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Investment Securities
 12 Months Ended
Dec. 31, 2023
Investments, Debt and Equity Securities [Abstract]  
Investment Holdings Investment Securities
Investment securities consisted of the following at December 31, 2023 and 2022:
 
(In thousands)
20232022
Available for sale debt securities$9,684,760 $12,238,316 
Trading debt securities28,830 43,523 
Equity securities:
   Readily determinable fair value5,723 6,210 
   No readily determinable fair value6,978 6,094 
Other:
   Federal Reserve Bank stock35,166 34,795 
   Federal Home Loan Bank stock10,640 10,678 
   Equity method investments— 1,434 
   Private equity investments176,667 178,127 
Total investment securities (1)
$9,948,764 $12,519,177 
(1) Accrued interest receivable totaled $28.9 million and $38.8 million at December 31, 2023 and December 31, 2022, respectively, and was included within other assets on the consolidated balance sheet.
        
The Company has elected to measure equity securities with no readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes for the identical or similar investment of the same issuer. This portfolio includes the Company's 823,447 shares of Visa Class B common stock, which are held by Commerce Bancshares, Inc. (the Company's parent company). These shares have a carrying value of zero, as there have not been observable price changes in orderly transactions for identical or similar investments of the same issuer. During the year-ended December 31, 2023, the Company did not record any impairment or significant other adjustments to the carrying amount of its portfolio of equity securities with no readily determinable fair value.

At Visa, Inc.’s (“Visa”) annual meeting of shareholders on January 23, 2024, shareholders approved Proposal 4 – Approval and Adoption of the Class B Exchange Offer Program Certificate Amendments as described in Visa's 2024 Proxy Statement. This proposal authorizes Visa to enable the release and public sale of portions of Visa’s Class B common stock in a measured and programmatic fashion through a series of exchange offers.

On January 24, 2024, the Company’s holdings of 823,447 shares of Visa Class B common stock were redenominated as Visa Class B-1 common stock pursuant to Visa’s Eighth Restated Certificate of Incorporation. On January 29, 2024, Visa filed Form S-4 Registration Statement with the Securities and Exchange Commission, which proposes an offer to exchange any and all issued and outstanding shares of Class B-1 common stock for a combination of shares of Class B-2 common stock and shares of Class C common stock. As of February 22, 2024, the Form S-4 Registration Statement was not yet effective. The Company is currently evaluating the proposed exchange offer.

Other investment securities include Federal Reserve Bank (FRB) stock, Federal Home Loan Bank (FHLB) stock, equity method investments, and investments in portfolio concerns held by the Company's private equity subsidiary. FRB stock and FHLB stock are held for debt and regulatory purposes. Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is based on total assets of the Company (subject to a cap) and the level of borrowings from the FHLB. These holdings are carried at cost. These adjustments are included in non-interest income on the Company's consolidated statements of income. The private equity investments are carried at estimated fair value.

The majority of the Company’s investment portfolio is comprised of available for sale debt securities, which are carried at fair value with changes in fair value reported in other comprehensive income (OCI). A summary of the available for sale debt securities by maturity groupings as of December 31, 2023 is shown in the following table. The weighted average yield for each range of maturities was calculated using the yield on each security within that range weighted by the amortized cost of each security at December 31, 2023. Yields on tax exempt securities have not been adjusted for tax exempt status. The investment portfolio includes agency mortgage-backed securities, which are guaranteed by agencies such as FHLMC, FNMA, and GNMA, in addition to non-agency mortgage-backed securities, which have no guarantee but are collateralized by commercial and residential mortgages. Also included are certain other asset-backed securities, which are primarily collateralized by credit cards, automobiles, student loans, and commercial loans. These securities differ from traditional debt securities primarily in that they may have uncertain maturity dates and are priced based on estimated prepayment rates on the underlying collateral.
(Dollars in thousands)
 Amortized Cost
Fair Value
Weighted Average Yield
U.S. government and federal agency obligations:
Within 1 year$399,926 $394,466 1.44 *%
After 1 but within 5 years263,138 255,368 1.26 *
After 5 but within 10 years178,203 166,680 .54 *
Total U.S. government and federal agency obligations
841,267 816,514 1.19 *
Government-sponsored enterprise obligations:
After 5 but within 10 years4,948 4,505 2.94 
After 10 years50,710 39,457 2.32 
Total government-sponsored enterprise obligations
55,658 43,962 2.38 
State and municipal obligations:
Within 1 year62,701 61,763 1.31 
After 1 but within 5 years403,542 376,194 1.67 
After 5 but within 10 years750,535 649,221 1.82 
After 10 years129,855 110,241 2.13 
Total state and municipal obligations
1,346,633 1,197,419 1.78 
Mortgage and asset-backed securities:
Agency mortgage-backed securities4,621,821 3,901,346 2.10 
Non-agency mortgage-backed securities1,331,288 1,157,898 2.37 
Asset-backed securities2,200,712 2,107,485 2.33 
Total mortgage and asset-backed securities
8,153,821 7,166,729 2.20 
Other debt securities:
Within 1 year48,102 47,374 1.87 
After 1 but within 5 years206,942 195,385 2.02 
After 5 but within 10 years239,082 205,950 1.83 
After 10 years13,260 11,427 1.82 
Total other debt securities
507,386 460,136 1.91 %
Total available for sale debt securities
$10,904,765 $9,684,760 
* Rate does not reflect inflation adjustment on inflation-protected securities

