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Securities

12 Months Ended

Dec. 31, 2023

Note 4: Securities

The following table summarizes the amortized cost and fair value of the securities portfolio at December 31, 2023 and the corresponding amounts of gross unrealized gains and losses were as follows:


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
December 31, 2023		Cost¹			Gains			Losses			Value
Securities available-for-sale
U.S. Treasury		$	174,602		$	-		$	(5,028)		$	169,574
U.S. government agencies			60,011			-			(3,052)			56,959
U.S. government agencies mortgage-backed			118,492			-			(12,122)			106,370
States and political subdivisions			238,440			1,325			(10,430)			229,335
Collateralized mortgage obligations			442,987			421			(50,864)			392,544
Asset-backed securities			69,248			42			(3,124)			66,166
Collateralized loan obligations			173,201			30			(1,350)			171,881
Total securities available-for-sale		$	1,276,981		$	1,818		$	(85,970)		$	1,192,829


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
December 31, 2022		Cost¹			Gains			Losses			Value
Securities available-for-sale
U.S. Treasury		$	224,054		$	-		$	(11,925)		$	212,129
U.S. government agencies			61,178			-			(5,130)			56,048
U.S. government agencies mortgage-backed			140,588			-			(15,598)			124,990
States and political subdivisions			239,999			363			(14,234)			226,128
Corporate bonds			10,000			-			(378)			9,622
Collateralized mortgage obligations			596,336			1			(62,569)			533,768
Asset-backed securities			210,388			6			(8,466)			201,928
Collateralized loan obligations			180,276			-			(5,530)			174,746
Total securities available-for-sale		$	1,662,819		$	370		$	(123,830)		$	1,539,359

¹ Excludes interest receivable of $6.6 million and $6.8 million at December 31, 2023 and December 31, 2022, respectively, that is recorded in other assets on the consolidated balance sheets.

FHLBC stock was $18.5 million and $5.6 million at December 31, 2023 and December 31, 2022, respectively. FRBC stock was $14.9 million at December 31, 2023 and December 31, 2022. Our FHLBC stock is necessary to maintain access to FHLBC advances.

Securities valued at $810.2 million as of December 31, 2023, were pledged to secure deposits and borrowings, and for other purposes, an increase from $547.8 million at year-end 2022.

The fair value, amortized cost and weighted average yield of debt securities at December 31, 2023 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		$	150,067		1.06	%		$	146,728
Due after one year through five years			99,527		1.36				94,572
Due after five years through ten years			59,571		2.92				55,005
Due after ten years			163,888		3.11				159,563
			473,053		2.07				455,868
Mortgage-backed and collateralized mortgage obligations			561,479		2.42				498,914
Asset-backed securities			69,248		4.35				66,166
Collateralized loan obligations			173,201		7.14				171,881
Total securities available-for-sale		$	1,276,981		3.03	%		$	1,192,829

As of December 31, 2023, the Company has no securities issued from one originator, other than the U.S. Government and its agencies, that individually amounted to over 10% of the Company’s stockholders equity.

Securities with unrealized losses with no corresponding allowance for credit losses at December 31, 2023 and 2022 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
December 31, 2023		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. Treasuries		-		$	-		$	-		4		$	5,028		$	169,574		4		$	5,028		$	169,574
U.S. government agencies		-			-			-		9			3,052			56,959		9			3,052			56,959
U.S. government agencies mortgage-backed		-			-			-		128			12,122			106,370		128			12,122			106,370
States and political subdivisions		12			137			27,974		27			10,293			108,408		39			10,430			136,382
Collateralized mortgage obligations		2			8			734		143			50,856			376,236		145			50,864			376,970
Asset-backed securities		-			-			-		17			3,124			61,671		17			3,124			61,671
Collateralized loan obligations		-			-			-		25			1,350			150,902		25			1,350			150,902
Total securities available-for-sale		14		$	145		$	28,708		353		$	85,825		$	1,030,120		367		$	85,970		$	1,058,828


		Less than 12 months								12 months or more
December 31, 2022		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. Treasuries		1		$	1,025		$	24,121		4		$	10,900		$	188,008		5		$	11,925		$	212,129
U.S. government agencies		-			-			-		9			5,130			56,048		9			5,130			56,048
U.S. government agencies mortgage-backed		15			975			11,369		117			14,623			113,621		132			15,598			124,990
States and political subdivisions		45			5,800			128,770		15			8,434			48,877		60			14,234			177,647
Corporate bonds		-			-			-		2			378			9,622		2			378			9,622
Collateralized mortgage obligations		80			12,895			180,624		120			49,674			348,880		200			62,569			529,504
Asset-backed securities		30			3,030			121,915		21			5,436			79,659		51			8,466			201,574
Collateralized loan obligations		23			3,579			112,772		11			1,951			61,974		34			5,530			174,746
Total securities available-for-sale		194		$	27,304		$	579,571		299		$	96,526		$	906,689		493		$	123,830		$	1,486,260

Available-for-sale debt securities in unrealized loss positions are evaluated for allowance related to credit losses at least quarterly. The analysis consists of screening all securities to determine if the bonds have market value loss exceeding 5% of book value and if that loss exceeds $200,000. Two other aspects of each security are assessed. The first is whether a security carries a government guarantee. If the security is backed by a 100% U.S. Government or U.S. Agency guarantee, then no allowance for credit loss would be considered necessary, since ultimately principal and interest of the investment would be paid. For securities that carried a U.S. Government guarantee of less than 100%, an allowance for credit loss analysis is performed. In the case of a partial government guarantee, the loss amount is assumed to be the percentage not guaranteed multiplied by the gain or loss on the position. In addition, a calculation is performed to estimate the amount of value change attributable to movements in interest rates. If the devaluation of a security is largely due to rate changes, then no allowance would be considered necessary. However, if a payment collected on a particular bond is less than the expected amount, individual credit analysis is conducted on that position. Furthermore, for positions whose market valuations are not directly attributable to movements in interest rates, even if all scheduled payments have been received, credit analysis is performed on each position.

The following table presents net realized gains (losses) on securities available-for-sale for the years ended:


		Year Ended
		December 31,
Securities available-for-sale		2023			2022			2021
Proceeds from sales of securities		$	205,738		$	30,981		$	605,846
Gross realized gains on securities			-			-			270
Gross realized losses on securities			(4,148)			(944)			(38)
Net realized (losses) gains		$	(4,148)		$	(944)		$	232
Income tax benefit (expense) on net realized (losses) gains		$	1,117		$	265		$	(65)
Effective tax rate applied			26.9	%		28.1	%		28.0