| Investment Securities |
5. INVESTMENT SECURITIES The amortized cost and estimated fair value of available-for-sale (“AFS”) and held-to-maturity (“HTM”) investment securities are summarized below. Fair value is generally determined based on quoted prices for similar assets in active markets or quoted prices for identical assets in markets that are not active. Estimated fair values were obtained from an independent pricing service utilizing observable market data.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2026 |
|
(Dollars in thousands) |
Amortized Cost |
|
|
Gross Unrealized Holding Gain |
|
|
Gross Unrealized Holding Loss |
|
|
Fair Value |
|
|
Total Percent |
|
AFS investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency/GSE |
$ |
45,601 |
|
|
$ |
— |
|
|
$ |
(152 |
) |
|
$ |
45,449 |
|
|
|
1.29 |
% |
Mortgage-backed securities |
|
2,787,437 |
|
|
|
704 |
|
|
|
(294,750 |
) |
|
|
2,493,391 |
|
|
|
70.67 |
% |
CMO/REMIC |
|
1,068,362 |
|
|
|
— |
|
|
|
(142,978 |
) |
|
|
925,384 |
|
|
|
26.23 |
% |
Municipal bonds |
|
21,439 |
|
|
|
9 |
|
|
|
(1,863 |
) |
|
|
19,585 |
|
|
|
0.56 |
% |
Collateralized loan obligations |
|
42,000 |
|
|
|
48 |
|
|
|
— |
|
|
|
42,048 |
|
|
|
1.19 |
% |
Other securities |
|
1,976 |
|
|
|
— |
|
|
|
— |
|
|
|
1,976 |
|
|
|
0.06 |
% |
Unallocated portfolio layer fair value basis
adjustments (1) |
|
(23,595 |
) |
|
|
— |
|
|
|
23,595 |
|
|
|
— |
|
|
|
0.00 |
% |
Total AFS investment securities |
$ |
3,943,220 |
|
|
$ |
761 |
|
|
$ |
(416,148 |
) |
|
$ |
3,527,833 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HTM investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency/GSE |
$ |
486,549 |
|
|
$ |
— |
|
|
$ |
(105,731 |
) |
|
$ |
380,818 |
|
|
|
22.16 |
% |
Mortgage-backed securities |
|
527,556 |
|
|
|
— |
|
|
|
(112,919 |
) |
|
|
414,637 |
|
|
|
24.03 |
% |
CMO/REMIC |
|
724,832 |
|
|
|
— |
|
|
|
(184,437 |
) |
|
|
540,395 |
|
|
|
33.02 |
% |
Municipal bonds |
|
435,577 |
|
|
|
2 |
|
|
|
(57,723 |
) |
|
|
377,856 |
|
|
|
19.84 |
% |
Other securities (2) |
|
20,778 |
|
|
|
— |
|
|
|
— |
|
|
|
20,778 |
|
|
|
0.95 |
% |
Total HTM investment securities |
$ |
2,195,292 |
|
|
$ |
2 |
|
|
$ |
(460,810 |
) |
|
$ |
1,734,484 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
(Dollars in thousands) |
Amortized Cost |
|
|
Gross Unrealized Holding Gain |
|
|
Gross Unrealized Holding Loss |
|
|
Fair Value |
|
|
Total Percent |
|
AFS investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency/GSE |
$ |
35,348 |
|
|
$ |
17 |
|
|
$ |
(81 |
) |
|
$ |
35,284 |
|
|
|
1.32 |
% |
Mortgage-backed securities |
|
2,089,155 |
|
|
|
2,199 |
|
|
|
(203,700 |
) |
|
|
1,887,654 |
|
|
|
70.35 |
% |
CMO/REMIC |
|
800,896 |
|
|
|
2,314 |
|
|
|
(108,060 |
) |
|
|
695,150 |
|
|
|
25.91 |
% |
Municipal bonds |
|
21,787 |
|
|
|
27 |
|
|
|
(524 |
) |
|
|
21,290 |
|
|
|
0.79 |
% |
Collateralized loan obligations |
|
42,000 |
|
|
|
— |
|
|
|
— |
|
|
|
42,000 |
|
|
|
1.57 |
% |
Other securities |
|
1,692 |
|
|
|
— |
|
|
|
— |
|
|
|
1,692 |
|
|
|
0.06 |
% |
Unallocated portfolio layer fair value basis
adjustments (1) |
|
(8,650 |
) |
|
|
8,650 |
|
|
|
— |
|
|
|
— |
|
|
|
0.00 |
% |
Total AFS investment securities |
$ |
2,982,228 |
|
|
$ |
13,207 |
|
|
$ |
(312,365 |
) |
|
$ |
2,683,070 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HTM investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency/GSE |