Investments in U.S. government and federal agency obligations include U.S. Treasury inflation-protected securities, which totaled $404.4 million, at fair value, at December 31, 2023. Interest paid on these securities increases with inflation and decreases with deflation, as measured by the non-seasonally adjusted Consumer Price Index (CPI-U). At maturity, the principal paid is the greater of an inflation-adjusted principal or the original principal.

Allowance for credit losses on available for sale debt securities
Securities for which fair value is less than amortized cost are reviewed for impairment. Special emphasis is placed on securities whose credit rating has fallen below Baa3 (Moody's) or BBB- (Standard & Poor's), whose fair values have fallen more than 20% below purchase price, or those which have been identified based on management’s judgment. These securities are placed on a watch list and cash flow analyses are prepared on an individual security basis. Certain securities are analyzed using a projected cash flow model, discounted to present value, and compared to the current amortized cost bases of the securities. The model uses input factors such as cash flow projections, contractual payments required, expected delinquency rates, credit support from other tranches, prepayment speeds, collateral loss severity rates (including loan to values), and various other information related to the underlying collateral. Securities not analyzed using the cash flow model are analyzed by reviewing credit ratings, credit support agreements, and industry knowledge to project future cash flows and any possible credit impairment.

At December 31, 2023, the fair value of securities on this watch list was $1.2 billion compared to $1.3 billion at December 31, 2022. Almost all of the securities included on the Company's watch list were experiencing unrealized loss positions due to the significant increase in interest rates and were analyzed outside of the cash flow model. At December 31,
2023, the securities on the Company's watch list that were not deemed to be solely related to increasing interest rates were securities backed by government-guaranteed student loans and are expected to perform as contractually required. As of December 31, 2023, the Company did not identify any securities for which a credit loss exists, and for the years ended December 31, 2023 and 2022, the Company did not recognize a credit loss expense on any available for sale debt securities.

The table below summarizes debt securities available for sale in an unrealized loss position, aggregated by length of loss period, for which an allowance for credit losses has not been recorded at December 31, 2023 and 2022. Unrealized losses on these available for sale securities have not been recognized into income because after review, the securities were deemed not to be impaired. The unrealized losses on these securities are primarily attributable to changes in interest rates and current market conditions. At December 31, 2023, the Company does not intend to sell the securities, nor is it anticipated that it would be required to sell any of these securities at a loss.

Less than 12 months12 months or longerTotal

(In thousands)
    Fair Value    
    Unrealized Losses
    Fair Value    
    Unrealized Losses
    Fair Value    
    Unrealized Losses
December 31, 2023
U.S. government and federal agency obligations$51,585 $809 $714,400 $24,025 $765,985 $24,834 
Government-sponsored enterprise obligations— — 43,962 11,696 43,962 11,696 
State and municipal obligations24,022 760 1,167,607 148,478 1,191,629 149,238 
Mortgage and asset-backed securities:
Agency mortgage-backed securities4,382 59 3,875,432 720,649 3,879,814 720,708 
Non-agency mortgage-backed securities— — 1,152,045 173,526 1,152,045 173,526 
Asset-backed securities19,086 156 2,081,293 93,076 2,100,379 93,232 
Total mortgage and asset-backed securities
23,468 215 7,108,770 987,251 7,132,238 987,466 
Other debt securities
— — 460,136 47,250 460,136 47,250 
Total
$99,075 $1,784 $9,494,875 $1,218,700 $9,593,950 $1,220,484 
December 31, 2022
U.S. government and federal agency obligations$605,840 $17,490 $380,573 $25,940 $986,413 $43,430 
Government-sponsored enterprise obligations25,068 4,650 18,040 7,971 43,108 12,621 
State and municipal obligations814,799 26,708 875,329 171,385 1,690,128 198,093 
Mortgage and asset-backed securities:
Agency mortgage-backed securities1,323,938 125,330 2,966,851 654,327 4,290,789 779,657 
Non-agency mortgage-backed securities135,984 16,736 1,069,222 195,218 1,205,206 211,954 
Asset-backed securities1,331,055 50,056 2,006,188 140,424 3,337,243 190,480 
Total mortgage and asset-backed securities2,790,977 192,122 6,042,261 989,969 8,833,238 1,182,091 
Other debt securities166,040 9,690 308,818 54,707 474,858 64,397 
Total$4,402,724 $250,660 $7,625,021 $1,249,972 $12,027,745 $1,500,632 

