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Securities | 9 Months Ended
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Sep. 30, 2021
Investments Debt And Equity Securities [Abstract] |
Securities | 5. Securities Securities Available for Sale This table provides detailed information about securities available for sale at September 30, 2021 and December 31, 2020 (in thousands):
September 30, 2021 |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury |  | $ | 69,515 |  |  | $ | 515 |  |  | $ | (171 | ) |  | $ | 69,859 |
U.S. Agencies |  |  | 89,113 |  |  |  | 4,542 |  |  |  | — |  |  |  | 93,655 |
Mortgage-backed |  |  | 7,309,736 |  |  |  | 126,649 |  |  |  | (66,164 | ) |  |  | 7,370,221 |
State and political subdivisions |  |  | 3,324,563 |  |  |  | 149,848 |  |  |  | (12,508 | ) |  |  | 3,461,903 |
Corporates |  |  | 163,920 |  |  |  | 3,345 |  |  |  | (213 | ) |  |  | 167,052 |
Total |  | $ | 10,956,847 |  |  | $ | 284,899 |  |  | $ | (79,056 | ) |  | $ | 11,162,690 |
December 31, 2020 |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury |  | $ | 29,911 |  |  | $ | 829 |  |  | $ | — |  |  | $ | 30,740 |
U.S. Agencies |  |  | 89,554 |  |  |  | 6,395 |  |  |  | — |  |  |  | 95,949 |
Mortgage-backed |  |  | 5,266,394 |  |  |  | 202,944 |  |  |  | (1,157 | ) |  |  | 5,468,181 |
State and political subdivisions |  |  | 3,424,309 |  |  |  | 199,848 |  |  |  | (538 | ) |  |  | 3,623,619 |
Corporates |  |  | 77,566 |  |  |  | 3,649 |  |  |  | (16 | ) |  |  | 81,199 |
Total |  | $ | 8,887,734 |  |  | $ | 413,665 |  |  | $ | (1,711 | ) |  | $ | 9,299,688 |
The following table presents contractual maturity information for securities available for sale at September 30, 2021 (in thousands):
|  | Amortized |  |  | Fair |
|  | Cost |  |  | Value |
Due in 1 year or less |  | $ | 170,215 |  |  | $ | 171,325 |
Due after 1 year through 5 years |  |  | 599,514 |  |  |  | 614,809 |
Due after 5 years through 10 years |  |  | 771,983 |  |  |  | 795,782 |
Due after 10 years |  |  | 2,105,399 |  |  |  | 2,210,553 |
Total |  |  | 3,647,111 |  |  |  | 3,792,469 |
Mortgage-backed securities |  |  | 7,309,736 |  |  |  | 7,370,221 |
Total securities available for sale |  | $ | 10,956,847 |  |  | $ | 11,162,690 |
Securities may be disposed of before contractual maturities due to sales by the Company or because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. For the nine months ended September 30, 2021, proceeds from the sales of securities available for sale were $295.5 million compared to $257.2 million for the same period in 2020. Securities available for sale with a fair value of $8.0 billion at September 30, 2021 and $7.8 billion at December 31, 2020 were pledged to secure U.S. Government deposits, other public deposits, certain trust deposits, derivative transactions, and repurchase agreements. Of these amounts, securities with a market value of $181.8 million and $371.5 million at September 30, 2021 and December 31, 2020, respectively, were pledged at the Federal Reserve Discount Window but were unencumbered as of those dates. Accrued interest on securities available for sale totaled $35.8 million and $42.6 million as of September 30, 2021 and December 31, 2020, respectively, and is included in the Accrued income line on the Company’s Consolidated Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available-for-sale securities presented above. Further, the Company has elected not to measure an ACL for accrued interest receivable. The following table shows the Company’s available-for-sale investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2021 and December 31, 2020 (in thousands):
|  | Less than 12 months |  |  | 12 months or more |  |  | Total |
September 30, 2021 |  | Count |  |  | Fair Value |  |  | Unrealized Losses |  |  | Count |  |  | Fair Value |  |  | Unrealized Losses |  |  | Count |  |  | Fair Value |  |  | Unrealized Losses |
Description of Securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury |  |  | 4 |  |  | $ | 59,419 |  |  | $ | (171 | ) |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 4 |  |  | $ | 59,419 |  |  | $ | (171 | )
U.S. Agencies |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Mortgage-backed |  |  | 249 |  |  |  | 3,939,967 |  |  |  | (64,932 | ) |  |  | 2 |  |  |  | 27,627 |  |  |  | (1,232 | ) |  |  | 251 |  |  |  | 3,967,594 |  |  |  | (66,164 | )