$ |
498,513 |
|
|
$ |
— |
|
|
$ |
(82,741 |
) |
|
$ |
415,772 |
|
|
|
21.96 |
% |
Mortgage-backed securities |
|
557,860 |
|
|
|
25 |
|
|
|
(84,512 |
) |
|
|
473,373 |
|
|
|
24.57 |
% |
CMO/REMIC |
|
751,639 |
|
|
|
— |
|
|
|
(152,417 |
) |
|
|
599,222 |
|
|
|
33.10 |
% |
Municipal bonds |
|
444,694 |
|
|
|
1,572 |
|
|
|
(26,826 |
) |
|
|
419,440 |
|
|
|
19.59 |
% |
Other securities (2) |
|
17,685 |
|
|
|
— |
|
|
|
— |
|
|
|
17,685 |
|
|
|
0.78 |
% |
Total HTM investment securities |
$ |
2,270,391 |
|
|
$ |
1,597 |
|
|
$ |
(346,496 |
) |
|
$ |
1,925,492 |
|
|
|
100.00 |
% |
(1)Represents the amount of portfolio layer method basis adjustments related to AFS mortgage-backed securities (“MBS”) securities hedged in a closed portfolio. Under GAAP, these basis adjustments are not allocated to individual securities, however the amounts impact the unrealized gains or losses of the hedged AFS securities. Refer to Note 11 for additional information. (2)Represents Commercial Property Assessed Clean Energy (“C-PACE”) bonds. The following table provides information about the amount of interest income earned on investment securities which is fully taxable, and interest income on investment securities which is exempt from regular federal income tax.
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|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
September 30, |
|
|
September 30, |
|
(Dollars in thousands) |
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
AFS investment securities |
|
|
|
|
|
|
|
|
|
|
|
Taxable |
$ |
29,237 |
|
|
$ |
18,722 |
|
|
$ |
71,575 |
|
|
$ |
55,466 |
|
Tax-advantaged |
|
147 |
|
|
|
145 |
|
|
|
438 |
|
|
|
434 |
|
Total interest income from AFS investment securities |
|
29,384 |
|
|
|
18,867 |
|
|
|
72,013 |
|
|
|
55,900 |
|
HTM investment securities |
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
9,926 |
|
|
|
10,494 |
|
|
|
30,134 |
|
|
|
31,690 |
|
Tax-advantaged |
|
2,254 |
|
|
|
2,318 |
|
|
|
6,834 |
|
|
|
7,029 |
|
Total interest income from HTM investment securities |
|
12,180 |
|
|
|
12,812 |
|
|
|
36,968 |
|
|
|
38,719 |
|
Total interest income from investment securities |
$ |
41,564 |
|
|
$ |
31,679 |
|
|
$ |
108,981 |
|
|
$ |
94,619 |
|
The following table presents the Company’s AFS and HTM investment securities, by investment category, in an unrealized loss position for which an allowance for credit losses has not been recorded as of September 30, 2026 and December 31, 2025.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2026 |
|
|
Less Than 12 Months |
|
|
12 Months or Longer |
|
|
Total |
|
(Dollars in thousands) |
Fair Value |
|
|
Gross Unrealized Holding Losses (1) |
|
|
Fair Value |
|
|
Gross Unrealized Holding Losses (1) |
|
|
Fair Value |
|
|
Gross Unrealized Holding Losses |
|
AFS investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency/GSE |
$ |
44,893 |
|
|
$ |
(152 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
44,893 |
|
|
$ |
(152 |
) |
Mortgage-backed securities |
|
950,317 |
|
|
|
(35,406 |
) |
|
|
1,359,153 |
|
|
|
(259,344 |
) |
|
|
2,309,470 |
|
|
|
(294,750 |
) |
CMO/REMIC |
|
615,345 |
|
|
|
(15,048 |
) |
|
|
310,039 |
|
|
|
(127,930 |
) |
|
|
925,384 |
|
|
|
(142,978 |
) |
Municipal bonds |
|
2,566 |
|
|
|
(179 |
) |
|
|
16,055 |
|
|
|
(1,684 |
) |
|
|
18,621 |
