Investment Securities

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

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

Investment Securities

Investment securities are designated as AFS, HTM, or equity on the consolidated balance sheets. The amortized cost and fair values of AFS and HTM securities at September 30, 2024 were as follows:

($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
AFS investment securities
U.S. Treasury securities	$	39,987	$	—	$	(3,039)	$	36,948
Obligations of state and political subdivisions (municipal securities)	82,845		11		(1,766)		81,089
Residential mortgage-related securities:
FNMA/FHLMC	1,201,968		990		(117,544)		1,085,414
GNMA	2,634,634		30,367		(1,441)		2,663,560
Commercial mortgage-related securities:
FNMA/FHLMC	18,423		—		(388)		18,035
GNMA	156,873		—		(5,256)		151,617
Asset backed securities:
FFELP	113,139		132		(922)		112,350
SBA	540		—		(24)		516
Other debt securities	3,000		—		(3)		2,997
Total AFS investment securities	$	4,251,409	$	31,500	$	(130,382)	$	4,152,527
HTM investment securities
U.S. Treasury securities	$	1,000	$	—	$	(10)	$	990
Obligations of state and political subdivisions (municipal securities)	1,664,740		4,596		(128,987)		1,540,348
Residential mortgage-related securities:
FNMA/FHLMC	900,743		24,025		(145,885)		778,883
GNMA	45,180		143		(2,344)		42,979
Private-label	329,349		8,519		(55,765)		282,103
Commercial mortgage-related securities:
FNMA/FHLMC	775,209		11,142		(126,498)		659,852
GNMA	53,005		258		(5,643)		47,620
Total HTM investment securities	$	3,769,224	$	48,682	$	(465,131)	$	3,352,775

The amortized cost and fair values of AFS and HTM securities at December 31, 2023 were as follows:

($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
AFS investment securities
U.S. Treasury securities	$	39,984	$	—	$	(4,083)	$	35,902
Obligations of state and political subdivisions (municipal securities)	94,008		23		(2,214)		91,817
Residential mortgage-related securities:
FNMA/FHLMC	1,274,052		294		(153,552)		1,120,794
GNMA	2,021,242		24,254		(2,822)		2,042,675
Commercial mortgage-related securities:
FNMA/FHLMC	18,691		—		(1,755)		16,937
GNMA	161,928		—		(7,135)		154,793
Asset backed securities:
FFELP	135,832		5		(1,862)		133,975
SBA	1,077		2		(28)		1,051
Other debt securities	3,000		—		(50)		2,950
Total AFS investment securities	$	3,749,814	$	24,579	$	(173,501)	$	3,600,892
HTM investment securities
U.S. Treasury securities	$	999	$	—	$	(36)	$	963
Obligations of state and political subdivisions (municipal securities)	1,682,473		5,638		(134,053)		1,554,059
Residential mortgage-related securities:
FNMA/FHLMC	941,973		27,007		(164,587)		804,393
GNMA	48,979		92		(2,901)		46,170
Private-label	345,083		9,796		(65,372)		289,507
Commercial mortgage-related securities:
FNMA/FHLMC	780,995		12,699		(160,781)		632,914
GNMA	59,733		386		(7,500)		52,619
Total HTM investment securities	$	3,860,235	$	55,619	$	(535,230)	$	3,380,624

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The expected maturities of AFS and HTM securities at September 30, 2024, are shown below:

	AFS					HTM
($ in thousands)	Amortized Cost		Fair Value			Amortized Cost		Fair Value
Due in one year or less	$	1,000	$	997		$	11,435	$	11,360
Due after one year through five years	54,051		50,642			58,464		58,594
Due after five years through ten years	44,549		43,392			179,171		175,603
Due after ten years	26,231		26,004			1,416,669		1,295,781
Total debt securities	125,832		121,034			1,665,740		1,541,338
Residential mortgage-related securities:
FNMA/FHLMC	1,201,968		1,085,414			900,743		778,883
GNMA	2,634,634		2,663,560			45,180		42,979
Private-label	—		—			329,349		282,103
Commercial mortgage-related securities:
FNMA/FHLMC	18,423		18,035			775,209		659,852
GNMA	156,873		151,617			53,005		47,620
Asset backed securities:
FFELP	113,139		112,350			—		—
SBA	540		516			—		—
Total investment securities	$	4,251,409	$	4,152,527		$	3,769,224	$	3,352,775
Ratio of fair value to amortized cost			97.7		%			89.0		%

On a quarterly basis, the Corporation refreshes the credit quality of each HTM security. The following table summarizes the credit quality indicators of HTM securities at amortized cost at September 30, 2024:

($ in thousands)	AAA		AA		A		Not Rated		Total
U.S. Treasury securities	$	1,000	$	—	$	—	$	—	$	1,000
Obligations of state and political subdivisions (municipal securities)	772,689		884,498		5,492		2,060		1,664,740
Residential mortgage-related securities:
FNMA/FHLMC	900,743		—		—		—		900,743
GNMA	45,180		—		—		—		45,180
Private-label	329,349		—		—		—		329,349
Commercial mortgage-related securities:
FNMA/FHLMC	775,209		—		—		—		775,209
GNMA	53,005		—		—		—		53,005
Total HTM securities	$	2,877,174	$	884,498	$	5,492	$	2,060	$	3,769,224

The following table summarizes the credit quality indicators of HTM securities at amortized cost at December 31, 2023:

($ in thousands)	AAA		AA		A		Not Rated		Total
U.S. Treasury securities	$	999	$	—	$	—	$	—	$	999
Obligations of state and political subdivisions (municipal securities)	760,329		915,303		5,687		1,155		1,682,473
Residential mortgage-related securities:
FNMA/FHLMC	941,973		—		—		—		941,973
GNMA	48,979		—		—		—		48,979
Private-label	345,083		—		—		—		345,083
Commercial mortgage-related securities:
FNMA/FHLMC	780,995		—		—		—		780,995
GNMA	59,733		—		—		—		59,733
Total HTM securities	$	2,938,090	$	915,303	$	5,687	$	1,155	$	3,860,235

The following table summarizes gross realized gains and losses on AFS securities, the gain on sale and net write-up of equity securities, and proceeds from the sale of AFS investment securities for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in thousands)	2024		2023		2024		2023
Gross realized (losses) on AFS securities	$	—	$	—	$	(197)	$	—
Gain on sale and net write-up (down) of equity securities	100		(11)		4,243		55
Investment securities gains, net	$	100	$	(11)	$	4,047	$	55
Proceeds from sales of AFS investment securities	$	—	$	—	$	9,472	$	—

During the first quarter of 2024, the Corporation sold its remaining Visa Class B restricted shares at a gain of $4 million.

Investment securities with a carrying value of $1.4 billion and $1.6 billion at September 30, 2024 and December 31, 2023, respectively, were pledged as required to secure certain deposits or for other purposes.

Accrued interest receivable on HTM securities totaled $16 million and $18 million at September 30, 2024 and December 31, 2023, respectively. Accrued interest receivable on AFS securities totaled $17 million and $15 million at September 30, 2024 and December 31, 2023, respectively. Accrued interest receivable on both HTM and AFS securities is included in interest receivable on the consolidated balance sheets.

The allowance for credit losses on HTM securities was approximately $75,000 at both September 30, 2024 and December 31, 2023, attributable entirely to the Corporation's municipal securities, included in HTM investment securities, net, at amortized cost on the consolidated balance sheets. The Corporation also holds U.S. Treasury, municipal, and mortgage-related securities issued by the U.S. government or a GSE which are backed by the full faith and credit of the U.S. government and private-label residential mortgage-related securities that have credit enhancement which covers the first 15% of losses and, as a result, no allowance for credit losses has been recorded related to these securities.

The following represents gross unrealized losses and the related fair value of AFS and HTM securities, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position, at September 30, 2024:

	Less than 12 months					12 months or more					Total
($ in thousands)	Number of Securities	Unrealized (Losses)		Fair Value		Number of Securities	Unrealized (Losses)		Fair Value		Unrealized (Losses)		Fair Value
AFS investment securities
U.S. Treasury securities	—	$	—	$	—	1	$	(3,039)	$	36,948	$	(3,039)	$	36,948
Obligations of state and political subdivisions (municipal securities)	18	(35)		8,205		112	(1,731)		66,172		(1,766)		74,377
Residential mortgage-related securities:
FNMA/FHLMC	4	(22)		6,211		82	(117,522)		1,026,799		(117,544)		1,033,011
GNMA	2	(36)		20,744		10	(1,405)		41,066		(1,441)		61,811
Commercial mortgage-related securities:
FNMA/FHLMC	—	—		—		1	(388)		18,035		(388)		18,035
GNMA	—	—		—		31	(5,256)		151,617		(5,256)		151,617
Asset backed securities:
FFELP	—	—		—		12	(922)		65,319		(922)		65,319
SBA	—	—		—		4	(24)		498		(24)		498
Other debt securities	—	—		—		1	(3)		997		(3)		997
Total	24	$	(93)	$	35,160	254	$	(130,289)	$	1,407,452	$	(130,382)	$	1,442,613
HTM investment securities
U.S. Treasury securities	—	$	—	$	—	1	$	(10)	$	990	$	(10)	$	990
Obligations of state and political subdivisions (municipal securities)	83	(517)		111,498		642	(128,470)		887,316		(128,987)		998,814
Residential mortgage-related securities:
FNMA/FHLMC	1	(1)		100		108	(145,884)		769,122		(145,885)		769,223
GNMA	—	—		—		79	(2,344)		33,584		(2,344)		33,584
Private-label	—	—		—		18	(55,765)		282,103		(55,765)		282,103
Commercial mortgage-related securities:
FNMA/FHLMC	—	—		—		43	(126,498)		632,665		(126,498)		632,665
GNMA	—	—		—		13	(5,643)		47,620		(5,643)		47,620
Total	84	$	(518)	$	111,598	904	$	(464,613)	$	2,653,401	$	(465,131)	$	2,765,000