State and political subdivisions |  |  | 513 |  |  |  | 539,497 |  |  |  | (10,792 | ) |  |  | 19 |  |  |  | 33,968 |  |  |  | (1,716 | ) |  |  | 532 |  |  |  | 573,465 |  |  |  | (12,508 | )
Corporates |  |  | 26 |  |  |  | 36,405 |  |  |  | (213 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 26 |  |  |  | 36,405 |  |  |  | (213 | )
Total |  |  | 792 |  |  | $ | 4,575,288 |  |  | $ | (76,108 | ) |  |  | 21 |  |  | $ | 61,595 |  |  | $ | (2,948 | ) |  |  | 813 |  |  | $ | 4,636,883 |  |  | $ | (79,056 | )
|  | Less than 12 months |  |  | 12 months or more |  |  | Total |
December 31, 2020 |  | Count |  |  | Fair Value |  |  | Unrealized Losses |  |  | Count |  |  | Fair Value |  |  | Unrealized Losses |  |  | Count |  |  | Fair Value |  |  | Unrealized Losses |
Description of Securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  | $ | — |
U.S. Agencies |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Mortgage-backed |  |  | 16 |  |  |  | 174,234 |  |  |  | (1,157 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 16 |  |  |  | 174,234 |  |  |  | (1,157 | )
State and political subdivisions |  |  | 24 |  |  |  | 55,653 |  |  |  | (279 | ) |  |  | 6 |  |  |  | 2,833 |  |  |  | (259 | ) |  |  | 30 |  |  |  | 58,486 |  |  |  | (538 | )
Corporates |  |  | 4 |  |  |  | 5,335 |  |  |  | (16 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 5,335 |  |  |  | (16 | )
Total |  |  | 44 |  |  | $ | 235,222 |  |  | $ | (1,452 | ) |  |  | 6 |  |  | $ | 2,833 |  |  | $ | (259 | ) |  |  | 50 |  |  | $ | 238,055 |  |  | $ | (1,711 | )
The unrealized losses in the Company’s investments in U.S. Treasury securities, Government Sponsored Entity (GSE) mortgage-backed securities, State and political subdivisions, and Corporates were caused by changes in interest rates, and not from a decline in credit of the underlying issuers. The U.S. Treasury, U.S. Agency, and GSE mortgage-backed securities are all considered to be agency-backed securities with no risk of loss as they are either explicitly or implicitly guaranteed by the U.S. government. The changes in fair value in the agency-backed portfolios are solely driven by change in interest rates caused by changing economic conditions. The Company has no knowledge of any underlying credit issues and the cash flows underlying the debt securities have not changed and are not expected to be impacted by changes in interest rates. For the State and political subdivision portfolio, the majority of the Company’s holdings are in general obligation bonds, which have a very low historical default rate due to issuers generally having unlimited taxing authority to service the debt. For both the State and political subdivision and Corporate portfolios, the Company has a robust process for monitoring credit risk, including both pre-purchase and ongoing post-purchase credit reviews and analysis. The Company monitors credit ratings of all bond issuers in these segments and reviews available financial data, including market and sector trends. As of September 30, 2021 and December 31, 2020, there was no ACL related to the Company’s available-for-sale securities as the decline in fair value did not result from credit issues. Securities Held to Maturity The following table shows the Company’s held-to-maturity investments’ amortized cost, fair value, and gross unrealized gains and losses at September 30, 2021 and December 31, 2020, respectively (in thousands):
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
September 30, 2021 |  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
State and political subdivisions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due in 1 year or less |  | $ | 8,364 |  |  | $ | 370 |  |  | $ | (9 | ) |  | $ | 8,725 |
Due after 1 year through 5 years |  |  | 154,850 |  |  |  | 1,574 |  |  |  | (300 | ) |  |  | 156,124 |
Due after 5 years through 10 years |  |  | 501,529 |  |  |  | 4,117 |  |  |  | (7,497 | ) |  |  | 498,149 |
Due after 10 years |  |  | 424,681 |  |  |  | 1,882 |  |  |  | (24,745 | ) |  |  | 401,818 |
Total state and political subdivisions |  | $ | 1,089,424 |  |  | $ | 7,943 |  |  | $ | (32,551 | ) |  | $ | 1,064,816 |
