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Securities

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

The amortized cost and fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

						As of June 30, 2023
						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
						(In Thousands)
Available-for-sale:
U.S. treasuries						$	9,105					$	1					$	(508)					8,598
U.S. government agency securities - government-sponsored enterprises						29,202						52						(625)						28,629
Municipal securities						41,108						—						(5,344)						35,764
Residential mortgage-backed securities - government issued						33,845						—						(2,837)						31,008
Residential mortgage-backed securities - government-sponsored enterprises						132,823						11						(13,016)						119,818
Commercial mortgage-backed securities - government issued						3,343						—						(535)						2,808
Commercial mortgage-backed securities - government-sponsored enterprises						32,134						—						(5,133)						27,001
						$	281,560					$	64					$	(27,998)					$	253,626

						As of December 31, 2022
						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
						(In Thousands)
Available-for-sale:
U.S. treasuries						$	4,977					$	—					$	(532)					$	4,445
U.S. government agency securities - government-sponsored enterprises						13,666						70						(531)						13,205
Municipal securities						45,088						90						(5,867)						39,311
Residential mortgage-backed securities - government issued						21,790						—						(2,359)						19,431
Residential mortgage-backed securities - government-sponsored enterprises						119,265						—						(12,942)						106,323
Commercial mortgage-backed securities - government issued						3,450						—						(518)						2,932
Commercial mortgage-backed securities - government-sponsored enterprises						31,515						—						(5,138)						26,377
						$	239,751					$	160					$	(27,887)					$	212,024

The amortized cost and fair value of securities held-to-maturity and the corresponding amounts of gross unrecognized gains and losses were as follows:

						As of June 30, 2023
						Amortized Cost						Gross Unrecognized Gains						Gross Unrecognized Losses						Fair Value
						(In Thousands)
Held-to-maturity:
Municipal securities						$	5,168					$	—					$	(72)					$	5,096
Residential mortgage-backed securities - government issued						1,415						—						(101)						1,314
Residential mortgage-backed securities - government-sponsored enterprises						1,242						—						(78)						1,164
Commercial mortgage-backed securities - government-sponsored enterprises						2,005						—						(110)						1,895
						$	9,830					$	—					$	(361)					$	9,469

						As of December 31, 2022
						Amortized Cost						Gross Unrecognized Gains						Gross Unrecognized Losses						Fair Value
						(In Thousands)
Held-to-maturity:
Municipal securities						$	7,467					$	7					$	(70)					$	7,404
Residential mortgage-backed securities - government issued						1,625						—						(107)						1,518
Residential mortgage-backed securities - government-sponsored enterprises						1,537						—						(93)						1,444
Commercial mortgage-backed securities - government-sponsored enterprises						2,006						—						(102)						1,904
						$	12,635					$	7					$	(372)					$	12,270

U.S. Treasuries contain treasury bonds issued by the United States Treasury. U.S. government agency securities - government-sponsored enterprises represent securities issued by Federal National Mortgage Association (“FNMA”) and the SBA. Municipal securities include securities issued by various municipalities located primarily within Wisconsin and are primarily general obligation bonds that are tax-exempt in nature. Residential and commercial mortgage-backed securities - government issued represent securities guaranteed by the Government National Mortgage Association. Residential and commercial mortgage-backed securities - government-sponsored enterprises include securities guaranteed by the Federal Home Loan Mortgage Corporation, FNMA, and the FHLB. The Corporation sold 16 available-for-sale securities during the three and six months ended June 30, 2023 and none during the three and six months ended June 30, 2022.

At June 30, 2023 and December 31, 2022, securities with a fair value of $46.0 million and $35.9 million, respectively, were pledged to secure various obligations, including interest rate swap contracts and municipal deposits.

The amortized cost and fair value of securities by contractual maturity at June 30, 2023 are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay certain obligations with or without call or prepayment penalties.

						Available-for-Sale												Held-to-Maturity
						Amortized Cost						Fair Value						Amortized Cost						Fair Value
						(In Thousands)
Due in one year or less						$	16,023					$	15,968					$	1,760					$	1,747
Due in one year through five years						17,490						16,197						3,006						2,952
Due in five through ten years						14,973						13,662						402						397
Due in over ten years						30,929						27,164						—						—
						79,415						72,991						5,168						5,096
Residential mortgage-backed securities						166,668						150,826						2,657						2,478
Commercial mortgage-backed securities						35,477						29,809						2,005						1,895
						$	281,560					$	253,626					$	9,830					$	9,469

The tables below show the Corporation’s gross unrealized losses and fair value of available-for-sale investments aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2023 and December 31, 2022. At June 30, 2023, the Corporation held 180 available-for-sale securities that were in an unrealized loss position. At June 30, 2023, the Corporation held 144 available-for-sale securities that have been in a continuous unrealized loss position for twelve months or greater.

