SECURITIES

3 Months Ended

Dec. 31, 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.


(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
Debt Securities AFS
At December 31, 2022
Corporate securities	$	25,000	$	—	$	(3,688)	$	21,312
SBA securities	103,325		—		(7,560)		95,765
Obligations of states and political subdivisions	2,453		—		(102)		2,351
Non-bank qualified obligations of states and political subdivisions	283,301		10		(25,259)		258,052
Asset-backed securities	146,906		—		(11,630)		135,276
Mortgage-backed securities	1,554,936		—		(219,914)		1,335,022
Total debt securities AFS	$	2,115,921	$	10	$	(268,153)	$	1,847,778
At September 30, 2022
Corporate securities	$	25,000	$	—	$	(2,813)	$	22,187
SBA securities	105,238		—		(7,470)		97,768
Obligations of states and political subdivisions	2,469		—		(125)		2,344
Non-bank qualified obligations of states and political subdivisions	290,754		—		(26,971)		263,783
Asset-backed securities	160,806		—		(13,016)		147,790
Mortgage-backed securities	1,581,452		—		(232,455)		1,348,997
Total debt securities AFS	$	2,165,719	$	—	$	(282,850)	$	1,882,869

Debt Securities HTM
At December 31, 2022
Non-bank qualified obligations of states and political subdivisions	$	38,131	$	—	$	(2,647)	$	35,484
Mortgage-backed securities	2,434		—		(260)		2,174
Total debt securities HTM	$	40,565	$	—	$	(2,907)	$	37,658
At September 30, 2022
Non-bank qualified obligations of states and political subdivisions	$	39,093	$	—	$	(3,190)	$	35,903
Mortgage-backed securities	2,589		—		(321)		2,268
Total debt securities HTM	$	41,682	$	—	$	(3,511)	$	38,171

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 December 31, 2022
Corporate securities	$	—	$	—	$	21,313	$	(3,688)	$	21,313	$	(3,688)
SBA securities	79,470		(4,652)		16,294		(2,908)		95,764		(7,560)
Obligations of state and political subdivisions	255		(17)		2,096		(85)		2,351		(102)
Non-bank qualified obligations of states and political subdivisions	115,532		(9,588)		141,555		(15,671)		257,087		(25,259)
Asset-backed securities	59,854		(2,236)		75,422		(9,394)		135,276		(11,630)
Mortgage-backed securities	760,800		(88,928)		574,222		(130,986)		1,335,022		(219,914)
Total debt securities AFS	$	1,015,911	$	(105,421)	$	830,902	$	(162,732)	$	1,846,813	$	(268,153)
At September 30, 2022
Corporate securities	$	—	$	—	$	22,187	$	(2,813)	$	22,187	$	(2,813)
SBA securities	97,767		(7,470)		—		—		97,767		(7,470)
Obligations of state and political subdivisions	2,345		(125)		—		—		2,345		(125)
Non-bank qualified obligations of states and political subdivisions	195,816		(19,743)		67,967		(7,228)		263,783		(26,971)
Asset-backed securities	64,886		(1,838)		82,904		(11,178)		147,790		(13,016)
Mortgage-backed securities	816,657		(106,583)		532,340		(125,872)		1,348,997		(232,455)
Total debt securities AFS	$	1,177,471	$	(135,759)	$	705,398	$	(147,091)	$	1,882,869	$	(282,850)

Debt Securities HTM
At December 31, 2022
Non-bank qualified obligations of states and political subdivisions	$	—	$	—	$	35,485	$	(2,647)	$	35,485	$	(2,647)
Mortgage-backed securities	2,174		(260)		—		—		2,174		(260)
Total debt securities HTM	$	2,174	$	(260)	$	35,485	$	(2,647)	$	37,659	$	(2,907)
At September 30, 2022
Non-bank qualified obligations of states and political subdivisions	$	3,984	$	(300)	$	31,919	$	(2,890)	$	35,903	$	(3,190)
Mortgage-backed securities	2,268		(321)		—		—		2,268		(321)
Total debt securities HTM	$	6,252	$	(621)	$	31,919	$	(2890)	$	38,171	$	(3,511)

At December 31, 2022, there were 194 securities AFS in an unrealized loss position. All of the mortgage-backed securities ("MBS") in an unrealized loss position at December 31, 2022 were government guaranteed. 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 December 31, 2022, there was no allowance for credit losses ("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 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 Small Business Administration ("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 December 31, 2022				At September 30, 2022
Securities AFS at Fair Value	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	1,788	$	1,783	$	718	$	715
Due after one year through five years	8,834		8,349		9,921		9,395
Due after five years through ten years	89,916		81,020		89,921		81,819
Due after ten years	460,447		421,604		483,707		441,943
	560,985		512,756		584,267		533,872
Mortgage-backed securities	1,554,936		1,335,022		1,581,452		1,348,997
Total securities AFS, at fair value	$	2,115,921	$	1,847,778	$	2,165,719	$	1,882,869

Securities HTM at Fair Value



Due after ten years	$	38,131	$	35,484	$	39,093	$	35,903
	38,131		35,484		39,093		35,903
Mortgage-backed securities	2,434		2,174		2,589		2,268
Total securities HTM, at cost	$	40,565	$	37,658	$	41,682	$	38,171

Equity Securities

The Company held $3.4 million at December 31, 2022 and $2.9 million at September 30, 2022 in marketable equity securities. The Company recognized zero and $2.3 million in unrealized loss on marketable equity securities during the three months ended December 31, 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 three months ended December 31, 2022 and 2021. No such securities were sold during the three months ended December 31, 2022.

Non-marketable equity securities with a readily determinable fair value totaled $7.8 million at December 31, 2022 and $7.2 million at September 30, 2022. The Company recognized $0.1 million in unrealized gains and $0.3 million in unrealized losses during the three months ended December 31, 2022 and 2021, respectively. No such securities were sold during the three months ended December 31, 2022.

Non-marketable equity securities without readily determinable fair value totaled $18.2 million at December 31, 2022 and $18.2 million at September 30, 2022. No such securities were sold during the three months ended December 31, 2022.

Federal Reserve Bank ("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 December 31, 2022 and September 30, 2022. These equity securities are 'restricted' in that they can only be owned by member banks.

Federal Home Loan Bank ("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 December 31, 2022 and at September 30, 2022.

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 three months ended December 31, 2022 and 2021, respectively.