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SECURITIES AVAILABLE FOR SALE

12 Months Ended

Dec. 31, 2024

SECURITIES AVAILABLE FOR SALE

SECURITIES AVAILABLE FOR SALE

NOTE 2. SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale:


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value			Allowance
December 31, 2024
Debt securities:
Obligations of US Government-sponsored enterprises		$	1,344		$	—		$	(26)		$	1,318		$	—
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			208,818			22			(31,524)			177,316			—
US Government agency			115,177			53			(11,314)			103,916			—
Private label			40,633			25			(1,094)			39,564			—
Obligations of states and political subdivisions thereof			116,421			5,564			(16,533)			105,452			—
Corporate bonds			100,923			290			(7,761)			93,452			(568)
Total securities available for sale		$	583,316		$	5,954		$	(68,252)		$	521,018		$	(568)


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value			Allowance
December 31, 2023
Debt securities:
Obligations of US Government-sponsored enterprises		$	2,021		$	—		$	(29)		$	1,992		$	—
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			223,602			12			(30,332)			193,282			—
US Government agency			85,005			145			(10,937)			74,213			—
Private label			60,888			18			(1,855)			59,051			—
Obligations of states and political subdivisions thereof			119,857			4,515			(14,204)			110,168			—
Corporate bonds			105,552			19			(9,703)			95,868			—
Total securities available for sale		$	596,925		$	4,709		$	(67,060)		$	534,574		$	—

Credit Quality Information

We monitor the credit quality of available for sale securities through credit ratings from various rating agencies and substantial price changes. In an effort to make informed decisions, we utilize credit ratings that express opinions about the credit quality of a security. Securities are triggered for further review in the quarter if the security has significant fluctuations in ratings, drops below investment-grade, or significant pricing changes. For securities without credit ratings, we utilize other financial information indicating the financial health of the underlying municipality, agency, or organization associated with the underlying security.

The amortized cost and estimated fair value of available for sale securities segregated by contractual maturity at December 31, 2024 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.


		Available for sale
(in thousands)		Amortized Cost			Fair Value
Within 1 year		$	3,000		$	2,618
Over 1 year to 5 years			52,398			48,177
Over 5 years to 10 years			44,527			42,074
Over 10 years			118,763			107,353
Total bonds and obligations			218,688			200,222
Mortgage-backed securities and collateralized mortgage obligations			364,628			320,796
Total securities available for sale		$	583,316		$	521,018

The following table summarizes proceeds from the sale of AFS securities and realized gains and losses:


		Proceeds from Sale
		of Securities
(in thousands)		Available for Sale			Realized Gains			Realized Losses			Net
2024		$	3,000		$	50		$	—		$	50
2023			2,000			34			—			34
2022			7,130			151			(98)			53

There were no sales of securities in 2024, the $3.0 million represents proceeds from a called security with a $50 thousand realized gain. There were no sales of securities in 2023, the $2.0 million represents proceeds from a called security with a $34 thousand realized gain.

Accrued interest receivable on available for sale securities totaled $3.3 million at December 31, 2024 and $4.0 million at December 31, 2023, which is reported in other assets on the statement of financial position.

The following tables summarize available for sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded at December 31, 2024 and 2023, aggregated by major security type and length of time in a continuous unrealized loss position:


		Less Than Twelve Months						Over Twelve Months						Total
		Gross						Gross						Gross
		Unrealized			Fair			Unrealized			Fair			Unrealized			Fair
(in thousands)		Losses			Value			Losses			Value			Losses			Value
December 31, 2024
Debt securities:
Obligations of US Government-sponsored enterprises		$	2		$	707		$	24		$	611		$	26		$	1,318
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			109			8,003			31,415			165,116			31,524			173,119
US Government agency			817			35,174			10,497			60,789			11,314			95,963
Private label			1			948			1,093			19,839			1,094			20,787
Obligations of states and political subdivisions thereof			115			4,962			16,418			99,109			16,533			104,071
Corporate bonds			26			2,438			4,495			75,002			4,521			77,440
Total securities available for sale		$	1,070		$	52,232		$	63,942		$	420,466		$	65,012		$	472,698


		Less Than Twelve Months						Over Twelve Months						Total
		Gross						Gross						Gross
		Unrealized			Fair			Unrealized			Fair			Unrealized			Fair
(in thousands)		Losses			Value			Losses			Value			Losses			Value
December 31, 2023
Debt securities:
Obligations of US Government-sponsored enterprises		$	1		$	1,084		$	28		$	907		$	29		$	1,991
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			10			3,439			30,322			188,611			30,332			192,050
US Government agency			2			120			10,935			68,891			10,937			69,011
Private label			—			26			1,855			59,007			1,855			59,033
Obligations of states and political subdivisions thereof			26			3,099			14,178			101,036			14,204			104,135
Corporate bonds			156			4,913			9,547			84,950			9,703			89,863
Total securities available for sale		$	195		$	12,681		$	66,865		$	503,402		$	67,060		$	516,083

Obligations of US Government-sponsored enterprises

7 out of the total 7 securities in our portfolio of AFS obligations of US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 1.96% of the amortized cost of securities in unrealized loss positions. The US Small Business Administration guarantees the contractual cash flows of all of our obligations of US Government-sponsored enterprises. The securities are investment-grade rated and there were no material underlying credit downgrades during the quarter.

