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Note 3 - Investment Securities | 12 Months Ended
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Dec. 31, 2022
Notes to Financial Statements |
Investment Securities | Note 3. Investment Securities The amortized cost and fair value of investment securities as of December 31, 2022 and 2021 are summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Gross | ​ | Gross | ​ | ​ | ​ | ​
​ | ​ | Amortized | ​ | Unrealized | ​ | Unrealized | ​ | Fair | ​
​ |  | Cost* |  | Gains |  | (Losses) |  | Value |
​ | ​ | (dollars in thousands)
December 31, 2022: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Securities HTM: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Municipal securities | ​ | $ | 586,272 | ​ | $ | 5,292 | ​ | $ | (56,978) | ​ | $ | 534,586 | ​
Other securities | ​ |  | 1,050 | ​ |  | — | ​ |  | — | ​ |  | 1,050 | ​
​ | ​ | $ | 587,322 | ​ | $ | 5,292 | ​ | $ | (56,978) | ​ | $ | 535,636 | ​
​ | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Securities AFS: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
U.S. treasuries and govt. sponsored agency securities | ​ | $ | 19,745 | ​ | $ | 19 | ​ | $ | (2,783) | ​ | $ | 16,981 | ​
Residential mortgage-backed and related securities | ​ |  | 73,438 | ​ |  | — | ​ |  | (7,223) | ​ |  | 66,215 | ​
Municipal securities | ​ |  | 239,812 | ​ |  | 66 | ​ |  | (46,700) | ​ |  | 193,178 | ​
Asset-backed securities | ​ | ​ | 18,885 | ​ | ​ | 48 | ​ | ​ | (205) | ​ | ​ | 18,728 | ​
Other securities | ​ |  | 48,631 | ​ |  | 27 | ​ |  | (2,800) | ​ |  | 45,858 | ​
​ | ​ | $ | 400,511 | ​ | $ | 160 | ​ | $ | (59,711) | ​ | $ | 340,960 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ * HTM securities shown on the balance sheet of $587.1 million represent amortized cost of $587.3 million, net of allowance for credit losses of $180 thousand as of December 31, 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 represent 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 municipalities are located primarily within the Midwest. The municipal debt investments are underwritten using specific guidelines with ongoing monitoring. ​ Note 3. Investment Securities (continued) 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 commercial 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 December 31, 2022 and 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)
December 31, 2022: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Securities HTM: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Municipal securities | ​ | $ | 347,651 | ​ | $ | (56,978) | ​ | $ | — | ​ | $ | — | ​ | $ | 347,651 | ​ | $ | (56,978)
​ | ​ | $ | 347,651 | ​ | $ | (56,978) | ​ | $ | — | ​ | $ | — | ​ | $ | 347,651 | ​ | $ | (56,978)
​ | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Securities AFS: | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
U.S. treasuries and govt. sponsored agency securities | ​ | $ | 5,138 | ​ | $ | (326) | ​ | $ | 10,591 | ​ | $ | (2,457) | ​ | $ | 15,729 | ​ | $ | (2,783)
Residential mortgage-backed and related securities | ​ |  | 48,469 | ​ |  | (3,327) | ​ |  | 17,690 | ​ |  | (3,896) | ​ |  | 66,159 | ​ |  | (7,223)
Municipal securities | ​ |  | 178,172 | ​ |  | (42,661) | ​ |  | 9,809 | ​ |  | (4,039) | ​ |  | 187,981 | ​ |  | (46,700)
Asset-backed securities | ​ | ​ | 13,684 | ​ | ​ | (205) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 13,684 | ​ | ​ | (205)
Other securities | ​ |  | 35,206 | ​ |  | (2,404) | ​ |  | 4,122 | ​ |  | (396) | ​ |  | 39,328 | ​ |  | (2,800)
​ | ​ | $ | 280,669 | ​ | $ | (48,923) | ​ | $ | 42,212 | ​ | $ | (10,788) | ​ | $ | 322,881 | ​ | $ | (59,711)
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 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 December 31, 2022, the investment portfolio included 695 securities. Of this number, 607 securities were in an unrealized loss position. The aggregate losses of these securities totaled approximately 11.81% of the total aggregate amortized cost. Of these 607 securities, 39 securities had an unrealized loss for 12 months or more. ​ Note 3. Investment Securities (continued) On January 1, 2021, the Company adopted ASU 2016-13, which replaced the legacy GAAP OTTI model with a credit loss model. ASU 2016-13 requires an allowance on lifetime expected credit losses on held to maturity debt securities. The following table presents the activity in the allowance for credit losses held to maturity securities by major security type for the years ended December 31, 2022 and 2021. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31, 2022 | ​ | Year Ended December 31, 2021 | ​
​ | ​ | Municipal | ​ | Other | ​ | ​ | ​ | Municipal | ​ | Other | ​ | ​ | ​
​ |  | securities |  | securities |  | Total | ​ | securities |  | securities |  | Total | ​
​ |  | (dollars in thousands)
Allowance for credit losses: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Beginning balance | ​ | $ | 198 | ​ | $ | — | ​ | $ | 198 | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​
