XML 27 R15.htm IDEA: XBRL DOCUMENT v3.19.2
SECURITIES
 9 Months Ended
Jun. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
SECURITIES SECURITIES

On October 1, 2018, the Company adopted ASU 2016-01 on a prospective basis, which redefined the definition of equity securities and required their segregation from available for sale debt securities. While changes in the fair value of debt securities continue to be recorded in the equity category of accumulated other comprehensive income, the new guidance requires that changes in fair value of equity securities with readily determinable fair value be recorded in current earnings. As required by the new guidance, the unrealized gain in fair value on equity securities with readily determinable fair value (recorded in accumulated other comprehensive income at September 30, 2018) was reclassified to retained earnings on October 1, 2018. The amount of the reclassification was $0.5 million, net of tax. Equity securities with readily determinable fair value include mutual funds of $1.8 million at cost and $1.9 million at fair value at June 30, 2019.

The amortized cost, gross unrealized gains and losses and estimated fair values of available for sale ("AFS") and held to maturity ("HTM") debt securities at June 30, 2019 and September 30, 2018 are presented below.
At June 30, 2019
AMORTIZED
COST
 
GROSS
UNREALIZED
GAINS
 
GROSS
UNREALIZED
(LOSSES)
 
FAIR
VALUE
 
(Dollars in Thousands)
Debt securities AFS
 
 
 
 
 
 
 
SBA securities
$
189,816

 
$
3,271

 
$
(21
)
 
$
193,066

Obligations of states and political subdivisions
858

 
17

 
—

 
875

Non-bank qualified obligations of states and political subdivisions
459,551

 
3,456

 
(2,347
)
 
460,660

Asset-backed securities
308,711

 
753

 
(2,168
)
 
307,296

Mortgage-backed securities
395,059

 
2,838

 
(2,696
)
 
395,201

Total debt securities AFS
$
1,353,995

 
$
10,335

 
$
(7,232
)
 
$
1,357,098

Common equities and mutual funds(1)(2)
$
3,593

 
$
826

 
$
—

 
$
4,419

(1) Equity securities at fair value are included within other assets on the consolidated statement of financial condition at June 30, 2019 and September 30, 2018.
(2) ASU 2016-01 adopted on October 1, 2018, on a prospective basis, removed equity securities from AFS category at June 30, 2019.

At September 30, 2018
AMORTIZED
COST
 
GROSS
UNREALIZED
GAINS
 
GROSS
UNREALIZED
(LOSSES)
 
FAIR
VALUE
 
(Dollars in Thousands)
Debt securities AFS
 
 
 
 
 
 
 
SBA securities
$
45,591

 
$
1

 
$
(1,255
)
 
$
44,337

  Obligations of states and political subdivisions
17,154

 
49

 
(293
)
 
16,910

Non-bank qualified obligations of states and political subdivisions
1,140,884

 
826

 
(31,825
)
 
1,109,885

Asset-backed securities
310,700

 
2,585

 
(257
)
 
313,028

Mortgage-backed securities
378,301

 
—

 
(14,236
)
 
364,065

Total debt securities AFS
$
1,892,630

 
$
3,461

 
$
(47,866
)
 
$
1,848,225

Common equities and mutual funds(1)
3,172

 
635

 
(7
)
 
3,800

Total AFS securities(1)
$
1,895,802

 
$
4,096

 
$
(47,873
)
 
$
1,852,025


(1) Equity securities at fair value are included within other assets on the consolidated statement of financial condition at June 30, 2019 and September 30, 2018.

At June 30, 2019
AMORTIZED
COST
 
GROSS
UNREALIZED
GAINS
 
GROSS
UNREALIZED
(LOSSES)
 
FAIR
VALUE
 
(Dollars in Thousands)
Debt securities HTM
 
 
 
 
 
 
 
Non-bank qualified obligations of states and political subdivisions
$
138,128

 
$
15

 
$
(2,500
)
 
$
135,643

Mortgage-backed securities
7,414

 
—

 
(119
)
 
7,295

Total held to maturity securities
$
145,542

 
$
15

 
$
(2,619
)
 
$
142,938

At September 30, 2018
AMORTIZED
COST
 
GROSS
UNREALIZED
GAINS
 
GROSS
UNREALIZED
(LOSSES)
 
FAIR
VALUE
 
(Dollars in Thousands)
Debt securities HTM
 
 
 
 
 
 
 
Non-bank qualified obligations of states and political subdivisions
$
163,893

 
$
—

 
$
(10,758
)
 
$
153,135

Mortgage-backed securities
7,850

 
—

 
(422
)
 
7,428

Total held to maturity securities
$
171,743

 
$
—

 
$
(11,180
)
 
$
160,563



Management has implemented a process to identify securities with potential credit impairment that are other-than-temporary.  This process involves evaluation of the length of time and extent to which the fair value has been less than the amortized cost basis, review of available information regarding the financial position of the issuer, monitoring the rating, watch, and outlook of the security, monitoring changes in value, cash flow projections, and the Company’s intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity.  To the extent the Company determines that a security is deemed to be other-than-temporarily impaired, an impairment loss is recognized.

