Investment Securities

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investment Securities

INVESTMENT SECURITIES     

Transfer of Securities Available-for-Sale to Held-to Maturity

Effective June 1, 2022, the Company transferred $2.3 billion in fair value of municipal securities, agency commercial MBS, private label commercial MBS, U.S. Treasury securities, and corporate debt securities from available-for-sale to held-to-maturity. At the time of transfer, $218.3 million of unrealized losses, net of tax, was retained in "Accumulated other comprehensive income (loss)" on the condensed consolidated balance sheets.

Securities Available-for-Sale

The following table presents amortized cost, gross unrealized gains and losses, and fair values of securities available-for-sale as of the dates indicated:

	June 30, 2023								December 31, 2022
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
Security Type	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
	(In thousands)
Agency residential MBS	$	2,592,344	$	—	$	(423,731)	$	2,168,613	$	2,685,038	$	—	$	(442,996)	$	2,242,042
U.S. Treasury securities	771,226		2		(98,145)		673,083		771,145		—		(101,075)		670,070
Agency commercial MBS	540,449		—		(60,492)		479,957		549,492		—		(61,886)		487,606
Agency residential CMOs	500,101		—		(60,874)		439,227		517,174		—		(60,111)		457,063
Municipal securities	395,200		—		(52,411)		342,789		399,724		—		(60,398)		339,326
Corporate debt securities	344,730		—		(64,217)		280,513		344,767		6		(32,868)		311,905
Private label residential CMOs	198,992		—		(39,485)		159,507		207,123		—		(40,399)		166,724
Collateralized loan obligations	109,168		—		(4,345)		104,823		109,159		—		(6,898)		102,261
Private label commercial MBS	25,137		—		(1,937)		23,200		28,903		—		(2,076)		26,827
Asset-backed securities	22,116		—		(391)		21,725		23,568		—		(1,155)		22,413
SBA securities	16,360		—		(1,278)		15,082		18,524		—		(1,274)		17,250
Total	$	5,515,823	$	2	$	(807,306)	$	4,708,519	$	5,654,617	$	6	$	(811,136)	$	4,843,487

As of June 30, 2023, the Company had not recorded an allowance for credit losses on securities available-for-sale. The Company does not consider unrealized losses on such securities to be attributable to credit-related factors, as the unrealized losses have occurred as a result of changes in non-credit related factors such as interest rates, market spreads, and market conditions subsequent to purchase.

As of June 30, 2023, securities available-for-sale with a fair value of $4.4 billion were pledged as collateral primarily for the Bank Term Funding Program borrowings, the FRB secured line of credit, and public deposits.

Realized Gains and Losses on Securities Available-for-Sale

The following table presents the amortized cost of securities sold with related gross realized gains, gross realized losses, and net realized (losses) gains for the years indicated:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Sales of Securities Available-for-Sale	2023		2022		2023		2022
	(In thousands)
Amortized cost of securities sold	$	—	$	393,432	$	—	$	599,520
Gross realized gains	$	—	$	1,544	$	—	$	2,734
Gross realized losses	—		(2,753)		—		(3,839)
Net realized gains (losses)	$	—	$	(1,209)	$	—	$	(1,105)

Unrealized Losses on Securities Available-for-Sale

The following tables present the gross unrealized losses and fair values of securities available-for-sale that were in unrealized loss positions as of the dates indicated:

	June 30, 2023
	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Security Type	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
Agency residential MBS	$	6,358	$	(400)	$	2,162,255	$	(423,331)	$	2,168,613	$	(423,731)
U.S. Treasury securities	—		—		668,123		(98,145)		668,123		(98,145)
Agency commercial MBS	—		—		479,957		(60,492)		479,957		(60,492)
Agency residential CMOs	701		(31)		438,527		(60,843)		439,228		(60,874)
Municipal securities	1,162		(87)		341,627		(52,324)		342,789		(52,411)
Corporate debt securities	13,997		(1,003)		266,516		(63,214)		280,513		(64,217)
Private label residential CMOs	—		—		159,507		(39,485)		159,507		(39,485)
Collateralized loan obligations	—		—		104,823		(4,345)		104,823		(4,345)
Private label commercial MBS	—		—		23,200		(1,937)		23,200		(1,937)
Asset-backed securities	—		—		21,725		(391)		21,725		(391)
SBA securities	—		—		15,082		(1,278)		15,082		(1,278)
Total	$	22,218	$	(1,521)	$	4,681,342	$	(805,785)	$	4,703,560	$	(807,306)

