1ST SOURCE CORP [SRCE] Filings

10-Q 1 source-20230630.htm 10-Q 2ND QUARTER 2023 source-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-6233

1st Source Corporation

(Exact name of registrant as specified in its charter)


Indiana						35-1068133
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


100 North Michigan Street
South Bend,	IN	46601
(Address of principal executive offices)		(Zip Code)

(574) 235-2000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock - without par value

SRCE

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

Number of shares of common stock outstanding as of July 14, 2023 — 24,687,881 shares

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TABLE OF CONTENTS


		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Financial Condition — June 30, 2023 and December 31, 2022	3
	Consolidated Statements of Income — three and six months ended June 30, 2023 and 2022	4
	Consolidated Statements of Comprehensive Income (Loss) — three and six months ended June 30, 2023 and 2022	5
	Consolidated Statements of Shareholders’ Equity — three and six months ended June 30, 2023 and 2022	6
	Consolidated Statements of Cash Flows — six months ended June 30, 2023 and 2022	7
	Notes to the Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45

SIGNATURES		46

EXHIBITS
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 32.1
	Exhibit 32.2

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1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited - Dollars in thousands)


	June 30, 2023		December 31, 2022
ASSETS
Cash and due from banks	$	86,742	$	84,703
Federal funds sold and interest bearing deposits with other banks	25,933		38,094
Investment securities available-for-sale	1,661,405		1,775,128
Other investments	25,320		25,293

Mortgages held for sale	2,321		3,914
Loans and leases, net of unearned discount:
Commercial and agricultural	797,188		812,031
Solar	376,905		381,163
Auto and light truck	901,054		808,117
Medium and heavy duty truck	319,634		313,862
Aircraft	1,060,340		1,077,722
Construction equipment	1,012,969		938,503
Commercial real estate	985,323		943,745
Residential real estate and home equity	617,495		584,737
Consumer	144,435		151,282
Total loans and leases	6,215,343		6,011,162
Allowance for loan and lease losses	(143,542)		(139,268)
Net loans and leases	6,071,801		5,871,894
Equipment owned under operating leases, net	26,582		31,700
Net premises and equipment	44,089		44,773
Goodwill and intangible assets	83,897		83,907
Accrued income and other assets	386,728		380,010
Total assets	$	8,414,818	$	8,339,416
LIABILITIES
Deposits:
Noninterest-bearing demand	$	1,721,947	$	1,998,151
Interest-bearing deposits:
Interest-bearing demand	2,528,231		2,591,464
Savings	1,163,166		1,198,191
Time	1,563,174		1,140,459
Total interest-bearing deposits	5,254,571		4,930,114
Total deposits	6,976,518		6,928,265
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	69,308		141,432
Other short-term borrowings	118,377		74,097
Total short-term borrowings	187,685		215,529
Long-term debt and mandatorily redeemable securities	46,649		46,555
Subordinated notes	58,764		58,764
Accrued expenses and other liabilities	165,115		166,537
Total liabilities	7,434,731		7,415,650
SHAREHOLDERS’ EQUITY
Preferred stock; no par value
Authorized 10,000,000 shares; none issued or outstanding	—		—
Common stock; no par value
Authorized 40,000,000 shares; issued 28,205,674 at June 30, 2023 and December 31, 2022	436,538		436,538
Retained earnings	744,442		694,862
Cost of common stock in treasury (3,523,113 shares at June 30, 2023 and 3,543,388 shares at December 31, 2022)	(120,410)		(119,642)
Accumulated other comprehensive loss	(139,550)		(147,690)
Total shareholders’ equity	921,020		864,068
Noncontrolling interests	59,067		$	59,698
Total equity	980,087		923,766
Total liabilities and equity	$	8,414,818	$	8,339,416

The accompanying notes are a part of the unaudited consolidated financial statements.

