SECURITIES

6 Months Ended

Jun. 30, 2022

The following table summarizes the amortized cost, gross unrealized gains and losses, and estimated fair values of securities available-for-sale (“AFS”) and securities held-to-maturity at June 30, 2022 and December 31, 2021.


($ in thousands)	June 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale securities:
U.S. Treasury	$	135,820	$	—	$	8,979	$	126,841
Obligations of U.S. government agencies and sponsored entities	172,020		16		13,375		158,660
Tax-exempt and taxable obligations of states and municipal subdivisions	671,353		1,126		80,661		591,818
Mortgage-backed securities - residential	368,957		71		29,201		339,827
Mortgage-backed securities - commercial	251,865		118		17,176		234,807
Corporate obligations	38,326		83		1,115		37,294
Total available-for-sale	$	1,638,341	$	1,413	$	150,507	$	1,489,247
Held-to-maturity:
U.S. Treasury	$	109,527	$	—	$	3,403	$	106,124
Obligations of U.S. government agencies and sponsored entities	33,127		—		489		32,638
Tax-exempt and taxable obligations of states and municipal subdivisions	146,958		162		11,576		135,544
Mortgage-backed securities - residential	163,453		—		10,139		153,314
Mortgage-backed securities - commercial	130,089		66		5,793		124,362
Corporate obligations	10,000		—		649		9,351
Total held-to-maturity	$	593,154	$	228	$	32,049	$	561,333


($ in thousands)	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale securities:
U.S. Treasury	$	135,889	$	83	$	814	$	135,158
Obligations of U.S. government agencies sponsored entities	182,877		1,238		1,094		183,021
Tax-exempt and taxable obligations of states and municipal subdivisions	698,861		12,452		2,811		708,502
Mortgage-backed securities - residential	410,269		4,123		3,425		410,967
Mortgage-backed securities - commercial	277,353		2,917		2,939		277,331
Corporate obligations	35,904		962		13		36,853
Total available-for-sale	$	1,741,153	$	21,775	$	11,096	$	1,751,832

The amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

ACL on Securities

Securities Available for Sale

Quarterly, the Company evaluates if a security has a fair value less than its amortized cost. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, the Company performs further analysis as outlined below:

•Review the extent to which the fair value is less than the amortized cost and determine if the decline is indicative of credit loss or other factors.

•The securities that violate the credit loss trigger above would be subjected to additional analysis.

•If the Company determines that a credit loss exists, the credit portion of the allowance will be measured using the discounted cash flow (“DCF”) analysis using the effective interest rate. The amount of credit loss the Company records will be limited to the amount by which the amortized cost exceeds the fair value. The allowance for the calculated credit loss will be monitored going forward for further credit deterioration or improvement.

At both June 30, 2022 and December 31, 2021, the results of the analysis did not identify any securities where the decline was indicative of credit loss factors; therefore, no credit loss was recognized on any of the securities AFS.

Accrued interest receivable is excluded from the estimate of credit losses for securities AFS. Accrued interest receivable totaled $7.2 million and $6.8 million at June 30, 2022 and December 31, 2021, respectively and was reported in interest receivable on the accompanying Consolidated Balance Sheet.

All AFS securities were current with no securities past due or on nonaccrual as of June 30, 2022 and December 31, 2021.

Securities Held to Maturity

At June 30, 2022, the potential credit loss exposure was $391 thousand and consisted of tax-exempt and taxable obligations of states and municipal subdivisions and corporate obligations securities. After applying appropriate probability of default (“PD”) and loss given default (“LGD”) assumptions, the total amount of current expected credit losses was deemed immaterial. Therefore, no reserve was recorded at June 30, 2022.

Accrued interest receivable is excluded from the estimate of credit losses for securities held-to-maturity. Accrued interest receivable totaled $2.0 million and $0 at June 30, 2022 and December 31, 2021, respectively and was reported in interest receivable on the accompanying Consolidated Balance Sheet.

At June 30, 2022, the Company had no securities held-to-maturity that were past due 30 days or more as to principal or interest payments. The Company had no securities held-to-maturity classified as nonaccrual at June 30, 2022.

