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Note 2 - Securities

12 Months Ended

Dec. 31, 2024

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 gain/(loss) were as follows at year-end 2024 and 2023:

						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
(Dollars in thousands)		Cost				Gains				Losses				Value
2024
U.S. Government agency debt obligations		$	542,676			$	131			$	(47,226	)		$	495,581
Mortgage-backed securities			31,696				4				(6,332	)			25,368
Municipal general obligation bonds			187,484				513				(7,827	)			180,170
Municipal revenue bonds			31,066				89				(2,422	)			28,733
Other investments			500				0				0				500
		$	793,422			$	737			$	(63,807	)		$	730,352
2023
U.S. Government agency debt obligations		$	442,496			$	0			$	(52,000	)		$	390,496
Mortgage-backed securities			35,168				20				(5,715	)			29,473
Municipal general obligation bonds			172,126				1,924				(6,190	)			167,860
Municipal revenue bonds			30,708				262				(2,207	)			28,763
Other investments			500				0				0				500
		$	680,998			$	2,206			$	(66,112	)		$	617,092

Securities with unrealized losses at year-end 2024 and 2023, 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
(Dollars in thousands)		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
Description of Securities		Value				Loss				Value				Loss				Value				Loss
2024
U.S. Government agency debt obligations		$	113,942			$	2,379			$	361,171			$	44,847			$	475,113			$	47,226
Mortgage-backed securities			194				1				24,865				6,331				25,059				6,332
Municipal general obligation bonds			63,387				1,117				92,153				6,710				155,540				7,827
Municipal revenue bonds			2,840				28				21,865				2,394				24,705				2,422
Other investments			0				0				0				0				0				0
		$	180,363			$	3,525			$	500,054			$	60,282			$	680,417			$	63,807
2023
U.S. Government agency debt obligations		$	0			$	0			$	390,496			$	52,000			$	390,496			$	52,000
Mortgage-backed securities			114				0				28,749				5,715				28,863				5,715
Municipal general obligation bonds			1,109				6				106,171				6,184				107,280				6,190
Municipal revenue bonds			1,506				8				20,602				2,199				22,108				2,207
Other investments			0				0				0				0				0				0
		$	2,729			$	14			$	546,018			$	66,098			$	548,747			$	66,112

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, 2024, 843 debt securities with estimated fair values totaling $680 million had unrealized losses aggregating $63.8 million. At December 31, 2023, 641 debt securities with estimated fair values totaling $549 million had unrealized losses aggregating $66.1 million. At December 31, 2024, unrealized losses aggregating $53.6 million were attributable to bonds issued or guaranteed by agencies of the U.S. federal government, while unrealized losses totaling $10.2 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 represent credit losses.

The amortized cost and fair values of debt securities at December 31, 2024, 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.

		Amortized				Fair
(Dollars in thousands)		Cost				Value
Due in one year or less		$	57,905			$	56,773
Due from one to five years			325,614				304,620
Due from five to ten years			314,543				281,808
Due after ten years			63,164				61,283
Mortgage-backed securities			31,696				25,368
Other investments			500				500
		$	793,422			$	730,352

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 $219 million and $203 million at December 31, 2024 and December 31, 2023, respectively, with estimated market values of $209 million and $197 million at the respective dates. We had no securities issued by all other states and their political subdivisions as of December 31, 2024 or December 31, 2023. 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 $122 million and $230 million at December 31, 2024 and 2023, respectively. The carrying value of U.S. Government agency debt obligations that are pledged to secure specific customer deposits was $11.7 million as of December 31, 2024. We had no U.S. Government agency debt obligations pledged to specific customer deposits as of December 31, 2023. Investments in FHLBI stock are restricted and may only be resold to, or redeemed by, the issuer.