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Investment Securities | 9 Months Ended
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Sep. 30, 2024
Investments, Debt and Equity Securities [Abstract] |
Investment Securities | Note 3. Investment Securities The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities as of September 30, 2024 and December 31, 2023, were as follows:
(dollars in thousands) |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
September 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Available-for-Sale: |  |  |  |  |  |  |  |  |  |  |  |
Debt Securities Issued by the U.S. Treasury and Government Agencies |  | $ | 235,927 |  |  | $ | 324 |  |  | $ | (7,222 | ) |  | $ | 229,029 |
Debt Securities Issued by States and Political Subdivisions |  |  | 73,142 |  |  |  | — |  |  |  | (7,297 | ) |  |  | 65,845 |
Debt Securities Issued by U.S. Government-Sponsored Enterprises |  |  | 1,506 |  |  |  | — |  |  |  | (42 | ) |  |  | 1,464 |
Debt Securities Issued by Corporations |  |  | 703,910 |  |  |  | 104 |  |  |  | (30,623 | ) |  |  | 673,391 |
Mortgage-Backed Securities: |  |  |  |  |  |  |  |  |  |  |  |
Residential - Government Agencies |  |  | 716,933 |  |  |  | 309 |  |  |  | (68,653 | ) |  |  | 648,589 |
Residential - U.S. Government-Sponsored Enterprises |  |  | 773,520 |  |  |  | 99 |  |  |  | (85,799 | ) |  |  | 687,820 |
Commercial - Government Agencies or Sponsored Agencies |  |  | 264,129 |  |  |  | 107 |  |  |  | (20,050 | ) |  |  | 244,186 |
Total Mortgage-Backed Securities |  |  | 1,754,582 |  |  |  | 515 |  |  |  | (174,502 | ) |  |  | 1,580,595 |
Total |  | $ | 2,769,067 |  |  | $ | 943 |  |  | $ | (219,686 | ) |  | $ | 2,550,324 |
Held-to-Maturity: |  |  |  |  |  |  |  |  |  |  |  |
Debt Securities Issued by the U.S. Treasury and Government Agencies |  | $ | 131,836 |  |  | $ | — |  |  | $ | (11,986 | ) |  | $ | 119,850 |
Debt Securities Issued by Corporations |  |  | 10,556 |  |  |  | — |  |  |  | (1,759 | ) |  |  | 8,797 |
Mortgage-Backed Securities: |  |  |  |  |  |  |  |  |  |  |  |
Residential - Government Agencies |  |  | 1,553,811 |  |  |  | 73 |  |  |  | (227,281 | ) |  |  | 1,326,603 |
Residential - U.S. Government-Sponsored Enterprises |  |  | 2,585,212 |  |  |  | 273 |  |  |  | (316,257 | ) |  |  | 2,269,228 |
Commercial - Government Agencies or Sponsored Agencies |  |  | 428,830 |  |  |  | — |  |  |  | (80,712 | ) |  |  | 348,118 |
Total Mortgage-Backed Securities |  |  | 4,567,853 |  |  |  | 346 |  |  |  | (624,250 | ) |  |  | 3,943,949 |
Total |  | $ | 4,710,245 |  |  | $ | 346 |  |  | $ | (637,995 | ) |  | $ | 4,072,596 |
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 $8.9 million and $9.0 million as of September 30, 2024 and December 31, 2023, respectively. For held-to-maturity (“HTM”) debt securities, AIR totaled $8.9 million and $8.7 million as of September 30, 2024 and December 31, 2023, respectively. AIR is included in the Accrued Interest Receivable line item on the Company’s unaudited consolidated statements of condition. The table below presents an analysis of the contractual maturities of the Company’s investment securities as of September 30, 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 |  | $ | 23,898 |  |  | $ | 23,656 |
Due After One Year Through Five Years |  |  | 442,494 |  |  |  | 421,354 |
Due After Five Years Through Ten Years |  |  | 470,158 |  |  |  | 446,599 |
|  |  | 936,550 |  |  |  | 891,609 |
Debt Securities Issued by Government Agencies |  |  | 77,935 |  |  |  | 78,120 |
Mortgage-Backed Securities: |  |  |  |  |  |
Residential - Government Agencies |  |  | 716,933 |  |  |  | 648,589 |
Residential - U.S. Government-Sponsored Enterprises |  |  | 773,520 |  |  |  | 687,820 |
Commercial - Government Agencies or Sponsored Agencies |  |  | 264,129 |  |  |  | 244,186 |
Total Mortgage-Backed Securities |  |  | 1,754,582 |  |  |  | 1,580,595 |
Total |  | $ | 2,769,067 |  |  | $ | 2,550,324 |
Held-to-Maturity: |  |  |  |  |  |
Due in One Year or Less |  | $ | 2,499 |  |  | $ | 2,422 |
Due After One Year Through Five Years |  |  | 79,801 |  |  |  | 73,930 |
Due After Five Year Through Ten Years |  |  | 60,092 |  |  |  | 52,295 |
|  |  | 142,392 |  |  |  | 128,647 |
Mortgage-Backed Securities: |  |  |  |  |  |
Residential - Government Agencies |  |  | 1,553,811 |  |  |  | 1,326,603 |
Residential - U.S. Government-Sponsored Enterprises |  |  | 2,585,212 |  |  |  | 2,269,228 |
Commercial - Government Agencies or Sponsored Agencies |  |  | 428,830 |  |  |  | 348,118 |
Total Mortgage-Backed Securities |  |  | 4,567,853 |  |  |  | 3,943,949 |
Total |  | $ | 4,710,245 |  |  | $ | 4,072,596 |
