SECURITIES

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

The following table summarizes the amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities and securities HTM at December 31, 2022 and 2021:


($ in thousands)	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S Treasury	$	135,752	$	—	$	11,898	$	123,854
Obligations of U.S. government agencies and sponsored entities	163,054		3		18,688		144,369
Tax-exempt and taxable obligations of states and municipal subdivisions	519,190		598		61,931		457,857
Mortgage-backed securities - residential	341,272		11		42,041		299,242
Mortgage-backed securities - commercial	215,200		60		24,363		190,897
Corporate obligations	43,869		—		2,987		40,882
Total available-for-sale	$	1,418,337	$	672	$	161,908	$	1,257,101
Held-to-maturity:
U.S. Treasury	$	109,631	$	—	$	5,175	$	104,456
Obligations of U.S. government agencies and sponsored entities	33,789		—		2,153		31,636
Tax-exempt and taxable obligations of states and municipal subdivisions	247,467		4,525		13,699		238,293
Mortgage-backed securities - residential	156,119		—		17,479		138,640
Mortgage-backed securities - commercial	134,478		7		13,798		120,687
Corporate obligations	10,000		—		1,615		8,385
Total held-to-maturity	$	691,484	$	4,532	$	53,919	$	642,097


($ in thousands)	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S Treasury	$	135,889	$	83	$	814	$	135,158
Obligations of U.S. government agencies and 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 Company reassessed classification of certain investments and effective October 2022, the Company transferred $863 thousand of obligations of U.S. government agencies and sponsored entities, $1.2 million of mortgage -backed securities - commercial, and $137.5 million of tax-exempt and taxable obligations of states and municipal subdivisions from AFS to HTM securities. The securities were transferred at their amortized costs basis, net of any remaining unrealized gain or loss reported in accumulated other comprehensive income. The related unrealized loss of $36.8 million included in other comprehensive income remained in other comprehensive income, to be amortized out of other comprehensive income with an offsetting entry to interest income as a yield adjustment through earnings over the remaining term of the securities. There was no allowance for credit loss associated with the AFS securities that were transferred to HTM.

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 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 December 31, 2022 and 2021, the results of the analysis did not identify any securities where the decline was indicative of credit loss factors; therefore, no DCF analysis was performed and 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 $6.2 million and $6.8 million at December 31, 2022 and 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 December 31, 2022.

Securities Held to Maturity

At December 31, 2022, the potential credit loss exposure was $242 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 for the years ended December 31, 2022 and 2021.

Accrued interest receivable is excluded from the estimate of credit losses for securities held-to-maturity. Accrued interest receivable totaled $3.6 million and $0 at December 31, 2022 and 2021, respectively and was reported in interest receivable on the accompanying Consolidated Balance Sheet.

At December 31, 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 for the years ended December 31, 2022 and 2021.

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 December 31, 2022, aggregated by credit quality indicators.


($ in thousands)	December 31, 2022
Aaa	$	467,736
Aa1/Aa2/Aa3	110,854
A1/A2	13,757
BBB	10,000
Not rated	89,137
Total	$	691,484

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.


($ in thousands)	December 31, 2022
Available-for-Sale	Amortized Cost		Fair Value
Within one year	$	48,959	$	47,812
One to five years	264,768		246,806
Five to ten years	358,442		314,217
Beyond ten years	189,695		158,126
Mortgage-backed securities: residential	341,273		299,242
Mortgage-backed securities: commercial	215,200		190,898
Total	$	1,418,337	$	1,257,101
Held-to-maturity
Within one year	$	20,262	$	20,096
One to five years	109,905		104,124
Five to ten years	47,855		43,459
Beyond ten years	222,865		215,091
Mortgage-backed securities: residential	156,119		138,640
Mortgage-backed securities: commercial	134,478		120,687
Total	$	691,484	$	642,097

The proceeds from sales and calls of securities and the associated gains and losses are listed below:


($ in thousands)	2022		2021		2020
Gross gains	$	82	$	202	$	289
Gross losses	164		59		8
Realized net (loss) gain	$	(82)	$	143	$	281

The amortized costs of securities pledged as collateral, to secure public deposits and for other purposes, was $1.031 billion and $889.5 million at December 31, 2022 and 2021, respectively.

The following table summarizes securities in an unrealized losses position for which an allowance for credit losses has not been recorded at December 31, 2022 and 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:


	2022
($ in thousands)	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-sale:
U.S. Treasury	$	4,563	$	419	$	119,292	$	11,479	$	123,855	$	11,898
Obligations of U.S. government agencies and sponsored entities	34,254		2,293		109,431		16,395		143,685		18,688
Tax-exempt and taxable obligations of states and municipal subdivisions	275,202		31,152		159,508		30,779		434,710		61,931
Mortgage-backed securities - residential	76,125		4,970		222,274		37,071		298,399		42,041
Mortgage-backed securities - commercial	50,193		3,025		136,062		21,338		186,255		24,363
Corporate obligations	35,142		1,995		5,739		992		40,881		2,987
Total available-for-sale	$	475,479	$	43,854	$	752,306	$	118,054	$	1,227,785	$	161,908
Held-to-maturity:
U.S. Treasury	$	104,457	$	5,175	$	—	$	—	$	104,457	$	5,175
Obligations of U.S. government agencies and sponsored entities	31,636		2,153		—		—		31,636		2,153
Tax-exempt and taxable obligations of states and municipal subdivisions	127,628		13,583		15,303		116		142,931		13,699
Mortgage-backed securities - residential	138,639		17,479		—		—		138,639		17,479
Mortgage-backed securities - commercial	119,758		13,798		—		—		119,758		13,798
Corporate obligations	8,385		1,615		—		—		8,385		1,615
Total held-to-maturity	$	530,503	$	53,803	$	15,303	$	116	$	545,806	$	53,919


	2021
	Less than 12 Months				12 Months or Longer				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		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 states 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 available-for-sale	$	966,502	$	10,511	$	20,938	$	585	$	987,440	$	11,096

At December 31, 2022 and December 31, 2021, the Company’s securities portfolio consisted of 1,265 and 304 securities, respectively, which were in an unrealized loss position. AFS 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 December 31, 2022. The Company did not consider these investments to be other-than-temporarily impaired at December 31, 2021.