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Note 3 - INVESTMENT SECURITIES | 6 Months Ended
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Jun. 30, 2022
Notes to Financial Statements |
Investment Securities | NOTE 3– INVESTMENT SECURITIES The amortized cost and fair value of investment securities as of June 30, 2022 and December 31, 2021 are summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Gross | ​ | Gross | ​ | ​ | ​ | ​
​ | ​ | Amortized | ​ | Unrealized | ​ | Unrealized | ​ | Fair | ​
​ |  | Cost* |  | Gains |  | (Losses) |  | Value |
​ | ​ | (dollars in thousands)
June 30, 2022: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Securities HTM: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Municipal securities | ​ | $ | 507,653 | ​ | $ | 5,359 | ​ | $ | (16,108) | ​ | $ | 496,904 | ​
Other securities | ​ |  | 1,050 | ​ |  | — | ​ |  | — | ​ |  | 1,050 | ​
​ | ​ | $ | 508,703 | ​ | $ | 5,359 | ​ | $ | (16,108) | ​ | $ | 497,954 | ​
​ | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Securities AFS: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
U.S. treasuries and govt. sponsored agency securities | ​ | $ | 22,424 | ​ | $ | 22 | ​ | $ | (1,998) | ​ | $ | 20,448 | ​
Residential mortgage-backed and related securities | ​ |  | 86,000 | ​ |  | 42 | ​ |  | (4,795) | ​ |  | 81,247 | ​
Municipal securities | ​ |  | 241,074 | ​ |  | 122 | ​ |  | (38,211) | ​ |  | 202,985 | ​
Asset-backed securities | ​ | ​ | 20,056 | ​ | ​ | 112 | ​ | ​ | (212) | ​ | ​ | 19,956 | ​
Other securities | ​ |  | 47,768 | ​ |  | 93 | ​ |  | (1,084) | ​ |  | 46,777 | ​
​ | ​ | $ | 417,322 | ​ | $ | 391 | ​ | $ | (46,300) | ​ | $ | 371,413 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ * HTM securities shown on the balance sheet of $508.5 million represents amortized cost of $508.7 million, net of allowance for credit losses of $198 thousand as of June 30, 2022. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Gross | ​ | Gross | ​ | ​
​ | ​ | Amortized | ​ | Unrealized | ​ | Unrealized | ​ | Fair
​ |  | Cost |  | Gains |  | (Losses) | ​ | Value
​ | ​ | (dollars in thousands)
December 31, 2021: |  | ​ |  |  | ​ |  |  | ​ |  | ​ | ​ | ​
Securities HTM: |  | ​ |  |  | ​ |  |  | ​ |  | ​ | ​ | ​
Municipal securities | ​ | $ | 471,533 | ​ | $ | 49,715 | ​ | $ | — | ​ | $ | 521,248
Other securities | ​ |  | 1,050 | ​ |  | — | ​ |  | (1) | ​ |  | 1,049
​ | ​ | $ | 472,583 | ​ | $ | 49,715 | ​ | $ | (1) | ​ | $ | 522,297
​ | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Securities AFS: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
U.S. govt. sponsored agency securities | ​ | $ | 23,370 | ​ | $ | 254 | ​ | $ | (296) | ​ | $ | 23,328
Residential mortgage-backed and related securities | ​ |  | 92,431 | ​ |  | 2,672 | ​ |  | (780) | ​ |  | 94,323
Municipal securities | ​ |  | 163,253 | ​ |  | 5,228 | ​ |  | (215) | ​ |  | 168,266
Asset-backed securities | ​ | ​ | 26,372 | ​ | ​ | 752 | ​ | ​ | — | ​ | ​ | 27,124
Other securities | ​ |  | 24,568 | ​ |  | 251 | ​ |  | (30) | ​ |  | 24,789
​ | ​ | $ | 329,994 | ​ | $ | 9,157 | ​ | $ | (1,321) | ​ | $ | 337,830
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
* HTM securities shown on the balance sheet of $472.4 million represents amortized cost of $472.6 million, net of allowance for credit losses of $198 thousand as of December 31, 2021. The Company's HTM municipal securities consist largely of private issues of municipal debt. The large majority of the municipalities are located within the Midwest. The municipal debt investments are underwritten using specific guidelines with ongoing monitoring. ​ The Company's residential mortgage-backed and related securities portfolio consists entirely of government sponsored or government guaranteed securities. The Company has not invested in private mortgage-backed securities or pooled trust preferred securities. ​ Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2022 and December 31, 2021, are summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Less than 12 Months | ​ | 12 Months or More | ​ | Total
