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DEBT SECURITIES

3 Months Ended

Mar. 31, 2025

DEBT SECURITIES

DEBT SECURITIES

2.DEBT SECURITIES

The following is a summary of securities available for sale and held to maturity:


					Gross			Gross			Allowance
		Amortized			Unrealized			Unrealized			for Credit			Fair
		Cost			Gains			Losses			Losses			Value

		(in thousands)

March 31, 2025:
Securities available for sale
U.S. government and government-sponsored enterprise obligations		$	42,143		$	—		$	5,454		$	—		$	36,689
U.S. government agency and government-sponsored residential mortgage-backed securities			279,192			214			53,449			—			225,957
SBA asset-backed securities			1,157			—			38			—			1,119
Corporate bonds			2,000			30			151			—			1,879
Total securities available for sale		$	324,492		$	244		$	59,092		$	—		$	265,644

Securities held to maturity
U.S. government and government-sponsored enterprise obligations		$	15,000		$	—		$	137		$	—		$	14,863
SBA asset-backed securities			4,211			—			7			—			4,204
Total securities held to maturity		$	19,211		$	—		$	144		$	—		$	19,067


					Gross			Gross			Allowance
		Amortized			Unrealized			Unrealized			for Credit			Fair
		Cost			Gains			Losses			Losses			Value

		(in thousands)

December 31, 2024:
Securities available for sale
U.S. government and government-sponsored enterprise obligations		$	42,143		$	—		$	6,480		$	—		$	35,663
U.S. government agency and government-sponsored residential mortgage-backed securities			283,523			43			58,569			—			224,997
SBA asset-backed securities			1,446			—			64			—			1,382
Corporate bonds			2,000			13			151			—			1,862
Total securities available for sale		$	329,112		$	56		$	65,264		$	—		$	263,904

Securities held to maturity
U.S. government and government-sponsored enterprise obligations		$	15,000		$	—		$	228		$	—		$	14,772
SBA asset-backed securities			4,627			—			114			—			4,513
Total securities held to maturity		$	19,627		$	—		$	342		$	—		$	19,285

Accrued interest receivable is excluded from the amortized cost basis of debt securities. Accrued interest receivable totaled $852,000 and $958,000 as of March 31, 2025 and December 31, 2024, respectively. At March 31, 2025, available-for-sale debt securities with a fair value of $262.6 million and held-to-maturity securities with a fair value of $14.9 million were pledged as collateral to provide borrowing capacity through the Federal Reserve’s Discount Window.

The amortized cost and fair value of debt securities by contractual maturity at March 31, 2025 is as follows:



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

		(in thousands)

After 1 year through 5 years		$	17,643		$	16,029		$	15,000		$	14,863
After 5 years through 10 years			26,500			22,539			—			—
Over 10 years			—			—			—			—
			44,143			38,568			15,000			14,863

U.S. government agency and government-sponsored residential mortgage-backed securities			279,192			225,957			—			—
SBA asset-backed securities			1,157			1,119			4,211			4,204

Total		$	324,492		$	265,644		$	19,211		$	19,067

U.S. government-sponsored residential mortgage-backed securities and securities whose underlying assets are loans from the SBA have stated maturities of two to 30 years; however, it is expected that such securities will have shorter actual lives due to prepayments. U.S. government and government-sponsored enterprise obligations and corporate bonds are callable at the discretion of the issuer. U.S. government and government-sponsored enterprise obligations and corporate bonds with a total fair value of $53.4 million have a final maturity of two to seven years and a call feature of one month to two years. At March 31, 2025 there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of shareholder equity.

There were no sales or calls of securities in the three months ended March 31, 2025 and 2024.

Information pertaining to securities with gross unrealized losses at March 31, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


		Less Than Twelve Months						Twelve Months and Over
		Gross						Gross
		Unrealized			Fair			Unrealized			Fair
		Losses			Value			Losses			Value

		(in thousands)
March 31, 2025:
Securities available for sale

U.S. government and government-sponsored enterprise obligations		$	—		$	—		$	5,454		$	36,689
U.S. government agency and government-sponsored residential mortgage-backed securities			—			—			53,449			207,424
SBA asset-backed securities			—			—			38			1,119
Corporate bonds			—			—			151			849
		$	—		$	—		$	59,092		$	246,081

Securities held to maturity

U.S. government and government-sponsored enterprise obligations		$	—		$	—			137			14,863
SBA asset-backed securities			7			4,204			—			—
		$	7		$	4,204		$	137		$	14,863

December 31, 2024:
Securities available for sale

U.S. government and government-sponsored enterprise obligations		$	-		$	-		$	6,480		$	35,663
U.S. government agency and government-sponsored residential mortgage-backed securities			31			9,346			58,538			206,308
SBA asset-backed securities			-			-			64			1,382
Corporate bonds			-			-			151			849
		$	31		$	9,346		$	65,233		$	244,202

Securities held to maturity

U.S. government and government-sponsored enterprise obligations		$	-		$	-			228			14,772
SBA asset-backed securities			114			4,512			-			-
		$	114		$	4,512		$	228		$	14,772

Management assesses the decline in fair value of investment securities on a regular basis. Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, a structural change in an investment, volatility of earnings of a specific issuer, or deterioration in credit quality of the issuer. Management evaluates both qualitative and quantitative factors to assess whether an impairment exists.

As of March 31, 2025, the Company’s security portfolio consisted of 112 debt securities, 101 of which were in an unrealized loss position. The unrealized losses are primarily related to the Company’s debt securities that were issued by U.S. government-sponsored enterprises and agencies. The Company does not believe that the debt securities that were in an unrealized loss position as of March 31, 2025 represent a credit loss impairment. As of March 31, 2025, and December 31, 2024, the gross unrealized loss positions were primarily related to mortgage-backed securities and other obligations issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. Total gross unrealized losses were primarily attributable to changes in interest rates relative to when the investment securities were purchased, and not due to the credit quality of the investment securities.

Management reviewed the collectability of the corporate bonds taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings, including ratings in effect as of the reporting period date as well as credit rating changes between the reporting period date and the filing date of this report, and other information. Management believes the unrealized losses on the corporate bonds are primarily attributable to changes in the investment spreads and interest rates, and not changes in the credit quality of the issuers of the corporate bonds.

Management expects to recover the entire amortized cost basis of the available-for-sale debt securities with an unrealized loss. Furthermore, the Company does not intend to sell these securities, and it is unlikely that the Company will be required to sell these securities, before recovery of their cost basis, which may be at maturity. Therefore, no ACL was recorded at March 31, 2025.

As of March 31, 2025, the held-to-maturity securities were U.S. government-sponsored enterprise obligations. These securities are guaranteed by the government-sponsored enterprise with a long history of no credit losses, and Management has determined these securities to have a zero loss expectation and therefore does not estimate an ACL on these securities.