The entire available for sale debt securities portfolio included $9.6 billion of securities that were in a loss position at December 31, 2023, compared to $12.0 billion at December 31, 2022. The total amount of unrealized loss on these securities was $1.2 billion at December 31, 2023, a decrease of $280.1 million compared to the unrealized loss at December 31, 2022. Securities with significant unrealized losses are discussed in the "Allowance for credit losses on available for sale debt securities" section above.
For debt securities classified as available for sale, the following table shows the amortized cost, fair value, and allowance for credit losses of securities available for sale at December 31, 2023 and 2022 and the corresponding amounts of gross unrealized gains and losses (pre-tax) in AOCI, by security type.

(In thousands)
 Amortized CostGross Unrealized GainsGross Unrealized LossesAllowance for Credit LossesFair Value
December 31, 2023
U.S. government and federal agency obligations$841,267 $81 $(24,834)$— $816,514 
Government-sponsored enterprise obligations55,658 — (11,696)— 43,962 
State and municipal obligations1,346,633 24 (149,238)— 1,197,419 
Mortgage and asset-backed securities:
Agency mortgage-backed securities4,621,821 233 (720,708)— 3,901,346 
Non-agency mortgage-backed securities1,331,288 136 (173,526)— 1,157,898 
Asset-backed securities2,200,712 5 (93,232)— 2,107,485 
Total mortgage and asset-backed securities
8,153,821 374 (987,466)— 7,166,729 
Other debt securities
507,386 — (47,250)— 460,136 
Total
$10,904,765 $479 $(1,220,484)$— $9,684,760 
December 31, 2022
U.S. government and federal agency obligations$1,078,807 $29 $(43,430)$— $1,035,406 
Government-sponsored enterprise obligations55,729 — (12,621)— 43,108 
State and municipal obligations1,965,028 174 (198,093)— 1,767,109 
Mortgage and asset-backed securities:
Agency mortgage-backed securities5,087,893 191 (779,657)— 4,308,427 
Non-agency mortgage-backed securities1,423,469 92 (211,954)— 1,211,607 
Asset-backed securities3,588,025 256 (190,480)— 3,397,801 
Total mortgage and asset-backed securities
10,099,387 539 (1,182,091)— 8,917,835 
Other debt securities
539,255 — (64,397)— 474,858 
Total
$13,738,206 $742 $(1,500,632)$— $12,238,316 
The following table presents proceeds from sales of securities and the components of investment securities gains and losses which have been recognized in earnings.

For the Year Ended December 31
(In thousands)202320222021
Proceeds from sales of securities:
Available for sale debt securities
$1,101,782 $86,240 $69,809 
 Equity securities
— 17 — 
Other
40,167 20,714 11,002 
Total proceeds
$1,141,949 $106,971 $80,811 
Investment securities gains (losses), net:
Available for sale debt securities:
Gains realized on sales$143 $— $— 
Losses realized on sales(8,587)(20,273)(3,284)
Equity securities:
Gains realized on sales— 17 — 
 Fair value adjustments, net
(487)(943)187 
Other:
 Gains realized on sales
976 1,670 1,611 
 Losses realized on sales
(1,076)(3,798)(159)
 Fair value adjustments, net24,016 43,833 31,704 
Total investment securities gains (losses), net$14,985 $20,506 $30,059 

At December 31, 2023, securities totaling $7.5 billion in fair value were pledged to secure public fund deposits, securities sold under agreements to repurchase, trust funds, and borrowings at the FRB and FHLB, compared to $4.7 billion at December 31, 2022. Securities pledged under agreements pursuant to which the collateral may be sold or re-pledged by the secured parties approximated $208 thousand, while the remaining securities were pledged under agreements pursuant to which the secured parties may not sell or re-pledge the collateral.

Except for obligations of various government-sponsored enterprises such as FNMA, FHLB and FHLMC, no investment in a single issuer exceeds 10% of stockholders’ equity.