Investment Securities

9 Months Ended

Sep. 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:

	September 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	$	2,536,755	$	—	$	(535,855)	$	2,000,900	$	2,685,038	$	—	$	(442,996)	$	2,242,042
U.S. Treasury securities	771,230		2		(107,030)		664,202		771,145		—		(101,075)		670,070
Agency commercial MBS	538,466		—		(67,572)		470,894		549,492		—		(61,886)		487,606
Agency residential CMOs	491,305		—		(73,326)		417,979		517,174		—		(60,111)		457,063
Municipal securities	396,357		—		(59,826)		336,531		399,724		—		(60,398)		339,326
Corporate debt securities	344,708		—		(59,420)		285,288		344,767		6		(32,868)		311,905
Private label residential CMOs	195,770		—		(46,824)		148,946		207,123		—		(40,399)		166,724
Collateralized loan obligations	109,168		—		(3,188)		105,980		109,159		—		(6,898)		102,261
Private label commercial MBS	23,381		—		(1,728)		21,653		28,903		—		(2,076)		26,827
Asset-backed securities	21,319		—		(328)		20,991		23,568		—		(1,155)		22,413
SBA securities	15,218		—		(1,410)		13,808		18,524		—		(1,274)		17,250
Total	$	5,443,677	$	2	$	(956,507)	$	4,487,172	$	5,654,617	$	6	$	(811,136)	$	4,843,487

As of September 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 September 30, 2023, securities available-for-sale with a fair value of $4.2 billion were pledged as collateral primarily for the Bank Term Funding Program borrowings, the FRB secured line of credit, and letters of credit.

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				Nine Months Ended
	September 30,				September 30,
Sales of Securities Available-for-Sale	2023		2022		2023		2022
	(In thousands)
Amortized cost of securities sold	$	—	$	440,445	$	—	$	1,039,965
Gross realized gains	$	—	$	3,226	$	—	$	5,960
Gross realized losses	—		(3,140)		—		(6,979)
Net realized gains (losses)	$	—	$	86	$	—	$	(1,019)

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:

	September 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	$	—	$	—	$	2,000,900	$	(535,855)	$	2,000,900	$	(535,855)
U.S. Treasury securities	—		—		659,302		(107,030)		659,302		(107,030)
Agency commercial MBS	—		—		470,894		(67,572)		470,894		(67,572)
Agency residential CMOs	—		—		417,979		(73,326)		417,979		(73,326)
Municipal securities	—		—		336,531		(59,826)		336,531		(59,826)
Corporate debt securities	4,650		(350)		280,638		(59,070)		285,288		(59,420)
Private label residential CMOs	—		—		148,946		(46,824)		148,946		(46,824)
Collateralized loan obligations	—		—		105,980		(3,188)		105,980		(3,188)
Private label commercial MBS	—		—		21,653		(1,728)		21,653		(1,728)
Asset-backed securities	—		—		20,991		(328)		20,991		(328)
SBA securities	—		—		13,808		(1,410)		13,808		(1,410)
Total	$	4,650	$	(350)	$	4,477,622	$	(956,157)	$	4,482,272	$	(956,507)

	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 September 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:

	September 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	$	—	$	—	$	—	$	2,536,755	$	2,536,755
U.S. Treasury securities	4,898		766,332		—		—		771,230
Agency commercial MBS	—		200,863		319,981		17,622		538,466
Agency residential CMOs	—		—		169,206		322,099		491,305
Municipal securities	—		97,471		276,758		22,128		396,357
Corporate debt securities	—		5,000		339,708		—		344,708
Private label residential CMOs	—		—		—		195,770		195,770
Collateralized loan obligations	—		—		80,330		28,838		109,168
Private label commercial MBS	—		—		1,412		21,969		23,381
Asset-backed securities	—		—		—		21,319		21,319
SBA securities	—		2,644		—		12,574		15,218
Total	$	4,898	$	1,072,310	$	1,187,395	$	3,179,074	$	5,443,677
Fair Value:
Agency residential MBS	$	—	$	—	$	—	$	2,000,900	$	2,000,900
U.S. Treasury securities	4,900		659,302		—		—		664,202
Agency commercial MBS	—		183,664		270,878		16,352		470,894
Agency residential CMOs	—		—		143,836		274,143		417,979
Municipal securities	—		84,826		232,366		19,339		336,531
Corporate debt securities	—		4,650		280,638		—		285,288
Private label residential CMOs	—		—		—		148,946		148,946
Collateralized loan obligations	—		—		78,358		27,622		105,980
Private label commercial MBS	—		—		1,347		20,306		21,653
Asset-backed securities	—		—		—		20,991		20,991
SBA securities	—		2,441		—		11,367		13,808
Total	$	4,900	$	934,883	$	1,007,423	$	2,539,966	$	4,487,172

