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Investment Securities

9 Months Ended

Sep. 30, 2025

2. Investment Securities

As of September 30, 2025 and December 31, 2024, investment securities consisted predominantly of the following investment categories:

Debt securities – includes debt securities issued by U.S. government agencies.

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 September 30, 2025 and December 31, 2024, 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 September 30, 2025 and December 31, 2024 were as follows:


	September 30, 2025								December 31, 2024
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
Government agency debt securities	$	—	$	—	$	—	$	—	$	8,170	$	—	$	(23)	$	8,147
Mortgage-backed securities:
Residential - Government agency		32,641		279		(1,086)		31,834		37,473		—		(1,614)		35,859
Residential - Government-sponsored enterprises		840,130		1,564		(66,253)		775,441		840,836		—		(102,723)		738,113
Commercial - Government agency		239,479		—		(48,312)		191,167		249,348		—		(53,223)		196,125
Commercial - Government-sponsored enterprises		43,761		—		(1,548)		42,213		48,015		—		(3,107)		44,908
Commercial - Non-agency		120,793		641		(24)		121,410		22,000		83		—		22,083
Collateralized mortgage obligations:
Government agency		475,946		800		(40,455)		436,291		452,038		—		(54,914)		397,124
Government-sponsored enterprises		327,554		541		(37,675)		290,420		359,416		—		(48,734)		310,682
Collateralized loan obligations		97,788		153		—		97,941		173,152		323		—		173,475
Total available-for-sale securities	$	2,178,092	$	3,978	$	(195,353)	$	1,986,717	$	2,190,448	$	406	$	(264,338)	$	1,926,516

Government agency debt securities	$	47,514	$	—	$	(3,557)	$	43,957	$	49,267	$	—	$	(5,398)	$	43,869
Mortgage-backed securities:
Residential - Government agency		37,979		—		(4,802)		33,177		40,888		—		(6,579)		34,309
Residential - Government-sponsored enterprises		88,255		—		(11,393)		76,862		92,573		—		(14,854)		77,719
Commercial - Government agency		30,817		—		(7,910)		22,907		31,009		—		(8,666)		22,343
Commercial - Government-sponsored enterprises		1,094,959		225		(110,402)		984,782		1,114,549		201		(149,244)		965,506
Collateralized mortgage obligations:
Government agency		842,658		—		(92,792)		749,866		907,565		—		(126,020)		781,545
Government-sponsored enterprises		1,397,112		—		(149,497)		1,247,615		1,500,212		—		(210,721)		1,289,491
Debt securities issued by states and political subdivisions		54,894		—		(4,177)		50,717		54,587		—		(6,860)		47,727
Total held-to-maturity securities	$	3,594,188	$	225	$	(384,530)	$	3,209,883	$	3,790,650	$	201	$	(528,342)	$	3,262,509

Accrued interest receivable related to available-for-sale investment securities was $5.0 million and $5.6 million as of September 30, 2025 and December 31, 2024, respectively. Accrued interest receivable related to held-to-maturity investment securities was $6.6 million as of both September 30, 2025 and December 31, 2024. Accrued interest receivable is recorded separately from the amortized cost basis of investment securities on the Company’s unaudited interim consolidated balance sheets.

Proceeds from calls and sales of investment securities were $30.7 million and nil, respectively, for the three months ended September 30, 2025, and $71.6 million and nil, respectively, for the nine months ended September 30, 2025. Proceeds from calls and sales of investment securities were $9.2 million and nil, respectively, for the three months ended September 30, 2024 and $43.0 million and nil, respectively, for the nine months ended September 30, 2024. The Company recorded gross realized gains of nil and gross realized losses of nil for the three and nine months ended September 30, 2025 and 2024. The income tax expense related to the Company’s net realized gain on the sale of investment securities was nil for the three and nine months ended September 30, 2025 and 2024. Gains and losses realized on sales of securities are determined using the specific identification method.

Interest income from taxable investment securities was $26.3 million and $26.6 million, respectively, for the three months ended September 30, 2025 and 2024, and $78.7 million and $84.2 million, respectively, for the nine months ended September 30, 2025 and 2024. Interest income from non-taxable investment securities was $3.1 million and $3.2 million, respectively, for the three months ended September 30, 2025 and 2024, and $9.3 million and $9.6 million, respectively, for the nine months ended September 30, 2025 and 2024.

