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Investment Securities

12 Months Ended

Dec. 31, 2024

3. Investment Securities

As of December 31, 2024 and 2023, investment securities consisted predominantly of the following investment categories:

U.S. Treasury and debt securities – includes U.S. Treasury notes and debt securities issued by government-sponsored enterprises.

Mortgage-backed securities – includes securities backed by notes or receivables secured by mortgage assets with cash flows based on actual or scheduled payments.

Collateralized mortgage obligations – includes securities backed by a pool of mortgages with cash flows distributed based on certain rules rather than pass through payments.

Collateralized loan obligations – includes structured debt securities backed by a pool of loans, consisting of primarily non-investment grade broadly syndicated corporate loans with additional credit enhancement. These are floating rate securities that have an investment grade rating of AA or better.

Debt securities issued by states and political subdivisions – includes general obligation bonds issued by state and local governments.

As of December 31, 2024 and 2023, the Company’s investment securities were classified as either available-for-sale or held-to-maturity. Amortized cost, gross unrealized holding gains and losses and fair value of available-for-sale and held-to-maturity investment securities as of December 31, 2024 and 2023 were as follows:


	2024								2023
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. Treasury and government agency debt securities	$	8,170	$	—	$	(23)	$	8,147	$	33,169	$	—	$	(666)	$	32,503
Government-sponsored enterprises debt securities		—		—		—		—		20,000		—		(408)		19,592
Mortgage-backed securities:
Residential - Government agency		37,473		—		(1,614)		35,859		11,303		—		(1,121)		10,182
Residential - Government-sponsored enterprises		840,836		—		(102,723)		738,113		895,421		—		(112,124)		783,297
Commercial - Government agency		249,348		—		(53,223)		196,125		268,944		—		(50,270)		218,674
Commercial - Government-sponsored enterprises		48,015		—		(3,107)		44,908		93,459		—		(7,028)		86,431
Commercial - Non-agency		22,000		83		—		22,083		21,964		—		(281)		21,683
Collateralized mortgage obligations:
Government agency		452,038		—		(54,914)		397,124		538,718		—		(67,568)		471,150
Government-sponsored enterprises		359,416		—		(48,734)		310,682		425,826		—		(61,856)		363,970
Collateralized loan obligations		173,152		323		—		173,475		249,871		43		(2,060)		247,854
Total available-for-sale securities	$	2,190,448	$	406	$	(264,338)	$	1,926,516	$	2,558,675	$	43	$	(303,382)	$	2,255,336

Government agency debt securities	$	49,267	$	—	$	(5,398)	$	43,869	$	52,051	$	—	$	(4,497)	$	47,554
Mortgage-backed securities:
Residential - Government agency		40,888		—		(6,579)		34,309		43,885		—		(5,189)		38,696
Residential - Government-sponsored enterprises		92,573		—		(14,854)		77,719		99,379		—		(11,013)		88,366
Commercial - Government agency		31,009		—		(8,666)		22,343		30,795		—		(7,017)		23,778
Commercial - Government-sponsored enterprises		1,114,549		201		(149,244)		965,506		1,129,738		195		(130,757)		999,176
Collateralized mortgage obligations:
Government agency		907,565		—		(126,020)		781,545		989,130		—		(109,471)		879,659
Government-sponsored enterprises		1,500,212		—		(210,721)		1,289,491		1,642,274		—		(193,897)		1,448,377
Debt securities issued by states and political subdivisions		54,587		—		(6,860)		47,727		54,197		—		(4,947)		49,250
Total held-to-maturity securities	$	3,790,650	$	201	$	(528,342)	$	3,262,509	$	4,041,449	$	195	$	(466,788)	$	3,574,856

Accrued interest receivable related to available-for-sale investment securities was $5.6 million and $7.2 million as of December 31, 2024 and 2023, respectively. Accrued interest receivable related to held-to-maturity investment securities was $6.6 million and $7.0 million as of December 31, 2024 and 2023, respectively. Accrued interest receivable is recorded separately from the amortized cost basis of investment securities on the Company’s consolidated balance sheets.