|
|
|
(1,863 |
) |
Total AFS investment securities |
$ |
1,613,121 |
|
|
$ |
(50,785 |
) |
|
$ |
1,685,247 |
|
|
$ |
(388,958 |
) |
|
$ |
3,298,368 |
|
|
$ |
(439,743 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HTM investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency/GSE |
$ |
— |
|
|
$ |
— |
|
|
$ |
380,818 |
|
|
$ |
(105,731 |
) |
|
$ |
380,818 |
|
|
$ |
(105,731 |
) |
Mortgage-backed securities |
|
20,833 |
|
|
|
(1,059 |
) |
|
|
393,804 |
|
|
|
(111,860 |
) |
|
|
414,637 |
|
|
|
(112,919 |
) |
CMO/REMIC |
|
— |
|
|
|
— |
|
|
|
540,395 |
|
|
|
(184,437 |
) |
|
|
540,395 |
|
|
|
(184,437 |
) |
Municipal bonds |
|
93,341 |
|
|
|
(7,963 |
) |
|
|
283,219 |
|
|
|
(49,760 |
) |
|
|
376,560 |
|
|
|
(57,723 |
) |
Total HTM investment securities |
$ |
114,174 |
|
|
$ |
(9,022 |
) |
|
$ |
1,598,236 |
|
|
$ |
(451,788 |
) |
|
$ |
1,712,410 |
|
|
$ |
(460,810 |
) |
(1)The gross unrealized holding losses of available-for-sale securities excludes the portfolio layer fair value hedge basis adjustments of $23.6 million at September 30, 2026.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
Less Than 12 Months |
|
|
12 Months or Longer |
|
|
Total |
|
(Dollars in thousands) |
Fair Value |
|
|
Gross Unrealized Holding Losses |
|
|
Fair Value |
|
|
Gross Unrealized Holding Losses |
|
|
Fair Value |
|
|
Gross Unrealized Holding Losses |
|
AFS investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency/GSE |
$ |
5,919 |
|
|
$ |
(81 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,919 |
|
|
$ |
(81 |
) |
Mortgage-backed securities |
|
32,579 |
|
|
|
(71 |
) |
|
|
1,586,803 |
|
|
|
(203,629 |
) |
|
|
1,619,382 |
|
|
|
(203,700 |
) |
CMO/REMIC |
|
— |
|
|
|
— |
|
|
|
344,865 |
|
|
|
(108,060 |
) |
|
|
344,865 |
|
|
|
(108,060 |
) |
Municipal bonds |
|
— |
|
|
|
— |
|
|
|
17,600 |
|
|
|
(524 |
) |
|
|
17,600 |
|
|
|
(524 |
) |
Total AFS investment securities |
$ |
38,498 |
|
|
$ |
(152 |
) |
|
$ |
1,949,268 |
|
|
$ |
(312,213 |
) |
|
$ |
1,987,766 |
|
|
$ |
(312,365 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HTM investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency/GSE |
$ |
— |
|
|
$ |
— |
|
|
$ |
415,772 |
|
|
$ |
(82,741 |
) |
|
$ |
415,772 |
|
|
$ |
(82,741 |
) |
Mortgage-backed securities |
|
— |
|
|
|
— |
|
|
|
455,255 |
|
|
|
(84,512 |
) |
|
|
455,255 |
|
|
|
(84,512 |
) |
CMO/REMIC |
|
— |
|
|
|
— |
|
|
|
599,222 |
|
|
|
(152,417 |
) |
|
|
599,222 |
|
|
|
(152,417 |
) |
Municipal bonds |
|
3,690 |
|
|
|
(11 |
) |
|
|
321,723 |
|
|
|
(26,815 |
) |
|
|
325,413 |
|
|
|
(26,826 |
) |
Total HTM investment securities |
$ |
3,690 |
|
|
$ |
(11 |
) |
|
$ |
1,791,972 |
|
|
$ |
(346,485 |
) |
|
$ |
1,795,662 |
|
|
$ |
(346,496 |
) |
The allowance for credit losses on investment securities is evaluated for both the AFS and HTM classifications of the investment portfolio in accordance with ASC 326. The Company reviews investment securities in an unrealized loss position to determine whether the decline in fair value is attributable to credit-related factors or non-credit-related factors, such as changes in interest rates and general market conditions and changes in issuer credit ratings. Unrealized losses on AFS securities attributable to non-credit-related factors are not recorded through an ACL. Such declines are recorded in accumulated other comprehensive