Note 2 - Investment Securities

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

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

Note 2: Investment Securities

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 December 31, 2023 and December 31, 2022, 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 December 31, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Debt securities available for sale:
Agency residential mortgage-backed securities ("MBS")	$	258,150	$	6	$	(18,702	)	$	239,454
Securities of U.S. Government sponsored entities		308,768		2		(13,851	)		294,919
Obligations of states and political subdivisions		72,679		42		(1,438	)		71,283
Corporate securities		2,129,103		480		(220,035	)		1,909,548
Collateralized loan obligations		1,501,248		830		(17,481	)		1,484,597
Total debt securities available for sale		4,269,948		1,360		(271,507	)		3,999,801
Debt securities held to maturity:
Agency residential MBS		78,565		17		(5,270	)		73,312
Obligations of states and political subdivisions		71,182		47		(335	)		70,894
Corporate securities		728,650		84		(23,378	)		705,356
Total debt securities held to maturity		878,397		148		(28,983	)		849,562
Total	$	5,148,345	$	1,508	$	(300,490	)	$	4,849,363

	At December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Debt securities available for sale:
Agency residential MBS	$	311,089	$	4	$	(25,045	)	$	286,048
Securities of U.S. Government sponsored entities		306,336		3		(15,486	)		290,853
Obligations of states and political subdivisions		84,024		59		(2,079	)		82,004
Corporate securities		2,406,566		1,032		(307,643	)		2,099,955
Collateralized loan obligations		1,587,326		527		(14,970	)		1,572,883
Total debt securities available for sale		4,695,341		1,625		(365,223	)		4,331,743
Debt securities held to maturity:
Agency residential MBS		104,852		13		(7,503	)		97,362
Obligations of states and political subdivisions		89,208		73		(538	)		88,743
Corporate securities		721,854		-		(34,448	)		687,406
Total debt securities held to maturity		915,914		86		(42,489	)		873,511
Total	$	5,611,255	$	1,711	$	(407,712	)	$	5,205,254

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

	At December 31, 2023
	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	$	52,703	$	52,357	$	15,117	$	15,095
Over 1 to 5 years		756,658		721,179		312,847		307,557
Over 5 to 10 years		1,701,189		1,502,214		471,868		453,598
Subtotal		2,510,550		2,275,750		799,832		776,250
Collateralized loan obligations		1,501,248		1,484,597		-		-
Agency residential MBS		258,150		239,454		78,565		73,312
Total	$	4,269,948	$	3,999,801	$	878,397	$	849,562

	At December 31, 2022
	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	$	251,578	$	250,317	$	12,676	$	12,659
Over 1 to 5 years		578,886		548,787		161,653		158,409
Over 5 to 10 years		1,966,462		1,673,708		636,733		605,081
Subtotal		2,796,926		2,472,812		811,062		776,149
Collateralized loan obligations		1,587,326		1,572,883		-		-
Agency residential MBS		311,089		286,048		104,852		97,362
Total	$	4,695,341	$	4,331,743	$	915,914	$	873,511

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.

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

	Debt Securities Available for Sale
	At December 31, 2023
	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		1	$	115	$	(2	)		107	$	238,642	$	(18,700	)		108	$	238,757	$	(18,702	)
Securities of U.S. Government sponsored entities		2		9,746		(15	)		19		278,265		(13,836	)		21		288,011		(13,851	)
Obligations of states and political subdivisions		2		2,280		(15	)		50		57,614		(1,423	)		52		59,894		(1,438	)
Corporate securities		-		-		-			151		1,894,602		(220,035	)		151		1,894,602		(220,035	)
Collateralized loan obligations		34		428,363		(8,914	)		67		578,643		(8,567	)		101		1,007,006		(17,481	)
Total		39	$	440,504	$	(8,946	)		394	$	3,047,766	$	(262,561	)		433	$	3,488,270	$	(271,507	)