​ | ​ | ​ | ​ | Gross | ​ | ​ | ​ | Gross | ​ | ​ | ​ | Gross
​ | ​ | Fair | ​ | Unrealized | ​ | Fair | ​ | Unrealized | ​ | Fair | ​ | Unrealized
​ |  | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
​ | ​ | (dollars in thousands)
June 30, 2022: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Securities HTM: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Municipal securities | ​ | $ | 68,468 | ​ | $ | (7,786) | ​ | $ | 95,070 | ​ | $ | (8,322) | ​ | $ | 163,538 | ​ | $ | (16,108)
​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Securities AFS: | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
U.S. treasuries and govt. sponsored agency securities | ​ | $ | 16,574 | ​ | $ | (1,359) | ​ | $ | 2,482 | ​ | $ | (639) | ​ | $ | 19,056 | ​ | $ | (1,998)
Residential mortgage-backed and related securities | ​ |  | 59,731 | ​ |  | (2,073) | ​ |  | 18,215 | ​ |  | (2,722) | ​ |  | 77,946 | ​ |  | (4,795)
Municipal securities | ​ |  | 185,244 | ​ |  | (37,071) | ​ |  | 3,828 | ​ |  | (1,140) | ​ |  | 189,072 | ​ |  | (38,211)
Asset-backed securities | ​ | ​ | 10,722 | ​ | ​ | (212) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 10,722 | ​ | ​ | (212)
Other securities | ​ |  | 32,950 | ​ |  | (1,084) | ​ |  | — | ​ |  | — | ​ |  | 32,950 | ​ |  | (1,084)
​ | ​ | $ | 305,221 | ​ | $ | (41,799) | ​ | $ | 24,525 | ​ | $ | (4,501) | ​ | $ | 329,746 | ​ | $ | (46,300)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Less than 12 Months | ​ | 12 Months or More | ​ | Total
​ | ​ | ​ | ​ | Gross | ​ | ​ | ​ | Gross | ​ | ​ | ​ | Gross
​ | ​ | Fair | ​ | Unrealized | ​ | Fair | ​ | Unrealized | ​ | Fair | ​ | Unrealized
​ |  | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
​ | ​ | (dollars in thousands)
December 31, 2021: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Securities HTM: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Other securities | ​ | $ | 1,049 | ​ | $ | (1) | ​ | $ | — | ​ | $ | — | ​ | $ | 1,049 | ​ | $ | (1)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Securities AFS: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
U.S. treasuries and govt. sponsored agency securities | ​ | $ | 9,802 | ​ | $ | (156) | ​ | $ | 3,035 | ​ | $ | (140) | ​ | $ | 12,837 | ​ | $ | (296)
Residential mortgage-backed and related securities | ​ |  | 5,363 | ​ |  | (67) | ​ |  | 19,406 | ​ |  | (713) | ​ |  | 24,769 | ​ |  | (780)
Municipal securities | ​ |  | 13,287 | ​ |  | (211) | ​ |  | 1,001 | ​ |  | (4) | ​ |  | 14,288 | ​ |  | (215)
Other securities | ​ | ​ | 4,528 | ​ | ​ | (30) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 4,528 | ​ | ​ | (30)
​ | ​ | $ | 32,980 | ​ | $ | (464) | ​ | $ | 23,442 | ​ | $ | (857) | ​ | $ | 56,422 | ​ | $ | (1,321)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ At June 30, 2022, the investment portfolio included 699 securities. Of this number, 463 securities were in an unrealized loss position. The aggregate losses of these securities totaled approximately 6.74% of the total amortized cost of the portfolio. Of these 463 securities, there were 91 securities that had an unrealized loss for twelve months or more. ​ The following table presents the activity in the allowance for credit losses for held to maturity securities by major security type for the three and six months ended June 30, 2022 and 2021. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended June 30, 2022 | ​ | Three Months Ended June 30, 2021 | ​ | Six Months Ended June 30, 2022 | ​ | Six Months Ended June 30, 2021 | ​
