SECURITIES

12 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

The amortized cost, gross unrealized gains and losses and estimated fair values of available for sale ("AFS") and held to maturity ("HTM") debt securities are presented below.


	Debt Securities AFS
(Dollars in Thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
At September 30, 2021
Corporate securities	$	25,000	$	—	$	—	$	25,000
SBA securities	151,958		5,251		—		157,209
Obligations of states and political subdivisions	2,497		10		—		2,507
Non-bank qualified obligations of states and political subdivisions	266,048		3,347		(1,100)		268,295
Asset-backed securities	393,103		3,003		(1,247)		394,859
Mortgage-backed securities	1,016,478		9,728		(9,177)		1,017,029
Total debt securities AFS	$	1,855,084	$	21,339	$	(11,524)	$	1,864,899
At September 30, 2020

SBA securities	$	159,722	$	5,391	$	(158)	$	164,955
Obligations of states and political subdivisions	825		16		—		841
Non-bank qualified obligations of states and political subdivisions	314,819		8,978		(23)		323,774
Asset-backed securities	329,139		2,015		(6,229)		324,925
Mortgage-backed securities	439,879		14,567		(839)		453,607
Total debt securities AFS	$	1,244,384	$	30,967	$	(7,249)	$	1,268,102


	Debt Securities HTM
(Dollars in Thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
At September 30, 2021
Non-bank qualified obligations of states and political subdivisions	$	52,944	$	103	$	(471)	$	52,576
Mortgage-backed securities	3,725		90		—		3,815
Total debt securities HTM	$	56,669	$	193	$	(471)	$	56,391
At September 30, 2020
Non-bank qualified obligations of states and political subdivisions	$	87,183	$	1,040	$	(29)	$	88,194
Mortgage-backed securities	5,427		124		—		5,551
Total debt securities HTM	$	92,610	$	1,164	$	(29)	$	93,745

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position, were as follows:


	LESS THAN 12 MONTHS				OVER 12 MONTHS				TOTAL
(Dollars in Thousands)	Fair Value		Gross Unrealized (Losses)		Fair Value		Gross Unrealized (Losses)		Fair Value		Gross Unrealized (Losses)
Debt Securities AFS
At September 30, 2021


Non-bank qualified obligations of states and political subdivisions	$	101,046	$	(1,100)	$	—	$	—	$	101,046	$	(1,100)
Asset-backed securities	127,110		(283)		91,553		(964)		218,663		(1,247)
Mortgage-backed securities	759,035		(7,418)		60,792		(1,759)		819,827		(9,177)
Total debt securities AFS	$	987,191	$	(8,801)	$	152,345	$	(2,723)	$	1,139,536	$	(11,524)
At September 30, 2020
SBA securities	$	32,257	$	(102)	$	9,875	$	(56)	$	42,132	$	(158)

Non-bank qualified obligations of states and political subdivisions	6,265		(6)		3,103		(17)		9,368		(23)
Asset-backed securities	106,474		(1,089)		178,686		(5,140)		285,160		(6,229)
Mortgage-backed securities	138,338		(839)		—		—		138,338		(839)
Total debt securities AFS	$	283,334	$	(2,036)	$	191,664	$	(5,213)	$	474,998	$	(7,249)

Debt Securities HTM
At September 30, 2021
Non-bank qualified obligations of states and political subdivisions	$	26,096	$	(471)	$	—	$	—	$	26,096	$	(471)

Total debt securities HTM	$	26,096	$	(471)	$	—	$	—	$	26,096	$	(471)
At September 30, 2020
Non-bank qualified obligations of states and political subdivisions	$	7,397	$	(9)	$	3,637	$	(20)	$	11,034	$	(29)

Total debt securities HTM	$	7,397	$	(9)	$	3,637	$	(20)	$	11,034	$	(29)

The adoption of CECL was inconsequential to debt securities AFS. At September 30, 2021, there were 67 securities AFS in an unrealized loss position. Management assessed each investment security with unrealized losses for credit loss and determined substantially all unrealized losses on these securities were due to credit spreads and interest rates versus credit loss. As part of that assessment, management evaluated and concluded that it is more-likely-than-not that the Company will not be required and does not intend to sell any of the securities prior to recovery of the amortized cost. At September 30, 2021, there was no ACL for debt securities AFS.

The amortized cost and fair value of debt securities by contractual maturity 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 MBS because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Therefore, MBS are not included in the maturity categories in the following maturity summary. The expected maturities of certain SBA securities may differ from contractual maturities because the borrowers may have the right to prepay the obligation. However, certain prepayment penalties may apply.