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1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited - Dollars in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Interest income:
Loans and leases	$	93,300	$	60,415	$	179,989	$	115,623
Investment securities, taxable	5,946		6,289		12,594		12,633
Investment securities, tax-exempt	330		157		812		291
Other	978		1,168		1,615		1,531
Total interest income	100,554		68,029		195,010		130,078
Interest expense:
Deposits	28,870		3,553		50,133		5,929
Short-term borrowings	1,625		23		3,018		47
Subordinated notes	1,028		851		2,048		1,674
Long-term debt and mandatorily redeemable securities	515		140		1,730		(652)
Total interest expense	32,038		4,567		56,929		6,998
Net interest income	68,516		63,462		138,081		123,080
Provision for credit losses	47		2,503		3,096		4,736
Net interest income after provision for credit losses	68,469		60,959		134,985		118,344
Noninterest income:
Trust and wealth advisory	6,467		6,087		12,146		12,001
Service charges on deposit accounts	3,118		2,942		6,121		5,734
Debit card	4,701		4,561		9,208		8,755
Mortgage banking	926		1,062		1,728		2,439
Insurance commissions	1,641		1,568		3,670		3,473
Equipment rental	2,326		3,295		4,829		6,957
Losses on investment securities available-for-sale	—		—		(44)		—
Other	3,590		3,315		8,434		6,616
Total noninterest income	22,769		22,830		46,092		45,975
Noninterest expense:
Salaries and employee benefits	28,236		25,562		56,833		51,029
Net occupancy	2,676		2,524		5,298		5,335
Furniture and equipment	1,414		1,384		2,721		2,679
Data processing	6,268		5,402		12,425		10,610
Depreciation – leased equipment	1,876		2,664		3,898		5,679
Professional fees	1,704		2,094		2,386		3,702
FDIC and other insurance	1,344		893		2,704		1,743
Business development and marketing	1,649		1,669		3,621		2,937

Other	3,998		3,463		8,700		7,277
Total noninterest expense	49,165		45,655		98,586		90,991
Income before income taxes	42,073		38,134		82,491		73,328
Income tax expense	9,626		8,804		18,913		16,597
Net income	32,447		29,330		63,578		56,731
Net (income) loss attributable to noncontrolling interests	(12)		(16)		(19)		(27)
Net income available to common shareholders	$	32,435	$	29,314	$	63,559	$	56,704
Per common share:
Basic net income per common share	$	1.30	$	1.18	$	2.55	$	2.28
Diluted net income per common share	$	1.30	$	1.18	$	2.55	$	2.28
Cash dividends	$	0.32	$	0.31	$	0.64	$	0.62
Basic weighted average common shares outstanding	24,686,435		24,691,747		24,686,760		24,717,625
Diluted weighted average common shares outstanding	24,686,435		24,691,747		24,686,760		24,717,625

The accompanying notes are a part of the unaudited consolidated financial statements.

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1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited - Dollars in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	32,447	$	29,330	$	63,578	$	56,731
Other comprehensive income (loss):
Unrealized (depreciation) appreciation of available-for-sale securities	(15,813)		(34,692)		10,663		(127,786)
Reclassification adjustment for realized losses included in net income	—		—		44		—
Income tax effect	3,728		8,218		(2,567)		30,636
Other comprehensive (loss) income, net of tax	(12,085)		(26,474)		8,140		(97,150)
Comprehensive income (loss)	20,362		2,856		$	71,718	$	(40,419)
Comprehensive (income) loss attributable to noncontrolling interests	(12)		(16)		(19)		(27)
Comprehensive income (loss) available to common shareholders	$	20,350	$	2,840	$	71,699	$	(40,446)

The accompanying notes are a part of the unaudited consolidated financial statements.

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1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited - Dollars in thousands, except per share amounts)



	Three Months Ended
	Preferred Stock		Common Stock		Retained Earnings		Cost of Common Stock in Treasury		Accumulated Other Comprehensive Income (Loss), Net		Total Shareholders’ Equity		Noncontrolling Interests		Total Equity
Balance at April 1, 2022	$	—	$	436,538	$	624,503	$	(115,654)	$	(80,537)	$	864,850	$	54,620	$	919,470
Net income	—		—		29,314		—		—		29,314		16		29,330
Other comprehensive loss	—		—		—		—		(26,474)		(26,474)		—		(26,474)
Issuance of 22,272 common shares under stock based compensation awards	—		—		474		439		—		913		—		913
Cost of 104,400 shares of common stock acquired for treasury	—		—		—		(4,661)		—		(4,661)		—		(4,661)
Common stock dividend ($0.31 per share)	—		—		(7,691)		—		—		(7,691)		—		(7,691)

Distributions to noncontrolling interests	—		—		—		—		—		—		(220)		(220)
Balance at June 30, 2022	$	—	$	436,538	$	646,600	$	(119,876)	$	(107,011)	$	856,251	$	54,416	$	910,667