For all securities considered temporarily impaired, the Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost, which may occur at maturity.  The Company believes it will collect all principal and interest due on all investments with amortized cost in excess of fair value and considered only temporarily impaired.

GAAP requires that, at acquisition, an enterprise classify debt securities into one of three categories: AFS, HTM or trading. AFS securities are carried at fair value on the consolidated statements of financial condition, and unrealized holding gains and losses are excluded from earnings and recognized as a separate component of equity in accumulated other comprehensive income (“AOCI”). HTM debt securities are measured at amortized cost. Both AFS and HTM are subject to review for other-than-temporary impairment. The Company had no trading securities at June 30, 2019 or September 30, 2018.

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 June 30, 2019 and September 30, 2018, were as follows:
 
LESS THAN 12 MONTHS
 
OVER 12 MONTHS
 
TOTAL
At June 30, 2019
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
(Dollars in Thousands)
Debt securities AFS
 
 
 
 
 
 
 
 
 
 
 
SBA securities
$
13,785

 
$
(21
)
 
$
—

 
$
—

 
$
13,785

 
$
(21
)
Obligations of states and political subdivisions
—

 
—

 
—

 
—

 
—

 
—

Non-bank qualified obligations of states and political subdivisions
—

 
—

 
230,117

 
(2,347
)
 
230,117

 
(2,347
)
Asset-backed securities
134,246

 
(1,230
)
 
62,450

 
(938
)
 
196,696

 
(2,168
)
Mortgage-backed securities
—

 
—

 
172,718

 
(2,696
)
 
172,718

 
(2,696
)
Total debt securities AFS
$
148,031

 
$
(1,251
)
 
$
465,285

 
$
(5,981
)
 
$
613,316

 
$
(7,232
)
Common equities and mutual funds(1)(2)
—

 
—

 
—

 
—

 
—

 
—

(1) Equity securities at fair value are included within other assets on the consolidated statement of financial condition at June 30, 2019 and September 30, 2018.
(2) ASU 2016-01 adopted on October 1, 2018, on a prospective basis, removed equity securities from AFS category at June 30, 2019.

 
LESS THAN 12 MONTHS
 
OVER 12 MONTHS
 
TOTAL
At September 30, 2018
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
(Dollars in Thousands)
Debt securities AFS
 
 
 
 
 
 
 
 
 
 
 
SBA securities
$
43,097

 
$
(1,255
)
 
$
—

 
$
—

 
$
43,097

 
$
(1,255
)
Obligations of state and political subdivisions
11,036

 
(279
)
 
881

 
(14
)
 
11,917

 
(293
)
Non-bank qualified obligations of states and political subdivisions
626,693

 
(13,539
)
 
358,095

 
(18,286
)
 
984,788

 
(31,825
)
Asset-backed securities
146,638

 
(257
)
 
—

 
—

 
146,638

 
(257
)
Mortgage-backed securities
121,217

 
(3,292
)
 
242,849

 
(10,944
)
 
364,066

 
(14,236
)
Total debt securities AFS
$
948,681

 
$
(18,622
)
 
$
601,825

 
$
(29,244
)
 
$
1,550,506

 
$
(47,866
)
Common equities and mutual funds(1)
1,818

 
(7
)
 
—

 
—

 
1,818

 
(7
)
Total debt AFS securities(1)
$
950,499

 
$
(18,629
)
 
$
601,825

 
$
(29,244
)
 
$
1,552,324

 
$
(47,873
)

(1)Equity securities at fair value are included within other assets on the consolidated statement of financial condition at June 30, 2019 and September 30, 2018.

 
LESS THAN 12 MONTHS
 
OVER 12 MONTHS
 
TOTAL
At June 30, 2019
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
(Dollars in Thousands)
Debt securities HTM
 
 
 
 
 
 
 
 
 
 
 
Non-bank qualified obligations of states and political subdivisions
$
—

 
$
—

 
$
129,424

 
$
(2,500
)
 
$
129,424

 
$
(2,500
)
Mortgage-backed securities
—

 
—

 
7,295

 
(119
)
 
7,295

 
(119
)
Total held to maturity securities
$
—

 
$
—

 
$
136,719

 
$
(2,619
)
 
$
136,719

 
$
(2,619
)

