 $759 $1,176 
Gross losses(1,650)(14)(5,372)(39)
Net gains (losses) on sales and redemptions of investment securities available for sale$(1,650)$481 $(4,613)$1,137