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:

	September 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	$	1,246,249	$	(140)	$	1,246,109	$	—	$	(128,038)	$	1,118,071
Agency commercial MBS	432,191		—		432,191		—		(53,609)		378,582
Private label commercial MBS	349,296		—		349,296		—		(46,634)		302,662
U.S. Treasury securities	186,308		—		186,308		—		(20,645)		165,663
Corporate debt securities	70,042		(1,360)		68,682		—		(20,365)		48,317
Total (1)	$	2,284,086	$	(1,500)	$	2,282,586	$	—	$	(269,291)	$	2,013,295

__________________________

(1)    Excludes accrued interest receivable of $11.3 million at September 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 September 30, 2023, securities held-to-maturity with an amortized cost of $2.2 billion and a fair value of $2.0 billion were pledged as collateral primarily for the FRB secured line of credit, Bank Term Funding Program borrowings, and public deposits.

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 September 30, 2023
Municipal securities	$	140	$	—	$	—	$	—	$	140
Corporate debt securities	1,360		—		—		—		1,360
Total	$	1,500	$	—	$	—	$	—	$	1,500
Nine Months Ended September 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 September 30, 2022
Municipal securities	$	140	$	—	$	—	$	—	$	140
Corporate debt securities	1,360		—		—		—		1,360
Total	$	1,500	$	—	$	—	$	—	$	1,500
Nine Months Ended September 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:

	September 30, 2023
Security Type	AAA		AA+		AA		AA-		A+		A		A-		BBB		NR		Total
	(In thousands)
Amortized Cost:
Municipal securities	$	552,283	$	409,001	$	167,325	$	86,149	$	12,012	$	1,791	$	—	$	—	$	17,688	$	1,246,249
Agency commercial
MBS	—		432,191		—		—		—		—		—		—		—		432,191
Private label
commercial MBS	349,296		—		—		—		—		—		—		—		—		349,296
U.S. Treasury
securities	—		186,308		—		—		—		—		—		—		—		186,308
Corporate debt
securities	—		—		—		—		—		—		—		44,339		25,703		70,042
Total	$	901,579	$	1,027,500	$	167,325	$	86,149	$	12,012	$	1,791	$	—	$	44,339	$	43,391	$	2,284,086

	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:

	September 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	$	—	$	—	$	385,555	$	860,694	$	1,246,249
Agency commercial MBS	—		—		413,871		18,320		432,191
Private label commercial MBS	—		—		36,299		312,997		349,296
U.S. Treasury securities	—		—		186,308		—		186,308
Corporate debt securities	—		—		10,201		59,841		70,042
Total	$	—	$	—	$	1,032,234	$	1,251,852	$	2,284,086
Fair Value:
Municipal securities	$	—	$	—	$	349,756	$	768,315	$	1,118,071
Agency commercial MBS	—		—		362,665		15,917		378,582
Private label commercial MBS	—		—		31,967		270,695		302,662
U.S. Treasury securities	—		—		165,663		—		165,663
Corporate debt securities	—		—		8,150		40,167		48,317
Total	$	—	$	—	$	918,201	$	1,095,094	$	2,013,295

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				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(In thousands)
Taxable interest	$	38,062	$	45,772	$	114,961	$	134,881
Non-taxable interest	4,872		6,872		14,697		23,571
Dividend income	2,392		491		4,058		1,007
Total interest income on investment securities	$	45,326	$	53,135	$	133,716	$	159,459