XML 24 R9.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Securities | 9 Months Ended
--- | ---
Sep. 30, 2016
Securities |
Securities | Note 2 – Securities Investment Portfolio Management Our investment portfolio serves the liquidity needs and income objectives of the Company. While the portfolio serves as an important component of the overall liquidity management at the Bank, portions of the portfolio also serve as income producing assets. The size and composition of the portfolio reflects liquidity needs, loan demand and interest income objectives. Portfolio size and composition will be adjusted from time to time. While a significant portion of the portfolio consists of readily marketable securities to address liquidity, other parts of the portfolio may reflect funds invested pending future loan demand or to maximize interest income without undue interest rate risk. Investments are comprised of debt securities and non-marketable equity investments. Securities available-for-sale are carried at fair value. Unrealized gains and losses, net of tax, on securities available-for-sale are reported as a separate component of equity. This balance sheet component changes as interest rates and market conditions change. Unrealized gains and losses are not included in the calculation of regulatory capital. In the second quarter of 2016, the securities held-to-maturity portfolio was reclassified to available-for-sale to allow for portfolio restructuring and to fund loan growth. This transfer of $244.8 million at net book value was approved by the Board of Directors, and will preclude any holdings of securities held-to-maturity for a two year period. In the third quarter of 2016, approximately $233.5 million of securities available-for-sale were sold to satisfy anticipated funding requirements for the acquisition of the Talmer branch. Securities losses of $2.0 million pretax were realized upon these sales. Nonmarketable equity investments include Federal Home Loan Bank of Chicago (“FHLBC”) stock and Federal Reserve Bank of Chicago (“Reserve Bank”) stock. FHLBC stock was recorded at $3.2 million at September 30, 2016, and $3.7 million at December 31, 2015. Reserve Bank stock was recorded at $4.8 million at September 30, 2016, and December 31, 2015. Our FHLBC stock is necessary to maintain access to FHLBC advances. The following table summarizes the amortized cost and fair value of the securities portfolio at September 30, 2016, and December 31, 2015, and the corresponding amounts of gross unrealized gains and losses (in thousands):
|  |  |  |  | Gross |  | Gross |  |  |
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair
September 30, 2016 |  | Cost |  | Gains |  | Losses |  | Value
Securities available-for-sale |  |  |  |  |  |  |  |
U.S. government agencies |  | $ | 1,661 |  | $ | - |  | $ | (158) |  | $ | 1,503
U.S. government agencies mortgage-backed |  |  | 42,899 |  |  | 824 |  |  | - |  |  | 43,723
States and political subdivisions |  |  | 21,489 |  |  | 765 |  |  | - |  |  | 22,254
Corporate bonds |  |  | 10,958 |  |  | - |  |  | (228) |  |  | 10,730
Collateralized mortgage obligations |  |  | 202,670 |  |  | 2,478 |  |  | (758) |  |  | 204,390
Asset-backed securities |  |  | 149,394 |  |  | 431 |  |  | (9,652) |  |  | 140,173
Collateralized loan obligations |  |  | 109,468 |  |  | - |  |  | (1,184) |  |  | 108,284
Total securities available-for-sale |  | $ | 538,539 |  | $ | 4,498 |  | $ | (11,980) |  | $ | 531,057
|  |  |  |  | Gross |  | Gross |  |  |
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair
December 31, 2015 |  | Cost |  | Gains |  | Losses |  | Value
Securities available-for-sale |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury |  | $ | 1,509 |  | $ | - |  | $ | - |  | $ | 1,509
U.S. government agencies |  |  | 1,683 |  |  | - |  |  | (127) |  |  | 1,556
U.S. government agencies mortgage-backed |  |  | 2,040 |  |  |  |  |  | (44) |  |  | 1,996
States and political subdivisions |  |  | 30,341 |  |  | 285 |  |  | (100) |  |  | 30,526
Corporate bonds |  |  | 30,157 |  |  | - |  |  | (757) |  |  | 29,400
Collateralized mortgage obligations |  |  | 68,743 |  |  | 24 |  |  | (1,847) |  |  | 66,920
Asset-backed securities |  |  | 241,872 |  |  | 74 |  |  | (10,038) |  |  | 231,908
Collateralized loan obligations |  |  | 94,374 |  |  | - |  |  | (2,123) |  |  | 92,251
Total securities available-for-sale |  | $ | 470,719 |  | $ | 383 |  | $ | (15,036) |  | $ | 456,066
Securities held-to-maturity |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agency mortgage-backed |  | $ | 36,505 |  | $ | 1,592 |  | $ | - |  | $ | 38,097
Collateralized mortgage obligations |  |  | 211,241 |  |  | 3,302 |  |  | (965) |  |  | 213,578
Total securities held-to-maturity |  | $ | 247,746 |  | $ | 4,894 |  | $ | (965) |  | $ | 251,675
The fair value, amortized cost and weighted average yield of debt securities at September 30, 2016, by contractual maturity, were as follows in the table below. Securities not due at a single maturity date are shown separately.