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

	Debt Securities Held to Maturity
	At December 31, 2023
	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		1	$	-	$	-			93	$	72,376	$	(5,270	)		94	$	72,376	$	(5,270	)
Obligations of states and political subdivisions		23		18,599		(90	)		26		25,466		(245	)		49		44,065		(335	)
Corporate securities		3		26,567		(1,184	)		46		641,598		(22,194	)		49		668,165		(23,378	)
Total		27	$	45,166	$	(1,274	)		165	$	739,440	$	(27,709	)		192	$	784,606	$	(28,983	)

Based upon the Company’s December 31, 2023 evaluation, the unrealized losses on debt securities were caused by market conditions for these types of securities. Increasing risk-free interest rates have caused large declines in bond values generally. Additionally, market rates for non-Treasury bonds are determined by the risk-free interest rate plus a risk premium spread; such spreads for investment grade, fixed rate, taxable corporate bonds have increased, also broadly reducing corporate bond values. 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 and corporate securities were investment grade rated at December 31, 2023.

The Company does not intend to sell any debt securities available for sale with an 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 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 interest rates increase, 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 December 31, 2023 and December 31, 2022, the Company’s debt securities pledged to secure public deposits, Federal Reserve Bank borrowings and short-term borrowed funds had a carrying amount of $2,034,706 thousand and $1,180,010 thousand, respectively.

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

	Debt Securities Available for Sale
	At December 31, 2022
	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		107	$	279,139	$	(24,222	)		9	$	6,110	$	(823	)		116	$	285,249	$	(25,045	)
Securities of U.S. Government sponsored entities		22		289,067		(15,486	)		-		-		-			22		289,067		(15,486	)
Obligations of states and political subdivisions		56		65,633		(1,902	)		8		3,265		(177	)		64		68,898		(2,079	)
Corporate securities		133		1,521,294		(170,453	)		56		555,727		(137,190	)		189		2,077,021		(307,643	)
Collateralized loan obligations		58		518,074		(13,772	)		20		192,692		(1,198	)		78		710,766		(14,970	)
Total		376	$	2,673,207	$	(225,835	)		93	$	757,794	$	(139,388	)		469	$	3,431,001	$	(365,223	)

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

	Debt Securities Held to Maturity
	At December 31, 2022
	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		97	$	95,814	$	(7,404	)		2	$	682	$	(99	)		99	$	96,496	$	(7,503	)
Obligations of states and political subdivisions		54		53,536		(538	)		-		-		-			54		53,536		(538	)
Corporate securities		49		672,406		(34,448	)		-		-		-			49		672,406		(34,448	)
Total		200	$	821,756	$	(42,390	)		2	$	682	$	(99	)		202	$	822,438	$	(42,489	)

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, and, for mortgage-backed and asset-backed securities, collateral levels, 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 Years Ended December 31,
	2023		2022			2021
	(In thousands)
Allowance for credit losses:
Beginning balance	$	1	$	7		$	9
Reversal of provision for credit losses		-		(6	)		(2	)
Chargeoffs		-		-			-
Recoveries		-		-			-
Total ending balance	$	1	$	1		$	7

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 December 31, 2023, 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 December 31, 2023, aggregated by credit rating:

	Credit Risk Profile by Credit Rating
	At December 31, 2023
	AAA/AA/A		BBB+		Not Rated		Total
	(In thousands)
Agency residential MBS	$	78,092	$	-	$	473	$	78,565
Obligations of states and political subdivisions		71,002		-		180		71,182
Corporate securities		506,508		222,142		-		728,650
Total	$	655,602	$	222,142	$	653	$	878,397

There were no debt securities held to maturity on nonaccrual status or past due 30 days or more as of December 31, 2023.

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 Years Ended December 31,
	2023		2022		2021
	(In thousands)
Taxable	$	221,742	$	158,465	$	106,329
Tax-exempt from regular federal income tax		4,484		5,819		8,424
Total interest income from investment securities	$	226,226	$	164,284	$	114,753