
	September 30, 2024
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value

Available-for-sale:
U.S. Treasury	$	139,692	$	—	$	(7,320)	$	—	$	132,372
U.S. government agency	59,167		101		(1,969)		—		57,299
Municipal	154,042		15		(16,185)		—		137,872
Mortgage-backed:
Agency residential	212,551		1,007		(10,309)		—		203,249
Agency commercial	131,313		8		(10,229)		—		121,092
Corporate	61,716		96		(3,393)		—		58,419
Total available-for-sale	$	758,481	$	1,227	$	(49,405)	$	—	$	710,303

	September 30, 2024
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses

Held-to-maturity:
U.S. government agency	$	88,465	$	—	$	(6,031)	$	82,434	$	—
Municipal	36,319		353		(138)		36,534		—
Mortgage-backed:
Agency residential	88,232		21		(3,595)		84,658		—
Agency commercial	292,059		26		(32,452)		259,633		—
Total held-to-maturity	$	505,075	$	400	$	(42,216)	$	463,259	$	—


	December 31, 2023
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value

Available-for-sale:
U.S. Treasury	$	159,715	$	—	$	(11,093)	$	—	$	148,622
U.S. government agency	55,359		—		(3,262)		—		52,097
Municipal	229,030		26		(23,499)		—		205,557
Mortgage-backed:
Agency residential	188,641		61		(14,718)		—		173,984
Agency commercial	141,214		3		(14,205)		—		127,012
Corporate	57,665		9		(5,485)		—		52,189
Total available-for-sale	$	831,624	$	99	$	(72,262)	$	—	$	759,461

	December 31, 2023
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses

Held-to-maturity:
U.S. government agency	$	88,448	$	—	$	(8,292)	$	80,156	$	—
Municipal	38,442		394		(163)		38,673		—
Mortgage-backed:
Agency residential	95,828		—		(5,569)		90,259		—
Agency commercial	298,721		—		(41,313)		257,408		—
Total held-to-maturity	$	521,439	$	394	$	(55,337)	$	466,496	$	—

As of September 30, 2024 and December 31, 2023, the Bank had debt securities with a carrying value of $549.3 million and $419.4 million, respectively, which were pledged to secure public deposits, securities sold under agreements to repurchase, available borrowing capacity, and for other purposes required or permitted by law.

The amortized cost and fair value of debt securities by contractual maturity, as of September 30, 2024, 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.


	Available-for-Sale				Held-to-Maturity
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value

Due in 1 year or less	$	50,398	$	49,930	$	4,891	$	4,873
Due after 1 year through 5 years	184,468		174,898		49,208		47,631
Due after 5 years through 10 years	157,851		142,184		68,427		64,225
Due after 10 years	21,900		18,950		2,258		2,239

Mortgage-backed:
Agency residential	212,551		203,249		88,232		84,658
Agency commercial	131,313		121,092		292,059		259,633
Total	$	758,481	$	710,303	$	505,075	$	463,259

The following table presents gross unrealized losses and fair value of debt securities available-for-sale that do not have an associated allowance for credit losses as of September 30, 2024 and December 31, 2023, aggregated by category and length of time that individual debt securities have been in a continuous unrealized loss position:


	September 30, 2024
	Investments in a Continuous Unrealized Loss Position
	Less than 12 Months				12 Months or More				Total
(dollars in thousands)	Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value

Available-for-sale:
U.S. Treasury	$	—	$	—	$	(7,320)	$	132,372	$	(7,320)	$	132,372
U.S. government agency	(5)		2,995		(1,964)		49,468		(1,969)		52,463
Municipal	—		—		(16,185)		135,209		(16,185)		135,209
Mortgage-backed:
Agency residential	(116)		19,691		(10,193)		137,916		(10,309)		157,607
Agency commercial	(5)		2,595		(10,224)		116,421		(10,229)		119,016
Corporate	—		—		(3,393)		44,464		(3,393)		44,464
Total available-for-sale	$	(126)	$	25,281	$	(49,279)	$	615,850	$	(49,405)	$	641,131


	December 31, 2023
	Investments in a Continuous Unrealized Loss Position
	Less than 12 Months				12 Months or More				Total
(dollars in thousands)	Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value

