At December 31, 2023, investment securities
held-to-maturity (HTM) totaled $2.46 billion, a decrease of $24.8 million, or 1.00% from September 30, 2023, and a decrease of
$89.7 million, or 3.51%, from December 31, 2022.
At December 31, 2023, investment securities available-for-sale (AFS) totaled $2.96 billion, inclusive of a pre-tax net unrealized loss of $449.8 million. AFS securities increased by
$83.0 million, or 2.89% from September 30, 2023 and decreased by $299.1 million, or 9.19%, from $3.26 billion at December 31, 2022. Pre-tax unrealized loss declined by
$178.7 million from September 30, 2023 and decreased by $50.3 million from December 31, 2022.
Combined, the AFS and HTM investments in
mortgage backed securities (MBS) and collateralized mortgage obligations (CMO) totaled $4.36 billion or approximately 80% of the total investment securities at December 31, 2023. Virtually all of our MBS and CMO are
issued or guaranteed by government or government sponsored enterprises, which have the implied guarantee of the U.S. Government. In addition, at December 31, 2023, we had $562.9 million of Government Agency securities, that represent
approximately 10.4% of the total investment securities.
Our combined AFS and HTM municipal securities totaled $493.6 million as of December 31, 2023,
or 9.1% of our total investment portfolio. These securities are located in 35 states. Our largest concentrations of holdings by state, as a percentage of total municipal bonds, are located in Texas at 15.89%, Minnesota at 11.28%, California at
9.58%, Ohio at 6.25%, Massachusetts at 6.15%, and Washington at 5.80%.
At December 31, 2023, the Company had $308.7 million of Bank Owned Life
insurance (BOLI). The $49.2 million increase in value of BOLI, when compared to September 30, 2023, was primarily due to a restructuring of the Companys life insurance policies, including a $4.5 million write-down in
value on surrender policies that was offset by a $10.9 million enhancement to cash surrender values, as well as additional policy purchases totaling $41 million. This restructuring is expected to increase future returns on our BOLI
policies resulting in additional non-taxable noninterest income in future years.
Loans
Total loans and leases, at amortized cost, of $8.90 billion at December 31, 2023 increased by $27.3 million, or 0.31%, from September 30, 2023. The
quarter-over quarter increase in loans included increases of $61.4 million in dairy & livestock and agribusiness loans, $31.8 million in commercial and industrial loans, and $3.7 million in construction loans, partially
offset by decreases of $58.6 million in commercial real estate loans and $12.5 million in SBA loans.
Total loans and leases, at amortized cost,
decreased by $174.5 million, or 1.92%, from December 31, 2022. After adjusting for PPP loans, which declined by $6.4 million, our core loans decreased by $168.1 million, or 1.85% from December 31, 2022. The
$168.1 million decreases included $100.4 million in commercial real estate loans, $21.5 million in construction loans, $20.7 million in dairy & livestock and agribusiness loans, $20.3 million in SBA loans,
$7.5 million in municipal lease financings, and $22.7 million in consumer and other loans, partially offset by an increase of $21.2 million in commercial and industrial loans.
Asset Quality
During the fourth quarter of 2023, we experienced credit
charge-offs of $181,000 and total recoveries of $28,000, resulting in net charge-offs of $153,000. The allowance for credit losses (ACL) totaled $86.8 million at December 31, 2023, compared to $89.0 million at
September 30, 2023 and $85.1 million at December 31, 2022. The ACL was increased by $1.7 million in 2023, including a $2.0 million provision for credit losses. At December 31, 2023, ACL as a percentage of total loans
and leases outstanding was 0.98%. This compares to 1.00% and 0.94% at September 30, 2023 and December 31, 2022, respectively.
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