Allowance for credit losses |  |  | (2,116 | ) |  |  |  |  |  |  |  |  |  |  |  |
Total state and political subdivisions, net of allowance for credit losses |  | $ | 1,087,308 |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
December 31, 2020 |  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
State and political subdivisions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due in 1 year or less |  | $ | 4,907 |  |  | $ | 29 |  |  | $ | — |  |  | $ | 4,936 |
Due after 1 year through 5 years |  |  | 123,643 |  |  |  | 3,402 |  |  |  | (144 | ) |  |  | 126,901 |
Due after 5 years through 10 years |  |  | 423,759 |  |  |  | 12,845 |  |  |  | (1,566 | ) |  |  | 435,038 |
Due after 10 years |  |  | 462,305 |  |  |  | 13,447 |  |  |  | (13,183 | ) |  |  | 462,569 |
Total state and political subdivisions |  | $ | 1,014,614 |  |  | $ | 29,723 |  |  | $ | (14,893 | ) |  | $ | 1,029,444 |
Allowance for credit losses |  |  | (2,610 | ) |  |  |  |  |  |  |  |  |  |  |  |
Total state and political subdivisions, net of allowance for credit losses |  | $ | 1,012,004 |  |  |  |  |  |  |  |  |  |  |  |  |
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. There were no sales of securities held to maturity during the nine months ended September 30, 2021 or 2020. The following table shows the Company’s held-to-maturity investments’ gross unrealized losses and fair value, aggregated by length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2021 and December 31, 2020, respectively (in thousands):
|  | Less than 12 months |  |  | 12 months or more |  |  | Total |
September 30, 2021 |  | Fair Value |  |  | Unrealized Losses |  |  | Fair Value |  |  | Unrealized Losses |  |  | Fair Value |  |  | Unrealized Losses |
State and political subdivisions |  | $ | 339,169 |  |  | $ | (8,130 | ) |  | $ | 197,950 |  |  | $ | (24,421 | ) |  | $ | 537,119 |  |  | $ | (32,551 | )
Total |  | $ | 339,169 |  |  | $ | (8,130 | ) |  | $ | 197,950 |  |  | $ | (24,421 | ) |  | $ | 537,119 |  |  | $ | (32,551 | )
|  | Less than 12 months |  |  | 12 months or more |  |  | Total |
December 31, 2020 |  | Fair Value |  |  | Unrealized Losses |  |  | Fair Value |  |  | Unrealized Losses |  |  | Fair Value |  |  | Unrealized Losses |
State and political subdivisions |  | $ | 132,271 |  |  | $ | (4,591 | ) |  | $ | 109,712 |  |  | $ | (10,302 | ) |  | $ | 241,983 |  |  | $ | (14,893 | )
Total |  | $ | 132,271 |  |  | $ | (4,591 | ) |  | $ | 109,712 |  |  | $ | (10,302 | ) |  | $ | 241,983 |  |  | $ | (14,893 | )
The unrealized losses in the Company’s held to maturity portfolio were caused by changes in the interest rate environment. The underlying bonds are evaluated for credit losses in conjunction with management’s estimate of the ACL based on credit rating. The following tables show the amortized cost basis by credit rating of the Company’s held-to-maturity investments at September 30, 2021 and December 31, 2020 (in thousands):
|  | Amortized Cost Basis by Credit Rating - HTM Debt Securities |
September 30, 2021 |  | A |  |  | BBB |  |  | BB |  |  | CCC-C |  |  | Total |
State and political subdivisions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Competitive |  | $ | 383,194 |  |  | $ | 595,824 |  |  | $ | 21,203 |  |  | $ | 910 |  |  | $ | 1,001,131 |
Utilities |  |  | 56,218 |  |  |  | 32,075 |  |  |  | — |  |  |  | — |  |  |  | 88,293 |
Total state and political subdivisions |  | $ | 439,412 |  |  | $ | 627,899 |  |  | $ | 21,203 |  |  | $ | 910 |  |  | $ | 1,089,424 |
|  | Amortized Cost Basis by Credit Rating - HTM Debt Securities |
December 31, 2020 |  | A |  |  | BBB |  |  | BB |  |  | CCC-C |  |  | Total |
State and political subdivisions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Competitive |  | $ | 340,290 |  |  | $ | 558,786 |  |  | $ | 18,078 |  |  | $ | 8,135 |  |  | $ | 925,289 |
Utilities |  |  | 56,232 |  |  |  | 33,093 |  |  |  | — |  |  |  | — |  |  |  | 89,325 |
Total state and political subdivisions |  | $ | 396,522 |  |  | $ | 591,879 |  |  | $ | 18,078 |  |  | $ | 8,135 |  |  | $ | 1,014,614 |