|  |  |  |  | Weighted |  |  |  |  |
|  | Amortized |  | Average |  |  | Fair |
Securities available-for-sale |  | Cost |  | Yield |  |  | Value |
Due in one year or less |  | $ | 410 |  | 4.60 | % |  | $ | 420 |
Due after one year through five years |  |  | 11,575 |  | 2.31 |  |  |  | 11,734 |
Due after five years through ten years |  |  | 18,573 |  | 2.43 |  |  |  | 18,538 |
Due after ten years |  |  | 3,550 |  | 2.77 |  |  |  | 3,795 |
|  |  | 34,108 |  | 2.45 |  |  |  | 34,487 |
Mortgage-backed and collateralized mortgage obligations |  |  | 245,569 |  | 2.43 |  |  |  | 248,113 |
Asset-backed securities |  |  | 149,394 |  | 1.95 |  |  |  | 140,173 |
Collateralized loan obligations |  |  | 109,468 |  | 3.66 |  |  |  | 108,284 |
Total securities available-for-sale |  | $ | 538,539 |  | 2.55 | % |  | $ | 531,057 |
At September 30, 2016, the Company’s investments include $118.9 million of asset-backed securities that are backed by student loans originated under the Federal Family Education Loan program (“FFEL”). Under the FFEL, private lenders made federally guaranteed student loans to parents and students and packaged and sold them as asset-backed securities. While the program was modified several times before elimination in 2010, not less than 97% of the outstanding principal amount of the loans made under FFEL are guaranteed by the U.S. Department of Education. In addition to the U.S. Department of Education guarantee, total added credit enhancement in the form of overcollateralization and/or subordination amounted to $12.8 million, or 9.62%, of outstanding principal. Securities with unrealized losses at September 30, 2016, and December 31, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands except for number of securities):
|  | Less than 12 months |  | 12 months or more |  |  |  |  |  |  |  |
September 30, 2016 |  | in an unrealized loss position |  | in an unrealized loss position |  | Total
|  | Number of |  | Unrealized |  | Fair |  | Number of |  | Unrealized |  | Fair |  | Number of |  | Unrealized |  | Fair
Securities available-for-sale |  | Securities |  | Losses |  | Value |  | Securities |  | Losses |  | Value |  | Securities |  | Losses |  | Value
U.S. government agencies |  | - |  | $ | - |  | $ | - |  | 1 |  | $ | 158 |  | $ | 1,503 |  | 1 |  | $ | 158 |  | $ | 1,503
Corporate bonds |  | 2 |  |  | 52 |  |  | 5,423 |  | 2 |  |  | 176 |  |  | 5,307 |  | 4 |  |  | 228 |  |  | 10,730
Collateralized mortgage obligations |  | 10 |  |  | 415 |  |  | 50,958 |  | 6 |  |  | 343 |  |  | 17,020 |  | 16 |  |  | 758 |  |  | 67,978
Asset-backed securities |  | 6 |  |  | 694 |  |  | 23,817 |  | 10 |  |  | 8,958 |  |  | 99,432 |  | 16 |  |  | 9,652 |  |  | 123,249
Collateralized loan obligations |  | 2 |  |  | 48 |  |  | 11,947 |  | 12 |  |  | 1,136 |  |  | 81,337 |  | 14 |  |  | 1,184 |  |  | 93,284
Total securities available-for-sale |  | 20 |  | $ | 1,209 |  | $ | 92,145 |  | 31 |  | $ | 10,771 |  | $ | 204,599 |  | 51 |  | $ | 11,980 |  | $ | 296,744
|  | Less than 12 months |  | 12 months or more |  |  |  |  |  |  |  |