	December 31, 2022
	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Security Type	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
Agency residential MBS	$	52,556	$	(6,193)	$	2,189,485	$	(436,803)	$	2,242,041	$	(442,996)
U.S. Treasury securities	4,972		(26)		665,098		(101,049)		670,070		(101,075)
Agency commercial MBS	316,892		(31,139)		170,714		(30,747)		487,606		(61,886)
Agency residential CMOs	245,755		(22,748)		211,309		(37,363)		457,064		(60,111)
Municipal securities	37,380		(3,129)		298,266		(57,269)		335,646		(60,398)
Corporate debt securities	302,643		(32,124)		4,256		(744)		306,899		(32,868)
Private label residential CMOs	19,261		(1,294)		147,464		(39,105)		166,725		(40,399)
Collateralized loan obligations	27,704		(1,818)		74,558		(5,080)		102,262		(6,898)
Private label commercial MBS	10,204		(508)		16,623		(1,568)		26,827		(2,076)
Asset-backed securities	22,413		(1,155)		—		—		22,413		(1,155)
SBA securities	17,250		(1,274)		—		—		17,250		(1,274)
Total	$	1,057,030	$	(101,408)	$	3,777,773	$	(709,728)	$	4,834,803	$	(811,136)

The securities that were in an unrealized loss position at June 30, 2023, were considered impaired and required further review to determine if the unrealized losses were credit-related. We concluded the unrealized losses were a result of the level of market interest rates relative to the types of securities and pricing changes caused by shifting supply and demand dynamics and not a result of downgraded credit ratings or other indicators of deterioration of the underlying issuers' ability to repay. We also considered the seniority of the tranches and U.S. government agency guarantees, if any, to assess whether an unrealized loss was credit-related. Accordingly, we determined the unrealized losses were not credit-related and recognized the unrealized losses in "Accumulated other comprehensive (loss) income" of "Stockholders' equity" on the condensed consolidated balance sheets. Although we periodically sell securities for portfolio management purposes, we do not foresee having to sell any impaired securities and believe that it is more likely than not we would not be required to sell any impaired securities before recovery of their amortized cost.

Contractual Maturities of Securities Available-for-Sale

The following table presents the contractual maturities of our securities available-for-sale portfolio based on amortized cost and carrying value as of the date indicated:

	June 30, 2023
			Due After		Due After
	Due		One Year		Five Years		Due
	Within		Through		Through		After
Security Type	One Year		Five Years		Ten Years		Ten Years		Total
	(In thousands)
Amortized Cost:
Agency residential MBS	$	—	$	—	$	—	$	2,592,344	$	2,592,344
U.S. Treasury securities	4,958		666,576		99,692		—		771,226
Agency commercial MBS	—		202,143		320,570		17,736		540,449
Agency residential CMOs	—		—		172,382		327,719		500,101
Municipal securities	—		65,454		307,486		22,260		395,200
Corporate debt securities	—		5,000		339,730		—		344,730
Private label residential CMOs	—		—		—		198,992		198,992
Collateralized loan obligations	—		—		70,330		38,838		109,168
Private label commercial MBS	—		—		—		25,137		25,137
Asset-backed securities	—		—		—		22,116		22,116
SBA securities	—		3,408		—		12,952		16,360
Total	$	4,958	$	942,581	$	1,310,190	$	3,258,094	$	5,515,823
Fair Value:
Agency residential MBS	$	—	$	—	$	—	$	2,168,613	$	2,168,613
U.S. Treasury securities	4,959		582,194		85,930		—		673,083
Agency commercial MBS	—		185,585		277,605		16,767		479,957
Agency residential CMOs	—		—		149,975		289,252		439,227
Municipal securities	—		58,119		264,120		20,550		342,789
Corporate debt securities	—		4,725		275,788		—		280,513
Private label residential CMOs	—		—		—		159,507		159,507
Collateralized loan obligations	—		—		67,716		37,107		104,823
Private label commercial MBS	—		—		—		23,200		23,200
Asset-backed securities	—		—		—		21,725		21,725
SBA securities	—		3,168		—		11,914		15,082
Total	$	4,959	$	833,791	$	1,121,134	$	2,748,635	$	4,708,519

CMBS, CMOs, and MBS have contractual maturity dates, but require periodic payments based upon scheduled amortization terms. Actual principal collections on these securities usually occur more rapidly than the scheduled amortization terms because of prepayments made by obligors of the underlying loan collateral.

