Securities

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

The book values and approximate fair values of investment securities at March 31, 2023 and December 31, 2022 are summarized as follows:


($ in thousands)	March 31, 2023					December 31, 2022
	Amortized Cost		Fair Value	Unrealized		Amortized Cost	Fair Value	Unrealized
				Gains	(Losses)			Gains	(Losses)
Securities available for sale:
U.S. Treasuries	$	174,510	170,109	—	(4,401)	174,420	168,758	—	(5,662)
Government-sponsored enterprise securities	71,959		59,304	—	(12,655)	71,957	57,456	—	(14,501)
Mortgage-backed securities	2,432,854		2,042,379	3	(390,478)	2,467,839	2,045,000	4	(422,843)
Corporate bonds	19,673		18,473	—	(1,200)	44,340	43,279	—	(1,061)
Total available for sale	$	2,698,996	2,290,265	3	(408,734)	2,758,556	2,314,493	4	(444,067)

Securities held to maturity:
Mortgage-backed securities	$	14,360	13,539	—	(821)	15,150	14,221	—	(929)
State and local governments	525,435		435,365	53	(90,123)	526,550	418,307	7	(108,250)
Total held to maturity	$	539,795	448,904	53	(90,944)	541,700	432,528	7	(109,179)

All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises ("GSE"), except for private mortgage-backed securities with a fair value of $0.8 million and $0.8 million as of March 31, 2023 and December 31, 2022, respectively.

The following table presents information regarding all securities with unrealized losses at March 31, 2023:


	Securities in an Unrealized Loss Position for Less than 12 Months			Securities in an Unrealized Loss Position for More than 12 Months		Total
($ in thousands)	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
U.S. Treasuries	$	—	—	170,109	4,401	170,109	4,401
Government-sponsored enterprise securities	—		—	59,304	12,655	59,304	12,655
Mortgage-backed securities	41,339		1,429	2,013,372	389,870	2,054,711	391,299
Corporate bonds	2,816		107	13,908	1,093	16,724	1,200
State and local governments	1,122		3	429,001	90,120	430,123	90,123
Total unrealized loss position	$	45,277	1,539	2,685,694	498,139	2,730,971	499,678

The following table presents information regarding all securities with unrealized losses at December 31, 2022:


	Securities in an Unrealized Loss Position for Less than 12 Months			Securities in an Unrealized Loss Position for More than 12 Months		Total
($ in thousands)	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
US Treasury securities	$	168,758	5,662	—	—	168,758	5,662
Government-sponsored enterprise securities	—		—	57,456	14,501	57,456	14,501
Mortgage-backed securities	221,006		18,215	1,835,958	405,557	2,056,964	423,772
Corporate bonds	40,644		947	886	114	41,530	1,061
State and local governments	48,385		8,323	368,897	99,927	417,282	108,250
Total unrealized loss position	$	478,793	33,147	2,263,197	520,099	2,741,990	553,246

As of March 31, 2023, the Company's securities portfolio held 657 securities of which 635 securities were in an unrealized loss position. As of December 31, 2022, the Company's securities portfolio held 666 securities of which 644 securities were in an unrealized loss position.

In the above tables, all of the securities that were in an unrealized loss position at March 31, 2023 and December 31, 2022 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns. In arriving at this conclusion, the Company reviewed third-party credit ratings and considered the severity of the impairment. The state and local government investments are comprised almost entirely of highly-rated municipal bonds issued by state and local governments throughout the nation. The Company has no significant concentrations of bond holdings from one state or local government entity. Nearly all of our mortgage-backed securities were issued by Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage Association ("FNMA"), Government National Mortgage Association ("GNMA"), or the Small Business Administration ("SBA"), each of which is a government agency or GSE and guarantees the repayment of the securities. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost.

At March 31, 2023 and December 31, 2022, the Company determined that expected credit losses associated with held to maturity debt securities were insignificant.

The book values and approximate fair values of investment securities at March 31, 2023, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Securities Available for Sale			Securities Held to Maturity
($ in thousands)	Amortized Cost		Fair Value	Amortized Cost	Fair Value
Due within one year	$	—	—	—	—
Due after one year but within five years	177,020		172,525	997	894
Due after five years but within ten years	88,122		74,362	73,454	62,882
Due after ten years	1,000		999	450,984	371,589
Mortgage-backed securities	2,432,854		2,042,379	14,360	13,539
Total securities	$	2,698,996	2,290,265	539,795	448,904

At March 31, 2023 and December 31, 2022, investment securities with carrying values of $826.9 million and $758.0 million, respectively, were pledged as collateral for public deposits.

At March 31, 2023 and December 31, 2022, there were no holdings of securities of any one issuer, other than U.S. Government and its agencies or GSEs, in an amount greater than 10% of shareholders' equity.

During the three months ended March 31, 2023, the Company sold substantially all of the securities acquired from GrandSouth at their initially recorded fair value. Accordingly, there was no gain or loss recorded on the sale of acquired securities. There were no sales of investment securities during the three months ended March 31, 2022.

Included in “Other assets” in the Consolidated Balance Sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank of Richmond (“Federal Reserve”) stock totaling $67.4 million and $39.6 million at March 31, 2023 and December 31, 2022, respectively. These investments do not have readily determinable fair values. The FHLB stock had a cost and fair value of $27.4 million and $14.7 million at March 31, 2023 and December 31, 2022, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system. The Federal Reserve stock had a cost and fair value of $40.0 million and $24.9 million at March 31, 2023 and December 31, 2022, respectively, and is a requirement for Federal Reserve member bank qualification. Periodically, both the FHLB and Federal Reserve recalculate the Company’s required level of holdings, and the Company either buys more stock or redeems a portion of the stock at cost. The Company determined that neither stock was impaired at either period end.

The Company owns 12,356 Class B shares of Visa, Inc. (“Visa”) stock that were received upon Visa’s initial public offering. These shares are expected to convert into Class A Visa shares subsequent to the settlement of certain litigation against Visa, to which the Company is not a party. The Class B shares have transfer restrictions, and the conversion rate into Class A shares is periodically adjusted as Visa settles litigation. The conversion rate at March 31, 2023 was approximately 1.60, which means the Company would have received approximately 19,758 Class A shares if the stock had converted on that date. This Class B stock does not have a readily determinable fair value and is carried at zero. If a readily determinable fair value becomes available for the Class B shares, or upon their conversion to Class A shares, the Company will adjust the carrying value of the stock to its market value with a credit to earnings.