Competitive held-to-maturity securities include not-for-profit enterprises that provide public functions such as housing, higher education or healthcare, but do so in a competitive environment. It also includes project financings that can have relatively high enterprise risk, such as deals backed by revenues from sports or convention facilities or start-up transportation ventures. Utilities are public enterprises providing essential services with a monopoly or near-monopoly over the service area. This includes environmental utilities (water, sewer, solid waste), power utilities (electric distribution and generation, gas), and transportation utilities (airports, parking, toll roads, mass transit, ports). All held-to-maturity securities were current and not past due at September 30, 2021 and December 31, 2020. Accrued interest on securities held to maturity totaled $6.3 million and $5.3 million as September 30, 2021 and December 31, 2020, respectively, and is included in the Accrued income line on the Company’s Consolidated Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of held-to-maturity securities presented above. Further, the Company has elected not to measure an ACL for accrued interest receivable. Trading Securities There were net unrealized losses on trading securities of $154 thousand and net unrealized gains of $25 thousand at September 30, 2021 and 2020, respectively. Net unrealized gains and losses are included in trading and investment banking income on the Company’s Consolidated Statements of Income. Securities sold not yet purchased totaled $2.3 million and $2.2 million at September 30, 20 2 1 and December 31, 20 20, respectively, and are classified within the Other liabilities line of the Company’s Consolidated Balance Sheets. Other Securities The table below provides detailed information for Other securities at September 30, 2021 and December 31, 2020 (in thousands):
|  | September 30, 2021 |  |  | December 31, 2020 |
FRB and FHLB stock |  | $ | 36,222 |  |  | $ | 33,222 |
Equity securities with readily determinable fair values |  |  | 66,316 |  |  |  | 134,197 |
Equity securities without readily determinable fair values |  |  | 172,107 |  |  |  | 128,634 |
Total |  | $ | 274,645 |  |  | $ | 296,053 |
Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is mainly tied to the level of borrowings from the FHLB. These holdings are carried at cost. Equity securities with readily determinable fair values are generally traded on an exchange and market prices are readily available. Equity securities without readily determinable fair values include equity investments which are held by a subsidiary qualified as a Small Business Investment Company, as well as investments in low-income housing partnerships within the areas the Company serves. As of December 31, 2020, equity securities without readily determinable fair values also included Prairie Capital Management (PCM) alternative investments in hedge funds and private equity funds, which are accounted for as equity-method investments. During the first quarter of 2021, the Company sold its membership interests in PCM. Unrealized gains or losses on equity securities with and without readily determine fair values are recognized in the Investment securities gains, net line of the Company’s Consolidated Statements of Income. Investment Securities Gains, Net The table below presents the components of Investments securities (losses) gains, net for the three and nine months ended September 30, 2021 and September 30, 2020 (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Investment securities (losses) gains, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gains realized on sales |  | $ | 1,060 |  |  | $ | 311 |  |  | $ | 5,080 |  |  | $ | 5,715 |
Losses realized on sales |  |  | (2 | ) |  |  | — |  |  |  | (2 | ) |  |  | (171 | )
Equity securities with readily determinable fair values: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value adjustments, net |  |  | (4,427 | ) |  |  | 84 |  |  |  | (9,607 | ) |  |  | 84 |
Equity securities without readily determinable fair values: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value adjustments, net |  |  | (141 | ) |  |  | (870 | ) |  |  | 8,138 |  |  |  | 1,996 |
Total investment securities (losses) gains, net |  | $ | (3,510 | ) |  | $ | (475 | ) |  | $ | 3,609 |  |  | $ | 7,624 |

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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