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Note 3 - Investment Securities | 3 Months Ended
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Mar. 31, 2025
Notes to Financial Statements |
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | Note 3: Investment Securities The Company uses its investment securities portfolio to manage interest rate risk, provide liquidity (including the ability to meet regulatory requirements), generate interest and dividend income, and as collateral for public deposits and wholesale funding sources. The Company’s investment securities portfolio includes debt securities classified as held to maturity and available for sale. While the Company intends to hold its investment securities to maturity, it may sell available for sale investment securities in response to structural changes in the balance sheet and related interest rate risk and to meet liquidity requirements, among other factors. An analysis of the amortized cost and fair value by major categories of debt securities available for sale, which are carried at fair value with net unrealized gains (losses) reported on an after-tax basis as a component of accumulated other comprehensive income, and debt securities held to maturity, which are carried at amortized cost, before allowance for credit losses of $1 thousand at March 31, 2025 and December 31, 2024, follows. In accordance with GAAP, unrealized gains and losses on held to maturity securities have not been recognized in the Company’s financial statements.
|  | At March 31, 2025 |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
|  | (In thousands) |
Debt securities available for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency residential mortgage-backed securities ("MBS") |  | $ | 218,825 |  |  | $ | 4 |  |  | $ | (14,487 | ) |  | $ | 204,342 |
Agency commercial MBS |  |  | 46,057 |  |  |  | 451 |  |  |  | (6 | ) |  |  | 46,502 |
Securities of U.S. Government sponsored entities |  |  | 311,809 |  |  |  | 19 |  |  |  | (12,106 | ) |  |  | 299,722 |
Obligations of states and political subdivisions |  |  | 62,177 |  |  |  | 7 |  |  |  | (1,603 | ) |  |  | 60,581 |
Corporate securities |  |  | 1,967,432 |  |  |  | - |  |  |  | (164,641 | ) |  |  | 1,802,791 |
Collateralized loan obligations |  |  | 823,921 |  |  |  | 514 |  |  |  | (2,324 | ) |  |  | 822,111 |
Total debt securities available for sale |  |  | 3,430,221 |  |  |  | 995 |  |  |  | (195,167 | ) |  |  | 3,236,049 |
Debt securities held to maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency residential MBS |  |  | 53,528 |  |  |  | 23 |  |  |  | (3,418 | ) |  |  | 50,133 |
Obligations of states and political subdivisions |  |  | 48,675 |  |  |  | 12 |  |  |  | (203 | ) |  |  | 48,484 |
Corporate securities |  |  | 737,146 |  |  |  | 277 |  |  |  | (22,915 | ) |  |  | 714,508 |
Total debt securities held to maturity |  |  | 839,349 |  |  |  | 312 |  |  |  | (26,536 | ) |  |  | 813,125 |
Total |  | $ | 4,269,570 |  |  | $ | 1,307 |  |  | $ | (221,703 | ) |  | $ | 4,049,174 |
|  | At December 31, 2024 |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
|  | (In thousands) |
Debt securities available for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency residential MBS |  | $ | 229,050 |  |  | $ | 1 |  |  | $ | (17,991 | ) |  | $ | 211,060 |
Agency commercial MBS |  |  | 7,098 |  |  |  | - |  |  |  | (132 | ) |  |  | 6,966 |
Securities of U.S. Government sponsored entities |  |  | 311,201 |  |  |  | 1 |  |  |  | (19,085 | ) |  |  | 292,117 |
U.S. Treasury Securities |  |  | 4,945 |  |  |  | 10 |  |  |  | - |  |  |  | 4,955 |
Obligations of states and political subdivisions |  |  | 63,878 |  |  |  | 9 |  |  |  | (1,701 | ) |  |  | 62,186 |
Corporate securities |  |  | 2,031,144 |  |  |  | 127 |  |  |  | (195,334 | ) |  |  | 1,835,937 |
