Securities

6 Months Ended

Jun. 30, 2025

Investments, Debt and Equity Securities [Abstract]

Debt securities

The amortized cost, gross unrealized gains and losses and estimated fair value of investment and mortgage-backed AFS and HTM securities, net of allowance for credit losses, as of June 30, 2025 and December 31, 2024 are reflected in the tables below (in thousands):


	June 30, 2025
	Amortized		Gross Unrealized		Gross Unrealized		Less: Allowance for		Estimated
AVAILABLE FOR SALE	Cost		Gains		Losses		Credit Losses		Fair Value
Investment securities:
U.S. Treasury	$	134,385	$	—	$	6	$	—	$	134,379

State and political subdivisions	453,026		27		64,443		—		388,610
Corporate bonds and other	17,436		187		398		—		17,225

MBS: (1)
Residential	907,499		7,999		3,433		—		912,065
Commercial	5,204		59		418		—		4,845
Total	$	1,517,550	$	8,272	$	68,698	$	—	$	1,457,124



	Amortized		Gross Unrealized		Gross Unrealized		Estimated		Less: Allowance for		Net Carrying
HELD TO MATURITY	Cost		Gains		Losses		Fair Value		Credit Losses		Amount
Investment securities:














State and political subdivisions	$	1,041,998	$	185	$	180,070	$	862,113	$	26	$	1,041,972
Corporate bonds and other	120,415		358		4,472		116,301		29		120,386
MBS: (1)
Residential	81,350		12		6,192		75,170		—		81,350
Commercial	29,198		—		1,405		27,793		—		29,198
Total	$	1,272,961	$	555	$	192,139	$	1,081,377	$	55	$	1,272,906


	December 31, 2024
	Amortized		Gross Unrealized		Gross Unrealized		Less: Allowance for		Estimated
AVAILABLE FOR SALE	Cost		Gains		Losses		Credit Losses		Fair Value
Investment securities:
U.S. Treasury	$	173,880	$	76	$	—	$	—	$	173,956

State and political subdivisions	458,013		36		43,717		—		414,332
Corporate bonds and other	14,646		263		401		—		14,508

MBS: (1)
Residential	935,639		835		10,088		—		926,386
Commercial	5,238		—		526		—		4,712
Total	$	1,587,416	$	1,210	$	54,732	$	—	$	1,533,894




















	Amortized		Gross Unrealized		Gross Unrealized		Estimated		Less: Allowance for		Net Carrying
HELD TO MATURITY	Cost		Gains		Losses		Fair Value		Credit Losses		Amount
Investment securities:
State and political subdivisions	$	1,040,912	$	4,004	$	152,697	$	892,219	$	—	$	1,040,912
Corporate bonds and other	124,095		17		6,553		117,559		—		124,095
MBS: (1)
Residential	84,660		8		8,549		76,119		—		84,660
Commercial	29,567		—		1,982		27,585		—		29,567
Total	$	1,279,234	$	4,029	$	169,781	$	1,113,482	$	—	$	1,279,234

(1) All MBS are issued and/or guaranteed by U.S. government agencies or U.S. GSEs.

From time to time, we transfer securities from AFS to HTM due to overall balance sheet strategies and our intent and ability to hold these securities until maturity. We did not transfer any securities from AFS to HTM during the six months ended June 30, 2025 or the year ended December 31, 2024. The remaining net unamortized, unrealized loss on the transferred securities included in AOCI in the accompanying balance sheets totaled $101.1 million ($79.8 million, net of tax) at June 30, 2025 and $105.1 million ($83.0 million, net of tax) at December 31, 2024. Any net unrealized gain or loss on the transferred securities included in AOCI at the time of transfer will be amortized over the remaining life of the underlying security as an adjustment to the yield on those securities. Securities transferred with losses included in AOCI continue to be included in management’s assessment for impairment for each individual security.

Investment securities and MBS with carrying values of $2.16 billion and $2.18 billion were pledged as of June 30, 2025 and December 31, 2024, respectively, to collateralize borrowings from the FRDW, repurchase agreements and public fund deposits, for potential liquidity needs or other purposes as required by law. At June 30, 2025 and December 31, 2024, the amount of excess collateral at the FRDW was $383.6 million and $431.7 million, respectively.

The following tables present the fair value and unrealized losses on AFS, if applicable, for which an allowance for credit losses has not been recorded, as well as HTM investment securities and MBS, if applicable, as of June 30, 2025 and December 31, 2024, segregated by major security type and length of time in a continuous loss position (in thousands):


	June 30, 2025
	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
AVAILABLE FOR SALE
Investment securities:
U.S. Treasury	$	134,379	$	6	$	—	$	—	$	134,379	$	6

State and political subdivisions	4,458		152		373,075		64,291		377,533		64,443
Corporate bonds and other	2,944		56		5,640		342		8,584		398

MBS:
Residential	170,868		740		30,203		2,693		201,071		3,433
Commercial	—		—		2,553		418		2,553		418
Total	$	312,649	$	954	$	411,471	$	67,744	$	724,120	$	68,698

HELD TO MATURITY
Investment securities:
State and political subdivisions	$	169,617	$	11,037	$	689,160	$	169,033	$	858,777	$	180,070
Corporate bonds and other	3,872		71		100,386		4,401		104,258		4,472
MBS:
Residential	2,510		215		72,213		5,977		74,723		6,192
Commercial	—		—		27,793		1,405		27,793		1,405
Total	$	175,999	$	11,323	$	889,552	$	180,816	$	1,065,551	$	192,139

	December 31, 2024
	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
AVAILABLE FOR SALE
Investment securities:


State and political subdivisions	$	12,089	$	64	$	398,304	$	43,653	$	410,393	$	43,717
Corporate bonds and other	2,967		33		5,612		368		8,579		401

MBS:
Residential	723,855		6,517		31,527		3,571		755,382		10,088
Commercial	2,223		12		2,489		514		4,712		526
Total	$	741,134	$	6,626	$	437,932	$	48,106	$	1,179,066	$	54,732

HELD TO MATURITY
Investment securities:
State and political subdivisions	$	73,272	$	1,779	$	704,563	$	150,918	$	777,835	$	152,697
Corporate bonds and other	2,212		149		111,392		6,404		113,604		6,553
MBS:
Residential	2,548		292		73,064		8,257		75,612		8,549
Commercial	—		—		27,585		1,982		27,585		1,982
Total	$	78,032	$	2,220	$	916,604	$	167,561	$	994,636	$	169,781

For those AFS debt securities in an unrealized loss position (i) where management has the intent to sell or (ii) where it will more-likely-than-not be required to sell the security before the recovery of its amortized cost basis, we recognize the loss in earnings. For those AFS debt securities in an unrealized loss position that do not meet either of these criteria, management assesses whether the decline in fair value has resulted from credit-related factors, using both qualitative and quantitative criteria. Determining the allowance under the credit loss method requires the use of a discounted cash flow method to assess the credit losses. Any credit-related impairment will be recognized in allowance for credit losses on the balance sheet with a

corresponding adjustment to earnings. Noncredit-related temporary impairment, the portion of the impairment relating to factors other than credit (such as changes in market interest rates), is recognized in other comprehensive income, net of tax.

As of June 30, 2025 and December 31, 2024, we did not have an allowance for credit losses on our AFS securities, based on our consideration of the qualitative factors associated with each security type in our AFS portfolio. The unrealized losses on our investment and MBS are due to changes in interest rates and spreads and other market conditions. We had 335 and 421 AFS debt securities in an unrealized loss position at June 30, 2025 and December 31, 2024, respectively. Our state and political subdivisions are highly rated municipal securities with a long history of no credit losses. Our AFS MBS are highly rated securities, which are either explicitly or implicitly backed by the U.S. Government through its agencies and which are highly rated by major ratings agencies and also have a long history of no credit losses. Our corporate bonds and other investment securities consist of primarily investment grade bonds.

We assess the likelihood of default and the potential amount of default when assessing our HTM securities for credit losses. We utilize term structures and, due to no prior loss exposure on our state and political subdivision securities or our corporate securities, we currently apply a third-party average loss given default rate to model these securities. We elected to use the collective evaluation method to model our HTM securities, which aligns with our third-party fair value measurement process. The model determined an expected credit loss over the life of the HTM securities of $55,000, and such amount was recognized as credit loss for the six months ended June 30, 2025, and a reversal of provision of credit loss of $9,000 was recognized for the three months ended June 30, 2025. Management evaluated the remote expectation of loss on the HTM portfolio, along with the qualitative factors associated with these securities, as well as the credit loss estimate of the model and concluded that an allowance for credit loss of $55,000 was sufficient as of June 30, 2025, due to the securities being highly rated municipals and primarily investment grade corporates with a long history of no credit losses. As of June 30, 2025, two corporate bonds were rated below investment grade. For the three and six months ended June 30, 2024, no credit loss was recognized.

The accrued interest receivable on our debt securities is excluded from the credit loss estimate and is included in interest receivable on our consolidated balance sheets. As of June 30, 2025, accrued interest receivable on AFS and HTM debt securities totaled $12.3 million and $12.8 million, respectively. As of December 31, 2024, accrued interest receivable on AFS and HTM debt securities totaled $13.6 million and $12.9 million, respectively. No HTM debt securities were past-due or on nonaccrual status as of June 30, 2025 or December 31, 2024.

The following table reflects interest income recognized on securities for the periods presented (in thousands):



	Three Months Ended June 30,
	2025		2024
U.S. Treasury	$	1,436	$	2,066

State and political subdivisions	11,659		13,888

Corporate bonds and other	1,593		1,765
MBS	13,040		11,084
Total interest income on securities	$	27,728	$	28,803



	Six Months Ended June 30,
	2025		2024
U.S. Treasury	$	3,003	$	4,089

State and political subdivisions	23,319		28,157
Corporate bonds and other	3,210		3,528
MBS	26,563		21,203
Total interest income on securities	$	56,095	$	56,977

There was a $554,000 net realized loss as a result of sales from the AFS securities portfolio for the six months ended June 30, 2025, which consisted of a net loss of $1.2 million on the unwind of fair value MBS hedges in the AFS securities portfolio, partially offset by $600,000 in realized gains. There was a $581,000 net realized loss as a result of sales from the AFS securities portfolio for the six months ended June 30, 2024, which consisted of $4.6 million in realized losses and $88,000 in realized gains, offset by a net gain of $4.0 million on the unwinding of fair value hedges on municipal securities in the AFS securities portfolio. There were no sales from the HTM portfolio during the three and six months ended June 30, 2025 or 2024. We calculate realized gains and losses on sales of securities under the specific identification method.

Expected maturities on our securities may differ from contractual maturities because issuers may have the right to call or prepay obligations. MBS are presented in total by category since MBS are typically issued with stated principal amounts and are backed by pools of mortgages that have loans with varying maturities. The characteristics of the underlying pool of mortgages, such as

fixed-rate or adjustable-rate, as well as prepayment risk, are passed on to the security holder. The term of a mortgage-backed pass-through security thus approximates the term of the underlying mortgages and can vary significantly due to prepayments.

The amortized cost and estimated fair value of AFS and HTM securities at June 30, 2025, are presented below by contractual maturity (in thousands):


	June 30, 2025
	Amortized Cost		Fair Value
AVAILABLE FOR SALE
Investment securities:
Due in one year or less	$	134,877	$	134,874
Due after one year through five years	6,715		6,676
Due after five years through ten years	27,902		27,480
Due after ten years	435,353		371,184
	604,847		540,214
MBS:	912,703		916,910
Total	$	1,517,550	$	1,457,124


	June 30, 2025
	Amortized Cost		Fair Value
HELD TO MATURITY
Investment securities:
Due in one year or less	$	135	$	135
Due after one year through five years	20,535		20,319
Due after five years through ten years	127,653		123,038
Due after ten years	1,014,090		834,922
	1,162,413		978,414
MBS:	110,548		102,963
Total	$	1,272,961	$	1,081,377

Equity Investments

Equity investments on our consolidated balance sheets include Community Reinvestment Act funds with a readily determinable fair value as well as equity investments without readily determinable fair values. At June 30, 2025 and December 31, 2024, we had equity investments recorded in our consolidated balance sheets of $9.5 million.

Any realized and unrealized gains and losses on equity investments are reported in income. Equity investments without readily determinable fair values are recorded at cost less impairment, if any. For the three and six months ended June 30, 2025, there was no gain or loss on the sale of equity securities.

The following is a summary of unrealized and realized gains and losses on equity investments recognized in other noninterest income in the consolidated statements of income during the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net gains (losses) recognized during the period on equity investments	$	16	$	(23)	$	95	$	(79)
Less: Net gains recognized during the period on equity investments sold during the period	—		—		—		—
Unrealized gains (losses) recognized during the reporting period on equity investments held at the reporting date	$	16	$	(23)	$	95	$	(79)

Equity investments are assessed quarterly for other-than-temporary impairment. Based upon that evaluation, management does not consider any of our equity investments to be other-than-temporarily impaired at June 30, 2025.

FHLB Stock

Our FHLB stock, which has limited marketability, is carried at cost and is assessed quarterly for other-than-temporary impairment. Based upon evaluation by management at June 30, 2025, our FHLB stock was not impaired and thus was not considered to be other-than-temporarily impaired.