Securities

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

The book values and approximate fair values of investment securities at March 31, 2024 and December 31, 2023 are summarized as follows:


($ in thousands)	March 31, 2024					December 31, 2023
	Amortized Cost		Fair Value	Unrealized		Amortized Cost	Fair Value	Unrealized
				Gains	(Losses)			Gains	(Losses)
Securities available for sale:
U.S. Treasuries	$	124,876	123,770	—	(1,106)	174,785	172,570	—	(2,215)
Government-sponsored enterprise securities	71,965		59,959	—	(12,006)	71,964	60,266	—	(11,698)
Mortgage-backed securities	2,291,854		1,886,949	22	(404,927)	2,323,674	1,937,784	30	(385,920)
Corporate bonds	18,676		17,805	—	(871)	19,676	18,759	—	(917)
Total available for sale	$	2,507,371	2,088,483	22	(418,910)	2,590,099	2,189,379	30	(400,750)

Securities held to maturity:
Mortgage-backed securities	$	11,369	10,682	—	(687)	12,085	11,447	—	(638)
State and local governments	514,258		425,973	5	(88,290)	521,593	438,176	39	(83,456)
Total held to maturity	$	525,627	436,655	5	(88,977)	533,678	449,623	39	(84,094)

All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises ("GSEs"), except for private mortgage-backed securities with a fair value of $0.7 million as of March 31, 2024 and December 31, 2023.

The following table presents information regarding all securities with unrealized losses at March 31, 2024:


	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	$	—	—	123,770	1,106	123,770	1,106
Government-sponsored enterprise securities	—		—	59,959	12,006	59,959	12,006
Mortgage-backed securities	448		1	1,895,026	405,613	1,895,474	405,614
Corporate bonds	—		—	16,055	871	16,055	871
State and local governments	5,356		26	420,149	88,264	425,505	88,290
Total unrealized loss position	$	5,804	27	2,514,959	507,860	2,520,763	507,887

The following table presents information regarding all securities with unrealized losses at December 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
US Treasury securities	$	—	—	172,570	2,215	172,570	2,215
Government-sponsored enterprise securities	—		—	60,266	11,698	60,266	11,698
Mortgage-backed securities	1,117		5	1,945,830	386,553	1,946,947	386,558
Corporate bonds	—		—	17,008	917	17,008	917
State and local governments	—		—	432,476	83,456	432,476	83,456
Total unrealized loss position	$	1,117	5	2,628,150	484,839	2,629,267	484,844

As of March 31, 2024, the Company's securities portfolio held 651 securities of which 631 securities were in an unrealized loss position. As of December 31, 2023, the Company's securities portfolio held 657 securities of which 632 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, 2024 and December 31, 2023 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.

At March 31, 2024 and December 31, 2023, the Company determined that expected credit losses associated with held to maturity securities and available for sale debt securities were insignificant.

The book values and approximate fair values of investment securities at March 31, 2024, 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	$	127,379	126,214	—	—
Due after one year but within five years	10,000		8,595	1,997	1,805
Due after five years but within ten years	78,138		66,725	148,754	126,626
Due after ten years	—		—	363,507	297,542
Mortgage-backed securities	2,291,854		1,886,949	11,369	10,682
Total securities	$	2,507,371	2,088,483	525,627	436,655

At March 31, 2024 and December 31, 2023, investment securities with carrying values of $910.8 million and $971.3 million, respectively, were pledged as collateral for public deposits. In addition, at March 31, 2024 and December 31, 2023, investment securities with carrying values of $668.9 million and $679.0 million, respectively, were pledged as collateral for Federal Reserve Bank ("Federal Reserve") borrowings.

At March 31, 2024 and December 31, 2023, 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.

There were no sales of investment securities during the three months ended March 31, 2024. During that same period, the Company received proceeds from the call of a security of $5.2 million and recorded a $975.2 thousand loss related to the unamortized premium balance at the time of the call. 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.

Included in “Other assets” in the consolidated balance sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve stock totaling $41.4 million and $54.5 million at March 31, 2024 and December 31, 2023, respectively. These investments do not have readily determinable fair values. The FHLB stock had a cost of $8.5 million and $21.7 million at March 31, 2024 and December 31, 2023, 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 $32.9 million and $32.8 million at March 31, 2024 and December 31, 2023, 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.

On March 31, 2024, the Company owned 12,356 Class B shares of Visa, Inc. (“Visa”) stock that were received upon Visa’s initial public offering. These shares were 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 was periodically adjusted as Visa settles litigation. The conversion rate at March 31, 2024 was 1.5875, which means the Company would have received approximately 19,615 Class A shares if the stock had converted on that date. As the Class B stock did not have a readily determinable fair value, it was carried at zero. In April 2024, the Class B shares were sold at a conversion rate of 1.5875 and a gain of $4.5 million was recognized.