Investment Securities

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Note 3. Investment Securities

The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities as of March 31, 2024, and December 31, 2023, were as follows:


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2024
Available-for-Sale:
Debt Securities Issued by the U.S. Treasury and Government Agencies	$	217,711	$	267	$	(11,666	)	$	206,312
Debt Securities Issued by States and Political Subdivisions		73,337		—		(9,886	)		63,451
Debt Securities Issued by U.S. Government-Sponsored Enterprises		1,506		—		(81	)		1,425
Debt Securities Issued by Corporations		705,308		244		(44,406	)		661,146
Mortgage-Backed Securities:
Residential - Government Agencies		691,565		119		(89,408	)		602,276
Residential - U.S. Government-Sponsored Enterprises		797,610		5		(113,042	)		684,573
Commercial - Government Agencies or Sponsored Agencies		155,691		—		(22,823	)		132,868
Total Mortgage-Backed Securities		1,644,866		124		(225,273	)		1,419,717
Total	$	2,642,728	$	635	$	(291,312	)	$	2,352,051
Held-to-Maturity:
Debt Securities Issued by the U.S. Treasury and Government Agencies	$	131,773	$	—	$	(16,655	)	$	115,118
Debt Securities Issued by Corporations		11,176		—		(2,126	)		9,050
Mortgage-Backed Securities:
Residential - Government Agencies		1,639,458		15		(283,447	)		1,356,026
Residential - U.S. Government-Sponsored Enterprises		2,697,411		10		(412,329	)		2,285,092
Commercial - Government Agencies or Sponsored Agencies		433,639		—		(94,303	)		339,336
Total Mortgage-Backed Securities		4,770,508		25		(790,079	)		3,980,454
Total	$	4,913,457	$	25	$	(808,860	)	$	4,104,622
December 31, 2023
Available-for-Sale:
Debt Securities Issued by the U.S. Treasury and Government Agencies	$	223,308	$	361	$	(11,096	)	$	212,573
Debt Securities Issued by States and Political Subdivisions		73,417		—		(9,611	)		63,806
Debt Securities Issued by U.S. Government-Sponsored Enterprises		1,556		—		(80	)		1,476
Debt Securities Issued by Corporations		706,002		142		(48,443	)		657,701
Mortgage-Backed Securities:
Residential - Government Agencies		713,918		194		(84,785	)		629,327
Residential - U.S. Government-Sponsored Enterprises		818,296		7		(109,176	)		709,127
Commercial - Government Agencies or Sponsored Agencies		157,515		—		(22,592	)		134,923
Total Mortgage-Backed Securities		1,689,729		201		(216,553	)		1,473,377
Total	$	2,694,012	$	704	$	(285,783	)	$	2,408,933
Held-to-Maturity:
Debt Securities Issued by the U.S. Treasury and Government Agencies	$	131,742	$	—	$	(15,211	)	$	116,531
Debt Securities Issued by Corporations		11,483		—		(1,998	)		9,485
Mortgage-Backed Securities:
Residential - Government Agencies		1,674,076		20		(265,493	)		1,408,603
Residential - U.S. Government-Sponsored Enterprises		2,744,094		9		(369,965	)		2,374,138
Commercial - Government Agencies or Sponsored Agencies		435,940		—		(91,060	)		344,880
Total Mortgage-Backed Securities		4,854,110		29		(726,518	)		4,127,621
Total	$	4,997,335	$	29	$	(743,727	)	$	4,253,637

The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities disclosed throughout this footnote. For available-for-sale (“AFS”) debt securities, AIR totaled $9.1 million and $9.0 million as of March 31, 2024, and December 31, 2023, respectively. For held-to-maturity (“HTM”) debt securities, AIR totaled $9.3 million and $8.7 million as of March 31, 2024, and December 31, 2023, respectively. AIR is included in the Accrued Interest Receivable line item on the Company’s consolidated statements of condition.

The table below presents an analysis of the contractual maturities of the Company’s investment securities as of March 31, 2024. Debt securities issued by government agencies (Small Business Administration securities) and mortgage-backed securities are disclosed separately in the table below as these investment securities may prepay prior to their scheduled contractual maturity dates.


(dollars in thousands)	Amortized Cost		Fair Value
Available-for-Sale:
Due in One Year or Less	$	21,821	$	21,211
Due After One Year Through Five Years		433,974		403,727
Due After Five Years Through Ten Years		481,799		446,973
Due After Ten Years		—		—
		937,594		871,911
Debt Securities Issued by Government Agencies		60,268		60,423
Mortgage-Backed Securities:
Residential - Government Agencies		691,565		602,276
Residential - U.S. Government-Sponsored Enterprises		797,610		684,573
Commercial - Government Agencies or Sponsored Agencies		155,691		132,868
Total Mortgage-Backed Securities		1,644,866		1,419,717
Total	$	2,642,728	$	2,352,051
Held-to-Maturity:
Due in One Year or Less		485		479
Due After One Year Through Five Years		82,273		73,516
Due After Five Year Through Ten Years		60,191		50,173
		142,949		124,168
Mortgage-Backed Securities:
Residential - Government Agencies		1,639,458		1,356,026
Residential - U.S. Government-Sponsored Enterprises		2,697,411		2,285,092
Commercial - Government Agencies or Sponsored Agencies		433,639		339,336
Total Mortgage-Backed Securities		4,770,508		3,980,454
Total	$	4,913,457	$	4,104,622

Investment securities with carrying values of $7.0 billion and $7.1 billion as of March 31, 2024, and December 31, 2023, respectively, were pledged to secure deposits of governmental entities, securities sold under agreements to repurchase, and FRB discount window borrowing.

