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Note 3 - Debt Securities Available for Sale and Held to Maturity

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 3: Debt Securities Available for Sale and Held to Maturity

The Company uses its debt 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 debt securities portfolio includes debt securities classified as held to maturity and available for sale. While the Company intends to hold its debt securities to maturity, it may sell debt securities available for sale in response to structural changes in the balance sheet and related interest rate risk and to meet liquidity requirements, among other factors.

Debt securities available for sale are carried at fair value with net unrealized gains (losses) reported on an after-tax basis as a component of accumulated other comprehensive income. Debt securities held to maturity are carried at amortized cost. The following tables provide an analysis of the amortized cost and fair value by major categories of debt securities available for sale and debt securities held to maturity before allowance for credit losses of $1 thousand at September 30, 2025 and December 31, 2024. In accordance with GAAP, unrealized gains and losses on held to maturity securities have not been recognized in the Company’s financial statements.

		At September 30, 2025
						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
		(In thousands)
Debt securities available for sale:
Agency residential mortgage-backed securities ("MBS")		$	203,929			$	6			$	(11,445	)		$	192,490
Agency commercial MBS			398,586				788				(2,210	)			397,164
Securities of U.S. Government sponsored entities			313,025				55				(7,888	)			305,192
Obligations of states and political subdivisions			52,418				8				(573	)			51,853
Corporate securities			1,917,181				-				(119,619	)			1,797,562
Collateralized loan obligations			562,034				512				(1,483	)			561,063
Total debt securities available for sale			3,447,173				1,369				(143,218	)			3,305,324
Debt securities held to maturity:
Agency residential MBS			46,433				26				(2,566	)			43,893
Obligations of states and political subdivisions			39,528				15				(45	)			39,498
Corporate securities			740,545				2,576				(9,324	)			733,797
Total debt securities held to maturity			826,506				2,617				(11,935	)			817,188
Total		$	4,273,679			$	3,986			$	(155,153	)		$	4,122,512

		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 amortized cost and fair value of debt securities by contractual maturity are shown in the following tables at the dates indicated:

		At September 30, 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		$	168,382			$	167,424			$	29,562			$	29,535
Over 1 to 5 years			1,234,938				1,183,538				411,838				413,990
Over 5 to 10 years			879,304				803,645				338,673				329,770
Subtotal			2,282,624				2,154,607				780,073				773,295
Collateralized loan obligations			562,034				561,063				-				-
Agency residential MBS			203,929				192,490				46,433				43,893
Agency commercial MBS			398,586				397,164				-				-
Total		$	3,447,173			$	3,305,324			$	826,506			$	817,188

		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.

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An analysis of the gross unrealized losses of the debt securities available for sale portfolio follows:

		Debt Securities Available for Sale
		At September 30, 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			5			$	18,550			$	(337	)			104			$	173,381			$	(11,108	)			109			$	191,931			$	(11,445	)
Agency commercial MBS			33				233,147				(2,210	)			-				-				-				33				233,147				(2,210	)
Securities of U.S. Government sponsored entities			-				-				-				19				288,409				(7,888	)			19				288,409				(7,888	)
Obligations of states and political subdivisions			1				1,311				(2	)			30				40,371				(571	)			31				41,682				(573	)
Corporate securities			-				-				-				129				1,796,562				(119,619	)			129				1,796,562				(119,619	)
Collateralized loan obligations			3				25,645				(78	)			9				84,308				(1,405	)			12				109,953				(1,483	)
Total			42			$	278,653			$	(2,627	)			291			$	2,383,031			$	(140,591	)			333			$	2,661,684			$	(143,218	)

An analysis of gross unrecognized losses of the debt securities held to maturity portfolio follows:

		Debt Securities Held to Maturity
		At September 30, 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			-			$	-			$	-				63			$	42,819			$	(2,566	)			63			$	42,819			$	(2,566	)
Obligations of states and political subdivisions			1				365				-				20				18,465				(45	)			21				18,830				(45	)
Corporate securities			2				4,705				(9	)			27				373,660				(9,315	)			29				378,365				(9,324	)
Total			3			$	5,070			$	(9	)			110			$	434,944			$	(11,926	)			113			$	440,014			$	(11,935	)

Based upon the Company’s September 30, 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 September 30, 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 debt 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 September 30, 2025 and December 31, 2024, the Company’s debt securities pledged had a carrying value of $1,858,958 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 Nine Months Ended September 30,
		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 September 30, 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 September 30, 2025, aggregated by credit rating:

		Credit Risk Profile by Credit Rating
		At September 30, 2025
		AAA/AA/A				BBB+/BBB				Not Rated				Total
		(In thousands)
Agency residential MBS		$	45,984			$	-			$	449			$	46,433
Obligations of states and political subdivisions			39,528				-				-				39,528
Corporate securities			557,363				183,182				-				740,545
Total		$	642,875			$	183,182			$	449			$	826,506

There were no debt securities held to maturity on nonaccrual status or past due 30 days or more as of September 30, 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								For the Nine Months
		Ended September 30,
		2025				2024				2025				2024
		(In thousands)

Taxable		$	38,402			$	48,699			$	118,529			$	154,648
Tax-exempt from federal income tax			735				892				2,398				2,839
Total interest income from investment securities		$	39,137			$	49,591			$	120,927			$	157,487