XML 23 R10.htm IDEA: XBRL DOCUMENT

Note 2 - Securities

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 2 – SECURITIES

The amortized cost and fair value of available for sale securities and the related pre-tax gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows at year-end 2022 and 2021:

						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
2022
U.S. Government agency debt obligations		$	453,836,000			$	0			$	(65,092,000	)		$	388,744,000
Mortgage-backed securities			38,002,000				19,000				(6,068,000	)			31,953,000
Municipal general obligation bonds			163,041,000				450,000				(9,058,000	)			154,433,000
Municipal revenue bonds			30,267,000				102,000				(3,063,000	)			27,306,000
Other investments			500,000				0				0				500,000
		$	685,646,000			$	571,000			$	(83,281,000	)		$	602,936,000
2021
U.S. Government agency debt obligations		$	398,874,000			$	266,000			$	(8,769,000	)		$	390,371,000
Mortgage-backed securities			41,906,000				549,000				(652,000	)			41,803,000
Municipal general obligation bonds			133,894,000				4,092,000				(392,000	)			137,594,000
Municipal revenue bonds			22,289,000				331,000				(145,000	)			22,475,000
Other investments			500,000				0				0				500,000
		$	597,463,000			$	5,238,000			$	(9,958,000	)		$	592,743,000

Securities with unrealized losses at year-end 2022 and 2021, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:

		Less than 12 Months								12 Months or More								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
Description of Securities		Value				Loss				Value				Loss				Value				Loss
2022
U.S. Government agency debt obligations		$	53,019,000			$	5,713,000			$	335,725,000			$	59,379,000			$	388,744,000			$	65,092,000
Mortgage-backed securities			31,127,000				6,068,000				12,000				0				31,139,000				6,068,000
Municipal general obligation bonds			97,252,000				4,516,000				32,870,000				4,542,000				130,122,000				9,058,000
Municipal revenue bonds			12,532,000				1,141,000				10,609,000				1,922,000				23,141,000				3,063,000
Other investments			0				0				0				0				0				0
		$	193,930,000			$	17,438,000			$	379,216,000			$	65,843,000			$	573,146,000			$	83,281,000
2021
U.S. Government agency debt obligations		$	274,287,000			$	5,274,000			$	110,053,000			$	3,495,000			$	384,340,000			$	8,769,000
Mortgage-backed securities			23,184,000				652,000				24,000				0				23,208,000				652,000
Municipal general obligation bonds			40,748,000				392,000				0				0				40,748,000				392,000
Municipal revenue bonds			12,843,000				137,000				414,000				8,000				13,257,000				145,000
Other investments			0				0				0				0				0				0
		$	351,062,000			$	6,455,000			$	110,491,000			$	3,503,000			$	461,553,000			$	9,958,000

We evaluate securities in an unrealized loss position at least quarterly. Consideration is given to the financial condition of the issuer, and the intent and ability we have to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. For those debt securities whose fair value is less than their amortized cost basis, we also consider our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and if we do not expect to recover the entire amortized cost basis of the security. In analyzing an issuer’s financial condition, we may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition.

At December 31, 2022, 732 debt securities with estimated fair values totaling $573 million had unrealized losses aggregating $83.3 million. At December 31, 2021, 333 debt securities with estimated fair values totaling $462 million had unrealized losses aggregating $10.0 million. At December 31, 2022, unrealized losses aggregating $71.2 million were attributable to bonds issued or guaranteed by agencies of the U.S. federal government, while unrealized losses totaling $12.1 million were associated with bonds issued by state-based municipalities. After considering the issuers of the bonds, and taking into account the fact that no municipal issuer had been subject to a credit rating downgrade by bond credit rating agencies, we determined that the unrealized losses were due to changing interest rate environments. As we do not intend to sell our debt securities before recovery of their cost basis and we believe it is more likely than not that we will not be required to sell our debt securities before recovery of the cost basis, no unrealized losses are deemed to be other-than-temporary.

The amortized cost and fair values of debt securities at December 31, 2022, by maturity, are shown in the following table. The contractual maturity is utilized for U.S. Government agency debt obligations and municipal bonds. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately. Weighted average yields are also reflected, with yields for municipal securities shown at their tax equivalent yield.

		Weighted				Amortized				Fair
		Average Yield				Cost				Value
Due in one year or less			0.76%			$	21,278,000			$	20,732,000
Due from one to five years			1.22				249,262,000				227,357,000
Due from five to ten years			1.88				318,700,000				271,652,000
Due after ten years			3.03				57,904,000				50,742,000
Mortgage-backed securities			2.10				38,002,000				31,953,000
Other investments			4.94				500,000				500,000
			1.72%			$	685,646,000			$	602,936,000

No securities were sold during the last three years.

Securities issued by the State of Michigan and all its political subdivisions had a combined amortized cost of $193 million and $155 million at December 31, 2022 and December 31, 2021, respectively, with estimated market values of $182 million and $158 million at the respective dates. We had no securities issued by all other states and their political subdivisions as of December 31, 2022. Securities issued by all other states and their political subdivisions had a combined amortized cost of $1.7 million with estimated market values of $1.7 million as of December 31, 2021. Total securities of any other specific issuer, other than the U.S. Government and its agencies and the State of Michigan and all its political subdivisions, did not exceed 10% of shareholders’ equity.

The carrying value of U.S. Government agency debt obligations and mortgage-backed securities that are pledged to secure repurchase agreements was $194 million and $197 million at December 31, 2022 and 2021, respectively. Investments in FHLBI stock are restricted and may only be resold to, or redeemed by, the issuer.