Collateralized loan obligations |  |  | 987,155 |  |  |  | 642 |  |  |  | (5,208 | ) |  |  | 982,589 |
Total debt securities available for sale |  |  | 3,634,471 |  |  |  | 790 |  |  |  | (239,451 | ) |  |  | 3,395,810 |
Debt securities held to maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency residential MBS |  |  | 57,927 |  |  |  | 23 |  |  |  | (4,218 | ) |  |  | 53,732 |
Obligations of states and political subdivisions |  |  | 51,261 |  |  |  | 12 |  |  |  | (377 | ) |  |  | 50,896 |
Corporate securities |  |  | 735,447 |  |  |  | - |  |  |  | (32,237 | ) |  |  | 703,210 |
Total debt securities held to maturity |  |  | 844,635 |  |  |  | 35 |  |  |  | (36,832 | ) |  |  | 807,838 |
Total |  | $ | 4,479,106 |  |  | $ | 825 |  |  | $ | (276,283 | ) |  | $ | 4,203,648 |
[The remainder of this page intentionally left blank] The amortized cost and fair value of debt securities by contractual maturity are shown in the following tables at the dates indicated:
|  | At March 31, 2025 |
|  | Debt Securities Available |  |  | Debt Securities Held |
|  | for Sale |  |  | to Maturity |
|  | Amortized |  |  | Fair |  |  | Amortized |  |  | Fair |
|  | Cost |  |  | Value |  |  | Cost |  |  | Value |
|  | (In thousands) |
Maturity in years: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 year or less |  | $ | 83,272 |  |  | $ | 82,874 |  |  | $ | 18,877 |  |  | $ | 18,819 |
Over 1 to 5 years |  |  | 1,093,030 |  |  |  | 1,039,910 |  |  |  | 379,408 |  |  |  | 376,571 |
Over 5 to 10 years |  |  | 1,165,116 |  |  |  | 1,040,310 |  |  |  | 387,536 |  |  |  | 367,602 |
Subtotal |  |  | 2,341,418 |  |  |  | 2,163,094 |  |  |  | 785,821 |  |  |  | 762,992 |
Collateralized loan obligations |  |  | 823,921 |  |  |  | 822,111 |  |  |  | - |  |  |  | - |
Agency residential MBS |  |  | 218,825 |  |  |  | 204,342 |  |  |  | 53,528 |  |  |  | 50,133 |
Agency commercial MBS |  |  | 46,057 |  |  |  | 46,502 |  |  |  | - |  |  |  | - |
Total |  | $ | 3,430,221 |  |  | $ | 3,236,049 |  |  | $ | 839,349 |  |  | $ | 813,125 |
|  | At December 31, 2024 |
|  | Debt Securities Available |  |  | Debt Securities Held |
|  | for Sale |  |  | to Maturity |
|  | Amortized |  |  | Fair |  |  | Amortized |  |  | Fair |
|  | Cost |  |  | Value |  |  | Cost |  |  | Value |
|  | (In thousands) |
Maturity in years: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 year or less |  | $ | 124,667 |  |  | $ | 124,448 |  |  | $ | 13,508 |  |  | $ | 13,468 |
Over 1 to 5 years |  |  | 993,874 |  |  |  | 940,578 |  |  |  | 347,566 |  |  |  | 342,500 |
Over 5 to 10 years |  |  | 1,292,627 |  |  |  | 1,130,169 |  |  |  | 425,634 |  |  |  | 398,138 |
Subtotal |  |  | 2,411,168 |  |  |  | 2,195,195 |  |  |  | 786,708 |  |  |  | 754,106 |
Collateralized loan obligations |  |  | 987,155 |  |  |  | 982,589 |  |  |  | - |  |  |  | - |
Agency residential MBS |  |  | 229,050 |  |  |  | 211,060 |  |  |  | 57,927 |  |  |  | 53,732 |
Agency commercial MBS |  |  | 7,098 |  |  |  | 6,966 |  |  |  | - |  |  |  | - |
Total |  | $ | 3,634,471 |  |  | $ | 3,395,810 |  |  | $ | 844,635 |  |  | $ | 807,838 |
Expected amortizing principal payments of collateralized loan obligations can differ from actual cash flows because the securities can be called and paid-off. Expected maturities of mortgage-related securities can differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. In addition, such factors as prepayments and interest rates may affect the yield on the carrying value of mortgage-related securities. [The remainder of this page intentionally left blank] An analysis of the gross unrealized losses of the debt securities available for sale portfolio follows:
|  | Debt Securities Available for Sale |
|  | At March 31, 2025 |