​ | ​ | Municipal | ​ | Other | ​ | ​ | ​ | Municipal | ​ | Other | ​ | ​ | ​ | Municipal | ​ | Other | ​ | ​ | ​ | Municipal | ​ | Other | ​ | ​ | ​
​ |  | securities |  | securities |  | Total | ​ | securities |  | securities |  | Total | ​ | securities |  | securities |  | Total | ​ | securities |  | securities |  | Total | ​
​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Allowance for credit losses: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Beginning balance | ​ | $ | 198 | ​ | $ | — | ​ | $ | 198 | ​ | $ | 173 | ​ | $ | 1 | ​ | $ | 174 | ​ | $ | 198 | ​ | $ | — | ​ | $ | 198 | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​
Impact of adopting ASU 2016-13 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 182 | ​ | ​ | 1 | ​ | ​ | 183 | ​
Provision for credit loss expense | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (9) | ​ | ​ | — | ​ | ​ | (9) | ​
Balance, ending | ​ | $ | 198 | ​ | $ | — | ​ | $ | 198 | ​ | $ | 173 | ​ | $ | 1 | ​ | $ | 174 | ​ | $ | 198 | ​ | $ | — | ​ | $ | 198 | ​ | $ | 173 | ​ | $ | 1 | ​ | $ | 174 | ​
​ All sales of securities for the three and six months ended June 30, 2022 and June 30, 2021 were securities identified as AFS. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Three Months Ended |  | Six Months Ended |
​ | ​ | ​ | ​ | ​ | June 30, 2022 | ​ | June 30, 2021 | ​ | June 30, 2022 | ​ | June 30, 2021 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Proceeds from sales of securities | ​ | ​ | ​ | ​ | $ | 111,375 | ​ | $ | 4,334 | ​ | $ | 111,375 | ​ | $ | 23,874 | ​
Gross gains from sales of securities | ​ | ​ | ​ | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​
Gross losses from sales of securities | ​ | ​ | ​ | ​ |  | — | ​ |  | (88) | ​ |  | — | ​ |  | (88) | ​
​ Upon the GFED acquisition, the Company sold a large portion of the acquired securities portfolio to improve the efficiency of the combined balance sheets. The amortized cost and fair value of securities as of June 30, 2022 by contractual maturity are shown below. Expected maturities of residential mortgage-backed and related securities and asset-backed securities may differ from contractual maturities because the residential mortgages underlying the securities may be prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following table. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Amortized Cost |  | Fair Value
​ | ​ | (dollars in thousands)
Securities HTM: |  | ​ |  |  | ​ |
Due in one year or less | ​ | $ | 2,968 | ​ | $ | 2,974
Due after one year through five years | ​ |  | 16,632 | ​ |  | 16,589
Due after five years | ​ |  | 489,103 | ​ |  | 478,391
​ | ​ | $ | 508,703 | ​ | $ | 497,954
Securities AFS: | ​ |  |  | ​ |  |
Due in one year or less | ​ | $ | 6,773 | ​ | $ | 6,772
Due after one year through five years | ​ |  | 4,129 | ​ |  | 4,162
Due after five years | ​ |  | 300,364 | ​ |  | 259,276
​ | ​ | ​ | 311,266 | ​ | ​ | 270,210
Residential mortgage-backed and related securities | ​ | ​ | 86,000 | ​ | ​ | 81,247
Asset-backed securities | ​ |  | 20,056 | ​ |  | 19,956
​ | ​ | $ | 417,322 | ​ | $ | 371,413
​ | ​ | ​ | ​ | ​ | ​ | ​
​ Portions of the U.S. government sponsored agency securities and municipal securities contain call options, which, at the discretion of the issuer, terminate the security at par and at predetermined dates prior to the stated maturity, summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Amortized Cost |  | Fair Value
​ | ​ | (dollars in thousands)
Securities HTM: |  | ​ |  |  | ​ |
Municipal securities | ​ | $ | 309,349 | ​ | $ | 305,321
​ | ​ |  |  | ​ |  |
Securities AFS: | ​ |  |  | ​ |  |
Municipal securities | ​ | ​ | 236,628 | ​ | ​ | 198,515
Other securities | ​ |  | 46,347 | ​ |  | 45,405
​ | ​ | $ | 282,975 | ​ | $ | 243,920
​ | ​ | ​ | ​ | ​ | ​ | ​
