Investment Securities

9 Months Ended

Sep. 30, 2025

(3.) INVESTMENT SECURITIES

The amortized cost and fair value of investment securities are summarized below (in thousands):


	Amortized			Unrealized		Unrealized		Fair
	Cost			Gains		Losses		Value
September 30, 2025
Securities available for sale:
Mortgage-backed securities:
Federal National Mortgage Association	$	274,642		$	4,623	$	4,851	$	274,414
Federal Home Loan Mortgage Corporation		266,560			3,376		17,666		252,270
Government National Mortgage Association		270,740			7		22,499		248,248
Collateralized mortgage obligations:
Federal National Mortgage Association		27,729			204		1,012		26,921
Federal Home Loan Mortgage Corporation		16,220			136		2,192		14,164
Government National Mortgage Association		69,925			910		—		70,835
Total mortgage-backed securities		925,816			9,256		48,220		886,852
Other debt securities		36,641			316		217		36,740
Total available for sale securities	$	962,457		$	9,572	$	48,437	$	923,592
Securities held to maturity:
U.S. Government agency and government sponsored enterprises	$	6,776		$	—	$	163	$	6,613
State and political subdivisions		33,792			39		4,915		28,916
Mortgage-backed securities:
Federal National Mortgage Association		4,809			—		377		4,432
Federal Home Loan Mortgage Corporation		7,251			—		1,073		6,178
Government National Mortgage Association		16,677			—		1,637		15,040
Collateralized mortgage obligations:
Federal National Mortgage Association		6,315			—		415		5,900
Federal Home Loan Mortgage Corporation		9,388			—		454		8,934
Government National Mortgage Association		2,619			—		155		2,464
Total mortgage-backed securities		47,059			—		4,111		42,948
Total held to maturity securities		87,627		$	39	$	9,189	$	78,477
Allowance for credit losses–securities		(2	)
Total held to maturity securities, net	$	87,625

December 31, 2024
Securities available for sale:
Mortgage-backed securities:
Federal National Mortgage Association		287,416			1		9,447		277,970
Federal Home Loan Mortgage Corporation		350,495			206		25,355		325,346
Government National Mortgage Association		216,392			84		23,210		193,266
Collateralized mortgage obligations:
Federal National Mortgage Association		14,720			—		1,320		13,400
Federal Home Loan Mortgage Corporation		20,357			136		2,732		17,761
Government National Mortgage Association		74,677			3		404		74,276
Privately issued		—			365		—		365
Total mortgage-backed securities		964,057			795		62,468		902,384
Other debt securities		8,663			69		11		8,721
Total available for sale securities	$	972,720		$	864	$	62,479	$	911,105

(3.) INVESTMENT SECURITIES (Continued)


	Amortized			Unrealized		Unrealized		Fair
	Cost			Gains		Losses		Value
December 31, 2024 (continued)
Securities held to maturity:
U.S. Government agencies and government sponsored enterprises	$	16,663		$	—	$	512	$	16,151
State and political subdivisions		45,333			26		5,192		40,167
Mortgage-backed securities:
Federal National Mortgage Association		5,120			—		580		4,540
Federal Home Loan Mortgage Corporation		7,365			—		1,367		5,998
Government National Mortgage Association		18,410			—		2,217		16,193
Collateralized mortgage obligations:
Federal National Mortgage Association		8,777			—		658		8,119
Federal Home Loan Mortgage Corporation		11,309			—		727		10,582
Government National Mortgage Association		3,026			—		220		2,806
Total mortgage-backed securities		54,007			—		5,769		48,238
Total held to maturity securities		116,003		$	26	$	11,473	$	104,556
Allowance for credit losses–securities		(2	)
Total held to maturity securities, net	$	116,001

The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities disclosed throughout this footnote. For available for sale (“AFS”) debt securities, AIR totaled $3.5 million and $3.4 million as of September 30, 2025 and December 31, 2024, respectively. For held to maturity (“HTM”) debt securities, AIR totaled $447 thousand and $456 thousand as of September 30, 2025 and December 31, 2024, respectively. AIR is included in other assets on the Company’s consolidated statements of financial condition.

For the three and nine months ended September 30, 2025 and 2024, the provision for credit losses for HTM investment securities was less than $1 thousand in each period.

Investment securities with a total fair value of $939.7 million and $828.8 million at September 30, 2025 and December 31, 2024, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

The proceeds and related gain or loss on sales of AFS securities for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025			2024
Proceeds from sales	$	29,186	$	—	$	94,142		$	—
Gross realized gains		703		—		1,311			—
Gross realized losses		—		—		(605	)		—

On December 13, 2024, the Company completed a public, underwritten common stock offering, further discussed in Note 9, Shareholders’ Equity. A portion of the proceeds from the stock offering was used to fund losses on the sale of $653.5 million of available for sale securities for a pre-tax loss of $100.2 million and the Company used the net proceeds from the sale of the securities to purchase higher-yielding agency wrapped investments with a face value of $642.6 million in December 2024.

(3.) INVESTMENT SECURITIES (Continued)

The scheduled maturities of securities available for sale and securities held to maturity at September 30, 2025 are shown below (in thousands). Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.


