Securities

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

(3) Securities

The amortized cost and fair market value of available-for-sale securities and the related gross unrealized gains and losses recognized were as follows:


September 30, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	71,255	$	457	$	(2,514	)	$	69,198
Obligations of states and political subdivisions		356,332		2,162		(20,689	)		337,805
Mortgage-backed securities in government sponsored entities		244,078		297		(24,590	)		219,785
Total debt securities (1)	$	671,665	$	2,916	$	(47,793	)	$	626,788


December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	71,418	$	315	$	(4,075	)	$	67,658
Obligations of states and political subdivisions		359,452		2,725		(23,578	)		338,599
Mortgage-backed securities in government sponsored entities		242,022		19		(30,026	)		212,015
Total debt securities (1)	$	672,892	$	3,059	$	(57,679	)	$	618,272

        (1) Excludes accrued interest securities receivable of $3,726 and $4,392 at September 30, 2024 and December 31, 2023, respectively, that is recorded in other assets on the consolidated balance sheets.

       

The amortized cost and fair value of debt securities at September 30, 2024, by contractual maturity, is shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.


Available for sale	Amortized Cost		Fair Value
Due in one year or less	$	5,975	$	5,972
Due after one year through five years		89,919		85,907
Due after five years through ten years		43,180		42,988
Due after ten years		288,513		272,136
Mortgage-backed securities		244,078		219,785
Total securities available-for-sale	$	671,665	$	626,788

There were no proceeds from sales of debt securities available-for-sale, gross realized gains or gross realized losses as of September 30, 2024 or September 30, 2023.

Securities are pledged by the Company from time to time to secure public deposits, other deposits and liabilities as required by law. The carrying value of pledged securities was approximately $210,563 and $211,616 as of September 30, 2024 and December 31, 2023, respectively.

The following tables show 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 at September 30, 2024 and December 31, 2023:


September 30, 2024	12 Months or less					More than 12 months					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	—	$	—		$	55,627	$	(2,514	)	$	55,627	$	(2,514	)
Obligations of states and political subdivisions		21,290		(67	)		175,189		(20,622	)		196,479		(20,689	)
Mortgage-backed securities in gov’t sponsored entities		—		—			197,991		(24,590	)		197,991		(24,590	)
Total	$	21,290	$	(67	)	$	428,807	$	(47,726	)	$	450,097	$	(47,793	)


December 31, 2023	12 Months or less					More than 12 months					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	224	$	(1	)	$	56,760	$	(4,074	)	$	56,984	$	(4,075	)
Obligations of states and political subdivisions		19,168		(78	)		162,291		(23,500	)		181,459		(23,578	)
Mortgage-backed securities in gov’t sponsored entities		20,112		(522	)		189,319		(29,504	)		209,431		(30,026	)
Total	$	39,504	$	(601	)	$	408,370	$	(57,078	)	$	447,874	$	(57,679	)

At September 30, 2024, there were a total of 387 securities in the portfolio with unrealized losses mainly due to higher current market rates when compared to the time of purchase. At December 31, 2023, the Company owned 394 securities that were in an unrealized loss position. The unrealized losses on securities have not been recognized into income because the issuers’ securities are of high credit quality, management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to currently higher market rates when compared to the time of purchase. The fair value is expected to recover as the securities approach their maturity date or reset date. The Company does not intend to sell until recovery and does not believe selling will be required before recovery.

Each quarter, we perform an analysis to determine if any of the unrealized losses on securities available-for-sale are comprised of credit losses as compared to unrealized losses due to market interest rate adjustments. Our assessment includes a review of the unrealized loss for each security issuance held; the financial condition and near-term prospects of the issuer, including external credit ratings and recent downgrades; and our ability and intent to hold the security for a period of time sufficient for a recovery in value. We also consider the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies. The portfolio continues to consist of a mix of fixed and floating-rate, high quality securities, largely rated AA (or better), displaying an overall effective duration of approximately 3.0 years. No credit losses were determined to be present as of September 30, 2024, as there was no credit quality deterioration noted. Therefore, no provision for credit losses on securities was recognized for the third quarter of 2024.

The following table presents the net gains and losses on equity investments recognized in earnings for the three and nine months ended September 30, 2024 and 2023 and the portion of unrealized gains and losses for the period that relates to equity investments held at September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net gains (losses) recognized on equity securities during the period	$	223	$	69	$	156	$	(169	)
Less: Net gains (losses) realized on the sale of equity securities during the period		—		—		—		—
Unrealized gains (losses) recognized on equity securities held at reporting date	$	223	$	69	$	156	$	(169	)

Equity securities consisting of investments in other financial institutions totaled $2.3 million and $2.2 million as of September 30, 2024 and December 31, 2023, respectively.

Federal Home Loan Bank of Chicago (“FHLBC”), Federal Reserve Bank of Cleveland (“FRBC”), United Bankers' Bancorp, Farmer Mac and Norwalk Community Development Corp stock are considered Other securities. FHLBC stock was recorded at $20.8 million at September 30, 2024 and $18.2 million at December 31, 2023. FRBC stock was recorded at $11.5 million at September 30, 2024 and December 31, 2023. United Bankers' Bancorp stock was recorded at $225 at September 30, 2024 and December 31, 2023. Farmer Mac stock was recorded at $42 at September 30, 2024 and December 31, 2023. Norwalk Community Development Corp stock was recorded at $2 at September 30, 2024 and December 31, 2023. Other securities are carried at cost, classified as restricted securities, and periodically evaluated for impairment based on ultimate recovery of par value.