For comparative purposes, the following represents gross unrealized losses and the related fair value of AFS and HTM securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2023:

	Less than 12 months					12 months or more					Total
($ in thousands)	Number of Securities	Unrealized (Losses)		Fair Value		Number of Securities	Unrealized (Losses)		Fair Value		Unrealized (Losses)		Fair Value
AFS investment securities
U.S. Treasury securities	—	$	—	$	—	1	$	(4,083)	$	35,902	$	(4,083)	$	35,902
Obligations of state and political subdivisions (municipal securities)	41	(347)		23,762		92	(1,867)		53,022		(2,214)		76,784
Residential mortgage-related securities:
FNMA/FHLMC	18	(333)		22,870		71	(153,219)		1,080,337		(153,552)		1,103,207
GNMA	13	(924)		156,847		5	(1,898)		26,643		(2,822)		183,490
Commercial mortgage-related securities:
FNMA/FHLMC	—	—		—		1	(1,755)		16,937		(1,755)		16,937
GNMA	9	(3,160)		103,055		22	(3,975)		51,738		(7,135)		154,793
Asset backed securities:
FFELP	—	—		—		14	(1,862)		125,339		(1,862)		125,339
SBA	—	—		—		5	(28)		761		(28)		761
Other debt securities	1	(9)		991		2	(42)		1,958		(50)		2,950
Total	82	$	(4,773)	$	307,527	213	$	(168,728)	$	1,392,635	$	(173,501)	$	1,700,162
HTM investment securities
U.S. Treasury securities	—	$	—	$	—	1	$	(36)	$	963	$	(36)	$	963
Obligations of state and political subdivisions (municipal securities)	182	(1,535)		180,270		537	(132,518)		792,940		(134,053)		973,210
Residential mortgage-related securities:
FNMA/FHLMC	20	(511)		30,323		94	(164,076)		771,042		(164,587)		801,365
GNMA	2	(17)		2,128		78	(2,884)		34,626		(2,901)		36,754
Private-label	—	—		—		18	(65,372)		289,507		(65,372)		289,507
Commercial mortgage-related securities:
FNMA/FHLMC	1	(121)		8,144		44	(160,660)		624,770		(160,781)		632,914
GNMA	—	—		—		13	(7,500)		52,619		(7,500)		52,619
Total	205	$	(2,184)	$	220,865	785	$	(533,046)	$	2,566,468	$	(535,230)	$	2,787,333

The Corporation reviews the AFS investment securities portfolio on a quarterly basis to monitor its credit exposure. A determination as to whether a security’s decline in fair value is the result of credit risk takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Corporation may consider in this impairment analysis include the extent to which the security has been in an unrealized loss position, the change in security rating, financial condition and near-term prospects of the issuer, as well as the security and industry specific economic conditions.

Based on the Corporation’s evaluation, management does not believe any unrealized losses at September 30, 2024 represent credit deterioration as these unrealized losses are primarily attributable to changes in interest rates and the current market conditions. As of September 30, 2024, the Corporation does not intend to sell, nor does it believe that it will be required to sell, the securities in an unrealized loss position before recovery of their amortized cost basis.

FHLB and Federal Reserve Bank stocks: The Corporation is required to maintain Federal Reserve Bank stock and FHLB stock as a member bank of both the Federal Reserve System and the FHLB, and in amounts as required by these institutions. These equity securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other marketable equity securities and their fair value is equal to amortized cost. The Corporation had FHLB stock of $90 million and $143 million at September 30, 2024 and December 31, 2023, respectively. The Corporation had Federal Reserve Bank stock of $88 million and $87 million at September 30, 2024 and December 31, 2023, respectively. Accrued interest receivable on FHLB stock totaled $2 million and $4 million at September 30, 2024 and December 31, 2023, respectively. Accrued interest receivable on Federal Reserve Bank Stock totaled approximately $855,000 at September 30, 2024 and there was none at December 31, 2023. Accrued interest receivable on both FHLB stock and Federal Reserve Bank stock is included in interest receivable on the consolidated balance sheets.

Equity Securities

Equity securities with readily determinable fair values: The Corporation's portfolio of equity securities with readily determinable fair values is primarily comprised of mutual funds. The Corporation had equity securities with readily determinable fair values of $11 million and $7 million at September 30, 2024 and December 31, 2023, respectively.

Equity securities without readily determinable fair values: The Corporation's portfolio of equity securities without readily determinable fair values primarily consists of an investment in a private loan fund. The Corporation had equity securities without readily determinable fair values carried at $13 million and $35 million at September 30, 2024 and December 31, 2023, respectively. During the first quarter of 2024, the Corporation sold all of its remaining Visa Class B restricted shares.