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SECURITIES AVAILABLE FOR SALE

3 Months Ended

Mar. 31, 2025

SECURITIES AVAILABLE FOR SALE

SECURITIES AVAILABLE FOR SALE

NOTE 2. SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale (“AFS”):


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value			Allowance
March 31, 2025
Debt securities:
Obligations of US Government-sponsored enterprises		$	1,276		$	—		$	(19)		$	1,257		$	—
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			207,165			90			(27,668)			179,587			—
US Government agency			126,947			168			(10,153)			116,962			—
Private label			21,260			7			(974)			20,293			—
Obligations of states and political subdivisions thereof			121,653			1			(19,813)			101,841			—
Corporate bonds			99,940			410			(6,329)			94,021			(1,204)
Total securities available for sale		$	578,241		$	676		$	(64,956)		$	513,961		$	(1,204)


					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)

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, significant pricing changes, or drops below investment-grade. 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.

Management recorded an 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 quarter ended March 31, 2025 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, 2025		$	—		$	—		$	—		$	—		$	—		$	568		$	568
Change in provision for credit losses			—			—			—			—			—			636			636
Balance at March 31, 2025		$	—		$	—		$	—		$	—		$	—		$	1,204		$	1,204

As of March 31, 2024, we carried no allowance on available for sale securities in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments.

We have nonaccrual corporate bonds of $8.0 million that we have $1.2 million in related allowance for credit losses as of March 31, 2025. At December 31, 2024 we had $9.0 million of corporate bonds that we allocated $568 thousand in related allowance for credit losses. In the first quarter of 2025, a $1.0 million nonaccrual security matured and was transferred to a financing receivable non-cash asset.

The amortized cost and estimated fair value of available for sale securities segregated by contractual maturity at March 31, 2025 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities and collateralized mortgage obligations are shown in total, as their maturities are highly variable.


		Available for sale
(in thousands)		Amortized Cost			Fair Value
Within 1 year		$	2,011		$	1,997
Over 1 year to 5 years			52,367			48,951
Over 5 years to 10 years			45,512			43,377
Over 10 years			122,979			102,794
Total bonds and obligations			222,869			197,119
Mortgage-backed securities and collateralized mortgage obligations			355,372			316,842
Total securities available for sale		$	578,241		$	513,961

The proceeds from sales, calls and maturities of securities available for sale, gross realized gains and gross realized losses for the three months ended March 31, 2025 and 2024 are as follows:


		Three Months Ended
		March 31,
(in thousands)		2025			2024
Proceeds from sales		$	—		$	—
Proceeds from calls/paydowns			28,336			7,739
Proceeds from maturities			—			—
Gross realized gains			—			—
Gross realized losses			—			—

Accrued interest receivable on available for sale securities totaled $3.4 million at March 31, 2025 and $3.3 million at December 31, 2024, which is reported in other assets on the balance sheets.

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 March 31, 2025 and December 31, 2024, aggregated by major security type and length of time in 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
March 31, 2025
Debt securities:
Obligations of US Government-sponsored enterprises		$	1		$	702		$	18		$	554		$	19		$	1,256
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			27			5,737			27,641			163,863			27,668			169,600
US Government agency			627			29,919			9,526			63,329			10,153			93,248
Private label			7			8,243			967			12,026			974			20,269
Obligations of states and political subdivisions thereof			106			4,804			19,707			95,656			19,813			100,460
Corporate bonds			31			10,939			4,462			63,044			4,493			73,983
Total securities available for sale		$	799		$	60,344		$	62,321		$	398,472		$	63,120		$	458,816


		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

The following summarizes, by investment security type, the impact of performing securities in an unrealized loss position at March 31, 2025:

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 1.51% 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

430 out of the total 482 securities in our portfolio of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 14.03% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association and 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 quarter.

US Government agency

131 out of the total 164 securities in our portfolio of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 9.82% 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 investment grade rated and there were no material underlying credit downgrades during the quarter.

Private label

17 of the total 20 securities in our portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 4.59% 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 17.50% 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 the risk. There were no material underlying credit downgrades during the quarter.

Corporate bonds

25 out of the total 32 securities in our portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 5.51% of the amortized cost of bonds in unrealized loss positions. We review the financial strength of all of these bonds, and we 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.

A summary of securities pledged as collateral for certain deposits and borrowing arrangements for the months ended March 31, 2025 and December 31, 2024 is as follows:


		March 31, 2025						December 31, 2024
		Carrying			Estimated			Carrying			Estimated
(in thousands)		Value			Fair Value			Value			Fair Value
Securities pledged for deposits		$	17,834		$	15,588		$	18,483		$	15,821
Securities pledged for repurchase agreements			16,354			13,959			16,764			14,020
Securities pledged for borrowings ⁽¹⁾			35,758			29,164			35,819			30,634
Total securities pledged		$	69,946		$	58,711		$	71,066		$	60,475

(1)

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