SECURITIES

3 Months Ended

Dec. 31, 2023

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, 2023
Corporate securities	$	25,000	$	—	$	(6,625)	$	18,375
SBA securities	94,458		—		(6,726)		87,732
Obligations of states and political subdivisions	2,351		—		(47)		2,304
Non-bank qualified obligations of states and political subdivisions	262,999		25		(34,136)		228,888
Asset-backed securities	244,965		96		(7,357)		237,704
Mortgage-backed securities	1,471,376		27		(195,825)		1,275,578
Total debt securities AFS	$	2,101,149	$	148	$	(250,716)	$	1,850,581
At September 30, 2023
Corporate securities	$	25,000	$	—	$	(6,750)	$	18,250
SBA securities	95,549		—		(10,307)		85,242
Obligations of states and political subdivisions	2,368		—		(79)		2,289
Non-bank qualified obligations of states and political subdivisions	269,396		—		(42,673)		226,723
Asset-backed securities	255,384		234		(9,419)		246,199
Mortgage-backed securities	1,495,636		—		(270,111)		1,225,525
Total debt securities AFS	$	2,143,333	$	234	$	(339,339)	$	1,804,228

Debt Securities HTM
At December 31, 2023
Non-bank qualified obligations of states and political subdivisions	$	33,337	$	—	$	(3,050)	$	30,287
Mortgage-backed securities	2,103		—		(210)		1,893
Total debt securities HTM	$	35,440	$	—	$	(3,260)	$	32,180
At September 30, 2023
Non-bank qualified obligations of states and political subdivisions	$	34,415	$	—	$	(4,844)	$	29,571
Mortgage-backed securities	2,176		—		(322)		1,854
Total debt securities HTM	$	36,591	$	—	$	(5,166)	$	31,425

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, 2023
Corporate securities	$	—	$	—	$	18,375	$	(6,625)	$	18,375	$	(6,625)
SBA securities	23,502		(742)		64,229		(5,984)		87,731		(6,726)
Obligations of state and political subdivisions	—		—		2,304		(47)		2,304		(47)
Non-bank qualified obligations of states and political subdivisions	1,616		(18)		225,198		(34,118)		226,814		(34,136)
Asset-backed securities	86,695		(257)		112,043		(7,100)		198,738		(7,357)
Mortgage-backed securities	17,688		(245)		1,256,811		(195,580)		1,274,499		(195,825)
Total debt securities AFS	$	129,501	$	(1,262)	$	1,678,960	$	(249,454)	$	1,808,461	$	(250,716)
At September 30, 2023
Corporate securities	$	—	$	—	$	18,250	$	(6,750)	$	18,250	$	(6,750)
SBA securities	22,327		(1,919)		62,915		(8,388)		85,242		(10,307)
Obligations of state and political subdivisions	—		—		2,289		(79)		2,289		(79)
Non-bank qualified obligations of states and political subdivisions	5,010		(83)		221,714		(42,590)		226,723		(42,673)
Asset-backed securities	46,528		(224)		115,608		(9,195)		162,136		(9,419)
Mortgage-backed securities	18,311		(944)		1,207,214		(269,167)		1,225,525		(270,111)
Total debt securities AFS	$	92,176	$	(3,170)	$	1,627,990	$	(336,169)	$	1,720,165	$	(339,339)

Debt Securities HTM
At December 31, 2023
Non-bank qualified obligations of states and political subdivisions	$	—	$	—	$	30,287	$	(3,050)	$	30,287	$	(3,050)
Mortgage-backed securities	—		—		1,893		(210)		1,893		(210)
Total debt securities HTM	$	—	$	—	$	32,180	$	(3,260)	$	32,180	$	(3,260)
At September 30, 2023
Non-bank qualified obligations of states and political subdivisions	$	—	$	—	$	29,571	$	(4,844)	$	29,571	$	(4,844)
Mortgage-backed securities	—		—		1,854		(322)		1,854		(322)
Total debt securities HTM	$	—	$	—	$	31,425	$	(5166)	$	31,425	$	(5,166)

The increase in the fair value of investment securities balances when comparing December 31, 2023 to September 30, 2023 was primarily driven by decreases in unrealized losses due to steady interest rates during the three months. At December 31, 2023, there were 199 securities AFS in an unrealized loss position. All of the mortgage-backed securities ("MBS") in an unrealized loss position at December 31, 2023 were government guaranteed. Management assessed each investment security with unrealized losses for credit loss and determined all unrealized losses on these securities were due to adverse market conditions and/or change in 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, 2023, 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 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, 2023				At September 30, 2023
Debt Securities AFS	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,597	$	3,579	$	5,023	$	4,971
Due after one year through five years	11,172		10,523		11,175		10,292
Due after five years through ten years	79,137		68,613		79,139		66,428
Due after ten years	535,867		492,288		552,360		497,012
	629,773		575,003		647,697		578,703
Mortgage-backed securities	1,471,376		1,275,578		1,495,636		1,225,525
Total debt securities AFS	$	2,101,149	$	1,850,581	$	2,143,333	$	1,804,228

Debt Securities HTM



Due after ten years	$	33,337	$	30,287	$	34,415	$	29,571
	33,337		30,287		34,415		29,571
Mortgage-backed securities	2,103		1,893		2,176		1,854
Total debt securities HTM	$	35,440	$	32,180	$	36,591	$	31,425

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, 2023 and September 30, 2023. 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 $4.0 million and $8.5 million at December 31, 2023 and at September 30, 2023, 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 cost approximates fair value.

Equity Securities. The Company held $4.2 million and $3.4 million in marketable equity securities within other assets on the Condensed Consolidated Statements of Financial Condition at December 31, 2023 and September 30, 2023, respectively. The Company recognized $0.1 million and zero in unrealized gains on marketable equity securities during the three months ended December 31, 2023 and 2022, respectively. No such securities were sold during the three months ended December 31, 2023.

Non-marketable equity securities with a readily determinable fair value totaled $9.7 million and $8.4 million at December 31, 2023 and September 30, 2023, respectively. The Company recognized $0.3 million and $0.1 million in unrealized gains during the three months ended December 31, 2023 and 2022, respectively. No such securities were sold during the three months ended December 31, 2023.

Non-marketable equity securities without readily determinable fair value totaled $14.9 million and $16.2 million at December 31, 2023 and September 30, 2023, respectively. There was one such security sold during the three months ended December 31, 2023 for a $2.5 million gain.

Equity Securities 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, 2023 and 2022, respectively.