	At September 30,
(Dollars in Thousands)	2021				2020
Securities AFS at Fair Value	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	810	$	822	$	1,385	$	1,398
Due after one year through five years	13,026		13,378		20,805		21,769
Due after five years through ten years	50,785		52,357		32,441		34,025
Due after ten years	773,985		781,313		749,874		757,303
	838,606		847,870		804,505		814,495
Mortgage-backed securities	1,016,478		1,017,029		439,879		453,607
Total securities AFS, at fair value	$	1,855,084	$	1,864,899	$	1,244,384	$	1,268,102


	At September 30,
(Dollars in Thousands)	2021				2020
Securities HTM at Fair Value	Amortized Cost		Fair Value		Amortized Cost		Fair Value



Due after ten years	$	52,944	$	52,576	$	87,183	$	88,194
	52,944		52,576		87,183		88,194
Mortgage-backed securities	3,725		3,815		5,427		5,551
Total securities HTM, at cost	$	56,669	$	56,391	$	92,610	$	93,745

Activity related to the sale of securities available for sale is summarized below.


	Fiscal Year Ended September 30,
(Dollars in Thousands)	2021		2020		2019
Available For Sale
Proceeds from sales	$	50,468	$	4,904	$	755,616
Gross gains on sales	179		51		6,006
Gross losses on sales	173		—		5,277
Net gain (loss) on securities AFS	$	6	$	51	$	729

There was no activity related to the sale of securities held to maturity during the fiscal years ended September 30, 2021, 2020, and 2019.

No securities were pledged as collateral for public funds on deposit at September 30, 2021 and 2020. No securities were pledged as collateral for individual, trust and estate deposits at September 30, 2021 and 2020.

Equity Securities

The Company held $12.7 million and $3.0 million in marketable equity securities at September 30, 2021 and 2020, respectively. The addition of marketable equity securities was a result of an investee becoming publicly traded in fiscal year ended September 30, 2021. Upon becoming publicly traded, the Company recognized a fair value adjustment of $7.5 million to reflect the increase in value since the Company's initial investment in May 2018. Subsequent fair value adjustments for this investee during fiscal year 2021 totaled $3.4 million in unrealized losses, or a net position of $4.1 million unrealized gain as of September 30, 2021. All other marketable equity securities and related activity were insignificant for the fiscal years ended September 30, 2021 and 2020, respectively. No marketable equity securities were sold during fiscal year 2021.

Non-marketable equity securities with a readily determinable fair value totaled $4.6 million and $2.8 million as of September 30, 2021 and 2020, respectively. The Company’s recognized $0.6 million and zero in unrealized gains during the fiscal years ended September 30, 2021 and 2020, respectively. No such securities were sold during fiscal year 2021.

Non-marketable equity securities without readily determinable fair value totaled $16.0 million and $23.0 million at September 30, 2021 and 2020, respectively.

FRB Stock

The Bank is required by federal law to subscribe to capital stock (divided into shares of $100 each) as a member of the FRB of Minneapolis with an amount equal to six per centum of the paid-up capital stock and surplus. One-half of the subscription is paid at time of application, and one-half is subject to call of the Board of Governors of the Federal Reserve System. FRB of Minneapolis stock held by the Bank totaled $19.7 million at September 30, 2021 and 2020. These equity securities are 'restricted' in that they can only be owned by member banks. At fiscal year-end 2021 and 2020, the Company pledged securities with fair values of approximately $236.1 million and $359.7 million against FRB advances, respectively.

Included in interest and dividend income from other investments is $1.5 million and $0.3 million related to dividend income on FRB stock for the fiscal years ended September 30, 2021 and 2020, respectively.

FHLB Stock

The Company’s borrowings from the FHLB are secured by a blanket collateral agreement with respect to a percentage of unencumbered loans and the pledge of specific investment securities. Such advances can be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities.

The investments in the FHLB stock are required investments related to the Company’s membership in and current borrowings from the FHLB of Des Moines. The investments in the FHLB of Des Moines could be adversely impacted by the financial operations of the FHLB and actions of their regulator, the Federal Housing Finance Agency.

The FHLB stock is carried at cost since it is generally redeemable at par value. The carrying value of the stock held at the FHLB was $8.7 million and $7.5 million at September 30, 2021 and 2020, respectively. At fiscal year-end 2021 and 2020, the Company pledged securities with fair values of approximately $644.7 million and $673.8 million, respectively, to be used against FHLB advances. In addition, a combination of qualifying residential and other real estate loans of zero and approximately $333.8 million were pledged as collateral at September 30, 2021 and 2020, respectively.

Included in interest and dividend income from other investments is $0.2 million, $0.8 million and $1.0 million related to dividend income on FHLB stock for the fiscal years ended September 30, 2021, 2020 and 2019, respectively.

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, FRB and FHLB stocks are less liquid than other marketable equity securities, and the fair value approximates cost.

Equity Security Impairment

The Company evaluates impairment for investments held at cost on at least an annual basis based on the ultimate recoverability of the par value. All other equity investments, including those under the equity method, are reviewed for other-than-temporary impairment on at least a quarterly basis. The Company recognized $2.6 million and $1.3 million in impairment for such investments for the fiscal years ended September 30, 2021 and 2020, respectively, and zero for the fiscal year ended September 30, 2019.