The Corporation also has not specifically identified available-for-sale securities in a loss position that it intends to sell in the near term and does not believe that it will be required to sell any such securities. The Corporation reviews its securities on a quarterly basis to assess declines in fair value for credit losses. Consideration is given to such factors as the credit rating of the borrower, market conditions such as current interest rates, any adverse conditions specific to the security, and delinquency status on contractual payments. For the three and six months ended June 30, 2023 and 2022, management concluded that in all instances securities with fair value less than carrying value was due to market and other factors; thus, no credit loss provision was required.

A summary of unrealized loss information for securities available-for-sale, categorized by security type and length of time for which the security has been in a continuous unrealized loss position, follows:

						As of June 30, 2023
						Less than 12 Months												12 Months or Longer												Total
						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses
						(In Thousands)
Available-for-sale:
U.S. treasuries						$	—					$	—					$	4,472					$	508					$	4,472					$	508
U.S. government agency securities - government-sponsored enterprises						16,287						115						2,990						510						19,277						625
Municipal securities						999						23						34,765						5,321						35,764						5,344
Residential mortgage-backed securities - government issued						19,960						699						11,048						2,138						31,008						2,837
Residential mortgage-backed securities - government-sponsored enterprises						43,820						1,290						74,153						11,726						117,973						13,016
Commercial mortgage-backed securities - government issued						—						—						2,808						535						2,808						535
Commercial mortgage-backed securities - government-sponsored enterprises						886						32						26,115						5,101						27,001						5,133
						$	81,952					$	2,159					$	156,351					$	25,839					$	238,303					$	27,998

						As of December 31, 2022
						Less than 12 Months												12 Months or Longer												Total
						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses
						(In Thousands)
Available-for-sale:
U.S. treasuries						$	—					$	—					$	4,446					$	532					$	4,446					$	532
U.S. government agency securities - government-sponsored enterprises						—						—						2,969						531						2,969						531
Municipal securities						26,759						3,132						10,133						2,735						36,892						5,867
Residential mortgage-backed securities - government issued						9,624						436						9,807						1,923						19,431						2,359
Residential mortgage-backed securities - government-sponsored enterprises						71,474						6,433						34,849						6,509						106,323						12,942
Commercial mortgage-backed securities - government issued						1,236						112						1,696						406						2,932						518
Commercial mortgage-backed securities - government-sponsored enterprises						7,758						984						18,619						4,154						26,377						5,138
						$	116,851					$	11,097					$	82,519					$	16,790					$	199,370					$	27,887

The tables below show the Corporation’s gross unrealized losses and fair value of held-to-maturity investments, aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2023 and December 31, 2022. At June 30, 2023, the Corporation held 34 held-to-maturity securities that were in an unrealized loss position. At June 30, 2023, the Corporation held 15 held-to-maturity securities that have been in a continuous unrealized loss position for twelve months or greater. Management assesses held-to-maturity securities for credit losses on a quarterly basis.

The assessment includes review of credit ratings, identification of delinquency and evaluation of market factors. Based on this analysis, management concludes the decline in fair value is due to market factors, specifically changes in interest rates. Accordingly, no credit loss provision was recorded in the unaudited Consolidated Statements of Income for the three and six months ended June 30, 2023 and 2022.

A summary of unrecognized loss information for securities held-to-maturity, categorized by security type and length of time for which the security has been in a continuous unrealized loss position, follows:

						As of June 30, 2023
						Less than 12 Months												12 Months or Longer												Total
						Fair Value						Unrecognized Losses						Fair Value						Unrecognized Losses						Fair Value						Unrecognized Losses
						(In Thousands)
Held-to-maturity:
Municipal securities						$	4,764					$	54					$	332					$	18					$	5,096					$	72
Residential mortgage-backed securities - government issued						—						—						1,314						101						1,314						101
Residential mortgage-backed securities - government-sponsored enterprises						221						19						943						59						1,164						78
Commercial mortgage-backed securities - government-sponsored enterprises						1,895						110						—						—						1,895						110
						$	6,880					$	183					$	2,589					$	178					$	9,469					$	361

						As of December 31, 2022
						Less than 12 Months												12 Months or Longer												Total
						Fair Value						Unrecognized Losses						Fair Value						Unrecognized Losses						Fair Value						Unrecognized Losses
						(In Thousands)
Held-to-maturity:
Municipal securities						$	6,035					$	52					$	267					$	18					$	6,302					$	70
Residential mortgage-backed securities - government issued						1,518						107						—						—						1,518						107
Residential mortgage-backed securities - government-sponsored enterprises						1,444						93						—						—						1,444						93
Commercial mortgage-backed securities - government-sponsored enterprises						1,904						102						—						—						1,904						102
						$	10,901					$	354					$	267					$	18					$	11,168					$	372

On January 1, 2023, the Corporation adopted ASU 2016-13, which replaced the legacy GAAP other-than-temporary impairment (“OTTI”) model with a credit loss model. ASU 2016-13 requires an allowance on lifetime expected credit losses on held to maturity debt securities. As of January 1, 2023 and June 30, 2023, the Corporation estimated the expected credit losses to be immaterial based on the composition of the securities portfolio.

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- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

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-Topic 320
-Name Accounting Standards Codification
-Publisher FASB
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