Proceeds from calls and sales of investment securities were $73.5 million and $264.3 million, respectively, for the year ended December 31, 2024. Including the 2023 sale of Visa Class B restricted shares described below, proceeds from calls and sales of investment securities were $8.3 million and $551.6 million, respectively, for the year ended December 31, 2023. Proceeds from calls and sales of investment securities were $1.7 million and nil, respectively, for the year ended December 31, 2022. The Company recorded gross realized gains of nil, $40.8 million and nil for the years ended December 31, 2024, 2023 and 2022, respectively. The Company recorded gross realized losses of $26.2 million, $40.0 million and nil for the years ended December 31, 2024, 2023 and 2022, respectively. The income tax benefit related to the Company’s net realized losses on the sale of investment securities was $7.0 million for the year ended December 31, 2024. The income tax expense related to the Company’s net realized gains on the sale of investment securities was $0.2 million and nil for the years ended December 31, 2023 and 2022, respectively. Gains and losses realized on sales of securities are determined using the specific identification method.

Interest income from taxable investment securities was $110.9 million, $134.5 million and $128.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. Interest income from non-taxable investment securities was $12.8 million, $13.2 million and $13.8 million for the years ended December 31, 2024, 2023 and 2022.

The amortized cost and fair value of debt securities issued by the U.S. Treasury, government agencies, government-sponsored enterprises and states and political subdivisions, non-agency mortgage-backed securities and collateralized loan obligations as of December 31, 2024, by contractual maturity, are shown below. Mortgage-backed securities and collateralized mortgage obligations issued by government agencies and government-sponsored enterprises are disclosed separately in the table below as remaining expected maturities will differ from contractual maturities as borrowers have the right to prepay obligations.


	December 31, 2024
	Amortized		Fair
(dollars in thousands)	Cost		Value
Available-for-sale securities
Due in one year or less	$	8,170	$	8,147
Due after one year through five years		9,275		9,296
Due after five years through ten years		146,351		146,596
Due after ten years		39,526		39,666
		203,322		203,705

Mortgage-backed securities:
Residential - Government agency		37,473		35,859
Residential - Government-sponsored enterprises		840,836		738,113
Commercial - Government agency		249,348		196,125
Commercial - Government-sponsored enterprises		48,015		44,908
Total mortgage-backed securities		1,175,672		1,015,005
Collateralized mortgage obligations:
Government agency		452,038		397,124
Government-sponsored enterprises		359,416		310,682
Total collateralized mortgage obligations		811,454		707,806
Total available-for-sale securities	$	2,190,448	$	1,926,516

Held-to-maturity securities
Due in one year or less	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		52,531		47,264
Due after ten years		51,323		44,332
		103,854		91,596

Mortgage-backed securities:
Residential - Government agency		40,888		34,309
Residential - Government-sponsored enterprises		92,573		77,719
Commercial - Government agency		31,009		22,343
Commercial - Government-sponsored enterprises		1,114,549		965,506
Total mortgage-backed securities		1,279,019		1,099,877
Collateralized mortgage obligations:
Government agency		907,565		781,545
Government-sponsored enterprises		1,500,212		1,289,491
Total collateralized mortgage obligations		2,407,777		2,071,036
Total held-to-maturity securities	$	3,790,650	$	3,262,509

At December 31, 2024, pledged securities totaled $3.8 billion, of which $2.1 billion was pledged to secure borrowing capacity, $1.7 billion was pledged to secure public deposits and $19.3 million was pledged to secure other financial transactions. At December 31, 2023, pledged securities totaled $5.0 billion, of which $2.6 billion was pledged to secure public deposits, $2.3 billion was pledged to secure borrowing capacity and $183.0 million was pledged to secure other financial transactions.

The Company held no securities of any single issuer, other than debt securities issued by the U.S. government, government agencies and government-sponsored enterprises, which were in excess of 10% of stockholders’ equity as of December 31, 2024 and 2023.

The following tables present the unrealized gross losses and fair values of securities in the available-for-sale portfolio by length of time that the 159 and 222 individual securities in each category have been in a continuous loss position as of December 31, 2024 and 2023, respectively. The unrealized losses on available-for-sale investment securities were attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities.

Time in Continuous Loss as of December 31, 2024

Less Than 12 Months

12 Months or More

Total

Unrealized

(dollars in thousands)

Losses

Fair Value

Losses

Fair Value

Losses

Fair Value

U.S. Treasury and government agency debt securities

—

(23)

8,147

(23)

8,147

Mortgage-backed securities:

Residential - Government agency

(154)

27,127

(1,460)

8,732

(1,614)

35,859

Residential - Government-sponsored enterprises

(2,997)

116,084

(99,726)

622,029

(102,723)

738,113

Commercial - Government agency

—

(53,223)

196,125

(53,223)

196,125

Commercial - Government-sponsored enterprises

—

(3,107)

44,908

(3,107)

44,908

Collateralized mortgage obligations:

Government agency

(712)

76,968

(54,202)

310,171

(54,914)

387,139

Government-sponsored enterprises

(912)

57,509

(47,822)

253,173

(48,734)

310,682

Total available-for-sale securities with unrealized losses

(4,775)

277,688

(259,563)

1,443,285

(264,338)

1,720,973


	Time in Continuous Loss as of December 31, 2023
	Less Than 12 Months				12 Months or More				Total
	Unrealized				Unrealized				Unrealized
(dollars in thousands)	Losses		Fair Value		Losses		Fair Value		Losses		Fair Value
U.S. Treasury and government agency debt securities	$	—	$	—	$	(666)	$	32,503	$	(666)	$	32,503
Government-sponsored enterprises debt securities		—		—		(408)		19,592		(408)		19,592
Mortgage-backed securities:
Residential - Government agency		—		—		(1,121)		10,182		(1,121)		10,182
Residential - Government-sponsored enterprises		—		—		(112,124)		783,297		(112,124)		783,297
Commercial - Government agency		—		—		(50,270)		218,674		(50,270)		218,674
Commercial - Government-sponsored enterprises		—		—		(7,028)		86,431		(7,028)		86,431
Commercial - Non-agency		—		—		(281)		21,683		(281)		21,683
Collateralized mortgage obligations:
Government agency		—		—		(67,568)		471,150		(67,568)		471,150
Government-sponsored enterprises		—		—		(61,856)		363,970		(61,856)		363,970
Collateralized loan obligations		(564)		63,667		(1,496)		163,126		(2,060)		226,793
Total available-for-sale securities with unrealized losses	$	(564)	$	63,667	$	(302,818)	$	2,170,608	$	(303,382)	$	2,234,275

At December 31, 2024 and 2023, the Company did not have any available-for-sale securities with the intent to sell and determined it was more likely than not that the Company would not be required to sell the securities prior to recovery of the amortized cost basis. As the Company had the intent and ability to hold the remaining available-for-sale securities in an unrealized loss position as of December 31, 2024 and 2023, each security with an unrealized loss position in the above tables has been further assessed to determine if a credit loss exists. As of December 31, 2024 and 2023, the Company did not expect any credit losses in its available-for-sale debt securities and no credit losses were recognized on available-for-sale securities during the years ended December 31, 2024 and 2023.

As of December 31, 2024 and 2023, the Company’s investment securities were comprised primarily of debt securities, mortgage-backed securities and collateralized mortgage obligations issued by the U.S. Government, its agencies and government-sponsored enterprises, with under 5% of the investment securities comprised of collateralized loan obligations rated AA or better and obligations issued by local state and political subdivisions rated AA or better. For investment securities issued by the U.S. Government, its agencies and government-sponsored enterprises, management has concluded that the long history with no credit losses from these issuers indicates an expectation that nonpayment of the amortized cost basis is zero, and these securities are explicitly or implicitly fully guaranteed by the U.S. government. The U.S. government can print its own currency and its currency is routinely held by central banks and other major financial institutions. The dollar is used in international commerce, and commonly is viewed as a reserve currency, all of which qualitatively indicates that historical credit loss information should be minimally affected by current conditions and reasonable and supportable forecasts. For collateralized loan obligations and debt securities issued by local state and political subdivisions, these securities are investment grade and highly rated and carry either sufficient credit enhancement or days cash on hand to support timely payments of principal and interest. As a result, the Company does not expect any future payment defaults and has not recorded an allowance for credit losses for its available-for-sale and held-to-maturity debt securities as of December 31, 2024 and 2023.

In the fourth quarter of 2023, the Company recorded a $40.8 million net realized gain related to the sale of approximately 120,000 Visa Class B restricted shares. The Company did not hold any Visa Class B restricted shares as of both December 31, 2024 and 2023.