​ As of June 30, 2022, the Company's municipal securities portfolios were comprised of general obligation bonds issued by 119 issuers with fair values totaling $116.4 million and revenue bonds issued by 185 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $583.5 million. The Company also held investments in general obligation bonds in 22 states, including eight states in which the aggregate fair value exceeded $5.0 million, and in revenue bonds in 29 states, including 12 states in which the aggregate fair value exceeded $5.0 million. As of December 31, 2021, the Company's municipal securities portfolios were comprised of general obligation bonds issued by 113 issuers with fair values totaling $114.5 million and revenue bonds issued by 165 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $575.0 million. The Company also held investments in general obligation bonds in 20 states, including seven states in which the aggregate fair value exceeded $5.0 million, and in revenue bonds in 28 states, including 13 states in which the aggregate fair value exceeded $5.0 million. Both general obligation and revenue bonds are diversified across many issuers. As of June 30, 2022 and as of December 31, 2021, the Company held revenue bonds of one issuer, located in Ohio, of which the aggregate book or market value exceeded 5% of the Company’s stockholders’ equity. The issuer’s financial condition is strong and the source of repayment is diversified. The Company monitors the investments and concentration closely. Of the general obligation and revenue bonds in the Company's portfolio, the majority are unrated bonds that represent small, private issuances. All unrated bonds were underwritten according to loan underwriting standards and have an average loan risk rating of 2, indicating very high quality. Additionally, many of these bonds are funding essential municipal services such as water, sewer, education, and medical facilities. The Company's municipal securities are owned by the four charters, whose investment policies set forth limits for various subcategories within the municipal securities portfolio. The investments of each charter are monitored individually, and as of June 2022, all were within policy limitations approved by the Company’s board of directors. Policy limits are calculated as a percentage of each charter's total risk-based capital. As of June 30, 2022, the Company's standard monitoring of its municipal securities portfolio had not uncovered any facts or circumstances resulting in significantly different credit ratings than those assigned by a nationally recognized statistical rating organization, or in the case of unrated bonds, the rating assigned using the credit underwriting standards. ​

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- Definition The entire disclosure for investment holdings. This includes the long positions of investments for the entity. It contains investments in affiliated and unaffiliated issuers. The investments include securities and non securities (i.e. commodities and futures contracts). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 6 -Subparagraph (SX 210.12-14) -URI http://asc.fasb.org/extlink&oid=122147990&loc=d3e611322-123010 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 3 -Subparagraph (SX 210.12-12B) -URI http://asc.fasb.org/extlink&oid=122147990&loc=d3e611197-123010 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 5D -Subparagraph (SX 210.12-13D) -URI http://asc.fasb.org/extlink&oid=122147990&loc=SL120429264-123010 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-12) -URI http://asc.fasb.org/extlink&oid=122147990&loc=d3e611133-123010 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 5 -Subparagraph (SX 210.12-13) -URI http://asc.fasb.org/extlink&oid=122147990&loc=d3e611282-123010 + Details
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