SECURITIES

9 Months Ended

Jun. 30, 2022

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 June 30, 2022
Corporate securities	$	25,000	$	—	$	(1,562)	$	23,438
SBA securities	84,506		247		(3,404)		81,349
Obligations of states and political subdivisions	2,726		—		(85)		2,641
Non-bank qualified obligations of states and political subdivisions	260,069		29		(15,137)		244,961
Asset-backed securities	171,623		—		(12,291)		159,332
Mortgage-backed securities	1,587,992		655		(143,845)		1,444,802
Total debt securities AFS	$	2,131,916	$	931	$	(176,324)	$	1,956,523
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


	Debt Securities HTM
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
At June 30, 2022
Non-bank qualified obligations of states and political subdivisions	$	41,122	$	—	$	(1,765)	$	39,357
Mortgage-backed securities	2,755		—		(149)		2,606
Total debt securities HTM	$	43,877	$	—	$	(1,914)	$	41,963
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

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous 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 June 30, 2022
Corporate securities	$	23,438	$	(1,562)	$	—	$	—	$	23,438	$	(1,562)
SBA securities	73,758		(3,404)		—		—		73,758		(3,404)
Obligations of state and political subdivisions	2,401		(85)		—		—		2,401		(85)
Non-bank qualified obligations of states and political subdivisions	237,769		(14,823)		3,414		(314)		241,183		(15,137)
Asset-backed securities	96,852		(6,435)		62,481		(5,856)		159,333		(12,291)
Mortgage-backed securities	1,033,772		(111,839)		227,715		(32,006)		1,261,487		(143,845)
Total debt securities AFS	$	1,467,990	$	(138,148)	$	293,610	$	(38,176)	$	1,761,600	$	(176,324)
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)

Debt Securities HTM
At June 30, 2022
Non-bank qualified obligations of states and political subdivisions	$	35,121	$	(1,530)	$	4,236	$	(235)	$	39,357	$	(1,765)
Mortgage-backed securities	2,607		(149)		—		—		2,607		(149)
Total debt securities HTM	$	37,728	$	(1,679)	$	4,236	$	(235)	$	41,964	$	(1,914)
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 June 30, 2022, there were 166 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 June 30, 2022, 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 that allow the issuer to call the security prior to maturity. Expected maturities may differ from contractual maturities in mortgage-backed securities ("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.


(Dollars in thousands)	At June 30, 2022				At September 30, 2021
Securities AFS at Fair Value	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	950	$	955	$	810	$	822
Due after one year through five years	10,797		10,489		13,026		13,378
Due after five years through ten years	68,339		63,705		50,785		52,357
Due after ten years	463,838		436,572		773,985		781,313
	543,924		511,721		838,606		847,870
Mortgage-backed securities	1,587,992		1,444,802		1,016,478		1,017,029
Total securities AFS, at fair value	$	2,131,916	$	1,956,523	$	1,855,084	$	1,864,899


	At June 30, 2022				At September 30, 2021
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities HTM at Fair Value



Due after ten years	$	41,122	$	39,357	$	52,944	$	52,576
	41,122		39,357		52,944		52,576
Mortgage-backed securities	2,755		2,606		3,725		3,815
Total securities HTM, at cost	$	43,877	$	41,963	$	56,669	$	56,391

Equity Securities

The Company held $3.1 million at June 30, 2022 and $12.7 million at September 30, 2021 in marketable equity securities. The Company recognized $3.8 million and none in unrealized loss on marketable equity securities during the nine months ended June 30, 2022 and 2021, respectively, which is attributable to an investee becoming publicly traded during fiscal year 2021. All other marketable equity securities and related activity were insignificant for the nine months ended June 30, 2022 and 2021. There was one marketable security sold during the nine months ended June 30, 2022 for a $0.3 million gain.

Non-marketable equity securities with a readily determinable fair value totaled $6.5 million at June 30, 2022 and $4.6 million at September 30, 2021. The Company recognized $0.6 million in unrealized gains and $0.4 million in unrealized gains during the nine months ended June 30, 2022 and 2021, respectively. No such securities were sold during the nine months ended June 30, 2022.

Non-marketable equity securities without readily determinable fair value totaled $20.7 million at June 30, 2022 and $16.0 million at September 30, 2021. There were three securities sold during the nine months ended June 30, 2022 for a $0.2 million gain.

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 June 30, 2022 and September 30, 2021. These equity securities are 'restricted' in that they can only be owned by member banks.

FHLB Stock

The Company's borrowings from the FHLB are secured by 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 $9.1 million at June 30, 2022 and $8.7 million at September 30, 2021.

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 no impairment for such investments for the nine months ended June 30, 2022.