Investments

9 Months Ended

Sep. 30, 2024

The aggregate carrying and approximate fair values of investment securities follow (in thousands). Fair values are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable financial instruments.


	September 30, 2024								December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
Obligations of states and
political subdivisions	$	225,155	$	595	$	13,805	$	211,945	$	228,456	$	371	$	16,089	$	212,738
Mortgage-backed securities:
U.S. government agencies	1,310,067		5,111		101,113		1,214,065		1,211,484		2,362		125,753		1,088,093
Private label	6,405		—		109		6,296		6,997		—		293		6,704
Trust preferred securities	4,604		—		89		4,515		4,599		—		321		4,278
Corporate securities	26,900		46		972		25,974		28,009		137		1,822		26,324
Total Securities Available-for-Sale	$	1,573,131	$	5,752	$	116,088	$	1,462,795	$	1,479,545	$	2,870	$	144,278	$	1,338,137

The Company's other investment securities include marketable equity securities and non-marketable equity securities held for investment. At September 30, 2024 and December 31, 2023, the Company held $7.2 million and $7.5 million, respectively, in marketable equity securities. Changes in the fair value of the marketable equity securities are recorded in "unrealized gains recognized on equity securities still held" in the consolidated statements of income. The Company's non-marketable securities consist of securities with limited marketability, such as stock in the Federal Reserve Bank ("FRB") or the Federal Home Loan Bank ("FHLB"). At September 30, 2024 and December 31, 2023, the Company held $23.6 million and $23.5 million, respectively, in non-marketable equity securities. These securities are carried at cost due to the restrictions placed on their transferability. The Company held no certificates of deposits for investment at September 30, 2024 and at December 31, 2023.

The majority of the Company's investment securities are mortgage-backed. These securities are collateralized by both residential and commercial properties. The mortgage-backed securities in which the Company has invested are predominantly issued by government-sponsored agencies such as Fannie Mae, Freddie Mac, and Ginnie Mae. At September 30, 2024 and December 31, 2023 there were no securities of any non-governmental issuer whose aggregate carrying value or estimated fair value exceeded 10% of shareholders' equity.

Certain investment securities owned by the Company were in an unrealized loss position (i.e., amortized cost basis exceeded the estimated fair value of the securities) as of September 30, 2024 and December 31, 2023. The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):


	September 30, 2024
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	4,683	$	33	$	178,275	$	13,772	$	182,958	$	13,805
Mortgage-backed securities:
U.S. Government agencies	—		—		766,660		101,113		766,660		101,113
Private label	1,294		12		5,002		97		6,296		109
Trust preferred securities	—		—		4,515		89		4,515		89
Corporate securities	—		—		24,322		972		24,322		972
Total available-for-sale	$	5,977	$	45	$	978,774	$	116,043	$	984,751	$	116,088


	December 31, 2023
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	7,591	$	66	$	180,560	$	16,023	$	188,151	$	16,089
Mortgage-backed securities:
U.S. Government agencies	2,046		10,271		740,914		115,482		742,960		125,753
Private label	—		—		4,835		293		4,835		293
Trust preferred securities	—		—		4,278		321		4,278		321
Corporate securities	—		—		24,609		1,822		24,609		1,822
Total available-for-sale	$	9,637	$	10,337	$	955,196	$	133,941	$	964,833	$	144,278

As of September 30, 2024, management does not intend to sell any impaired security and it is not more than likely that it will be required to sell any impaired security before the recovery of its amortized cost basis. The unrealized losses on debt securities are primarily the result of interest rate changes, credit spread fluctuations on agency-issued mortgage-related securities, general financial market uncertainty and market volatility. These conditions should not prohibit the Company from receiving its contractual principal and interest payments on its debt securities. The fair value is expected to recover as the securities approach their maturity date or repricing date. Due to the previously mentioned factors, as of September 30, 2024, management believes the unrealized losses detailed in the table above are temporary and therefore no allowance for credit losses has been recognized on the Company’s securities. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss will be recognized in net income in the period the other-than-temporary impairment is identified, while any noncredit loss will be recognized in other comprehensive income. During the three and nine months ended September 30, 2024 and 2023, the Company had no credit-related net investment impairment losses.

The amortized cost and estimated fair value of debt securities at September 30, 2024, by contractual maturity, is shown in the following table (in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties. Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.


	Amortized Cost		Estimated Fair Value
Available-for-Sale Debt Securities
Due in one year or less	$	2,401	$	2,388
Due after one year through five years	143,021		138,928
Due after five years through ten years	360,136		344,318
Due after ten years	1,067,573		977,161
Total	$	1,573,131	$	1,462,795

Proceeds from sales, gross gains and gross losses recognized by the Company from investment security transactions are summarized in the table below (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Proceeds on sales of available for sale securities	$	—	$	17,690	$	—	$	103,249

Gross realized gains on available for sale securities sold	$	—	$	—	$	—	$	975
Gross realized losses on available for sale securities sold	—		(730)		—		(932)
Net realized available for sale securities (losses) gains	$	—	$	(730)	$	—	$	43

Gross unrealized gains recognized on equity securities still held	$	406	$	929	$	964	$	679
Gross unrealized losses recognized on equity securities still held	(53)		(929)		(399)		(612)
Net unrealized (losses) gains recognized on equity securities still held	$	353	$	—	$	565	$	67

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $760 million and $709 million at September 30, 2024 and December 31, 2023, respectively.