	Amortized		Fair
	Cost		Value
Debt securities available for sale:
Due in one year or less	$	—	$	—
Due from one to five years		9		9
Due after five years through ten years		60,485		60,871
Due after ten years		901,963		862,712
Total available for sale securities	$	962,457	$	923,592
Debt securities held to maturity:
Due in one year or less	$	7,128	$	7,130
Due from one to five years		14,869		14,250
Due after five years through ten years		17,924		15,869
Due after ten years		47,706		41,228
Total held to maturity securities	$	87,627	$	78,477

(3.) INVESTMENT SECURITIES (Continued)

Unrealized losses on investment securities for which an allowance for credit losses has not been recorded and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands):


	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
September 30, 2025
Securities available for sale:
Mortgage-backed securities:
Federal National Mortgage Association	$	—	$	—	$	19,438	$	4,851	$	19,438	$	4,851
Federal Home Loan Mortgage Corporation		—		—		67,826		17,666		67,826		17,666
Government National Mortgage Association		131,658		2,467		107,980		20,032		239,638		22,499
Collateralized mortgage obligations:
Federal National Mortgage Association		—		—		3,635		1,012		3,635		1,012
Federal Home Loan Mortgage Corporation		—		—		7,370		2,192		7,370		2,192
Government National Mortgage Association		—		—		—		—		—		—
Total mortgage-backed securities		131,658		2,467		206,249		45,753		337,907		48,220
Other debt securities		17,275		217		—		—		17,275		217
Total AFS debt securities with unrealized losses	$	148,933	$	2,684	$	206,249	$	45,753	$	355,182	$	48,437

December 31, 2024
Securities available for sale:
Mortgage-backed securities:
Federal National Mortgage Association		258,197		3,525		19,732		5,922		277,929		9,447
Federal Home Loan Mortgage Corporation		228,956		2,941		75,647		22,414		304,603		25,355
Government National Mortgage Association		113,772		2,120		69,935		21,090		183,707		23,210
Collateralized mortgage obligations:
Federal National Mortgage Association		9,742		16		3,658		1,304		13,400		1,320
Federal Home Loan Mortgage Corporation		2,411		29		7,655		2,703		10,066		2,732
Government National Mortgage Association		64,493		404						64,493		404
Total mortgage-backed securities		677,571		9,035		176,627		53,433		854,198		62,468
Other debt securities		3,652		11		—		—		3,652		11
Total AFS debt securities with unrealized losses	$	681,223	$	9,046	$	176,627	$	53,433	$	857,850	$	62,479

(3.) INVESTMENT SECURITIES (Continued)

The total number of AFS securities’ positions in the investment portfolio in an unrealized loss position, for which an allowance for credit losses had not been recorded, was 52 at September 30, 2025 and 76 at December 31, 2024. At September 30, 2025, the Company had a position in 37 investment securities with a fair value of $206.2 million and a total unrealized loss of $45.8 million that had been in a continuous unrealized loss position for more than 12 months, and a total of 15 securities’ positions in the Company’s investment portfolio with a fair value of $148.9 million and a total unrealized loss of $2.7 million that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2024, the Company had a position in 37 investment securities with a fair value of $176.6 million and a total unrealized loss of $53.4 million that had been in a continuous unrealized loss position for more than 12 months, and a total of 39 securities’ positions in the Company’s investment portfolio with a fair value of $681.2 million and a total unrealized loss of $9.0 million that had been in a continuous unrealized loss position for less than 12 months. The unrealized loss on investment securities was predominantly caused by changes in market interest rates subsequent to purchase. The fair value of most of the Company’s portfolio fluctuates as market interest rates change.

Securities Available for Sale

As of September 30, 2025 and December 31, 2024, no allowance for credit losses had been recognized on AFS securities in an unrealized loss position as management does not believe any of the securities were impaired due to reasons of credit quality. This is based upon our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our available for sale securities and in consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. Furthermore, the Company expects to recover the amortized cost basis of its investments and more than likely will not need to sell before the recovery period for operating purposes, with no impairment identified. As the portfolio is managed from a liquidity, earnings, and risk standpoint, sales from the AFS portfolio may be warranted based upon prevailing market factors. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

Securities Held to Maturity

The Company’s HTM investment securities include debt securities that are 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, are widely recognized as “risk free,” and have a long history of zero credit loss. In addition, the Company’s HTM investment securities include debt securities that are issued by state and local government agencies, or municipal bonds.

The Company monitors the credit quality of our municipal bonds through the use of a credit rating agency or by ratings that are derived by an internal scoring model. The scoring methodology for the internally derived ratings is based on a series of financial ratios for the municipality being reviewed as compared to typical industry figures. This information is used to determine the financial strengths and weaknesses of the municipality, which is indicated with a numeric rating. This number is then converted into a letter rating to better match the system used by the credit rating agencies. As of September 30, 2025, $29.1 million of our municipal bonds were rated as an equivalent to Standard & Poor’s A/AA/AAA, with $4.7 million internally rated to be the equivalent of Standard & Poor’s A/AA/AAA rating. Additionally, no municipal bonds were rated below investment grade. As of December 31, 2024, $41.9 million of our municipal bonds were rated as an equivalent to Standard & Poor’s A/AA/AAA, with $3.4 million internally rated to be the equivalent of Standard & Poor’s A/AA/AAA rating, and no municipal bonds were rated below investment grade.

As of September 30, 2025 and December 31, 2024, the Company had no past due or nonaccrual held to maturity investment securities.