income, net. If the Company intends to sell an AFS security, or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the amortized cost basis of the security is written down to fair value through earnings. Management determined that no credit losses exist for securities in an unrealized loss position as of September 30, 2026 and December 31, 2025. Accordingly, no allowance for credit losses was recorded on the Company's investment securities portfolio. At September 30, 2026, investment securities with carrying values of $2.68 billion were pledged to secure various types of deposits, including $1.02 billion of public funds. In addition, investment securities with carrying values of $2.62 billion were pledged to secure $682.3 million for repurchase agreements, $1.87 billion for unused borrowing capacity, and approximately $70.1 million for other purposes as required or permitted by law. At December 31, 2025, investment securities with carrying values of $2.74 billion were pledged to secure various types of deposits, including $942.0 million of public funds. In addition, investment securities with carrying values of $2.0 billion were pledged to secure $548.6 million for repurchase agreements, $1.35 billion for unused borrowing capacity, and approximately $57.0 million for other purposes as required or permitted by law. The amortized cost and fair value of debt securities at September 30, 2026, by contractual maturity, are shown in the following table. Although mortgage-backed securities and CMO/REMIC securities have weighted average remaining contractual maturities of approximately 25 years, expected maturities will differ from contractual maturities because borrowers may have the right to prepay such obligations without penalty. Mortgage-backed securities and CMO/REMIC securities are included in maturity categories based upon estimated average lives which incorporate estimated prepayment speeds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2026 |
|
|
Available-for-sale |
|
|
Held-to-maturity |
|
(Dollars in thousands) |
Amortized Cost |
|
|
Fair Value |
|
|
Amortized Cost |
|
|
Fair Value |
|
Due in one year or less |
$ |
51,593 |
|
|
$ |
51,424 |
|
|
$ |
3,256 |
|
|
$ |
3,240 |
|
Due after one year through five years |
|
98,047 |
|
|
|
106,749 |
|
|
|
133,396 |
|
|
|
121,128 |
|
Due after five years through ten years |
|
1,713,645 |
|
|
|
1,457,665 |
|
|
|
525,373 |
|
|
|
422,906 |
|
Due after ten years |
|
2,079,935 |
|
|
|
1,911,995 |
|
|
|
1,533,267 |
|
|
|
1,187,210 |
|
Total investment securities |
$ |
3,943,220 |
|
|
$ |
3,527,833 |
|
|
$ |
2,195,292 |
|
|
$ |
1,734,484 |
|
Investment in Federal Home Loan Bank and Federal Reserve Bank of San Francisco Stock The Bank is a member of the Federal Home Loan Bank (“FHLB”), and members are required to own a certain amount of FHLB stock based on the level of borrowings and other factors. The Bank is also a member of the Federal Reserve Bank of San Francisco (“FRB”) System and is required to subscribe a certain amount of FRB stock based on the Bank's capital and surplus. The investments in FHLB and FRB stock are carried at cost and are periodically evaluated for impairment based on, among other things, the capital adequacy and overall financial condition of the FHLB and FRB. No impairment losses were recorded as of September 30, 2026.
|