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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2025

INVESTMENT SECURITIES

INVESTMENT SECURITIES

NOTE 5: INVESTMENT SECURITIES

Available-for-sale securities (“AFS”), which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Realized gains and losses, based on the specifically identified amortized cost of the individual security, are included in non-interest income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders’ equity. Premiums and discounts are amortized and accreted, respectively, to interest income over the estimated life of the security. Prepayments are anticipated for certain mortgage-backed and Small Business Administration (SBA) securities. Premiums on callable securities are amortized to their earliest call date.

Held-to-maturity securities (“HTM”), which include any security for which the Company has both the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income over the security’s estimated life. Prepayments are anticipated for certain mortgage-backed securities. Premiums on callable securities are amortized to their earliest call date.

The amortized cost and fair values of securities were as follows:


		September 30, 2025
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
		Cost			Gains			Losses			Value

		(In Thousands)
AVAILABLE-FOR-SALE SECURITIES:
Agency mortgage-backed securities		$	331,285		$	668		$	27,308		$	304,645
Agency collateralized mortgage obligations			121,636			927			6,550			116,013
States and political subdivisions			56,639			156			3,049			53,746
Small Business Administration securities			62,433			19			5,508			56,944
		$	571,993		$	1,770		$	42,415		$	531,348


		September 30, 2025
								Amortized			Gross			Gross
		Amortized			Fair Value			Carrying			Unrealized			Unrealized			Fair
		Cost			Adjustment			Value			Gains			Losses			Value

		(In Thousands)
HELD-TO-MATURITY SECURITIES:
Agency mortgage-backed securities		$	70,036		$	1,450		$	71,486		$	—		$	6,086		$	65,400
Agency collateralized mortgage obligations			105,632			(1,926)			103,706			—			11,080			92,626
States and political subdivisions			6,099			24			6,123			—			560			5,563
		$	181,767		$	(452)		$	181,315		$	—		$	17,726		$	163,589


		December 31, 2024
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
		Cost			Gains			Losses			Value

		(In Thousands)
AVAILABLE-FOR-SALE SECURITIES:
Agency mortgage-backed securities		$	346,712		$	69		$	40,874		$	305,907
Agency collateralized mortgage obligations			123,395			—			9,771			113,624
States and political subdivisions securities			58,608			69			2,729			55,948
Small Business Administration securities			65,849			—			7,955			57,894
		$	594,564		$	138		$	61,329		$	533,373


		December 31, 2024
								Amortized			Gross			Gross
		Amortized			Fair Value			Carrying			Unrealized			Unrealized			Fair
		Cost			Adjustment			Value			Gains			Losses			Value

		(In Thousands)
HELD-TO-MATURITY SECURITIES:
Agency mortgage-backed securities		$	71,065		$	1,864		$	72,929		$	—		$	8,523		$	64,406
Agency collateralized mortgage obligations			110,493			(2,140)			108,353			—			15,495			92,858
States and political subdivisions			6,137			14			6,151			—			650			5,501
		$	187,695		$	(262)		$	187,433		$	—		$	24,668		$	162,765

The amortized cost and fair value of available-for-sale and held-to-maturity securities at September 30, 2025, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


		Available-for-Sale						Held-to-Maturity
		Amortized			Fair			Amortized			Fair
		Cost			Value			Carrying Value			Value

		(In Thousands)
One year or less		$	—		$	—		$	—		$	—
After one through two years			245			246			—			—
After two through three years			1,012			1,025			—			—
After three through four years			—			—			—			—
After four through five years			—			—			1,052			994
After five through fifteen years			22,107			21,111			4,564			4,146
After fifteen years			33,275			31,364			507			423
Securities not due on a single maturity date			515,354			477,602			175,192			158,026
		$	571,993		$	531,348		$	181,315		$	163,589

Certain available-for-sale investments in debt securities are reported in the financial statements at an amount less than their amortized cost. The total fair value of these investments at September 30, 2025 and December 31, 2024, was approximately $418.0 million and $523.9 million, respectively, which was approximately 78.7% and 98.2% of the Company’s total available-for-sale investment portfolio at those dates. A high percentage of the unrealized losses were related to the Company’s mortgage-backed securities, collateralized mortgage obligations and Small Business Administration (SBA) securities, which are issued and guaranteed by U.S. government-sponsored entities and agencies. The Company’s state and political subdivisions securities are investments in insured fixed rate municipal bonds for which the issuers continue to make timely principal and interest payments under the contractual terms of the securities. Held-to-maturity investments in debt securities are reported in the financial statements at their amortized carrying value at September 30, 2025 and December 31, 2024, which was $181.3 million and $187.4 million, respectively. Total fair value of these investments at September 30, 2025 and December 31, 2024 was approximately $163.6 million and $162.8 million, respectively, which is 100.0% of the Company’s held-to-maturity investment portfolio.