Balance at April 1, 2023	$	—	$	436,538	$	719,495	$	(119,409)	$	(127,465)	$	909,159	$	59,285	$	968,444
Net income	—		—		32,435		—		—		32,435		12		32,447
Other comprehensive loss	—		—		—		—		(12,085)		(12,085)		—		(12,085)
Issuance of 20,285 common shares under stock based compensation awards	—		—		448		410		—		858		—		858
Cost of 33,276 shares of common stock acquired for treasury	—		—		—		(1,411)		—		(1,411)		—		(1,411)
Common stock dividend ($0.32 per share)	—		—		(7,936)		—		—		(7,936)		—		(7,936)


Distributions to noncontrolling interests	—		—		—		—		—		—		(230)		(230)
Balance at June 30, 2023	$	—	$	436,538	$	744,442	$	(120,410)	$	(139,550)	$	921,020	$	59,067	$	980,087


	Six Months Ended
	Preferred Stock		Common Stock		Retained Earnings		Cost of Common Stock in Treasury		Accumulated Other Comprehensive Income (Loss), Net		Total Shareholders’ Equity		Noncontrolling Interests		Total Equity
Balance at January 1, 2022	$	—	$	436,538	$	603,787	$	(114,209)	$	(9,861)	$	916,255	$	53,209	$	969,464


Net income	—		—		56,704		—		—		56,704		27		56,731
Other comprehensive loss	—		—		—		—		(97,150)		(97,150)		—		(97,150)
Issuance of 60,714 common shares under stock based compensation awards	—		—		1,498		1,169		—		2,667		—		2,667
Cost of 149,819 shares of common stock acquired for treasury	—		—		—		(6,836)		—		(6,836)		—		(6,836)
Common stock dividend ($0.62 per share)	—		—		(15,389)		—		—		(15,389)		—		(15,389)
Contributions from noncontrolling interests	—		—		—		—		—		—		1,627		1,627
Distributions to noncontrolling interests	—		—		—		—		—		—		(447)		(447)
Balance at June 30, 2022	$	—	$	436,538	$	646,600	$	(119,876)	$	(107,011)	$	856,251	$	54,416	910,667

Balance at January 1, 2023	$	—	$	436,538	$	694,862	$	(119,642)	$	(147,690)	$	864,068	$	59,698	$	923,766


Net income	—		—		63,559		—		—		63,559		19		63,578
Other comprehensive income	—		—		—		—		8,140		8,140		—		8,140
Issuance of 69,910 common shares under stock based compensation awards	—		—		1,874		1,409		—		3,283		—		3,283
Cost of 49,635 shares of common stock acquired for treasury	—		—		—		(2,177)		—		(2,177)		—		(2,177)
Common stock dividend ($0.64 per share)	—		—		(15,853)		—		—		(15,853)		—		(15,853)

Distributions to noncontrolling interests	—		—		—		—		—		—		(650)		(650)

Balance at June 30, 2023	$	—	$	436,538	$	744,442	$	(120,410)	$	(139,550)	$	921,020	$	59,067	$	980,087

The accompanying notes are a part of the unaudited consolidated financial statements.

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1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Dollars in thousands)


	Six Months Ended June 30,
	2023		2022
Operating activities:
Net income	$	63,578	$	56,731
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	3,096		4,736
Depreciation of premises and equipment	2,307		2,322
Depreciation of equipment owned and leased to others	3,898		5,679
Stock-based compensation	2,240		1,619
Amortization of investment securities premiums and accretion of discounts, net	2,062		2,110
Amortization of mortgage servicing rights	435		736

Amortization of right of use assets	1,554		1,577
Deferred income taxes	(4,100)		(3,259)
Losses on investment securities available-for-sale	44		—
Originations of loans held for sale, net of principal collected	(19,345)		(55,752)
Proceeds from the sales of loans held for sale	21,571		64,533
Net gain on sale of loans held for sale	(633)		(1,022)
Net gain on sale of other real estate and repossessions	(103)		(269)


Change in interest receivable	(397)		(377)
Change in interest payable	14,216		409
Change in other assets	(1,078)		(729)
Change in other liabilities	2,899		9,788
Other	(617)		(1,879)
Net change in operating activities	91,627		86,953

Investing activities:
Proceeds from sales of investment securities available-for-sale	64,928		—
Proceeds from maturities and paydowns of investment securities available-for-sale	60,396		102,979
Purchases of investment securities available-for-sale	(3,000)		(206,223)
Net change in partnership investments	(18,770)		(10,081)
Net change in other investments	(27)		1,651
Loans sold or participated to others	36,385		10,223
Proceeds from principal payments on direct finance leases	28,659		21,358

Net change in loans and leases	(269,172)		(237,225)
Net change in equipment owned under operating leases	1,220		6,175
Purchases of premises and equipment	(1,625)		(552)
Proceeds from disposal of premises and equipment	3		18
Purchases of bank owned life insurance policies	—		(10,000)
Proceeds from sales of other real estate and repossessions	963		2,305
Net change in investing activities	(100,040)		(319,372)

Financing activities:
Net change in demand deposits and savings accounts	(374,462)		165,019
Net change in time deposits	422,715		(99,188)
Net change in short-term borrowings	(27,844)		(32,188)

Payments on long-term debt	(3,055)		(23,414)
Stock issued under stock purchase plans	77		252
Acquisition of treasury stock	(2,177)		(6,836)
Net (distributions to) contributions from noncontrolling interests	(650)		1,180
Cash dividends paid on common stock	(16,313)		(15,830)
Net change in financing activities	(1,709)		(11,005)


Net change in cash and cash equivalents	(10,122)		(243,424)
Cash and cash equivalents, beginning of year	122,797		525,187
Cash and cash equivalents, end of period	$	112,675	$	281,763
Supplemental Information:
Non-cash transactions:
Loans transferred to other real estate and repossessed assets	$	668	$	1,279
Common stock matching contribution to Employee Stock Ownership and Profit Sharing Plan	1,753		683
Right of use assets obtained in exchange for lease obligations	2,710		561

The accompanying notes are a part of the unaudited consolidated financial statements.

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1ST SOURCE CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Accounting Policies

1st Source Corporation is a bank holding company headquartered in South Bend, Indiana that provides, through its subsidiaries (collectively referred to as “1st Source” or “the Company”), a broad array of financial products and services.

Basis of Presentation – The accompanying unaudited consolidated financial statements reflect all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income (loss), changes in shareholders’ equity, and cash flows for the periods presented. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted.

The Notes to the Consolidated Financial Statements appearing in 1st Source Corporation’s Annual Report on Form 10-K (2022 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Statement of Financial Condition at December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation.

Use of Estimates in the Preparation of Financial Statements – Financial statements prepared in accordance with GAAP require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.

Loans and Leases – Loans are stated at the principal amount outstanding, net of unamortized deferred loan origination fees and costs and net of unearned income. Interest income is accrued as earned based on unpaid principal balances. Origination fees and direct loan and lease origination costs are deferred, and the net amount amortized to interest income over the estimated life of the related loan or lease. Loan commitment fees are deferred and amortized into other income over the commitment period.

Direct financing leases are carried at the aggregate of lease payments plus estimated residual value of the leased property, net of unamortized deferred lease origination fees and costs and unearned income. Only those costs incurred as a direct result of closing a lease transaction are capitalized and all other initial direct costs are expensed immediately. Interest income on direct financing leases is recognized over the term of the lease to achieve a constant periodic rate of return on the outstanding investment.

Accrued interest is included in Accrued Income and Other Assets on the Consolidated Statements of Financial Condition and is excluded from the calculation of the allowance for credit losses. The accrual of interest on loans and leases is discontinued when a loan or lease becomes contractually delinquent for 90 days, or when an individual analysis of a borrower’s credit worthiness indicates a credit should be placed on nonperforming status, except for residential mortgage loans and consumer loans that are well secured and in the process of collection. Residential mortgage loans are placed on nonaccrual at the time the loan is placed in foreclosure. When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the allowance for loan and lease losses. However, in some cases, the Company may elect to continue the accrual of interest when the net realizable value of collateral is sufficient to cover the principal and accrued interest. When a loan or lease is classified as nonaccrual and the future collectability of the recorded loan or lease balance is doubtful, collections on interest and principal are applied as a reduction to principal outstanding. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured, which is typically evidenced by a sustained repayment performance of at least six months.

