Held-to-maturity (“HTM”) securities, which include any security for which the Company has both the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the security’s estimated life. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date.

Available-for-sale (“AFS”) securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders’ equity, further discussed below. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date.

During the quarters ended June 30, 2022 and September 30, 2021, the Company transferred, at fair value, $1.99 billion and $500.8 million, respectively, of securities from the AFS portfolio to the HTM portfolio. As of September 30, 2023, the related remaining combined net unrealized losses of $131.2 million in accumulated other comprehensive income (loss) will be amortized over the remaining life of the securities. No gains or losses on these securities were recognized at the time of transfer.


(In thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
Held-to-maturity

September 30, 2023
U.S. Government agencies	$	452,428	$	—	$	452,428	$	—	$	(117,530)	$	334,898
Mortgage-backed securities	1,178,324		—		1,178,324		—		(172,976)		1,005,348
State and political subdivisions	1,859,172		(1,520)		1,857,652		26		(564,366)		1,293,312
Other securities	255,582		(1,694)		253,888		—		(39,235)		214,653
Total HTM	$	3,745,506	$	(3,214)	$	3,742,292	$	26	$	(894,107)	$	2,848,211

December 31, 2022
U.S. Government agencies	$	448,012	$	—	$	448,012	$	—	$	(102,558)	$	345,454
Mortgage-backed securities	1,190,781		—		1,190,781		227		(118,960)		1,072,048
State and political subdivisions	1,861,102		(110)		1,860,992		56		(446,198)		1,414,850
Other securities	261,199		(1,278)		259,921		—		(29,040)		230,881
Total HTM	$	3,761,094	$	(1,388)	$	3,759,706	$	283	$	(696,756)	$	3,063,233

Mortgage-backed securities (“MBS”) are commercial MBS, secured by commercial properties, and residential MBS, generally secured by single-family residential properties. All mortgage-backed securities included in the table above were issued by U.S. government agencies or corporations. As of September 30, 2023, HTM MBS consists of $143.1 million and $1.04 billion of commercial MBS and residential MBS, respectively. As of December 31, 2022, HTM MBS consists of $149.2 million and $1.04 billion of commercial MBS and residential MBS, respectively.


(In thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
Available-for-sale

September 30, 2023
U.S. Treasury	$	2,278	$	—	$	—	$	(54)	$	2,224
U.S. Government agencies	179,638		—		45		(6,924)		172,759
Mortgage-backed securities	2,444,803		—		—		(287,711)		2,157,092
State and political subdivisions	999,373		—		111		(209,140)		790,344
Other securities	264,818		(1,196)		—		(27,620)		236,002
Total AFS	$	3,890,910	$	(1,196)	$	156	$	(531,449)	$	3,358,421

December 31, 2022
U.S. Treasury	$	2,257	$	—	$	—	$	(60)	$	2,197
U.S. Government agencies	191,498		—		103		(7,322)		184,279
Mortgage-backed securities	2,809,319		—		20		(266,437)		2,542,902
State and political subdivisions	1,056,124		—		250		(185,300)		871,074
Other securities	272,215		—		—		(19,813)		252,402
Total AFS	$	4,331,413	$	—	$	373	$	(478,932)	$	3,852,854

As of September 30, 2023, AFS MBS consists of $859.9 million and $1.30 billion of commercial MBS and residential MBS, respectively. As of December 31, 2022, AFS MBS consists of $1.07 billion and $1.47 billion of commercial MBS and residential MBS, respectively.

Accrued interest receivable on HTM and AFS securities at September 30, 2023 was $17.5 million and $18.6 million, respectively, and is included in interest receivable on the consolidated balance sheets. The Company has made the election to exclude all accrued interest receivable from securities from the estimate of credit losses.

The following table summarizes the Company’s AFS investments in an unrealized loss position for which an allowance for credit loss has not been recorded as of September 30, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:


	Less Than 12 Months				12 Months or More				Total
(In thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
Available-for-sale
U.S. Treasury	$	—	$	—	$	2,224	$	(54)	$	2,224	$	(54)
U.S. Government agencies	9,161		(21)		158,972		(6,903)		168,133		(6,924)
Mortgage-backed securities	9,924		(140)		2,147,168		(287,571)		2,157,092		(287,711)
State and political subdivisions	11,170		(502)		771,404		(208,638)		782,574		(209,140)
Other securities	15,169		(3,505)		202,990		(22,919)		218,159		(26,424)
Total AFS	$	45,424	$	(4,168)	$	3,282,758	$	(526,085)	$	3,328,182	$	(530,253)

As of September 30, 2023, the Company’s investment portfolio included $3.36 billion of AFS securities, of which $3.33 billion, or 99.1%, were in an unrealized loss position that were not deemed to have credit losses. A portion of the unrealized losses were related to the Company’s MBS, which are issued and guaranteed by U.S. government-sponsored entities and agencies, and the Company’s state and political subdivision securities, specifically investments in insured fixed rate municipal bonds for which the issuers continue to make timely principal and interest payments under the contractual terms of the securities.

Furthermore, the decline in fair value for each of the above AFS securities is attributable to the rates for those investments yielding less than current market rates. Management does not believe any of the securities are impaired due to reasons of credit quality. Management believes the declines in fair value for the securities are temporary. Management does not have the immediate intent to sell the securities, and management believes the accounting standard of “more likely than not” has not been met regarding whether the Company would be required to sell any of the AFS securities before recovery of amortized cost.

All MBS held by the Company are issued by U.S. government-sponsored entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, highly rated by major rating agencies and have a long history of no credit losses. Accordingly, no allowance for credit losses has been recorded for these securities.