December 31, 2015 |  | in an unrealized loss position |  | in an unrealized loss position |  | Total
|  | Number of |  | Unrealized |  |  | Fair |  | Number of |  | Unrealized |  |  | Fair |  | Number of |  | Unrealized |  |  | Fair
Securities available-for-sale |  | Securities |  | Losses |  |  | Value |  | Securities |  | Losses |  |  | Value |  | Securities |  | Losses |  |  | Value
U.S. government agencies |  | - |  | $ | - |  | $ | - |  | 1 |  | $ | 127 |  | $ | 1,556 |  | 1 |  | $ | 127 |  | $ | 1,556
U.S. government agencies mortgage-backed |  | 1 |  |  | 44 |  |  | 1,996 |  | - |  |  | - |  |  | - |  | 1 |  |  | 44 |  |  | 1,996
States and political subdivisions |  | 2 |  |  | 19 |  |  | 1,541 |  | 1 |  |  | 81 |  |  | 1,713 |  | 3 |  |  | 100 |  |  | 3,254
Corporate bonds |  | 5 |  |  | 292 |  |  | 14,866 |  | 3 |  |  | 465 |  |  | 14,534 |  | 8 |  |  | 757 |  |  | 29,400
Collateralized mortgage obligations |  | 4 |  |  | 334 |  |  | 16,218 |  | 7 |  |  | 1,513 |  |  | 43,618 |  | 11 |  |  | 1,847 |  |  | 59,836
Asset-backed securities |  | 9 |  |  | 2,080 |  |  | 78,301 |  | 8 |  |  | 7,958 |  |  | 121,217 |  | 17 |  |  | 10,038 |  |  | 199,518
Collateralized loan obligations |  | 5 |  |  | 446 |  |  | 29,480 |  | 9 |  |  | 1,677 |  |  | 62,771 |  | 14 |  |  | 2,123 |  |  | 92,251
Total securities available-for-sale |  | 26 |  | $ | 3,215 |  | $ | 142,402 |  | 29 |  | $ | 11,821 |  | $ | 245,409 |  | 55 |  | $ | 15,036 |  | $ | 387,811
Securities held-to-maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collateralized mortgage obligations |  | 8 |  | $ | 505 |  | $ | 40,307 |  | 2 |  | $ | 460 |  | $ | 33,842 |  | 10 |  | $ | 965 |  | $ | 74,149
Total securities held-to-maturity |  | 8 |  | $ | 505 |  | $ | 40,307 |  | 2 |  | $ | 460 |  | $ | 33,842 |  | 10 |  | $ | 965 |  | $ | 74,149
Recognition of other-than-temporary impairment was not necessary in the three and nine months ending September 30, 2016, or the year ended December 31, 2015. The changes in fair value related primarily to interest rate fluctuations. Our review of other-than-temporary impairment determined that there was no credit quality deterioration.

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsDebtAndEquitySecuritiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Debt Security -URI http://asc.fasb.org/extlink&oid=6509901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27290-111563 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6379141&loc=d3e15032-111544 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27232-111563 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Equity Security -URI http://asc.fasb.org/extlink&oid=6511694 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27161-111563 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27357-111563 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27405-111563 + Details
Name: | us-gaap_InvestmentsInDebtAndMarketableEquitySecuritiesAndCertainTradingAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration