Securities

6 Months Ended

Jun. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Securities

5. Securities

Securities Available for Sale

This table provides detailed information about securities available for sale at June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury	$	809,122	$	773	$	(6,825	)	$	803,070
U.S. Agencies		661,737		—		(2,651	)		659,086
Mortgage-backed		4,315,860		812		(545,477	)		3,771,195
State and political subdivisions		1,315,005		110		(100,388	)		1,214,727
Corporates		346,030		—		(25,675	)		320,355
Collateralized loan obligations		338,285		942		(287	)		338,940
Total	$	7,786,039	$	2,637	$	(681,303	)	$	7,107,373

December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury	$	1,308,689	$	254	$	(10,201	)	$	1,298,742
U.S. Agencies		162,406		252		(2,937	)		159,721
Mortgage-backed		4,128,576		949		(508,740	)		3,620,785
State and political subdivisions		1,359,744		2,218		(74,987	)		1,286,975
Corporates		382,069		—		(30,794	)		351,275
Collateralized loan obligations		351,376		811		(1,072	)		351,115
Total	$	7,692,860	$	4,484	$	(628,731	)	$	7,068,613

The following table presents contractual maturity information for securities available for sale at June 30, 2024 (in thousands):

	Amortized		Fair
	Cost		Value
Due in 1 year or less	$	898,944	$	892,089
Due after 1 year through 5 years		1,452,834		1,422,180
Due after 5 years through 10 years		612,812		574,807
Due after 10 years		505,589		447,102
Total		3,470,179		3,336,178
Mortgage-backed securities		4,315,860		3,771,195
Total securities available for sale	$	7,786,039	$	7,107,373

Securities may be disposed of before contractual maturities due to sales by the Company or because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

For the six months ended June 30, 2024, there were $19.2 million in proceeds from sales of securities available for sale. For the six months ended June 30, 2023, there were $68 thousand in proceeds from sales of securities available for sale. Securities transactions resulted in gross realized gains of $139 thousand and no gross realized losses for the six months ended June 30, 2024. There were no gross realized gains and $2 thousand of gross realized losses for the six months ended June 30, 2023.

There were $8.8 billion and $10.1 billion of securities pledged to secure U.S. Government deposits, other public deposits, certain trust deposits, derivative transactions, and repurchase agreements at June 30, 2024 and December 31, 2023, respectively.

Accrued interest on securities available for sale totaled $36.4 million and $31.6 million as of June 30, 2024 and December 31, 2023, respectively, and is included in the Accrued income line on the Company’s Consolidated Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available-for-sale securities presented above. Further, the Company has elected not to measure an ACL for accrued interest receivable.

The following table shows the Company’s available-for-sale investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2024 and December 31, 2023 (in thousands):

	Less than 12 months							12 months or more							Total
June 30, 2024	Count		Fair Value		Unrealized Losses			Count		Fair Value		Unrealized Losses			Count		Fair Value		Unrealized Losses
Description of Securities
U.S. Treasury		60	$	414,665	$	(2,430	)		13	$	172,775	$	(4,395	)		73	$	587,440	$	(6,825	)
U.S. Agencies		13		571,388		(728	)		7		87,698		(1,923	)		20		659,086		(2,651	)
Mortgage-backed		54		360,634		(3,343	)		848		3,262,160		(542,134	)		902		3,622,794		(545,477	)
State and political subdivisions		306		214,127		(11,309	)		1,677		958,321		(89,079	)		1,983		1,172,448		(100,388	)
Corporates		—		—		—			249		320,355		(25,675	)		249		320,355		(25,675	)
Collateralized loan obligations		12		89,819		(135	)		9		66,473		(152	)		21		156,292		(287	)
Total		445	$	1,650,633	$	(17,945	)		2,803	$	4,867,782	$	(663,358	)		3,248	$	6,518,415	$	(681,303	)

	Less than 12 months							12 months or more							Total
December 31, 2023	Count		Fair Value		Unrealized Losses			Count		Fair Value		Unrealized Losses			Count		Fair Value		Unrealized Losses
Description of Securities
U.S. Treasury		8	$	509,946	$	(267	)		63	$	745,573	$	(9,934	)		71	$	1,255,519	$	(10,201	)
U.S. Agencies		—		—		—			16		116,324		(2,937	)		16		116,324		(2,937	)
Mortgage-backed		14		19,154		(476	)		852		3,526,296		(508,264	)		866		3,545,450		(508,740	)
State and political subdivisions		388		200,835		(9,202	)		1,476		890,545		(65,785	)		1,864		1,091,380		(74,987	)
Corporates		—		—		—			267		351,275		(30,794	)		267		351,275		(30,794	)
Collateralized loan obligations		1		4,246		(4	)		32		210,872		(1,068	)		33		215,118		(1,072	)
Total		411	$	734,181	$	(9,949	)		2,706	$	5,840,885	$	(618,782	)		3,117	$	6,575,066	$	(628,731	)

The unrealized losses in the Company’s investments were caused by changes in interest rates, and not from a decline in credit of the underlying issuers. The U.S. Treasury, U.S. Agency, and GSE mortgage-backed securities are all considered to be agency-backed securities with no risk of loss as they are either explicitly or implicitly guaranteed by the U.S. government. The changes in fair value in the agency-backed portfolios are solely driven by change in interest rates caused by changing economic conditions. The Company has no knowledge of any underlying credit issues and the cash flows underlying the debt securities have not changed and are not expected to be impacted by changes in interest rates.

For the State and political subdivision portfolio, the majority of the Company’s holdings are in general obligation bonds, which have a very low historical default rate due to issuers generally having unlimited taxing authority to service the debt. For the State and political, Corporate, and Collateralized loan obligations portfolios, the Company has a robust process for monitoring credit risk, including both pre-purchase and ongoing post-purchase credit reviews and analysis. The Company monitors credit ratings of all bond issuers in these segments and reviews available financial data, including market and sector trends.

During the six months ended June 30, 2023, the Company recorded a $4.9 million impairment on one Corporate available-for-sale security.

As of June 30, 2024 and December 31, 2023, there was no ACL related to the Company’s available-for-sale securities as the decline in fair value did not result from credit issues.

Securities Held to Maturity

The following table provides detailed information about securities held to maturity at June 30, 2024 and December 31, 2023, respectively (in thousands):

June 30, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Allowance for Credit Losses			Net Carrying Amount
U.S. Agencies	$	116,270	$	—	$	(2,273	)	$	113,997	$	—		$	116,270
Mortgage-backed		2,632,661		—		(421,856	)		2,210,805		—			2,632,661
State and political subdivisions		2,800,659		13,939		(225,992	)		2,588,606		(2,956	)		2,797,703
Total	$	5,549,590	$	13,939	$	(650,121	)	$	4,913,408	$	(2,956	)	$	5,546,634

December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Allowance for Credit Losses			Net Carrying Amount
U.S. Agencies	$	123,210	$	—	$	(2,686	)	$	120,524	$	—		$	123,210
Mortgage-backed		2,738,253		18		(356,657	)		2,381,614		—			2,738,253
State and political subdivisions		2,830,405		21,021		(170,197	)		2,681,229		(3,258	)		2,827,147
Total	$	5,691,868	$	21,039	$	(529,540	)	$	5,183,367	$	(3,258	)	$	5,688,610

The following table presents contractual maturity information for securities held to maturity at June 30, 2024 (in thousands):

	Amortized		Fair
	Cost		Value
Due in 1 year or less	$	232,274	$	229,504
Due after 1 year through 5 years		222,096		216,413
Due after 5 years through 10 years		802,704		754,813
Due after 10 years		1,659,855		1,501,873
Total		2,916,929		2,702,603
Mortgage-backed securities		2,632,661		2,210,805
Total securities held to maturity	$	5,549,590	$	4,913,408

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

There were no sales of securities held to maturity during the six months ended June 30, 2024 or 2023.