Impact of adopting ASU 2016-13 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 182 | ​ | ​ | 1 | ​ | ​ | 183 | ​
Provision for credit loss expense | ​ | ​ | (18) | ​ | ​ | — | ​ | ​ | (18) | ​ | ​ | 16 | ​ | ​ | (1) | ​ | ​ | 15 | ​
Balance, ending | ​ | $ | 180 | ​ | $ | — | ​ | $ | 180 | ​ | $ | 198 | ​ | $ | — | ​ | $ | 198 | ​
​ The credit loss model under ASU 2016-13, applicable to AFS debt securities, requires the recognition of credit losses through an allowance account, but retains the concept from the OTTI model that credit losses are recognized once securities become impaired. See Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies” included in this Form 10-K, for a discussion of the impact of the adoption of ASU 2016-13. All sales of securities for the years ended December 31, 2022, 2021 and 2020, respectively, were from securities identified as AFS. Information on proceeds received, as well as the gains and losses from the sale of those securities are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ |  | 2022 |  | 2021 |  | 2020
​ | ​ | ​ | ​ | ​ | ​ | (dollars in thousands)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Proceeds from sales of securities | ​ | ​ | ​ | ​ | ​ | $ | 111,375 | ​ | $ | 23,874 | ​ | $ | 38,562
Gross gains from sales of securities | ​ | ​ | ​ | ​ | ​ |  | — | ​ |  | — | ​ |  | 2,553
Gross losses from sales of securities | ​ | ​ | ​ | ​ | ​ |  | — | ​ |  | (88) | ​ |  | (69)
​ Subsequent to the closing of the GFED acquisition, the Company sold $111.4 million of the acquired securities portfolio to improve the efficiency of the combined balance sheets. These were the only securities sales for the year ended December 31, 2022. The amortized cost and fair value of securities as of December 31, 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 mortgages underlying the securities may be called or 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 | ​ | $ | 2,902 | ​ | $ | 2,895
Due after one year through five years | ​ |  | 18,998 | ​ |  | 19,359
Due after five years | ​ |  | 565,422 | ​ |  | 513,382
​ | ​ | $ | 587,322 | ​ | $ | 535,636
Securities AFS: | ​ |  |  | ​ |  |
Due in one year or less | ​ | $ | 4,522 | ​ | $ | 4,510
Due after one year through five years | ​ |  | 4,159 | ​ |  | 4,135
Due after five years | ​ |  | 299,507 | ​ |  | 247,372
​ | ​ | ​ | 308,188 | ​ | ​ | 256,017
Residential mortgage-backed and related securities | ​ | ​ | 73,438 | ​ | ​ | 66,215
Asset-backed securities | ​ |  | 18,885 | ​ |  | 18,728
​ | ​ | $ | 400,511 | ​ | $ | 340,960
​ | ​ | ​ | ​ | ​ | ​ | ​
​ Note 3. Investment Securities (continued) 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 | ​ | $ | 330,576 | ​ | $ | 296,851
​ | ​ |  |  | ​ |  |
Securities AFS: | ​ |  |  | ​ |  |
Municipal securities | ​ | ​ | 235,334 | ​ | ​ | 188,707
Other securities | ​ |  | 47,681 | ​ |  | 44,923
​ | ​ | $ | 283,015 | ​ | $ | 233,630
​ As of December 31, 2022 and 2021, investment securities with a carrying value of $47.0 million and $246.5 million, respectively, were pledged on public deposits, FHLB advances, derivative liabilities, and in connection with a Goldman Sachs cash management program. As of December 31, 2022, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 118 issuers with fair values totaling $110.6 million and revenue bonds issued by 181 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $617.2 million. The Company held investments in general obligation bonds in 22 states, including seven states in which the aggregate fair value exceeded $5.0 million. The Company held investments 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 held investments in general obligation bonds in 20 states, including seven states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in 25 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 December 31, 2022 and 2021, the Company held revenue bonds of two issuers, located in Ohio, the aggregate book or market value of which exceeded 5% of the Company’s stockholders’ equity. The issuers’ financial condition is strong and the source of repayment is diversified. The Company monitors the investment 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 risk rating of 2, indicating very high quality. Additionally, many of these bonds are funding essential municipal services (water, sewer, education, medical facilities). The Company’s municipal securities are owned by each of 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 December 31, 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 December 31, 2022, the Company’s standard monitoring of its municipal securities portfolio had not uncovered any facts or circumstances resulting in significantly different credits 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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=122147990&loc=d3e611282-123010 + Details
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