The table below presents the losses from the sales of investment securities for the three months ended March 31, 2024, and March 31, 2023:


	Three Months Ended March 31,
(dollars in thousands)	2024			2023
Total Losses on Sales of Investment Securities	$	(1,497	)	$	(1,792	)

The losses on sales of investment securities during the three months ended March 31, 2024, and March 31, 2023, were due to fees paid to the counterparties of the Company’s prior Visa Class B share sale transactions, which are expensed as incurred. These losses were not the result of the Company selling its investment securities.

The following table summarizes the Company’s AFS debt securities in an unrealized loss position for which an allowance for credit losses was not deemed necessary, aggregated by major security type and length of time in a continuous unrealized loss position:


	Less Than 12 Months					12 Months or Longer					Total
(dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
March 31, 2024
Available-for-Sale:
Debt Securities Issued by the U.S. Treasury and Government Agencies	$	11,302	$	(65	)	$	154,379	$	(11,601	)	$	165,681	$	(11,666	)
Debt Securities Issued by States and Political Subdivisions		—		—			63,451		(9,886	)		63,451		(9,886	)
Debt Securities Issued by U.S. Government- Sponsored Enterprises		—		—			1,425		(81	)		1,425		(81	)
Debt Securities Issued by Corporations		197,573		(2,427	)		413,329		(41,979	)		610,902		(44,406	)
Mortgage-Backed Securities:
Residential - Government Agencies		3,611		(2	)		594,450		(89,406	)		598,061		(89,408	)
Residential - U.S. Government-Sponsored Enterprises		—		—			684,250		(113,042	)		684,250		(113,042	)
Commercial - Government Agencies or Sponsored Agencies		—		—			132,868		(22,823	)		132,868		(22,823	)
Total Mortgage-Backed Securities		3,611		(2	)		1,411,568		(225,271	)		1,415,179		(225,273	)
Total	$	212,486	$	(2,494	)	$	2,044,152	$	(288,818	)	$	2,256,638	$	(291,312	)

December 31, 2023
Available-for-Sale:
Debt Securities Issued by the U.S. Treasury and Government Agencies	$	7,171	$	(16	)	$	155,341	$	(11,080	)	$	162,512	$	(11,096	)
Debt Securities Issued by States and Political Subdivisions		237		(2	)		63,509		(9,609	)		63,746		(9,611	)
Debt Securities Issued by U.S. Government- Sponsored Enterprises		—		—			1,476		(80	)		1,476		(80	)
Debt Securities Issued by Corporations		220,987		(4,013	)		411,573		(44,430	)		632,560		(48,443	)
Mortgage-Backed Securities:
Residential - Government Agencies		9,628		(13	)		613,926		(84,772	)		623,554		(84,785	)
Residential - U.S. Government-Sponsored Enterprises		—		—			708,797		(109,176	)		708,797		(109,176	)
Commercial - Government Agencies or Sponsored Agencies		—		—			134,923		(22,592	)		134,923		(22,592	)
Total Mortgage-Backed Securities		9,628		(13	)		1,457,646		(216,540	)		1,467,274		(216,553	)
Total	$	238,023	$	(4,044	)	$	2,089,545	$	(281,739	)	$	2,327,568	$	(285,783	)

The Company does not believe the AFS debt securities that were in an unrealized loss position as of March 31, 2024, which were comprised of 388 individual securities, represent a credit loss impairment. As of March 31, 2024, and December 31, 2023, the gross unrealized loss positions were primarily related to mortgage-backed securities issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Total gross unrealized losses 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. The Company does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity.

Substantially all of the Company’s HTM debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Therefore, an allowance for credit losses for these securities was not deemed necessary as of March 31, 2024.

Interest income from taxable and non-taxable investment securities for the three months ended March 31, 2024, and March 31, 2023, were as follows:


	Three Months Ended March 31,
(dollars in thousands)	2024		2023
Taxable	$	43,887	$	47,757
Non-Taxable		6		84
Total Interest Income from Investment Securities	$	43,893	$	47,841

As of March 31, 2024, and December 31, 2023, the carrying value of the Company’s Federal Home Loan Bank of Des Moines stock and Federal Reserve Bank stock was as follows:


(dollars in thousands)	March 31, 2024		December 31, 2023
Federal Home Loan Bank of Des Moines Stock	$	34,750	$	34,750
Federal Reserve Bank Stock		27,626		27,522
Total	$	62,376	$	62,272

These securities can only be redeemed or sold at their par value and only to the respective issuing institution or to another member institution. The Company records these non-marketable equity securities as a component of other assets and periodically evaluates these securities for impairment. Management considers these non-marketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value.