Securities Held-to-Maturity

The following table presents amortized cost, allowance for credit losses, gross unrealized gains and losses, and fair values of securities held-to-maturity as of the date indicated:

	June 30, 2023
			Allowance
			for		Net		Gross		Gross
	Amortized		Credit		Carrying		Unrealized		Unrealized		Fair
Security Type	Cost		Losses		Amount		Gains		Losses		Value
	(In thousands)
Municipal securities	$	1,245,462	$	(140)	$	1,245,322	$	173	$	(53,811)	$	1,191,684
Agency commercial MBS	430,578		—		430,578		—		(35,178)		395,400
Private label commercial MBS	348,123		—		348,123		—		(34,612)		313,511
U.S. Treasury securities	185,581		—		185,581		—		(12,987)		172,594
Corporate debt securities	69,958		(1,360)		68,598		—		(20,975)		47,623
Total (1)	$	2,279,702	$	(1,500)	$	2,278,202	$	173	$	(157,563)	$	2,120,812

__________________________

(1)    Excludes accrued interest receivable of $13.4 million at June 30, 2023 which is recorded in "Other assets" on the condensed consolidated balance sheets.

	December 31, 2022
			Allowance
			for		Net		Gross		Gross
	Amortized		Credit		Carrying		Unrealized		Unrealized		Fair
Security Type	Cost		Losses		Amount		Gains		Losses		Value
	(In thousands)
Municipal securities	$	1,243,443	$	(140)	$	1,243,303	$	8	$	(77,526)	$	1,165,785
Agency commercial MBS	427,411		—		427,411		—		(34,287)		393,124
Private label commercial MBS	345,825		—		345,825		—		(26,027)		319,798
U.S. Treasury securities	184,162		—		184,162		—		(12,462)		171,700
Corporate debt securities	69,794		(1,360)		68,434		—		(8,369)		60,065
Total (1)	$	2,270,635	$	(1,500)	$	2,269,135	$	8	$	(158,671)	$	2,110,472

__________________________

(1)    Excludes accrued interest receivable of $13.5 million at December 31, 2022 which is recorded in "Other assets" on the condensed consolidated balance sheets.

As of June 30, 2023, securities held-to-maturity with an amortized cost of $2.2 billion and a fair value of $2.1 billion were pledged as collateral primarily for public deposits, the FRB secured line of credit, Bank Term Funding Program borrowings, and letters of credit.

Allowance for Credit Losses on Securities Held-to-Maturity

The following table presents the changes by major security type in our allowance for credit losses on securities held-to-maturity for the periods indicated:

	Allowance for		Provision						Allowance for
	Credit Losses,		for						Credit Losses,
	Beginning		Credit						End of
Security Type	of Period		Losses		Charge-offs		Recoveries		Period
	(In thousands)
Three Months Ended June 30, 2023
Municipal securities	$	140	$	—	$	—	$	—	$	140
Corporate debt securities	1,360		—		—		—		1,360
Total	$	1,500	$	—	$	—	$	—	$	1,500
Six Months Ended June 30, 2023
Municipal securities	$	140	$	—	$	—	$	—	$	140
Corporate debt securities	1,360		—		—		—		1,360
Total	$	1,500	$	—	$	—	$	—	$	1,500

	Allowance for		Provision						Allowance for
	Credit Losses,		for						Credit Losses,
	Beginning		Credit						End of
Security Type	of Period		Losses		Charge-offs		Recoveries		Period
	(In thousands)
Three Months Ended June 30, 2022
Municipal securities	$	—	$	140	$	—	$	—	$	140
Corporate debt securities	—		1,360		—		—		1,360
Total	$	—	$	1,500	$	—	$	—	$	1,500
Six Months Ended June 30, 2022
Municipal securities	$	—	$	140	$	—	$	—	$	140
Corporate debt securities	—		1,360		—		—		1,360
Total	$	—	$	1,500	$	—	$	—	$	1,500

Credit losses on HTM securities are recorded at the time of purchase, acquisition, or when the Company designates securities as held-to-maturity. Credit losses on HTM securities are representative of current expected credit losses that may be incurred over the life of the investment. Accrued interest receivable on HTM securities, which is included in other assets on the condensed consolidated balance sheets, is excluded from the estimate of expected credit losses. HTM U.S. treasury securities and agency-backed MBS securities are considered to have no risk of loss as they are either explicitly or implicitly guaranteed by the U.S. government. The change in fair value in the HTM private label CMBS portfolio is solely driven by changes in interest rates. The Company has no knowledge of any underlying credit issues and the cash flows underlying the debt securities have not changed and are not expected to be impacted by changes in interest rates and, thus, there is no related ACL for this portfolio. The underlying bonds in the Company’s HTM municipal securities and HTM corporate debt securities portfolios are evaluated for credit losses in conjunction with management’s estimate of the allowance for credit losses based primarily on credit ratings.