US Government-sponsored enterprises

460 out of the total 484 securities in our portfolio of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 15.40% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation guarantee the contractual cash flows of all of our US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the year.

US Government agency

137 out of the total 161 securities in our portfolio of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 10.55% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association guarantees the contractual cash flows of all of our US government agency securities. The securities are rated investment grade and there were no material underlying credit downgrades during the year.

Private label

18 of the total 24 securities in our portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 5.00% of the amortized cost of securities in unrealized loss positions. We expect to receive all of the future contractual cash flows related to the amortized cost on these securities.

Obligations of states and political subdivisions thereof

62 of the total 67 securities in our portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 14.37% of the amortized cost of securities in unrealized loss positions. We continually monitor the municipal bond sector of the market carefully and periodically evaluate the appropriate level of exposure to the market. At this time, we believe (i) the bonds in this portfolio carry minimal risk of default and (ii) we are appropriately compensated for that risk. There were no material underlying credit downgrades during the year.

Corporate bonds

27 of the total 32 securities in our portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 5.31% of the amortized cost of securities in unrealized loss positions. We review the financial strength of all of these bonds, and have concluded that the amortized cost remains supported by the expected future cash flows of these securities. The most recent review includes all bond issuers and their current credit ratings, financial performance and capitalization.

We expect to recover the amortized cost basis on all securities in our AFS portfolio. Furthermore, we do not intend to sell nor do we anticipate that we will be required to sell any securities in an unrealized loss position as of December 31, 2024, prior to this recovery. Our ability and intent to hold these securities until recovery is supported by our capital and liquidity positions as well as historically low portfolio turnover.

Management recorded and allowance for credit losses on two corporate notes where there was a change in future estimated cash flows during the year ended December 31, 2024. A discounted cash flow approach is used to determine the amount of the allowance. The cash flows expected to be collected, after considering expected prepayments, are discounted at the original effective interest rate. The amount of the allowance is limited to the difference between the amortized cost basis of the security and its estimated fair value.

The table below presents a rollforward by major security type for the year ended December 31, 2024 of the allowance for credit losses on available for sale debt securities held at period end:


(in thousands)			Obligations of US Government-sponsored enterprises			US Government -sponsored enterprises			US Government agency			Private Label			Obligations of states and political subdivisions thereof			Corporate Bonds			Total
Balance at January 1, 2024		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Credit losses on securities for which credit losses were not previously recorded			—			—			—			—			—			1,171			1,171
Credit losses on previously impaired securities			—			—			—			—			—			—			—
Write-offs charged against the allowance			—			—			—			—			—			(603)			(603)
Recoveries of amounts previously written off			—			—			—			—			—			—			—
Balance at December 31, 2024		$	—		$	—		$	—		$	—		$	—		$	568		$	568

As of December 31, 2023, we carried no allowance on available for sale debt securities in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments.

The Company recorded a change in the allowance for credit losses due to the passage of time in interest income of $603 thousand in December 31, 2024. There was no allowance for credit losses on interest income for the year ended December 31, 2023.

We have nonaccrual securities available for sale of $9 million that have $568 thousand in related allowance for credit losses as of December 31, 2024. There were no available for sale debt securities in nonaccrual status and no related allowance for credit losses as of December 31, 2023.

A summary of securities pledged as collateral for certain deposits and borrowing arrangements for the years ended December 31, 2024 and 2023 is as follows:


		December 31, 2024						December 31, 2023
		Carrying			Estimated			Carrying			Estimated
(in thousands)		Value			Fair Value			Value			Fair Value
Securities pledged for deposits		$	18,483		$	15,821		$	24,347		$	21,341
Securities pledged for repurchase agreements			16,764			14,020			18,841			16,230
Securities pledged for borrowings ⁽¹⁾			35,819			30,634			113,775			95,318
Total securities pledged		$	71,066		$	60,475		$	156,963		$	132,889

(1)	The Bank pledged securities as collateral for certain borrowing arrangements with the Federal Home Loan Bank of Boston and Federal Reserve Bank of Boston.

The following table summarizes the balance of securities available for sale at December 31, 2024 that represent greater than 10% of shareholders’ equity:



(in thousands)		Amortized Cost			Fair Value
Federal National Mortgage Association		$	138,375		$	118,106
Federal Home Loan Mortgage Corporation			70,443			59,210
Government National Mortgage Association			115,177			103,916
Obligations of states and political subdivisions thereof			116,421			105,452
Corporate Bonds			100,923			93,452