During the year ended December 31, 2022, securities with an amortized cost of $4.1 billion and a fair value of $3.8 billion were transferred from the available-for-sale classification to the held-to-maturity classification as the Company has the positive intent and ability to hold these securities to maturity. The transfers of securities were

made at fair value at the time of transfer. The unrealized holding loss at the time of transfer is retained in AOCI and will be amortized over the remaining life of the securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfers. The amortized cost balance of securities held to maturity in the tables above includes a net unamortized unrealized loss of $189.5 million at June 30, 2024.

Accrued interest on securities held to maturity totaled $26.9 million and $27.2 million as of June 30, 2024 and December 31, 2023, respectively, and is included in the Accrued income line on the Company’s Consolidated Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of held-to-maturity securities presented above. Further, the Company has elected not to measure an ACL for accrued interest receivable.

The following table shows the Company’s held-to-maturity investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2024 and December 31, 2023, respectively (in thousands):

	Less than 12 months							12 months or more							Total
June 30, 2024	Count		Fair Value		Unrealized Losses			Count		Fair Value		Unrealized Losses			Count		Fair Value		Unrealized Losses
U.S. Agencies		—	$	—	$	—			10	$	113,997	$	(2,273	)		10	$	113,997	$	(2,273	)
Mortgage-backed		4		2,141		(47	)		265		2,208,664		(421,809	)		269		2,210,805		(421,856	)
State and political subdivisions		56		273,506		(13,253	)		1,432		1,850,868		(212,739	)		1,488		2,124,374		(225,992	)
Total		60	$	275,647	$	(13,300	)		1,707	$	4,173,529	$	(636,821	)		1,767	$	4,449,176	$	(650,121	)

	Less than 12 months							12 months or more							Total
December 31, 2023	Count		Fair Value		Unrealized Losses			Count		Fair Value		Unrealized Losses			Count		Fair Value		Unrealized Losses
U.S. Agency		—	$	—	$	—			11	$	120,524	$	(2,686	)		11	$	120,524	$	(2,686	)
Mortgage-backed		2		1,469		(14	)		263		2,377,922		(356,643	)		265		2,379,391		(356,657	)
State and political subdivisions		146		570,950		(22,557	)		1,343		1,612,442		(147,640	)		1,489		2,183,392		(170,197	)
Total		148	$	572,419	$	(22,571	)		1,617	$	4,110,888	$	(506,969	)		1,765	$	4,683,307	$	(529,540	)

The unrealized losses in the Company’s held-to-maturity portfolio were caused by changes in the interest rate environment. The U.S. Agency and GSE mortgage-backed securities are considered to be agency-backed securities with no risk of loss as they are either explicitly or implicitly guaranteed by the U.S. government. Therefore, the Company’s expected lifetime loss for these portfolios is zero and there is no ACL recorded for these portfolios. The Company has no knowledge of any underlying credit issues and the cash flows underlying the debt securities have not changed and are not expected to be impacted by changes in interest rates.

For the State and political subdivision portfolio, the Company’s holdings are in general obligation bonds as well as private placement bonds, which have very low historical default rates due to issuers generally having unlimited taxing authority to service the debt. The Company has a robust process for monitoring credit risk, including both pre-purchase and ongoing post-purchase credit reviews and analysis. The Company monitors credit ratings of all bond issuers in these segments and reviews available financial data, including market and sector trends. The underlying bonds are evaluated for credit losses in conjunction with management’s estimate of the ACL based on credit rating.