Occasionally, the Company modifies loans and leases to borrowers in financial distress (typically denoted by internal credit quality graded “substandard” or worse) by providing term extensions, other-than-insignificant payment delays, or interest rate reductions. In some cases, a combination of modifications are made to the same loan or lease. These modifications typically result from the Company’s loss mitigation activities. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance for loan and lease losses estimate or a charge-off to the allowance for loan and lease losses.

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Note 2 — Recent Accounting Pronouncements

Investments-Equity Method and Joint Ventures: In March 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards (ASU) No. 2023-02 “Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. This guidance is effective for public business entities for fiscal years including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted in any interim period. The Company is assessing ASU 2023-02 and its impact on its accounting and disclosures.

Fair Value Measurements: In June 2022, the FASB issued ASU No. 2022-03 “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This guidance is effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company has assessed ASU 2022-03 and does not expect it to have a material impact on its accounting and disclosures.

Reference Rate Reform: In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. In January 2021, the FASB issued ASU 2021-01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. In December of 2022, the FASB issued ASU No. 2022-06 which extended the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. The guidance ensures the relief in Topic 848 covers the period of time during which a significant number of modifications may take place and the ASU defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. The Company implemented its transition plan away from LIBOR as of June 30, 2023. The adoption of these ASUs did not have a material impact on its accounting and disclosures.

Note 3 — Investment Securities Available-For-Sale

The following table shows investment securities available-for-sale.


(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
June 30, 2023
U.S. Treasury and Federal agencies securities	$	1,043,977	$	—	$	(84,699)	$	959,278
U.S. States and political subdivisions securities	110,145		141		(7,375)		102,911
Mortgage-backed securities — Federal agencies	681,552		3		(91,120)		590,435
Corporate debt securities	8,467		—		(266)		8,201
Foreign government and other securities	600		—		(20)		580
Total debt securities available-for-sale	$	1,844,741	$	144	$	(183,480)	$	1,661,405

December 31, 2022
U.S. Treasury and Federal agencies securities	$	1,090,743	$	—	$	(92,145)	$	998,598
U.S. States and political subdivisions securities	130,670		591		(8,499)		122,762
Mortgage-backed securities — Federal agencies	730,672		60		(93,674)		637,058
Corporate debt securities	16,486		—		(355)		16,131
Foreign government and other securities	600		—		(21)		579
Total debt securities available-for-sale	$	1,969,171	$	651	$	(194,694)	$	1,775,128

Amortized cost excludes accrued interest receivable which is included in Accrued Income and Other Assets on the Consolidated Statements of Financial Condition. At June 30, 2023 and December 31, 2022, accrued interest receivable on investment securities available-for-sale was $4.96 million and $5.98 million, respectively.

At June 30, 2023 and December 31, 2022, the residential mortgage-backed securities held by the Company consisted primarily of GNMA, FNMA and FHLMC pass-through certificates which are guaranteed by those respective agencies of the United States government (Government Sponsored Enterprise, GSEs).

Table of Contents

The following table shows the contractual maturities of investments in debt securities available-for-sale at June 30, 2023. Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	123,846	$	121,030
Due after one year through five years	1,001,283		914,043
Due after five years through ten years	15,333		13,272
Due after ten years	22,727		22,625
Mortgage-backed securities	681,552		590,435
Total debt securities available-for-sale	$	1,844,741	$	1,661,405

The following table summarizes gross unrealized losses and fair value by investment category and age. At June 30, 2023, the Company’s available-for-sale securities portfolio consisted of 709 securities, 666 of which were in an unrealized loss position.


	Less than 12 Months				12 months or Longer				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2023
U.S. Treasury and Federal agencies securities	$	14,317	$	(474)	$	944,961	$	(84,225)	$	959,278	$	(84,699)
U.S. States and political subdivisions securities	21,967		(277)		63,862		(7,098)		85,829		(7,375)
Mortgage-backed securities - Federal agencies	82,096		(3,993)		506,019		(87,127)		588,115		(91,120)
Corporate debt securities	—		—		8,201		(266)		8,201		(266)
Foreign government and other securities	—		—		580		(20)		580		(20)
Total debt securities available-for-sale	$	118,380	$	(4,744)	$	1,523,623	$	(178,736)	$	1,642,003	$	(183,480)

December 31, 2022
U.S. Treasury and Federal agencies securities	$	164,481	$	(6,299)	$	834,117	$	(85,846)	$	998,598	$	(92,145)
U.S. States and political subdivisions securities	57,592