Securities Held-to-Maturity by Credit Quality Indicator

The Company uses S&P, Moody's, Fitch, Kroll, and Egan Jones ratings as the credit quality indicators for its held-to-maturity securities. The following table presents our securities held-to-maturity portfolio at amortized cost by the lowest available credit rating as of the dates indicated:

	June 30, 2023
Security Type	AAA		AA+		AA		AA-		A+		A		A-		BBB		NR		Total
	(In thousands)
Amortized Cost:
Municipal securities	$	552,131	$	403,500	$	166,760	$	86,060	$	12,018	$	1,894	$	—	$	—	$	23,099	$	1,245,462
Agency commercial
MBS	—		430,578		—		—		—		—		—		—		—		430,578
Private label
commercial MBS	348,123		—		—		—		—		—		—		—		—		348,123
U.S. Treasury
securities	—		185,581		—		—		—		—		—		—		—		185,581
Corporate debt
securities	—		—		—		—		—		—		—		44,306		25,652		69,958
Total	$	900,254	$	1,019,659	$	166,760	$	86,060	$	12,018	$	1,894	$	—	$	44,306	$	48,751	$	2,279,702

	December 31, 2022
Security Type	AAA		AA+		AA		AA-		A+		A		A-		BBB		NR		Total
	(In thousands)
Amortized Cost:
Municipal securities	$	568,674	$	385,990	$	173,751	$	95,471	$	—	$	1,901	$	—	$	—	$	17,656	$	1,243,443
Agency commercial
MBS	—		427,411		—		—		—		—		—		—		—		427,411
Private label
commercial MBS	345,825		—		—		—		—		—		—		—		—		345,825
U.S. Treasury
securities	—		184,162		—		—		—		—		—		—		—		184,162
Corporate debt
securities	—		—		—		—		—		—		23,244		20,999		25,551		69,794
Total	$	914,499	$	997,563	$	173,751	$	95,471	$	—	$	1,901	$	23,244	$	20,999	$	43,207	$	2,270,635

Contractual Maturities of Securities Held-to-Maturity

The following table presents the contractual maturities of our securities held-to-maturity portfolio based on amortized cost and fair value as of the date indicated:

	June 30, 2023
			Due After		Due After
	Due		One Year		Five Years		Due
	Within		Through		Through		After
Security Type	One Year		Five Years		Ten Years		Ten Years		Total
	(In thousands)
Amortized Cost:
Municipal securities	$	—	$	—	$	368,095	$	877,367	$	1,245,462
Agency commercial MBS	—		—		409,517		21,061		430,578
Private label commercial MBS	—		—		36,193		311,930		348,123
U.S. Treasury securities	—		—		185,581		—		185,581
Corporate debt securities	—		—		10,211		59,747		69,958
Total	$	—	$	—	$	1,009,597	$	1,270,105	$	2,279,702
Fair Value:
Municipal securities	$	—	$	—	$	348,295	$	843,389	$	1,191,684
Agency commercial MBS	—		—		375,946		19,454		395,400
Private label commercial MBS	—		—		33,057		280,454		313,511
U.S. Treasury securities	—		—		172,594		—		172,594
Corporate debt securities	—		—		8,000		39,623		47,623
Total	$	—	$	—	$	937,892	$	1,182,920	$	2,120,812

Commercial MBS have contractual maturity dates, but require periodic payments based upon scheduled amortization terms. Actual principal collections on these securities usually occur more rapidly than the scheduled amortization terms because of prepayments made by obligors of the underlying loan collateral.

Interest Income on Investment Securities

The following table presents the composition of our interest income on investment securities, including available-for-sale and held-to-maturity, for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
	(In thousands)
Taxable interest	$	38,207	$	44,467	$	76,899	$	89,109
Non-taxable interest	4,922		8,180		9,825		16,699
Dividend income	1,024		255		1,666		516
Total interest income on investment securities	$	44,153	$	52,902	$	88,390	$	106,324