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SECURITIES AVAILABLE FOR SALE

9 Months Ended

Sep. 30, 2025

SECURITIES AVAILABLE FOR SALE

SECURITIES AVAILABLE FOR SALE

NOTE 3. SECURITIES AVAILABLE FOR SALE

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


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value			Allowance
September 30, 2025
Debt securities:
Obligations of US Government-sponsored enterprises		$	1,139		$	—		$	(15)		$	1,124		$	—
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			276,037			2,680			(23,778)			254,939			—
US Government agency			151,116			309			(10,134)			141,291			—
Private label			11,986			9			(869)			11,126			—
Obligations of states and political subdivisions thereof			120,775			3			(18,155)			102,623			—
Corporate bonds			89,738			222			(3,253)			86,707			—
Total available-for-sale debt securities		$	650,791		$	3,223		$	(56,204)		$	597,810		$	—


					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 available-for-sale debt securities		$	583,316		$	5,954		$	(68,252)		$	521,018		$	(568)

Credit Quality Information

We monitor the credit quality of available-for-sale debt 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 was 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. As of September 30, 2025 we have one nonaccrual corporate bond of $8.0

million written down by $5.8 million, of which $4.6 million is included in losses on available-for-sale debt securities. The bond previously carried a $1.2 million allowance, which was charged-off through the allowance for credit losses on securities during the period ended June 30, 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 table below presents a rollforward by major security type for the quarter and year ended September 30, 2025 of the allowance for credit losses on available-for-sale debt securities held at period end:


			Three Months Ended September 30,						Nine Months Ended September 30,
			2025						2025
(in thousands)			Corporate Bonds			Total			Corporate Bonds			Total
Beginning Balance		$	—		$	—		$	568		$	568
Provision for credit losses on available-for-sale debt securities			—			—			636			636
Charge-offs			—			—			(1,204)			(1,204)
Ending Balance		$	—		$	—		$	—		$	—

As of September 30, 2024, we carried no allowance on available-for-sale debt securities in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments.

The amortized cost and estimated fair value of available-for-sale debt securities segregated by contractual maturity at September 30, 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		$	9,986		$	9,832
Over 1 year to 5 years			46,362			45,270
Over 5 years to 10 years			41,691			39,470
Over 10 years			113,613			95,882
Total bonds and obligations			211,652			190,454
Mortgage-backed securities and collateralized mortgage obligations			439,139			407,356
Total available-for-sale debt securities		$	650,791		$	597,810

The proceeds from sales, calls and maturities of available-for-sale debt securities, gross realized gains and losses for the three and nine months ended September 30, 2025 and 2024 are as follows:


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
(in thousands)		2025			2024			2025			2024
Proceeds from sales		$	40,987		$	—		$	40,987		$	—
Proceeds from calls/paydowns			31,559			10,350			73,216			44,006
Proceeds from maturities			—			11			—			3,011
Gross realized gains			247			—			247			50
Gross realized losses			6			—			6			—
Gross impairment losses			178			—			4,571			—

Accrued interest receivable on available-for-sale debt securities totaled $3.6 million at September 30, 2025 and $3.3 million at December 31, 2024, which is reported in other assets on the consolidated balance sheets.

The following tables summarize available-for-sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded at September 30, 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
September 30, 2025
Debt securities:
Obligations of US Government-sponsored enterprises		$	1		$	692		$	14		$	432		$	15		$	1,124
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			13			1,242			23,765			157,795			23,778			159,037
US Government agency			1,017			35,579			9,117			70,735			10,134			106,314
Private label			—			—			869			9,102			869			9,102
Obligations of states and political subdivisions thereof			11			1,290			18,144			96,646			18,155			97,936
Corporate bonds			134			13,858			3,119			58,381			3,253			72,239
Total available-for-sale debt securities		$	1,176		$	52,661		$	55,028		$	393,091		$	56,204		$	445,752


		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 available-for-sale debt securities		$	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 September 30, 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 1.33% 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

370 out of the total 511 securities in our portfolio of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 13.01% 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

127 out of the total 168 securities in our portfolio of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 8.70% 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

13 of the total 17 securities in our portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 8.71% 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

54 of the total 65 securities in our portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 15.64% 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

23 out of the total 32 securities in our portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 4.31% 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 September 30, 2025 and December 31, 2024 is as follows:


		September 30, 2025						December 31, 2024
		Carrying			Estimated			Carrying			Estimated
(in thousands)		Value			Fair Value			Value			Fair Value
Securities pledged for deposits		$	16,650		$	14,757		$	18,483		$	15,821
Securities pledged for repurchase agreements			15,505			13,463			16,764			14,020
Securities pledged for borrowings ⁽¹⁾			49,886			43,452			35,819			30,634
Total securities pledged		$	82,041		$	71,672		$	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 (the “Reserve Bank”).