 
LESS THAN 12 MONTHS
 
OVER 12 MONTHS
 
TOTAL
At September 30, 2018
Fair
Value
 
Unrealized
(Losses)
 
Fair
Value
 
Unrealized
(Losses)
 
Fair Value
 
Unrealized
(Losses)
 
(Dollars in Thousands)
Debt securities HTM
 
 
 
 
 
 
 
 
 
 
 
Non-bank qualified obligations of states and political subdivisions
$
5,767

 
$
(287
)
 
$
147,368

 
$
(10,471
)
 
$
153,135

 
$
(10,758
)
Mortgage-backed securities
—

 
—

 
7,428

 
(422
)
 
7,428

 
(422
)
Total held to maturity securities
$
5,767

 
$
(287
)
 
$
154,796

 
$
(10,893
)
 
$
160,563

 
$
(11,180
)


At June 30, 2019, the investment portfolio included securities with current unrealized losses that have existed for longer than one year.  All of these securities are considered to be acceptable credit risks. Because (i) the declines in fair value were due to changes in market interest rates, not in estimated cash flows, (ii) the Company does not intend or has not made a decision to sell these securities and (iii) it is not more likely than not that the Company will be required to sell the securities before recovery of their amortized cost basis, which may occur at maturity, no other-than-temporary impairment was recorded at June 30, 2019.


The amortized cost and fair value of debt securities by contractual maturity as of the dates set forth below are shown below.  Certain securities have call features which allow the issuer to call the security prior to maturity.  Expected maturities may differ from contractual maturities in mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.  Therefore, mortgage-backed securities are not included in the maturity categories in the following maturity summary.  The expected maturities of certain housing related municipal securities, SBA and asset-backed securities may differ from contractual maturities because the borrowers may have the right to prepay the obligation. However, certain prepayment penalties may apply.
AFS Securities at Fair Value
AMORTIZED
COST
 
FAIR
VALUE
 
At June 30, 2019
(Dollars in Thousands)
 
 
 
 
Due in one year or less
$
—

 
$
—

Due after one year through five years
11,336

 
11,711

Due after five years through ten years
62,337

 
64,221

Due after ten years
885,263

 
885,965

 
958,936

 
961,897

Mortgage-backed securities
395,059

 
395,201

Total securities at fair value
$
1,353,995

 
$
1,357,098

 
AMORTIZED
COST
 
FAIR
VALUE
At September 30, 2018
(Dollars in Thousands)
 
 
 
 
Due in one year or less
$
2,532

 
$
2,529

Due after one year through five years
41,415

 
41,504

Due after five years through ten years
352,099

 
350,143

Due after ten years
1,118,283

 
1,089,984

 
1,514,329

 
1,484,160

Mortgage-backed securities
378,301

 
364,065

Common equities and mutual funds(1)
3,172

 
3,800

Total securities at fair value
$
1,895,802

 
$
1,852,025

(1)Equity securities at fair value are included within other assets on the consolidated statement of financial condition at June 30, 2019 and September 30, 2018.

HTM Securities at Fair Value
AMORTIZED
COST
 
FAIR
VALUE
 
At June 30, 2019
(Dollars in Thousands)
 
 
 
 
Due after ten years
$
138,128

 
$
135,643

 
138,128

 
135,643

Mortgage-backed securities
7,414

 
7,295

Total held to maturity securities at cost
$
145,542

 
$
142,938

 
AMORTIZED
COST
 
FAIR
VALUE
At September 30, 2018
(Dollars in Thousands)
Due after ten years
$
163,893

 
$
153,135

 
163,893

 
153,135

Mortgage-backed securities
7,850

 
7,428

Total held to maturity securities at cost
$
171,743

 
$
160,563



Other investments, at cost, which are included in other assets on the consolidated statement of financial condition, include equity securities without a readily determinable fair value and shares of stock in the Federal Home Loan Bank ("FHLB") of Des Moines. Equity securities without a readily determinable fair value totaled $2.5 million at June 30, 2019 and $2.0 million at September 30, 2018. FHLB of Des Moines stock at June 30, 2019 and September 30, 2018 totaled $17.2 million and $23.4 million, respectively. The decrease in FHLB stock directly correlates with lower short-term borrowings balances at June 30, 2019 compared to September 30, 2018. The Company’s wholly-owned subsidiary, MetaBank, is required by federal law to maintain FHLB stock as a member of FHLB of Des Moines. These equity securities are ‘restricted’ in that they can only be sold back to the respective institution from which they were acquired or another member institution at par. Therefore, FHLB stock is less liquid than other marketable equity securities, and the fair value approximates cost. The Company evaluates impairment for investments held at cost on at least an annual basis based on the ultimate recoverability of the par value. No impairment was recognized for such investments for the nine months ended June 30, 2019.