Investment Securities

6 Months Ended

Jun. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Investment Securities

The amortized cost and the approximate fair values of investment securities are summarized as follows:

June 30, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-Sale:
U.S. Treasury notes	$	250.2	$	—	$	(27.3)	$	222.9
State, county, and municipal securities	253.9		—		(40.9)		213.0
Obligations of U.S. government agencies	174.5		—		(11.6)		162.9
U.S. agency commercial mortgage-backed securities	1,199.6		0.3		(92.2)		1,107.7
U.S. agency residential mortgage-backed securities	1,408.1		0.4		(141.3)		1,267.2
Collateralized mortgage obligations	1,250.0		0.7		(126.1)		1,124.6
Private mortgage-backed securities	230.0		—		(31.6)		198.4
Collateralized loan obligations	1,066.8		1.8		—		1,068.6
Corporate securities	260.2		—		(22.4)		237.8
Total	$	6,093.3	$	3.2	$	(493.4)	$	5,603.1

June 30, 2024	Amortized Cost1		Allowance for Credit Losses		Net Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Held-to-Maturity:
U.S. Treasury notes	$	99.5	$	—	$	99.5	$	—	$	(1.6)	$	97.9
State, county, and municipal securities	178.2		—		178.2		0.1		(26.7)		151.6
Obligations of U.S. government agencies	356.0		—		356.0		—		(44.9)		311.1
U.S. agency commercial mortgage-backed securities	496.2		—		496.2		—		(57.9)		438.3
U.S. agency residential mortgage-backed securities	1,159.6		—		1,159.6		—		(148.7)		1,010.9
Collateralized mortgage obligations	452.7		—		452.7		—		(72.0)		380.7
Corporate securities	57.0		(0.7)		56.3		—		(6.4)		49.9
Total	$	2,799.2	$	(0.7)	$	2,798.5	$	0.1	$	(358.2)	$	2,440.4
(1) Amortized cost presented above includes $9.3 million of unamortized gains in U.S. agency residential and commercial mortgage-backed securities and collateralized mortgage obligations related to the 2021 transfer of securities from available-for-sale to held-to-maturity, and $17.0 million of unamortized losses in state, county, and municipal, obligations of U.S. government agencies and collateralized loan obligations related to the 2022 transfer of securities from available-for-sale to held-to-maturity.

December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-Sale:
U.S. Treasury notes	$	250.2	$	—	$	(25.5)	$	224.7
State, county, and municipal securities	256.7		—		(36.9)		219.8
Obligations of U.S. government agencies	179.4		—		(10.9)		168.5
U.S. agency commercial mortgage-backed securities	1,192.7		0.6		(87.7)		1,105.6
U.S. agency residential mortgage-backed securities	1,496.3		1.2		(130.6)		1,366.9
Collateralized mortgage obligations	1,308.5		1.3		(120.3)		1,189.5
Private mortgage-backed securities	241.3		—		(30.9)		210.4
Collateralized loan obligations	1,121.9		0.1		(2.3)		1,119.7
Corporate securities	260.8		—		(24.4)		236.4
Total	$	6,307.8	$	3.2	$	(469.5)	$	5,841.5

December 31, 2023	Amortized Cost1		Allowance for Credit Losses		Net Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Held-to-Maturity:
U.S. Treasury notes	$	399.0	$	—	$	399.0	$	—	$	(2.8)	$	396.2
State, county, and municipal securities	179.2		—		179.2		0.2		(24.2)		155.2
Obligations of U.S. government agencies	354.5		—		354.5		—		(42.4)		312.1
U.S. agency commercial mortgage-backed securities	510.5		—		510.5		—		(52.9)		457.6
U.S. agency residential mortgage-backed securities	1,232.6		—		1,232.6		—		(137.0)		1,095.6
Collateralized mortgage obligations	475.9		—		475.9		0.2		(69.0)		407.1
Corporate securities	57.0		(0.8)		56.2		—		(6.0)		50.2
Total	$	3,208.7	$	(0.8)	$	3,207.9	$	0.4	$	(334.3)	$	2,874.0
(1) Amortized cost presented above includes $10.7 million of unamortized gains and $18.1 million of unamortized losses related to the 2021 and 2022 transfer of securities from available-for-sale to held-to-maturity.

The following tables show the gross unrealized losses and fair values of available-for-sale investment securities and the length of time individual investment securities have been in an unrealized loss position as of June 30, 2024 and December 31, 2023.

