Securities

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

The book values and approximate fair values of investment securities at September 30, 2024 and December 31, 2023 are summarized as follows:


($ in thousands)	September 30, 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	$	—	$	—	$	—	$	—	$	174,785	$	172,570	$	—	$	(2,215)
Government-sponsored enterprise securities	71,968		62,872		—		(9,096)		71,964		60,266		—		(11,698)
Mortgage-backed securities	2,150,849		1,828,802		39		(322,086)		2,323,674		1,937,784		30		(385,920)
Corporate bonds	16,179		15,784		—		(395)		19,676		18,759		—		(917)
Total available for sale	$	2,238,996	$	1,907,458	$	39	$	(331,577)	$	2,590,099	$	2,189,379	$	30	$	(400,750)

Securities held to maturity:
Mortgage-backed securities	$	9,923	$	9,564	$	—	$	(359)	$	12,085	$	11,447	$	—	$	(638)
State and local governments	511,878		438,736		29		(73,171)		521,593		438,176		39		(83,456)
Total held to maturity	$	521,801	$	448,300	$	29	$	(73,530)	$	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 September 30, 2024 and December 31, 2023.

The following table presents information regarding all securities with unrealized losses at September 30, 2024:


	Securities in an Unrealized Loss Position for Less than Twelve Months				Securities in an Unrealized Loss Position for More than Twelve Months				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

Government-sponsored enterprise securities	$	—	$	—	$	62,872	$	9,096	$	62,872	$	9,096
Mortgage-backed securities	318		—		1,835,466		322,445		1,835,784		322,445
Corporate bonds	380		49		13,654		346		14,034		395
State and local governments	520		—		433,118		73,171		433,638		73,171
Total unrealized loss position	$	1,218	$	49	$	2,345,110	$	405,058	$	2,346,328	$	405,107

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


	Securities in an Unrealized Loss Position for Less than Twelve Months				Securities in an Unrealized Loss Position for More than Twelve Months				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasuries	$	—	$	—	$	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 September 30, 2024, the Company's securities portfolio included 620 securities of which 586 securities were in an unrealized loss position. As of December 31, 2023, the Company's securities portfolio included 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 September 30, 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 September 30, 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 fair values of investment securities at September 30, 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 after one year but within five years	$	39,996	$	35,320	$	5,394	$	5,289
Due after five years but within ten years	48,151		43,336		183,914		159,345
Due after ten years	—		—		322,570		274,102
Mortgage-backed securities	2,150,849		1,828,802		9,923		9,564
Total securities	$	2,238,996	$	1,907,458	$	521,801	$	448,300

At September 30, 2024 and December 31, 2023, investment securities with carrying values of $924.8 million and $971.3 million, respectively, were pledged as collateral for public deposits. In addition, at September 30, 2024 and December 31, 2023, investment securities with carrying values of $582.6 million and $679.0 million, respectively, were pledged as collateral for Federal Reserve Bank ("Federal Reserve") borrowings.

At September 30, 2024 and December 31, 2023, there were no holdings of securities of any one issuer, other than the 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 September 30, 2024.

During the second quarter of 2024, the Company sold all of its holdings of Class B shares of Visa, Inc. (“Visa”) stock that were received upon Visa’s initial public offering and recognized a gain of $4.5 million. As the Class B stock did not initially have a readily determinable fair value, it was carried at $0 prior to the sale.

During the second quarter of 2024, the Company received proceeds from sales of securities of $138.2 million and recorded $4.7 million in gross losses from the sales. This loss was partially offset by the $4.5 million gain on the sale of the Visa stock discussed above. Included in "Securities losses, net" in the consolidated statements of income, during the first quarter of 2024, the Company received proceeds from the call of a security of $5.2 million and recorded a $975 thousand loss related to the unamortized premium balance at the time of the call. During the first quarter of 2023, the Company sold substantially all of the securities acquired from GrandSouth at their initially recorded fair values. 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 $41.2 million and $54.5 million at September 30, 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 September 30, 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 $32.7 million and $32.8 million at September 30, 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.