Regarding securities issued by state and political subdivisions and other HTM securities, the adequacy of the reserve for credit loss is determined quarterly based on methodology similar to the methodology for determining the allowance for credit losses on loans. The methodology considers, but is not limited to: (i) issuer bond ratings, (ii) issuer geography, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) probability-weighted multiple scenario forecasts, and (v) the issuers’ size.


(In thousands)	State and Political Subdivisions		Other Securities		Total
Three Months Ended September 30, 2023
Held-to-maturity
Beginning balance, July 1, 2023	$	934	$	2,280	$	3,214
Provision for credit loss expense	—		—		—
Net increase (decrease) in allowance on previously impaired securities	586		(586)		—
Ending balance, September 30, 2023	$	1,520	$	1,694	$	3,214

Available-for-sale
Beginning balance, July 1, 2023	$	—	$	2,396	$	2,396
Provision for credit loss expense	—		—		—
Net decrease in allowance on previously impaired securities	—		(1,200)		(1,200)
Ending balance, September 30, 2023	$	—	$	1,196	$	1,196

Nine Months Ended September 30, 2023
Held-to-maturity
Beginning balance, January 1, 2023	$	110	$	1,278	$	1,388
Provision for credit loss expense	824		1,002		1,826
Net increase (decrease) in allowance on previously impaired securities	586		(586)		—
Ending balance, September 30, 2023	$	1,520	$	1,694	$	3,214

Available-for-sale
Beginning balance, January 1, 2023	$	—	$	—	$	—
Provision for credit loss expense	—		12,800		12,800
Reduction due to sales	—		(2,078)		(2,078)
Net decrease in allowance on previously impaired securities	—		(2,526)		(2,526)
Securities charged-off	—		(7,000)		(7,000)
Ending balance, September 30, 2023	$	—	$	1,196	$	1,196


(In thousands)	State and Political Subdivisions		Other Securities		Total
Three Months Ended September 30, 2022
Held-to-maturity
Beginning balance, July 1, 2022	$	103	$	1,278	$	1,381
Provision for credit loss expense	—		—		—
Net increase (decrease) in allowance on previously impaired securities	3		(3)		—
Recoveries	1		2		3
Ending balance, September 30, 2022	$	107	$	1,277	$	1,384

Nine Months Ended September 30, 2022
Held-to-maturity
Beginning balance, January 1, 2022	$	1,197	$	82	$	1,279
Provision for credit loss expense	—		—		—
Net increase (decrease) in allowance on previously impaired securities	(1,180)		1,180		—
Recoveries	90		15		105
Ending balance, September 30, 2022	$	107	$	1,277	$	1,384

Based upon the Company’s analysis of the underlying risk characteristics of its AFS portfolio, including credit ratings and other qualitative factors, as previously discussed, the provision for credit losses related to AFS securities recorded for the nine months ended September 30, 2023 was $10.3 million, while the provision for credit losses related to AFS securities was reduced by $1.2 million during the three months ended September 30, 2023. During the nine months ended September 30, 2023, the Company charged-off $7.0 million directly related to one corporate bond which was deemed uncollectible in the period. The remaining allowance for credit loss on the AFS portfolio of $1.2 million at September 30, 2023 is related to outstanding exposure for two nonperforming corporate bonds.


	State and Political Subdivisions
(In thousands)	Not Guaranteed or Pre-Refunded		Other Credit Enhancement or Insurance		Pre-Refunded		Total		Other Securities
Aaa/AAA	$	179,897	$	299,873	$	—	$	479,770	$	—
Aa/AA	636,466		523,018		—		1,159,484		—
A	46,948		161,580		—		208,528		102,179
Baa/BBB	—		4,374		—		4,374		153,403
Not Rated	7,016		—		—		7,016		—
Total	$	870,327	$	988,845	$	—	$	1,859,172	$	255,582

Historical loss rates associated with securities having similar grades as those in the Company’s portfolio have generally not been significant. Pre-refunded securities, if any, have been defeased by the issuer and are fully secured by cash and/or U.S. Treasury securities held in escrow for payment to holders when the underlying call dates of the securities are reached.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Taxable:
Held-to-maturity	$	11,062	$	10,679	$	33,133	$	23,169
Available-for-sale	23,672		14,169		67,150		41,622

Non-taxable:
Held-to-maturity	10,137		10,181		30,488		26,371
Available-for-sale	5,767		5,925		17,392		21,352
Total	$	50,638	$	40,954	$	148,163	$	112,514

The amortized cost and estimated fair value by maturity of securities as of September 30, 2023 are shown in the following table. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. Accordingly, actual maturities may differ from contractual maturities.


	Held-to-Maturity				Available-for-Sale
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	2,192	$	2,128	$	69,877	$	68,611
After one through five years	9,261		8,731		159,285		154,113
After five through ten years	384,518		319,298		220,681		189,896
After ten years	2,171,211		1,512,706		996,002		788,447
Securities not due on a single maturity date	1,178,324		1,005,348		2,444,803		2,157,092
Other securities (no maturity)	—		—		262		262
Total	$	3,745,506	$	2,848,211	$	3,890,910	$	3,358,421

There were no gross realized gains and no gross realized losses from the call or sale of securities during the three months ended September 30, 2023. There were no gross realized gains and $391,000 of gross realized losses recorded from the sale of securities during the nine months ended September 30, 2023. There were approximately $8,000 of gross realized gains and $30,000 of gross realized losses from the sale and call of securities during the three months ended September 30, 2022, and approximately $45,000 of gross realized gains and $271,000 of gross realized losses from the sale and call of securities during the nine months ended September 30, 2022. The income tax expense/benefit related to security gains/losses was 26.135% of the gross amounts in 2023 and 2022.

The Company has entered into various fair value hedging transactions to mitigate the impact of changing interest rates on the fair value of AFS securities. See Note 23, Derivative Instruments, for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.