And it’s really low to no growth on average for the next couple of years. And so that’s the — basically the base case scenario when you take the weightings, consensus baseline would be positive to the allowance. But we’re really aligned to a slow to no-growth scenario for the allowance.Jared Shaw Okay, thanks a lot. Operator The next question comes from Kevin Fitzsimmons from D.A. Davidson. Kevin, your line is open. Please go ahead. Kevin Fitzsimmons Hey guys, good morning. I just — I know we’ve had a few questions on credit just more general and top level, but I just wanted to — if this has been addressed already, I apologize, but there was a linked quarter increase in nonperformers, and it looks like also special mention and substandard.
And I’m just wondering if there’s any kind of common thread to that, is that just more what’s happening in the environment, is it more of a proactive stance? I know, Kevin, earlier, you mentioned about some of the problem credits are ones that were challenged before and just have had some lifelines thrown out from the government, and now they’re still challenged. But just a little more color on — any color on what segments are driving that deterioration that we saw linked quarter? Thanks. Robert Derrick Hey Kevin, this is Bob. Thanks for the question. As far as NPLs go moved up to 41 basis points, it’s really a handful of credits that we already had rated that kind of moved into nonaccrual status at the same time. Again, I would point to the level of criticized and classified accruing loans behind that as being fairly manageable with no specific industry or concentration, if you will, geographically speaking to speak of.
So a few credits that were a little bit larger, and then you had just normal migration due to the economic environment in sort of our smaller business and consumer books. So when you do the math on that, throw in the larger ones, it pushes you up, still 41 basis points about where we were a few quarters back. So not significantly higher, but certainly migrating up. As we had mentioned, the bias is still probably for negative migration although it’s certainly within our expectations. In terms of charge-offs, I kind of felt like that’s what you’re asking as we were going forward. Those will eventually — they will work their way back up to some level of what you may call normalization. I tend to think that if you go back pre-pandemic, and we were in the 25 to 30 basis point range, if you will, that probably feels okay, although it’s certainly subject to quarterly swings, particularly if you have some larger credits.
But all in all, that’s what’s driving the slight increase in those numbers, Kevin.Kevin Fitzsimmons Okay, great, great. Thanks. One quick follow-up, just there was a lot of focus a number of weeks ago on underlying losses within held to maturity. You guys have been pretty exclusively, I think, exclusively available for sale. And just maybe if you can touch on the trade-offs in that approach and whether that may — whether that could or would change going forward?Jamie Gregory You’re right. We’re 100% available for sale. As we thought about the use of held to maturity, we believe that it really had more negatives than positives where it limits your ability to trade the securities, and all you get is a change in the accounting treatment. And so there’s no economic benefit outside of the appearance of AOCI on the balance sheet and in tangible common equity.
And so we did not choose or elect to put any securities in held to maturity. It has been an interesting time over the past quarter as this has become a focus and looking at AOCI and comparing the unrealized losses with and without held to maturity. For us, as we reflect on the use of it, we still believe that it is an accounting treatment that doesn’t really change anything, but it does provide a limitation on your ability to manage your balance sheet. And so it’s not that attractive.When it becomes attractive would be if there was a change in the regulatory environment where you had to include AOCI in regulatory capital ratios. And if that happened and held to maturity securities were excluded from that, then that would materially change the view around the benefits of using the held to maturity designation.
Clearly, there’s no clarity around that — what will happen there and how that will play out. But that’s generally how we think about it. But to date, we’re very comfortable with where we are with our securities portfolio, very comfortable with the unrealized losses in that portfolio. You saw some improvement quarter-on-quarter in that, and we will wait to see if there are any changes on the regulatory side to the treatment of AOCI.Kevin Fitzsimmons But Jamie, do you think that given all that attention that was on held to maturity, you think they’d never make that change of doing it for AOCI but not for held to maturity?Jamie Gregory That’s beyond me. I can’t opine on the direction they would go with this. To me, logically, if your view is that you want to look at long duration risk on the balance sheet and you want to focus in on securities, then you should probably include everything.
But I can’t opine on what the regulations will be in the future.Kevin Blair And Kevin, you know this, but that’s a very surgical way to think about it because nobody is marking the deposit side on the other side of the ledger. So when you look at it from an EVE perspective, you could argue that you’re only looking at one component of it. And if you mark the liabilities, you’d be in a very different position.Kevin Fitzsimmons That is a very fair point. Okay, thank you guys. Kevin Blair Thank you Kevin.Operator The next question comes from Christopher Marinac from Janney Montgomery Scott. Christopher, your line is open. Please go ahead. Christopher Marinac Thanks very much. Kevin, I was just going to ask you the same point about marketing deposits, so thank you for covering that.
My other question was on the FHLB increase. Was that due to the overall line or did you have to pledge more collateral this quarter?Jamie Gregory That is due to pledging more collateral as we’ve always felt comfortable with our liquidity profile and contingent liquidity sources. But this — in the past month, there have been new metrics that people, that the press and analysts have focused in on like contingent liquidity relative to uninsured deposits and ratios like that. And so we spent a lot of time over the past few weeks looking at our loans that were not pledged anywhere. And we had almost $30 billion of unpledged loans. And so we spent time looking at those data tapes, sending them to the home loan bank, sending them to the Federal Reserve and increasing our contingent liquidity at those locations.
