WILSON BANK HOLDING CO
For the period ended Dec 31, 2023. Filed Feb 28, 2024.
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FY2023 · Filed Feb 28, 2024
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EX-13.1 · Securities
Securities
Securities decreased 1.43% to $811,081,000 at December 31, 2023 from $822,812,000 at December 31, 2022, and comprised the second largest and other primary component of the Company’s earning assets. Securities decreased due to the sale of securities and the run-off of our declining balance securities in 2023, partially offset by an increase in the fair market value of our securities portfolio due to a decline in interest rates that caused the fair market value of our securities portfolio to increase and by the purchase of new securities with higher yields. The average yield, including tax equivalent adjustment, of the securities portfolio at December 31, 2023 was 2.33% with a weighted average life of 8.25 years, as compared to an average yield of 2.15% and a weighted average life of 8.25 years at December 31, 2022. The weighted average lives on mortgage-backed securities reflect the repayment rate used for book value calculations.
Certain debt securities that management has the positive intent and ability to hold to maturity are classified as "held-to-maturity" and recorded at amortized cost. Trading securities are recorded at fair value with changes in fair value included in earnings. Securities not classified as held to maturity or trading, including equity securities with readily determinable fair values, are classified as “available-for-sale” and recorded at fair value, with unrealized gains and losses on our available-for-sale securities excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.
Upon and subsequent to adoption of CECL, for available-for-sale debt securities in an unrealized loss position, we evaluate the securities at each measurement date to determine whether the decline in the fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized through the allowance for credit losses on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings via provision for credit loss. At December 31, 2023 and December 31, 2022, we determined that available-for-sale securities that experienced a decline in fair value below the amortized cost basis were driven by changes in interest rates and not due to credit-related factors. Therefore, there was no provision for credit loss recognized during the twelve months ended December 31, 2023 with respect to our available-for-sale securities.
No securities have been classified as trading securities or held-to-maturity at December 31, 2023, December 31, 2022, or December 31, 2021.
Investment securities at December 31, 2023 and December 31, 2022 consisted of the following:
| Securities Available-For-Sale | ||||
|---|---|---|---|---|
| (In Thousands) | ||||
| Gross · Gross · Estimated | ||||
| Amortized | Unrealized | Unrealized | Market | |
| Cost | Gains | Losses | Value | |
| U.S. Treasury and other U.S. government agencies | $4,901 | — | 472 | 4,429 |
| U.S. Government-sponsored enterprises (GSEs) | 167,738 | — | 23,570 | 144,168 |
| Mortgage-backed securities | 480,759 | 230 | 63,959 | 417,030 |
| Asset-backed securities | 51,183 | 193 | 1,403 | 49,973 |
| Corporate bonds | 2,500 | — | 77 | 2,423 |
| Obligations of states and political subdivisions | 223,358 | 397 | 30,697 | 193,058 |
| $930,439 | 820 | 120,178 | 811,081 | |
| Securities Available-For-Sale | ||||
|---|---|---|---|---|
| (In Thousands) | ||||
| Gross · Gross · Estimated | ||||
| Amortized | Unrealized | Unrealized | Market | |
| Cost | Gains | Losses | Value | |
| U.S. Treasury and other U.S. government agencies | $7,353 | — | 856 | 6,497 |
| U.S. Government-sponsored enterprises (GSEs) | 177,261 | — | 32,049 | 145,212 |
| Mortgage-backed securities | 518,727 | 1 | 74,290 | 444,438 |
| Asset-backed securities | 47,538 | — | 2,288 | 45,250 |
| Corporate bonds | 2,500 | — | 97 | 2,403 |
| Obligations of states and political subdivisions | 218,936 | — | 39,924 | 179,012 |
| $972,315 | 1 | 149,504 | 822,812 | |
The following table details the contractual maturities and weighted average yields of investment securities of the Company. Actual maturities may differ from contractual maturities of mortgage and asset-backed securities because the mortgages or other assets underlying
such securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories noted below as of December 31, 2023:
| Available-For-Sale Securities | Estimated Market Value | Weighted Average Yields |
|---|---|---|
| (In Thousands, Except Yields) | ||
| Mortgage and asset-backed securities | ||
| One year or less | $13 | 3.98% |
| After one year through five years | 24,584 | 1.44 |
| After five years through ten years | 88,445 | 3.69 |
| After ten years | 353,961 | 2.45 |
| Total Mortgage and asset backed securities | 467,003 | 2.63 |
| U.S. Treasury and other U.S. government agencies: | ||
| One year or less | — | — |
| After one year through five years | 4,429 | 1.11 |
| After five years through ten years | — | — |
| After ten years | — | — |
| Total U.S. Treasury and other U.S. government agencies: | 4,429 | 1.11 |
| U.S. Government-sponsored enterprises (GSEs): | ||
| One year or less | — | — |
| After one year through five years | 43,500 | 0.93 |
| After five years through ten years | 85,426 | 1.54 |
| After ten years | 15,242 | 2.14 |
| Total U.S. Government-sponsored enterprises (GSEs) | 144,168 | 1.42 |
| Obligations of states and political subdivisions*: | ||
| One year or less | 289 | 0.71 |
| After one year through five years | 15,123 | 1.86 |
| After five years through ten years | 70,113 | 1.93 |
| After ten years | 107,533 | 2.98 |
| Total obligations of states and political subdivisions | 193,058 | 2.51 |
| Corporate bonds: | ||
| One year or less | — | — |
| After one year through five years | 2,423 | 4.25 |
| After five years through ten years | — | — |
| After ten years | — | — |
| Total corporate bonds | 2,423 | 4.25 |
| Total available-for-sale securities | $811,081 | 2.33% |
- Weighted average yield on tax-exempt obligations is stated on a tax-equivalent basis, assuming a weighted average Federal income tax rate of 21%.
We computed weighted average yields using coupon interest, adding discount accretion or subtracting premium amortization, as appropriate, on a ratable basis over the life of each security. We computed the weighted average yield for each maturity range using the fair value of each security in that range.
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