|  | No. of |  |  | Less than 12 months |  |  | No. of |  |  | 12 months or longer |  |  | No. of |  |  | Total |
|  | Investment |  |  |  |  |  |  | Unrealized |  |  | Investment |  |  |  |  |  |  | Unrealized |  |  | Investment |  |  |  |  |  |  | Unrealized |
|  | Positions |  |  | Fair Value |  |  | Losses |  |  | Positions |  |  | Fair Value |  |  | Losses |  |  | Positions |  |  | Fair Value |  |  | Losses |
|  | ($ in thousands) |
Agency residential MBS |  |  | 10 |  |  | $ | 13,725 |  |  | $ | (420 | ) |  |  | 102 |  |  | $ | 186,156 |  |  | $ | (14,067 | ) |  |  | 112 |  |  | $ | 199,881 |  |  | $ | (14,487 | )
Agency commercial MBS |  |  | 1 |  |  |  | 3,220 |  |  |  | (6 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 3,220 |  |  |  | (6 | )
Securities of U.S. Government sponsored entities |  |  | 1 |  |  |  | 1,937 |  |  |  | (1 | ) |  |  | 19 |  |  |  | 282,994 |  |  |  | (12,105 | ) |  |  | 20 |  |  |  | 284,931 |  |  |  | (12,106 | )
Obligations of states and political subdivisions |  |  | 4 |  |  |  | 4,668 |  |  |  | (17 | ) |  |  | 39 |  |  |  | 49,171 |  |  |  | (1,586 | ) |  |  | 43 |  |  |  | 53,839 |  |  |  | (1,603 | )
Corporate securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 134 |  |  |  | 1,802,791 |  |  |  | (164,641 | ) |  |  | 134 |  |  |  | 1,802,791 |  |  |  | (164,641 | )
Collateralized loan obligations |  |  | 3 |  |  |  | 38,770 |  |  |  | (66 | ) |  |  | 24 |  |  |  | 202,002 |  |  |  | (2,258 | ) |  |  | 27 |  |  |  | 240,772 |  |  |  | (2,324 | )
Total |  |  | 19 |  |  | $ | 62,320 |  |  | $ | (510 | ) |  |  | 318 |  |  | $ | 2,523,114 |  |  | $ | (194,657 | ) |  |  | 337 |  |  | $ | 2,585,434 |  |  | $ | (195,167 | )
An analysis of gross unrecognized losses of the debt securities held to maturity portfolio follows:
|  | Debt Securities Held to Maturity |
|  | At March 31, 2025 |
|  | No. of |  |  | Less than 12 months |  |  | No. of |  |  | 12 months or longer |  |  | No. of |  |  | Total |
|  | Investment |  |  |  |  |  |  | Unrecognized |  |  | Investment |  |  |  |  |  |  | Unrecognized |  |  | Investment |  |  |  |  |  |  | Unrecognized |
|  | Positions |  |  | Fair Value |  |  | Losses |  |  | Positions |  |  | Fair Value |  |  | Losses |  |  | Positions |  |  | Fair Value |  |  | Losses |
|  | ($ in thousands) |
Agency residential MBS |  |  | - |  |  | $ | - |  |  | $ | - |  |  |  | 76 |  |  | $ | 49,121 |  |  | $ | (3,418 | ) |  |  | 76 |  |  | $ | 49,121 |  |  | $ | (3,418 | )
Obligations of states and political subdivisions |  |  | 13 |  |  |  | 8,648 |  |  |  | (19 | ) |  |  | 27 |  |  |  | 24,879 |  |  |  | (184 | ) |  |  | 40 |  |  |  | 33,527 |  |  |  | (203 | )
Corporate securities |  |  | 18 |  |  |  | 167,402 |  |  |  | (1,597 | ) |  |  | 35 |  |  |  | 459,147 |  |  |  | (21,318 | ) |  |  | 53 |  |  |  | 626,549 |  |  |  | (22,915 | )
Total |  |  | 31 |  |  | $ | 176,050 |  |  | $ | (1,616 | ) |  |  | 138 |  |  | $ | 533,147 |  |  | $ | (24,920 | ) |  |  | 169 |  |  | $ | 709,197 |  |  | $ | (26,536 | )
Based upon the Company’s March 31, 2025 evaluation, the unrealized losses on debt securities were caused by market conditions for these types of securities. Market interest rates are currently higher than the book yield of the securities, causing declines in bond values generally. The Company continually monitors interest rate changes, risk premium spread changes, credit rating changes for issuers of bonds owned, collateralized loan obligations’ collateral levels, and corporate bond issuers’ common stock price changes. All collateralized loan obligations, obligations of states and political subdivisions, and corporate securities were investment grade rated at March 31, 2025. The Company does not intend to sell any debt securities available for sale with a material unrealized loss and has concluded that it is more likely than not that it will not be required to sell the debt securities prior to recovery of the amortized cost basis. The Company evaluates held to maturity corporate securities individually, monitoring each issuer’s financial condition, profitability, cash flows and credit rating agency conclusions. The Company has evaluated each issuer’s historical financial performance and ability to service debt payments, including throughout and following the 2008-2009 recession. The Company has an expectation that nonpayment of the amortized cost basis continues to be zero. The fair values of debt securities could decline in the future if market interest rates rise, the general economy deteriorates, inflation increases, credit ratings decline, the issuers’ financial condition deteriorates, or the liquidity for debt securities declines. As a result, significant credit losses on debt securities may occur in the future. As of March 31, 2025 and December 31, 2024, the Company’s debt securities pledged had a carrying value of $1,987,534 thousand and $2,049,954 thousand, respectively, primarily to secure public deposits, Federal Reserve Bank borrowings and securities sold under repurchase agreements. An analysis of the gross unrealized losses of the debt securities available for sale portfolio follows:
|  | Debt Securities Available for Sale |
|  | At December 31, 2024 |
|  | No. of |  |  | Less than 12 months |  |  | No. of |  |  | 12 months or longer |  |  | No. of |  |  | Total |
|  | Investment |  |  |  |  |  |  | Unrealized |  |  | Investment |  |  |  |  |  |  | Unrealized |  |  | Investment |  |  |  |  |  |  | Unrealized |
|  | Positions |  |  | Fair Value |  |  | Losses |  |  | Positions |  |  | Fair Value |  |  | Losses |  |  | Positions |  |  | Fair Value |  |  | Losses |
|  | ($ in thousands) |
Agency residential MBS |  |  | 12 |  |  | $ | 18,030 |  |  | $ | (471 | ) |  |  | 103 |  |  | $ | 192,963 |  |  | $ | (17,520 | ) |  |  | 115 |  |  | $ | 210,993 |  |  | $ | (17,991 | )
Agency commercial MBS |  |  | 2 |  |  |  | 6,966 |  |  |  | (132 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2 |  |  |  | 6,966 |  |  |  | (132 | )
Securities of U.S. Government sponsored entities |  |  | 3 |  |  |  | 12,085 |  |  |  | (53 | ) |  |  | 19 |  |  |  | 275,467 |  |  |  | (19,032 | ) |  |  | 22 |  |  |  | 287,552 |  |  |  | (19,085 | )
Obligations of states and political subdivisions |  |  | 2 |  |  |  | 2,764 |  |  |  | (21 | ) |  |  | 40 |  |  |  | 51,759 |  |  |  | (1,680 | ) |  |  | 42 |  |  |  | 54,523 |  |  |  | (1,701 | )
Corporate securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 138 |  |  |  | 1,824,327 |  |  |  | (195,334 | ) |  |  | 138 |  |  |  | 1,824,327 |  |  |  | (195,334 | )
Collateralized loan obligations |  |  | 3 |  |  |  | 26,825 |  |  |  | (15 | ) |  |  | 32 |  |  |  | 309,249 |  |  |  | (5,193 | ) |  |  | 35 |  |  |  | 336,074 |  |  |  | (5,208 | )
Total |  |  | 22 |  |  | $ | 66,670 |  |  | $ | (692 | ) |  |  | 332 |  |  | $ | 2,653,765 |  |  | $ | (238,759 | ) |  |  | 354 |  |  | $ | 2,720,435 |  |  | $ | (239,451 | )
An analysis of gross unrecognized losses of the debt securities held to maturity portfolio follows:
|  | Debt Securities Held to Maturity |
|  | At December 31, 2024 |
|  | No. of |  |  | Less than 12 months |  |  | No. of |  |  | 12 months or longer |  |  | No. of |  |  | Total |
|  | Investment |  |  |  |  |  |  | Unrecognized |  |  | Investment |  |  |  |  |  |  | Unrecognized |  |  | Investment |  |  |  |  |  |  | Unrecognized |
|  | Positions |  |  | Fair Value |  |  | Losses |  |  | Positions |  |  | Fair Value |  |  | Losses |  |  | Positions |  |  | Fair Value |  |  | Losses |
|  | ($ in thousands) |
Agency residential MBS |  |  | - |  |  | $ | - |  |  | $ | - |  |  |  | 80 |  |  | $ | 52,771 |  |  | $ | (4,218 | ) |  |  | 80 |  |  | $ | 52,771 |  |  | $ | (4,218 | )