The following tables show the amortized cost basis by credit rating of the Company’s held-to-maturity investments at June 30, 2024 and December 31, 2023 (in thousands):

	Amortized Cost Basis by Credit Rating - HTM Debt Securities
June 30, 2024	AAA		AA		A		BBB		BB		CCC-C		Total
State and political subdivisions:
Competitive	$	—	$	9,080	$	442,509	$	641,441	$	30,112	$	22,134	$	1,145,276
Utilities		1,577,195		—		52,788		25,400		—		—		1,655,383
Total state and political subdivisions	$	1,577,195	$	9,080	$	495,297	$	666,841	$	30,112	$	22,134	$	2,800,659

	Amortized Cost Basis by Credit Rating - HTM Debt Securities
December 31, 2023	AAA		AA		A		BBB		BB		B		CCC-C		Total
State and political subdivisions:
Competitive	$	—	$	7,704	$	464,349	$	641,743	$	30,734	$	15,326	$	2,649	$	1,162,505
Utilities		757,381		795,448		87,736		26,720		615		—		—		1,667,900
Total state and political subdivisions	$	757,381	$	803,152	$	552,085	$	668,463	$	31,349	$	15,326	$	2,649	$	2,830,405

Competitive held-to-maturity securities include not-for-profit enterprises that provide public functions such as housing, higher education or healthcare, but do so in a competitive environment. It also includes project financings that can have relatively high enterprise risk, such as deals backed by revenues from sports or convention facilities or start-up transportation ventures.

Utilities and general obligation are public enterprises providing essential services with a monopoly or near-monopoly over the service area. This includes environmental utilities (water, sewer, solid waste), power utilities (electric distribution and generation, gas), and transportation utilities (airports, parking, toll roads, mass transit, ports).

The following table presents the aging of past due held-to-maturity securities at June 30, 2024 (in thousands):

June 30, 2024	30-89 Days Past Due and Accruing		Greater than 90 Days Past Due and Accruing		Non- Accrual		Total Past Due		Current		Total
State and political subdivisions:
Competitive	$	40,570	$	—	$	—	$	40,570	$	1,104,706	$	1,145,276
Utilities		—		—		—		—		1,655,383		1,655,383
Total state and political subdivisions	$	40,570	$	—	$	—	$	40,570	$	2,760,089	$	2,800,659

All held-to-maturity securities were current and not past due at December 31, 2023.

Trading Securities

There were net unrealized gains on trading securities of $6 thousand and net unrealized losses of $1 thousand at June 30, 2024 and 2023, respectively. Net unrealized gains and losses are included in trading and investment banking income on the Company’s Consolidated Statements of Income. Securities sold not yet purchased totaled $10.8 million and $8.0 million at June 30, 2024 and December 31, 2023, respectively, and are classified within the Other liabilities line of the Company’s Consolidated Balance Sheets.

Other Securities

The table below provides detailed information for Other securities at June 30, 2024 and December 31, 2023 (in thousands):

	June 30, 2024		December 31, 2023
FRB and FHLB stock	$	65,172	$	87,672
Equity securities with readily determinable fair values		11,355		11,228
Equity securities without readily determinable fair values		371,123		394,035
Total	$	447,650	$	492,935

Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is mainly tied to the level of borrowings from the FHLB. These holdings are carried at cost. Equity securities with readily determinable fair values are generally traded on an exchange and market prices are readily available. Equity securities without readily determinable fair values include equity investments which are held by a subsidiary qualified as a Small Business Investment Company, as well as investments in low-income housing partnerships within the areas the Company serves. Unrealized gains or losses on equity securities with and without readily determinable fair values are recognized in the Investment securities gains, net line of the Company’s Consolidated Statements of Income.

Investment Securities Gains, Net

The table below presents the components of Investments securities (losses) gains, net for the three and six months ended June 30, 2024 and June 30, 2023 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Investment securities (losses) gains, net
Available-for-sale debt securities:
Gains realized on sales	$	—		$	—		$	139		$	—
Losses realized on sales		—			—			—			(2	)
Impairment of AFS security		—			(125	)		—			(4,925	)
Equity securities with readily determinable fair values:
Fair value adjustments, net		(26	)		(62	)		(49	)		26
Equity securities without readily determinable fair values:
Fair value adjustments, net		(2,565	)		1,087			(3,015	)		477
Sales		724			—			10,429			—
Total investment securities (losses) gains, net	$	(1,867	)	$	900		$	7,504		$	(4,424	)