	Less than 12 Months				12 Months or More				Total
June 30, 2024	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Available-for-Sale:
U.S. Treasury notes	$	—	$	—	$	222.9	$	(27.3)	$	222.9	$	(27.3)
State, county, and municipal securities	1.0		—		210.3		(40.9)		211.3		(40.9)
Obligations of U.S. government agencies	—		—		162.6		(11.6)		162.6		(11.6)
U.S. agency commercial mortgage-backed securities	34.2		(0.4)		1,052.1		(91.8)		1,086.3		(92.2)
U.S. agency residential mortgage-backed securities	61.6		(1.3)		1,176.3		(140.0)		1,237.9		(141.3)
Collateralized mortgage obligations	34.6		(0.6)		1,056.1		(125.5)		1,090.7		(126.1)
Private mortgage-backed securities	—		—		198.4		(31.6)		198.4		(31.6)
Corporate securities	—		—		237.9		(22.4)		237.9		(22.4)
Total	$	131.4	$	(2.3)	$	4,316.6	$	(491.1)	$	4,448.0	$	(493.4)

	Less than 12 Months				12 Months or More				Total
December 31, 2023	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Available-for-Sale:
U.S. Treasury notes	$	—	$	—	$	224.7	$	(25.5)	$	224.7	$	(25.5)
State, county, and municipal securities	—		—		217.1		(36.9)		217.1		(36.9)
Obligations of U.S. government agencies	—		—		168.0		(10.9)		168.0		(10.9)
U.S. agency commercial mortgage-backed securities	0.2		—		1,083.1		(87.7)		1,083.3		(87.7)
U.S. agency residential mortgage-backed securities	0.7		—		1,287.5		(130.6)		1,288.2		(130.6)
Collateralized mortgage obligations	—		—		1,142.4		(120.3)		1,142.4		(120.3)
Private mortgage-backed securities	—		—		210.5		(30.9)		210.5		(30.9)
Collateralized loan obligations	—		—		935.7		(2.3)		935.7		(2.3)
Corporate securities	—		—		236.5		(24.4)		236.5		(24.4)
Total	$	0.9	$	—	$	5,505.5	$	(469.5)	$	5,506.4	$	(469.5)

As of June 30, 2024 and December 31, 2023, there were no holdings of securities of any issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.

The Company determines the allowance for credit losses on both available-for-sale and held-to-maturity investment securities by a discounted cash flow approach using each security’s effective interest rate at the time of purchase or upon acquisition. The allowance for credit losses is measured as the amount by which an investment security’s amortized cost exceeds the net present value of expected future cash flows. However, the amount of credit losses for available-for-sale investment securities is limited to the amount of a security’s unrealized loss. The allowance for credit loss on held-to-maturity investment securities is representative of current expected credit losses that management expects to be incurred over the life of the investment and established through a charge to provision for credit losses in current period earnings. For held-to-maturity investment securities, the Company has the intent and ability to hold these investment securities to maturity.

The investment securities portfolio primarily contains securities that are guaranteed by a sovereign entity or are generally considered to have non-credit related risks, such as interest rate risk or liquidity factors. The Company considers whether the securities are issued by the federal government or its agencies and whether downgrades by bond rating agencies have occurred.

As of June 30, 2024 and December 31, 2023, the Company had 676 and 704 individual available-for-sale investment securities, respectively, that were in an unrealized loss position, which was related primarily to fluctuations in current interest rates. The Company does not intend to sell any of the available-for-sale securities in the above table, and the Company does not anticipate it will have to sell any securities before a recovery in cost.

The following table presents the activity in the allowance for credit losses related to available-for-sale investment securities:
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Beginning balance	$	—	$	2.6	$	—	$	—
(Reduction of) provision for credit losses	—		(1.2)		—		1.4
Ending balance	$	—	$	1.4	$	—	$	1.4
The following table presents the activity in the allowance for credit losses related to held-to-maturity investment securities:
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Beginning balance	$	0.7	$	0.7	$	0.8	$	1.9
Reduction of credit losses	—		—		(0.1)		(1.2)
Ending balance	$	0.7	$	0.7	$	0.7	$	0.7

On a quarterly basis, the Company refreshes the credit quality indicator of each held-to-maturity security. The following table summarizes the credit quality indicators of held-to-maturity securities at amortized cost for the periods indicated:

June 30, 2024	AAA		AA		A		BBB		BB		Not Rated		Total
U.S. Treasury notes	$	99.5	$	—	$	—	$	—	$	—	$	—	$	99.5
State, county, and municipal securities	68.9		91.1		10.2		—		—		8.0		178.2
Obligations of U.S. government agencies	356.0		—		—		—		—		—		356.0
U.S. agency commercial mortgage-backed securities
FNMA/FHLMC	350.9		—		—		—		—		—		350.9
GNMA	145.3		—		—		—		—		—		145.3
U.S. agency residential mortgage-backed securities
FNMA/FHLMC	1,119.4		—		—		—		—		—		1,119.4
GNMA	40.2		—		—		—		—		—		40.2
Collateralized mortgage obligations
FNMA/FHLMC	317.2		—		—		—		—		—		317.2
GNMA	135.5		—		—		—		—		—		135.5
Corporate securities	—		—		—		47.0		5.0		5.0		57.0
Total	$	2,632.9	$	91.1	$	10.2	$	47.0	$	5.0	$	13.0	$	2,799.2

December 31, 2023	AAA		AA		A		BBB		BB		Not Rated		Total
U.S. Treasury notes	$	399.0	$	—	$	—	$	—	$	—	$	—	$	399.0
State, county, and municipal securities	69.0		92.3		10.6		—		—		7.3		179.2
Obligations of U.S. government agencies	354.5		—		—		—		—		—		354.5
U.S. agency commercial mortgage-backed securities
FNMA/FHLMC	359.7		—		—		—		—		—		359.7
GNMA	150.8		—		—		—		—		—		150.8
U.S. agency residential mortgage-backed securities
FNMA/FHLMC	1,189.8		—		—		—		—		—		1,189.8
GNMA	42.8		—		—		—		—		—		42.8
Collateralized mortgage obligations
FNMA/FHLMC	334.1		—		—		—		—		—		334.1
GNMA	141.8		—		—		—		—		—		141.8
Corporate securities	—		—		—		47.0		5.0		5.0		57.0
Total	$	3,041.5	$	92.3	$	10.6	$	47.0	$	5.0	$	12.3	$	3,208.7

As of June 30, 2024 and December 31, 2023, the Company had $35.4 million and $38.5 million, respectively, of accrued interest receivable from investment securities on the consolidated balance sheets. Accrued interest receivable is presented as a separate line item on the consolidated balance sheets and the Company does not include accrued interest receivable in the carrying amount of financial assets held at the amortized cost basis or in the related allowance for credit losses calculation.

As of June 30, 2024 and December 31, 2023, there were no available-for-sale or held-to-maturity securities on nonaccrual status. All securities in the portfolio were current with their contractual principal and interest payments.

As of June 30, 2024 and December 31, 2023, there were no collateral-dependent available-for-sale or held-to-maturity securities.

There were no material gross realized gains and no material gross realized losses during the three and the six month periods ended June 30, 2024. During the three months ended June 30, 2023, there were no material gross realized gains and no material gross realized losses, and during the six months ended June 30, 2023 there were no material gross realized gains and $23.5 million in gross realized losses on the disposition of available-for-sale investment securities, resulting from the sale of $853.0 million of investment securities.

The following schedule represents the amortized cost of debt securities by contractual maturity except for maturities of mortgage-backed securities, which have been adjusted to reflect shorter maturities based upon estimated prepayments of principal.

	Available-for-Sale				Held-to-Maturity
June 30, 2024	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within one year	$	63.7	$	62.7	$	2.5	$	2.5
After one year but within five years	1,307.6		1,213.5		430.7		404.0
After five years but within ten years	1,148.0		1,044.3		557.3		487.0
After ten years	3,574.0		3,282.6		1,808.7		1,546.9
Total	$	6,093.3	$	5,603.1	$	2,799.2	$	2,440.4

As of June 30, 2024, the Company held investment securities callable within one year having amortized costs and estimated fair values of $1,595.1 million and $1,541.6 million, respectively. These investment securities are primarily included in the “after ten years” category in the table above. As of June 30, 2024, the Company had no callable structured notes.

As of June 30, 2024 and December 31, 2023, the Company had amortized costs of $4,391.6 million and $3,858.6 million, respectively, for investment securities pledged to secure public deposits, derivatives, and securities sold under repurchase agreements that had estimated fair values of $3,902.1 million and $3,462.2 million, as of June 30, 2024 and December 31, 2023, respectively. All securities sold under repurchase agreements are with clients and

mature on the next banking day. The Company retains possession of the underlying securities sold under repurchase agreements.

As of June 30, 2024 and December 31, 2023, the Company held $182.3 million and $223.2 million, respectively, in equity securities in a combination of Federal Reserve Bank and Federal Home Loan Bank stocks, which are restricted nonmarketable securities acquired to meet regulatory requirements. These securities are carried at cost.