Obligations of states and political subdivisions |  |  | 24 |  |  |  | 15,822 |  |  |  | (78 | ) |  |  | 26 |  |  |  | 25,814 |  |  |  | (299 | ) |  |  | 50 |  |  |  | 41,636 |  |  |  | (377 | )
Corporate securities |  |  | 23 |  |  |  | 251,790 |  |  |  | (4,230 | ) |  |  | 35 |  |  |  | 451,420 |  |  |  | (28,007 | ) |  |  | 58 |  |  |  | 703,210 |  |  |  | (32,237 | )
Total |  |  | 47 |  |  | $ | 267,612 |  |  | $ | (4,308 | ) |  |  | 141 |  |  | $ | 530,005 |  |  | $ | (32,524 | ) |  |  | 188 |  |  | $ | 797,617 |  |  | $ | (36,832 | )
The Company evaluates debt securities on a quarterly basis including changes in security ratings issued by rating agencies, changes in the financial condition of the issuer, collateral levels and, for mortgage-backed and asset-backed securities, delinquency and loss information with respect to the underlying collateral, changes in the levels of subordination for the Company’s particular position within the repayment structure and remaining credit enhancement as compared to expected credit losses of the security. In addition to monitoring credit rating agency evaluations, Management performs its own evaluations regarding the credit worthiness of the issuer or the securitized assets underlying asset backed securities. The following table presents the activity in the allowance for credit losses for debt securities held to maturity:
|  | For the Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
|  | (In thousands) |
Allowance for credit losses: |  |  |  |  |  |  |  |
Beginning balance |  | $ | 1 |  |  | $ | 1 |
Provision |  |  | - |  |  |  | - |
Chargeoffs |  |  | - |  |  |  | - |
Recoveries |  |  | - |  |  |  | - |
Total ending balance |  | $ | 1 |  |  | $ | 1 |
Agency mortgage-backed securities were assigned no credit loss allowance due to the perceived backing of government sponsored entities. Municipal securities were evaluated for risk of default based on credit rating and remaining term to maturity using Moody’s risk of default factors; Moody’s loss upon default factors were applied to the assumed defaulted principal amounts to estimate the amount for credit loss allowance. Corporate securities held to maturity were individually evaluated for expected credit loss by evaluating the issuer’s financial condition, profitability, cash flows, and credit ratings. At March 31, 2025, no credit loss allowance was assigned to corporate securities held to maturity. The following table summarizes the amortized cost of debt securities held to maturity at March 31, 2025, aggregated by credit rating:
|  | Credit Risk Profile by Credit Rating |
|  | At March 31, 2025 |
|  | AAA/AA/A |  |  | BBB+/BBB |  |  | Not Rated |  |  | Total |
|  | (In thousands) |
Agency residential MBS |  | $ | 53,064 |  |  | $ | - |  |  | $ | 464 |  |  | $ | 53,528 |
Obligations of states and political subdivisions |  |  | 48,675 |  |  |  | - |  |  |  | - |  |  |  | 48,675 |
Corporate securities |  |  | 554,871 |  |  |  | 182,275 |  |  |  | - |  |  |  | 737,146 |
Total |  | $ | 656,610 |  |  | $ | 182,275 |  |  | $ | 464 |  |  | $ | 839,349 |
There were no debt securities held to maturity on nonaccrual status or past due 30 days or more as of March 31, 2025. The following table provides information about the amount of interest income earned on investment securities which is fully taxable and which is exempt from federal income tax:
|  | For the Three Months |
|  | Ended March 31, |
|  | 2025 |  |  | 2024 |
|  | (In thousands) |
Taxable |  | $ | 41,280 |  |  | $ | 54,145 |
Tax-exempt from regular federal income tax |  |  | 839 |  |  |  | 994 |
Total interest income from investment securities |  | $ | 42,119 |  |  | $ | 55,139 |

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