

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
AFS investment securities:
September 30, 2023
U.S. Treasury	$	14,947	$	—	$	(2,033)	$	12,914
Agency	457,694		—		(52,180)		405,514
Corporate	560,873		57		(56,122)		504,808

Collateralized mortgage obligations	337,195		—		(32,865)		304,330
Mortgage-backed securities	840,545		—		(153,512)		687,033
Total AFS investment securities	$	2,211,254	$	57	$	(296,712)	$	1,914,599





December 31, 2022
U.S. Treasury	$	49,156	$	—	$	(2,139)	$	47,017
Agency	485,331		—		(53,893)		431,438
Corporate	586,652		—		(44,104)		542,548

Collateralized mortgage obligations	829,928		—		(65,699)		764,229
Mortgage-backed securities	953,678		—		(137,897)		815,781
Total AFS investment securities	$	2,904,745	$	—	$	(303,732)	$	2,601,013



(Dollars in thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrecognized Gain		Gross Unrecognized Loss		Estimated Fair Value
HTM investment securities:
September 30, 2023

Municipal bonds	$	1,146,583	$	(128)	$	1,146,455	$	—	$	(321,595)	$	824,860
Collateralized mortgage obligations	341,238		—		341,238		1,064		(17,902)		324,400
Mortgage-backed securities	233,881		—		233,881		—		(44,999)		188,882
Other	16,292		—		16,292		—		—		16,292
Total HTM investment securities	$	1,737,994	$	(128)	$	1,737,866	$	1,064	$	(384,496)	$	1,354,434

The Company reassesses classification of certain investments as part of the ongoing review of the investment securities portfolio. During the first nine months of 2023, the Company transferred $410.7 million of AFS collateralized mortgage obligations to HTM securities. The Company intends and has the ability to hold the securities transferred to maturity. The transfer of these securities was accounted for at fair value on the transfer date. These collateralized mortgage obligations securities had a net carrying amount of $360.3 million with a pre-tax unrealized loss of $50.4 million, which are accreted into interest income as yield adjustments over the remaining term of the securities. No gains or losses were recorded at the time of transfer.

During the first nine months of 2022, the Company transferred an AFS municipal bond portfolio of $831.4 million and mortgage-backed securities of $255.0 million to HTM securities. The Company intends and has the ability to hold the securities transferred to maturity. The transfer of these securities was accounted for at fair value on the transfer date. The municipal bonds had a net carrying amount of $780.7 million with a pre-tax unrealized loss of $50.8 million, and the mortgage-backed securities had a net carrying amount of $238.8 million with a pre-tax unrealized loss of $16.2 million, both of which are accreted into interest income as yield adjustments over the remaining term of the securities. No gains or losses were recorded at the time of transfer.

Investment securities with carrying values of $3.59 billion and $195.6 million as of September 30, 2023 and December 31, 2022, respectively, were pledged to other borrowings, secure public deposits, and for other purposes as required or permitted by law. The increase in the investment securities pledged during the first nine months of 2023 was primarily due to the additional investment securities with carrying values of $1.66 billion pledged to the Federal Reserve's discount window and $1.73 billion pledged to the Federal Reserve's new Bank Term Funding Program launched in March 2023 to increase the Company’s access to funding and provide liquidity.

Unrealized gains and losses on AFS investment securities, net of tax, are recognized in stockholders’ equity as accumulated other comprehensive income or loss. At September 30, 2023, the Company had a net unrealized loss on AFS investment securities of $296.7 million, or $212.3 million net of tax in accumulated other comprehensive loss, compared to a net unrealized loss of $303.7 million, or $217.4 million net of tax in accumulated other comprehensive loss, at December 31, 2022.

For investment securities transferred from AFS to HTM, the net after-tax unrealized gains and losses at the date of transfer continue to be reported in stockholders’ equity as accumulated other comprehensive loss and are amortized over the remaining lives of the securities as an adjustment of yield in a manner consistent with the amortization of a premium or discount, with an offsetting entry to interest income for the accretion of the unrealized loss associated with the transferred securities. At September 30, 2023, the unrealized loss on investment securities transferred from AFS to HTM was $106.6 million, or $76.3 million net of tax in accumulated other comprehensive loss.

The table below summarizes the number, fair value, and gross unrealized holding losses of the Company’s AFS investment securities in an unrealized loss position for which an allowance for credit losses has not been recorded as of the dates indicated, aggregated by investment category and length of time in a continuous loss position.


	September 30, 2023
	Less than 12 Months					12 Months or Longer					Total
(Dollars in thousands)	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
AFS investment securities:
U.S. Treasury	—	$	—	$	—	1	$	12,914	$	(2,033)	1	$	12,914	$	(2,033)
Agency	—	—		—		40	405,514		(52,180)		40	405,514		(52,180)
Corporate	1	16,623		(3,377)		51	473,191		(52,745)		52	489,814		(56,122)

Collateralized mortgage obligations	1	4,786		(61)		49	299,544		(32,804)		50	304,330		(32,865)
Mortgage-backed securities.	—	—		—		79	687,033		(153,512)		79	687,033		(153,512)
Total AFS investment securities	2	$	21,409	$	(3,438)	220	$	1,878,196	$	(293,274)	222	$	1,899,605	$	(296,712)


	December 31, 2022
	Less than 12 Months					12 Months or Longer					Total
(Dollars in thousands)	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
AFS investment securities:
U.S. Treasury	5	$	33,982	$	(237)	1	$	13,036	$	(1,902)	6	$	47,018	$	(2,139)
Agency	8	79,895		(1,265)		35	351,543		(52,628)		43	431,438		(53,893)
Corporate	35	327,984		(20,840)		21	214,565		(23,264)		56	542,549		(44,104)

Collateralized mortgage obligations	41	522,955		(33,318)		40	241,229		(32,381)		81	764,184		(65,699)
Mortgage-backed securities	13	91,762		(6,987)		68	724,019		(130,910)		81	815,781		(137,897)
Total AFS investment securities	102	$	1,056,578	$	(62,647)	165	$	1,544,392	$	(241,085)	267	$	2,600,970	$	(303,732)

The Company reviews individual securities classified as AFS to determine whether unrealized losses are deemed credit related or due to other factors such as changes in interest rates and general market conditions. An ACL on AFS investment securities is recorded when unrealized losses have been deemed, through the Company’s qualitative assessment, to be credit related. Non-credit related unrealized losses on AFS investment securities, which may be attributed to changes in interest rates and other market-related factors, are not recorded through an ACL. Such declines are recorded as an adjustment to accumulated other comprehensive income, net of tax. In the event the Company is required to sell or has the intent to sell an AFS security that has experienced a decline in fair value below its amortized cost, the Company writes the amortized cost of the security down to fair value in the current period.

The ACL for HTM investment securities is estimated on a collective basis, based on shared risk characteristics, and is determined at the individual security level when the Company deems a security to no longer possess shared risk characteristics. Credit losses on HTM investment securities are representative of the amount needed to reduce the amortized cost basis to reflect the net amount expected to be collected.

The Company determines credit losses on both AFS and HTM investment securities through the use of a discounted cash flow approach using the security’s effective interest rate. The ACL 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 AFS investment securities is limited to the amount of a security’s unrealized loss. The ACL is established through a charge to provision for credit losses in current period earnings.

At September 30, 2023 and December 31, 2022, the Company had an ACL of $128,000 and $43,000, respectively, for HTM investment securities classified as municipal bonds. The following table presents a rollforward by major security type of the ACL on the Company's HTM debt securities as of and for the periods indicated:

The Company had no ACL for AFS investment securities at September 30, 2023 and December 31, 2022. The Company performed a qualitative assessment of these investments as of September 30, 2023 and determined that the decrease in unrealized losses was the result of general market conditions, including changes in interest rates driven by the Federal Reserve’s policy to reduce levels of inflation, and does not believe the declines in fair value were credit related. As of September 30, 2023, the Company had not recorded credit losses on AFS securities that were in an unrealized loss position due to the high quality of the investments, with investment grade ratings, and many of them issued by U.S. government agencies. As of September 30, 2023, 74% of our AFS securities were U.S. Treasury, U.S. government agency, and U.S. government-sponsored enterprise securities. Additionally, the Company continues to receive contractual principal and interest payments in a timely manner. It is more likely than not that the Company will not be required to sell the securities prior to their anticipated recoveries, and at this time the Company does not intend to sell these securities. There was no provision for credit losses recognized for AFS investment securities during the three and nine months ended September 30, 2023 and 2022.

At September 30, 2023 and December 31, 2022, there were no AFS or HTM securities in nonaccrual status. All securities in the portfolio were current with their contractual principal and interest payments. At September 30, 2023 and December 31, 2022, there were no securities purchased with deterioration in credit quality since their origination. At September 30, 2023 and December 31, 2022, there were no collateral dependent AFS or HTM securities.


	Three Months Ended		Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
(Dollars in thousands)	2023		2022		2023		2022
Amortized cost of AFS investment securities sold	$	—	$	231,076	$	304,182	$	934,703

Gross realized gains	$	—	$	—	$	986	$	13,645
Gross realized (losses)	—		(393)		(848)		(11,935)
Net realized (losses) gains on sales of AFS investment securities	$	—	$	(393)	$	138	$	1,710


	Due in One Year or Less				Due after One Year through Five Years				Due after Five Years through Ten Years				Due after Ten Years				Total
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
AFS investment securities:
U.S. Treasury	$	—	$	—	$	14,947	$	12,914	$	—	$	—	$	—	$	—	$	14,947	$	12,914
Agency	80,578		78,561		245,493		224,454		106,631		84,760		24,992		17,739		457,694		405,514
Corporate	13,000		12,974		275,068		270,367		272,805		221,467		—		—		560,873		504,808

Collateralized mortgage obligations	—		—		57,210		56,349		187,343		162,195		92,642		85,786		337,195		304,330
Mortgage-backed securities	5,596		5,538		—		—		483,857		410,229		351,092		271,266		840,545		687,033
Total AFS investment securities	99,174		97,073		592,718		564,084		1,050,636		878,651		468,726		374,791		2,211,254		1,914,599
HTM investment securities:

Municipal bonds	—		—		26,176		23,682		37,903		32,366		1,082,504		768,812		1,146,583		824,860
Collateralized mortgage obligations	—		—		116		116		—		—		341,122		324,284		341,238		324,400
Mortgage-backed securities	—		—		—		—		3,489		3,395		230,392		185,487		233,881		188,882
Other	—		—		—		—		—		—		16,292		16,292		16,292		16,292
Total HTM investment securities	—		—		26,292		23,798		41,392		35,761		1,670,310		1,294,875		1,737,994		1,354,434
Total investment securities	$	99,174	$	97,073	$	619,010	$	587,882	$	1,092,028	$	914,412	$	2,139,036	$	1,669,666	$	3,949,248	$	3,269,033