Available-for-sale:
U.S. Treasury	$	—	$	—	$	(11,093)	$	148,622	$	(11,093)	$	148,622
U.S. government agency	(2)		168		(3,260)		51,910		(3,262)		52,078
Municipal	(26)		4,749		(23,473)		194,287		(23,499)		199,036
Mortgage-backed:
Agency residential	(163)		9,354		(14,555)		156,785		(14,718)		166,139
Agency commercial	(26)		3,016		(14,179)		123,404		(14,205)		126,420
Corporate	(414)		4,361		(5,071)		45,826		(5,485)		50,187
Total available-for-sale	$	(631)	$	21,648	$	(71,631)	$	720,834	$	(72,262)	$	742,482

As of September 30, 2024, there were 627 debt securities in an unrealized loss position for a period of twelve months or more, and 13 debt securities in an unrealized loss position for a period of less than twelve months.

U.S. Treasury, U.S. government agency, and agency mortgage-backed securities are considered to have no risk of credit loss as they are either explicitly or implicitly guaranteed by the U.S. government. The changes in fair value in these portfolios are considered to be primarily driven by changes in market interest rates and other non-credit risks, such as prepayment and liquidity risks.

Municipal securities include approximately 73% general obligation bonds as of September 30, 2024, which have a very low historical default rate due to issuers generally having taxing authority to service the debt. The remainder of the municipal securities are also of high credit quality with ratings of Aa3/AA- or better. The Company evaluates credit risk through monitoring credit ratings and reviews of available financial data. The changes in fair value in these portfolios are considered to be primarily driven by changes in market interest rates and other non-credit risks, such as call and liquidity risks. The estimated allowance for credit losses for the municipal debt securities held-to-maturity was deemed insignificant.

Corporate securities include investment grade corporate and bank subordinated debt securities. The Company evaluates credit risk through monitoring credit ratings, reviews of available issuer financial data, and sector trends. During 2024, the changes in fair value in corporate securities were considered to be primarily driven by changes in market interest rates and other non-credit risks, such as call and liquidity risks. There was no allowance for credit losses recorded on corporate debt securities as of September 30, 2024 and December 31, 2023.

During the first half of 2023, a provision for credit losses of $0.8 million was recognized, related to one bank subordinated debt security reflecting heightened potential credit risk following the failures of other banks in 2023. This heightened potential credit risk was later reduced after a merger announcement by the issuer of the bank subordinated debt security and a negative provision for credit losses of $0.8 million was recorded during the third quarter of 2023.

As of September 30, 2024, the Company did not intend to sell the debt securities that are in an unrealized loss position, and it was more likely than not that the Company would recover the amortized cost prior to being required to sell the debt securities.


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023

Proceeds from sales	$	—	$	39,436	$	66,812	$	185,280
Gross realized gains	—		—		—		—
Gross realized losses	—		(813)		(3,382)		(1,820)

Equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in unrealized gains (losses) on equity securities on the consolidated statements of income. The Company has elected to measure equity securities with no readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar securities of the same issuer.


	September 30, 2024
(dollars in thousands)	Readily Determinable Fair Value		No Readily Determinable Fair Value

Initial cost	$	3,124	$	2,973
Cumulative net unrealized gains (losses)	240		(335)
Carrying value	$	3,364	$	2,638


	December 31, 2023
(dollars in thousands)	Readily Determinable Fair Value		No Readily Determinable Fair Value

Initial cost	$	3,143	$	2,840
Cumulative net unrealized gains (losses)	217		(335)
Carrying value	$	3,360	$	2,505

As of September 30, 2024 and December 31, 2023, the cumulative net unrealized losses on equity securities with no readily determinable fair value reflect impairments of $0.2 million and downward adjustments based on observable price changes of an identical investment of $0.2 million. There have been no upward adjustments based on observable price changes to equity securities with no readily determinable fair value.


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023

Readily determinable fair value	$	136	$	(46)	$	24	$	77
No readily determinable fair value	—		—		—		(138)
Unrealized gains (losses) on equity securities	$	136	$	(46)	$	24	$	(61)