Investment securities with carrying values of $7.0 billion and $7.1 billion as of September 30, 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 gains and losses from the sales of investment securities for the three and nine months ended September 30, 2024 and 2023:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(dollars in thousands) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Gross Gains on Sales of Investment Securities |  | $ | — |  |  | $ | 145 |  |  | $ | — |  |  | $ | 145 |
Gross Losses on Sales of Investment Securities |  |  | (1,103 | ) |  |  | (6,879 | ) |  |  | (4,201 | ) |  |  | (9,981 | )
Net Gains (Losses) on Sales of Investment Securities |  | $ | (1,103 | ) |  | $ | (6,734 | ) |  | $ | (4,201 | ) |  | $ | (9,836 | )
The losses on sales of investment securities during the three and nine months ended September 30, 2024 and 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. The losses on sales of investment securities during the three months ended September 30, 2023 included a $4.6 million realized loss from sales of various corporate and municipal bonds, a strategic decision made by the Company to reduce the size of its AFS portfolio. The following table summarizes the Company’s AFS debt securities in an unrealized loss position for which an allowance for credit losses was no t 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 |
September 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-Sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt Securities Issued by the U.S. Treasury and Government Agencies |  | $ | 32,603 |  |  | $ | (66 | ) |  | $ | 157,416 |  |  | $ | (7,156 | ) |  | $ | 190,019 |  |  | $ | (7,222 | )
Debt Securities Issued by States and Political Subdivisions |  |  | — |  |  |  | — |  |  |  | 65,810 |  |  |  | (7,297 | ) |  |  | 65,810 |  |  |  | (7,297 | )
Debt Securities Issued by U.S. Government- Sponsored Enterprises |  |  | — |  |  |  | — |  |  |  | 1,464 |  |  |  | (42 | ) |  |  | 1,464 |  |  |  | (42 | )
Debt Securities Issued by Corporations |  |  | — |  |  |  | — |  |  |  | 598,286 |  |  |  | (30,623 | ) |  |  | 598,286 |  |  |  | (30,623 | )
Mortgage-Backed Securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential - Government Agencies |  |  | 2,211 |  |  |  | (1 | ) |  |  | 565,187 |  |  |  | (68,652 | ) |  |  | 567,398 |  |  |  | (68,653 | )
Residential - U.S. Government-Sponsored Enterprises |  |  | — |  |  |  | — |  |  |  | 662,402 |  |  |  | (85,799 | ) |  |  | 662,402 |  |  |  | (85,799 | )
Commercial - Government Agencies or Sponsored Agencies |  |  | 48,998 |  |  |  | — |  |  |  | 132,647 |  |  |  | (20,050 | ) |  |  | 181,645 |  |  |  | (20,050 | )
Total Mortgage-Backed Securities |  |  | 51,209 |  |  |  | (1 | ) |  |  | 1,360,236 |  |  |  | (174,501 | ) |  |  | 1,411,445 |  |  |  | (174,502 | )
Total |  | $ | 83,812 |  |  | $ | (67 | ) |  | $ | 2,183,212 |  |  | $ | (219,619 | ) |  | $ | 2,267,024 |  |  | $ | (219,686 | )
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 no t believe the AFS debt securities that were in an unrealized loss position as of September 30, 2024, which were comprised of 359 individual securities, represent a credit loss impairment. As of September 30, 2024 and December 31, 2023, 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. Mortgage-backed securities issued by U.S. government agencies or U.S. government-sponsored enterprises 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. Debt securities issued by corporations are of high credit quality and the issuers continue to make timely principal and interest payments. T he Company does no t 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 no t deemed necessary as of September 30, 2024 and December 31, 2023. Interest income from taxable and non-taxable investment securities for the three and nine months ended September 30, 2024 and 2023 were as follows:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(dollars in thousands) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Taxable |  | $ | 44,068 |  |  | $ | 46,367 |  |  | $ | 130,724 |  |  | $ | 140,718 |
Non-Taxable |  |  | 296 |  |  |  | 23 |  |  |  | 596 |  |  |  | 189 |
Total Interest Income from Investment Securities |  | $ | 44,364 |  |  | $ | 46,390 |  |  | $ | 131,320 |  |  | $ | 140,907 |
As of September 30, 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) |  | September 30, 2024 |  |  | December 31, 2023 |
Federal Home Loan Bank of Des Moines Stock |  | $ | 34,750 |  |  | $ | 34,750 |
Federal Reserve Bank Stock |  |  | 30,238 |  |  |  | 27,522 |
Total |  | $ | 64,988 |  |  | $ | 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 in the unaudited consolidated statements of condition 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.

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