Held-to-maturity investment securities are evaluated for potential losses under ASU 2016-13. The Company continually assesses its liquidity sources, both on-balance sheet and off-balance sheet, and believes that at September 30, 2025, it had ample liquidity sources to fund its ongoing operations without selling investment securities in this portfolio.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings of issuers, management believes the declines in fair value for the Company’s available-for-sale debt securities are not credit related.

The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2025 and December 31, 2024:


		September 30, 2025
		Less than 12 Months						12 Months or More						Total
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
Description of Securities		Value			Losses			Value			Losses			Value			Losses

		(In Thousands)
AVAILABLE-FOR-SALE SECURITIES:
Agency mortgage-backed securities		$	3,274		$	(11)		$	245,989		$	(27,297)		$	249,263		$	(27,308)
Agency collateralized mortgage obligations			—			—			71,782			(6,550)			71,782			(6,550)
States and political subdivisions securities			5,068			(247)			42,155			(2,802)			47,223			(3,049)
Small Business Administration securities			—			—			49,763			(5,508)			49,763			(5,508)
		$	8,342		$	(258)		$	409,689		$	(42,157)		$	418,031		$	(42,415)

HELD-TO-MATURITY SECURITIES:
Agency mortgage-backed securities		$	—		$	—		$	65,400		$	(6,086)		$	65,400		$	(6,086)
Agency collateralized mortgage obligations			—			—			92,626			(11,080)			92,626			(11,080)
States and political subdivisions securities			—			—			5,563			(560)			5,563			(560)
		$	—		$	—		$	163,589		$	(17,726)		$	163,589		$	(17,726)


		December 31, 2024
		Less than 12 Months						12 Months or More						Total
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
Description of Securities		Value			Losses			Value			Losses			Value			Losses

		(In Thousands)
AVAILABLE-FOR-SALE SECURITIES:
Agency mortgage-backed securities		$	45,977		$	(1,008)		$	253,971		$	(39,866)		$	299,948		$	(40,874)
Agency collateralized mortgage obligations			50,720			(890)			62,903			(8,881)			113,623			(9,771)
States and political subdivisions securities			7,229			(270)			50,665			(7,685)			57,894			(7,955)
Small Business Administration securities			14,523			(343)			37,945			(2,386)			52,468			(2,729)
		$	118,449		$	(2,511)		$	405,484		$	(58,818)		$	523,933		$	(61,329)

HELD-TO-MATURITY SECURITIES:
Agency mortgage-backed securities		$	—		$	—		$	64,406		$	(8,523)		$	64,406		$	(8,523)
Agency collateralized mortgage obligations			—			—			92,858			(15,495)			92,858			(15,495)
States and political subdivisions securities			—			—			5,501			(650)			5,501			(650)
		$	—		$	—		$	162,765		$	(24,668)		$	162,765		$	(24,668)

There were no sales of available-for-sale securities during the three or nine months ended September 30, 2025 or September 30, 2024, respectively.

Allowance for Credit Losses. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments. All of the mortgage-backed, collateralized mortgage, and SBA securities held by the Company as of September 30, 2025 were issued by U.S. government-sponsored entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. Likewise, the Company has not historically experienced losses on these types of securities. Accordingly, no allowance for credit losses has been recorded for these securities.

Regarding securities issued by state and political subdivisions, management considers the following when evaluating these securities: (i) current issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) updated financial information of the issuer, (v) internal forecasts and (vi) whether such securities provide insurance or other credit enhancement or are pre-refunded by the issuers. These securities are highly rated by major rating agencies and have a long history of no credit losses. Likewise, the Company has not experienced historical losses on these types of securities. Accordingly, no allowance for credit losses has been recorded for these securities.