Securities are classified as AFS or HTM on the consolidated balance sheets at the time of purchase. AFS securities include those securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity, and are carried at fair value on the consolidated balance sheets. HTM securities include those securities which the Company has both the positive intent and ability to hold to maturity, and are carried at amortized cost on the consolidated balance sheets. Premiums and discounts on investment securities are amortized or accreted into interest income over the estimated life of the related securities using the effective interest method.


	March 31, 2024
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities AFS:
U.S. Treasury securities	$	15,940	$	—	$	1,998	$	13,942
U.S. government agency securities	7,038		—		59		6,979
State, county and municipals	340,665		226		27,826		313,065
Mortgage-backed securities	423,325		1,007		38,242		386,090
Corporate debt securities	92,347		—		8,460		83,887
Total securities AFS	$	879,315	$	1,233	$	76,585	$	803,963


	December 31, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities AFS:
U.S. Treasury securities	$	15,988	$	—	$	1,865	$	14,123
U.S. government agency securities	7,430		—		46		7,384
State, county and municipals	360,496		651		26,325		334,822
Mortgage-backed securities	388,378		1,437		37,193		352,622
Corporate debt securities	102,895		26		9,299		93,622
Total securities AFS	$	875,187	$	2,114	$	74,728	$	802,573

On March 7, 2023, Nicolet executed the sale of $500 million (par value) U.S. Treasury held to maturity securities for a pre-tax loss of $38 million or an after-tax loss of $28 million. Proceeds from the sale were used to reduce existing FHLB borrowings with the remainder held in investable cash. As a result of the sale of securities previously classified as held to maturity, the remaining unsold portfolio of held to maturity securities, with a book value of $177 million, was reclassified to available for sale with a carrying value of approximately $157 million. The unrealized loss on this portfolio of $20 million (at the time of reclassification) increased the balance of accumulated other comprehensive loss $15 million, net of the deferred tax effect, and is subject to future market changes.


	Three Months Ended March 31,
(in thousands)	2024		2023
Securities AFS:
Gross gains	$	1,038	$	126
Gross losses	(70)		(339)
Gains (losses) on sales of securities AFS, net	$	968	$	(213)
Proceeds from sales of securities AFS	$	4,987	$	22,565
Securities HTM:
Gross gains	$	—	$	—
Gross losses	—		(37,723)
Gains (losses) on sales of securities HTM, net	$	—	$	(37,723)
Proceeds from sales of securities HTM	$	—	$	460,051

All mortgage-backed securities included in the securities portfolio were issued by U.S. government agencies and corporations. Investment securities with a carrying value of $366 million and $364 million, as of March 31, 2024 and December 31, 2023, respectively, were pledged as collateral to secure public deposits and borrowings, as applicable, and for liquidity or other purposes as required by regulation. Accrued interest on investment securities totaled $5 million at both March 31, 2024 and December 31, 2023, and is included in accrued interest receivable and other assets on the consolidated balance sheets.

The following table presents gross unrealized losses and the related estimated fair value of investment securities for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position.


	March 31, 2024
	Less than 12 months				12 months or more				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities
Securities AFS:
U.S. Treasury securities	$	—	$	—	$	13,942	$	1,998	$	13,942	$	1,998	1
U.S. government agency securities	5,245		36		1,734		23		6,979		59		11
State, county and municipals	32,220		574		247,255		27,252		279,475		27,826		536
Mortgage-backed securities	41,197		274		278,448		37,968		319,645		38,242		444
Corporate debt securities	5,492		49		75,597		8,411		81,089		8,460		55
Total	$	84,154	$	933	$	616,976	$	75,652	$	701,130	$	76,585	1,047


	December 31, 2023
	Less than 12 months				12 months or more				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities
Securities AFS:
U.S. Treasury securities	$	—	$	—	$	14,123	$	1,865	$	14,123	$	1,865	1
U.S. government agency securities	4,621		31		1,793		15		6,414		46		10
State, county and municipals	29,336		330		257,916		25,995		287,252		26,325		528
Mortgage-backed securities	6		—		291,124		37,193		291,130		37,193		433
Corporate debt securities	—		—		85,265		9,299		85,265		9,299		59
Total	$	33,963	$	361	$	650,221	$	74,367	$	684,184	$	74,728	1,031

During first quarter 2023, the Company recognized provision expense of $2.3 million related to the expected credit loss on a bank subordinated debt investment (acquired in an acquisition), and immediately charged-off the full investment. The Company does not consider its remaining securities AFS with unrealized losses to be attributable to credit-related factors, as the unrealized losses in each category have occurred as a result of changes in noncredit-related factors such as changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration. Furthermore, the Company does not have the intent to sell any of these AFS securities and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost. As of March 31, 2024 and December 31, 2023, no allowance for credit losses on AFS securities was recognized.

The amortized cost and fair value of investment securities by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties; as this is particularly inherent in mortgage-backed securities, these securities are not included in the maturity categories below.


As of March 31, 2024	Securities AFS
(in thousands)	Amortized Cost		Fair Value
Due in less than one year	$	39,136	$	38,732
Due in one year through five years	135,670		124,331
Due after five years through ten years	181,049		161,532
Due after ten years	100,135		93,278
	455,990		417,873
Mortgage-backed securities	423,325		386,090
Total investment securities	$	879,315	$	803,963

Other investments include “restricted” equity securities, equity securities with readily determinable fair values, and private company securities. As a member of the Federal Reserve Bank System and the Federal Home Loan Bank (“FHLB”) System, Nicolet is required to maintain an investment in the capital stock of these entities. These equity securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other exchange traded equity securities. As no ready market exists for these stocks, and they have no quoted market value, these investments are carried at cost. Also included are investments in other private companies that do not have quoted market prices, which are carried at cost less impairment charges, if any. The carrying value of other investments are summarized as follows.


	March 31, 2024		December 31, 2023
(in thousands)	Amount		Amount
Federal Reserve Bank stock	$	32,871	$	33,087
Federal Home Loan Bank (“FHLB”) stock	9,674		9,674
Equity securities with readily determinable fair values	8,771		4,240
Other investments	9,148		10,559
Total other investments	$	60,464	$	57,560