The amortized cost and fair value of debt securities issued by government agencies and states and political subdivisions, non-agency mortgage-backed securities and collateralized loan obligations as of September 30, 2025, 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.


	September 30, 2025
	Amortized		Fair
(dollars in thousands)	Cost		Value
Available-for-sale securities
Due in one year or less	$	—	$	—
Due after one year through five years		78,662		79,248
Due after five years through ten years		93,938		94,091
Due after ten years		45,981		46,012
		218,581		219,351

Mortgage-backed securities:
Residential - Government agency		32,641		31,834
Residential - Government-sponsored enterprises		840,130		775,441
Commercial - Government agency		239,479		191,167
Commercial - Government-sponsored enterprises		43,761		42,213
Total mortgage-backed securities		1,156,011		1,040,655
Collateralized mortgage obligations:
Government agency		475,946		436,291
Government-sponsored enterprises		327,554		290,420
Total collateralized mortgage obligations		803,500		726,711
Total available-for-sale securities	$	2,178,092	$	1,986,717

Held-to-maturity securities
Due in one year or less	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		51,958		48,993
Due after ten years		50,450		45,681
		102,408		94,674

Mortgage-backed securities:
Residential - Government agency		37,979		33,177
Residential - Government-sponsored enterprises		88,255		76,862
Commercial - Government agency		30,817		22,907
Commercial - Government-sponsored enterprises		1,094,959		984,782
Total mortgage-backed securities		1,252,010		1,117,728
Collateralized mortgage obligations:
Government agency		842,658		749,866
Government-sponsored enterprises		1,397,112		1,247,615
Total collateralized mortgage obligations		2,239,770		1,997,481
Total held-to-maturity securities	$	3,594,188	$	3,209,883

At September 30, 2025, pledged securities totaled $4.4 billion, of which $2.4 billion was pledged to secure borrowing capacity, $2.0 billion was pledged to secure public deposits and $49.5 million was pledged to secure other financial transactions. 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.

The Company held no securities of any single issuer, other than debt securities issued by government agencies and government-sponsored enterprises, which were in excess of 10% of stockholders’ equity as of September 30, 2025 and December 31, 2024.

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 140 and 159 individual securities in each category have been in a continuous loss position as of September 30, 2025 and December 31, 2024, 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 September 30, 2025

Less Than 12 Months

12 Months or More

Total

Unrealized

(dollars in thousands)

Losses

Fair Value

Losses

Fair Value

Losses

Fair Value

Mortgage-backed securities:

Residential - Government agency

—

(1,086)

8,395

(1,086)

8,395

Residential - Government-sponsored enterprises

(233)

51,145

(66,020)

572,041

(66,253)

623,186

Commercial - Government agency

—

(48,312)

191,167

(48,312)

191,167

Commercial - Government-sponsored enterprises

—

(1,548)

42,213

(1,548)

42,213

Commercial - Non-agency

(24)

7,020

—

(24)

7,020

Collateralized mortgage obligations:

Government agency

(18)

16,203

(40,437)

292,492

(40,455)

308,695

Government-sponsored enterprises

—

(37,675)

236,744

(37,675)

236,744

Total available-for-sale securities with unrealized losses

(275)

74,368

(195,078)

1,343,052

(195,353)

1,417,420


	Time in Continuous Loss as of December 31, 2024
	Less Than 12 Months				12 Months or More				Total
	Unrealized				Unrealized				Unrealized
(dollars in thousands)	Losses		Fair Value		Losses		Fair Value		Losses		Fair Value
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

At September 30, 2025 and December 31, 2024, 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 September 30, 2025 and December 31, 2024, each security with an unrealized loss position in the above tables has been further assessed to determine if a credit loss exists. As of September 30, 2025 and December 31, 2024, 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 three and nine months ended September 30, 2025 and for the year ended December 31, 2024.

As of September 30, 2025 and December 31, 2024, the Company’s investment securities were comprised primarily of debt securities, mortgage-backed securities and collateralized mortgage obligations issued by U.S. government agencies and government-sponsored enterprises, with under 5% of the investment securities comprised of collateralized loan obligations rated AA or better, obligations issued by local state and political subdivisions rated AA or better and non-agency commercial mortgage-backed securities rated AAA. 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, debt securities issued by local state and political subdivisions and non-agency commercial mortgage-backed securities, 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 September 30, 2025 or December 31, 2024.