The Company monitors the credit quality of the debt securities held-to-maturity through the use of credit ratings. The Company monitors the credit ratings on a quarterly basis. The following table summarizes the amortized cost of debt securities held-to-maturity at June 30, 2022, aggregated by credit quality indicators.


($ in thousands)	June 30, 2022
A2	$	1,419
Aa1/Aa2/Aa3	19,711
Aaa	446,055
Not rated	125,969
Total	$	593,154


($ in thousands)	June 30, 2022
	Amortized Cost		Fair Value
Available-for-sale:
Due less than one year	$	27,963	$	27,852
Due after one year through five years	269,064		257,549
Due after five years through ten years	387,471		350,647
Due greater than ten years	333,021		278,565
Mortgage-backed securities - residential	368,957		339,827
Mortgage-backed securities - commercial	251,865		234,807
Total	$	1,638,341	$	1,489,247

Held-to-maturity:
Due less than one year	$	20,798	$	20,545
Due after one year through five years	109,904		106,351
Due after five years through ten years	35,543		33,601
Due greater than ten years	133,367		123,160
Mortgage-backed securities - residential	163,453		153,314
Mortgage-backed securities - commercial	130,089		124,362
Total	$	593,154	$	561,333

The amortized costs of securities pledged as collateral, to secure public deposits and for other purposes, was $1.075 billion and $889.5 million at June 30, 2022 and December 31, 2021, respectively.

The following table summarizes securities in an unrealized loss position for which an allowance for credit losses has not been recorded at June 30, 2022 and December 31, 2021. There were no held-to-maturity securities at December 31, 2021. The securities are aggregated by major security type and length of time in a continuous unrealized loss position:


($ in thousands)	June 30, 2022
	Losses < 12 Months				Losses 12 Months or >				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Available-for-sale:
U.S. Treasury	$	124,260	$	8,794	$	2,582	$	185	$	126,842	$	8,979
Obligations of U.S. government agencies and sponsored entities	152,689		12,837		4,503		538		157,192		13,375
Tax-exempt and taxable obligations of state and municipal subdivisions	477,118		70,673		58,393		9,988		535,511		80,661
Mortgage-backed securities - residential	299,279		24,606		31,500		4,595		330,779		29,201
Mortgage-backed securities - commercial	182,312		13,954		30,647		3,222		212,959		17,176
Corporate obligations	27,684		1,111		27		4		27,711		1,115
Total	$	1,263,342	$	131,975	$	127,652	$	18,532	$	1,390,994	$	150,507

Held-to-maturity:
U.S. Treasury	$	106,124	$	3,403	$	—	$	—	$	106,124	$	3,403
Obligations of U.S. government agencies and sponsored entities	32,638		489		—		—		32,638		489
Tax-exempt and taxable obligations of state and municipal subdivisions	86,881		11,576		—		—		86,881		11,576
Mortgage-backed securities - residential	153,314		10,139		—		—		153,314		10,139
Mortgage-backed securities - commercial	119,649		5,793		—		—		119,649		5,793
Corporate obligations	9,351		649		—		—		9,351		649
Total	$	507,957	$	32,049	$	—	$	—	$	507,957	$	32,049


($ in thousands)	December 31, 2021
	Losses < 12 Months				Losses 12 Months or >				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Treasury	$	130,098	$	814	$	—	$	—	$	130,098	$	814
Obligations of U.S. government agencies and sponsored entities	121,402		933		5,254		161		126,656		1,094
Tax-exempt and taxable obligations of state and municipal subdivisions	249,430		2,692		3,692		119		253,122		2,811
Mortgage-backed securities - residential	284,183		3,228		8,912		197		293,095		3,425
Mortgage-backed securities - commercial	174,697		2,836		3,038		103		177,735		2,939
Corporate obligations	6,692		8		42		5		6,734		13
Total	$	966,502	$	10,511	$	20,938	$	585	$	987,440	$	11,096

At June 30, 2022 and December 31, 2021, the Company’s securities portfolio consisted of 1,237 and 304 securities, respectively, which were in an unrealized loss position. Securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. The unrealized losses shown above are due to increases in market rates over the yields available at the time of purchase of the underlying securities and not credit quality. 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 the investments before recovery of their amortized cost basis. No allowance for credit losses was needed at June 30, 2022 and December 31, 2021.