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Note 4 - Investment Securities

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 4 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of available for sale (“AFS”) securities and held to maturity (“HTM”) securities at December 31, 2023 and 2022, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss:

						*Gross*				*Gross*
*(dollars in thousands)*		*Amortized*				*Unrealized*				*Unrealized*				*Fair*
December 31, 2023		*Cost*				*Gains*				*Losses*				*Value*
Available for sale
Government agency securities		$	8,705			$	—			$	(544	)		$	8,161
SBA agency securities			13,289				144				(216	)			13,217
Mortgage-backed securities: residential			40,507				—				(5,855	)			34,652
Collateralized mortgage obligations: residential			94,071				454				(12,198	)			82,327
Collateralized mortgage obligations: commercial			69,941				22				(2,664	)			67,299
Commercial paper			73,121				—				(16	)			73,105
Corporate debt securities			34,800				—				(4,109	)			30,691
Municipal securities			12,636				—				(3,127	)			9,509
Total		$	347,070			$	620			$	(28,729	)		$	318,961

Held to maturity
Municipal taxable securities		$	501			$	3			$	—			$	504
Municipal securities			4,708				—				(115	)			4,593
Total		$	5,209			$	3			$	(115	)		$	5,097

						*Gross*				*Gross*
*(dollars in thousands)*		*Amortized*				*Unrealized*				*Unrealized*				*Fair*
December 31, 2022		*Cost*				*Gains*				*Losses*				*Value*
Available for sale
Government agency securities		$	5,012			$	—			$	(517	)		$	4,495
SBA agency securities			2,634				—				(223	)			2,411
Mortgage-backed securities: residential			44,809				—				(6,752	)			38,057
Mortgage-backed securities: commercial			4,887				—				(16	)			4,871
Collateralized mortgage obligations: residential			82,759				—				(12,856	)			69,903
Collateralized mortgage obligations: commercial			44,591				—				(2,901	)			41,690
Commercial paper			49,551				2				(16	)			49,537
Corporate debt securities			41,176				1				(4,165	)			37,012
Municipal securities			12,669				—				(3,815	)			8,854
Total		$	288,088			$	3			$	(31,261	)		$	256,830

Held to maturity
Municipal taxable securities		$	1,003			$	7			$	(3	)		$	1,007
Municipal securities			4,726				—				(170	)			4,556
Total		$	5,729			$	7			$	(173	)		$	5,563

There was no sale of investment securities during the years ended December 31, 2023, 2022, and 2021.

At December 31, 2023, we pledged investment securities with a fair value of $95.2 million for certificates of deposit from the state of California. One security with a fair value of $61,000 and $76,000 was pledged to secure a local agency deposit at December 31, 2023 and 2022.

Accrued interest receivable for investment debt securities at December 31, 2023 and 2022 totaled $962,000 and $810,000.

The amortized cost and fair value of the investment securities portfolio as of December 31, 2023 and 2022 are shown by expected maturity below. Mortgage-backed securities are classified in accordance with their estimated average life. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

		*Less than One Year*								*More than One Year to Five Years*								*More than Five Years to Ten Years*								*More than Ten Years*								*Total*
		*Amortized*								*Amortized*								*Amortized*								*Amortized*								*Amortized*
*(dollars in thousands)*		*Cost*				*Fair Value*				*Cost*				*Fair Value*				*Cost*				*Fair Value*				*Cost*				*Fair Value*				*Cost*				*Fair Value*
December 31, 2023
Government agency securities		$	—			$	—			$	8,705			$	8,161			$	—			$	—			$	—			$	—			$	8,705			$	8,161
SBA securities			—				—				2,292				2,095				10,997				11,122				—				—				13,289				13,217
Mortgage-backed securities: residential			—				—				11,023				9,986				19,762				16,965				9,722				7,701				40,507				34,652
Collateralized mortgage obligations: residential			18				17				36,876				35,758				57,177				46,552				—				—				94,071				82,327
Collateralized mortgage obligations: commercial			3,014				3,018				20,296				18,481				46,631				45,800				—				—				69,941				67,299
Commercial paper			73,121				73,105				—				—				—				—				—				—				73,121				73,105
Corporate debt securities			—				—				12,912				12,491				19,249				16,232				2,639				1,968				34,800				30,691
Municipal securities			—				—				—				—				—				—				12,636				9,509				12,636				9,509
Total available for sale		$	76,153			$	76,140			$	92,104			$	86,972			$	153,816			$	136,671			$	24,997			$	19,178			$	347,070			$	318,961

Municipal taxable securities		$	—			$	—			$	501			$	504			$	—			$	—			$	—			$	—			$	501			$	504
Municipal securities			—				—				—				—				2,952				2,873				1,756				1,720				4,708				4,593
Total held to maturity		$	—			$	—			$	501			$	504			$	2,952			$	2,873			$	1,756			$	1,720			$	5,209			$	5,097
*(dollars in thousands)*
December 31, 2022
Government agency securities		$	—			$	—			$	5,012			$	4,495			$	—			$	—			$	—			$	—			$	5,012			$	4,495
SBA securities			—				—				2,634				2,411				—				—				—				—				2,634				2,411
Mortgage-backed securities: residential			—				—				13,013				11,598				29,114				24,361				2,682				2,098				44,809				38,057
Mortgage-backed securities: commercial			—				—				4,887				4,871				—				—				—				—				4,887				4,871
Collateralized mortgage obligations: residential			—				—				20,687				19,646				62,072				50,257				—				—				82,759				69,903
Collateralized mortgage obligations: commercial			—				—				16,382				14,644				28,209				27,046				—				—				44,591				41,690
Commercial paper			49,551				49,537				—				—				—				—				—				—				49,551				49,537
Corporate debt securities			3,705				3,706				11,355				10,806				23,454				20,662				2,662				1,838				41,176				37,012
Municipal securities			—				—				—				—				—				—				12,669				8,854				12,669				8,854
Total available for sale		$	53,256			$	53,243			$	73,970			$	68,471			$	142,849			$	122,326			$	18,013			$	12,790			$	288,088			$	256,830

Municipal taxable securities		$	501			$	498			$	502			$	509			$	—			$	—			$	—			$	—			$	1,003			$	1,007
Municipal securities			—				—				—				—				1,739				1,692				2,987				2,864				4,726				4,556
Total held to maturity		$	501			$	498			$	502			$	509			$	1,739			$	1,692			$	2,987			$	2,864			$	5,729			$	5,563

The securities that were in an unrealized loss position at December 31, 2023, and December 31, 2022, were evaluated to determine whether the decline in fair value below the amortized cost basis resulted from a credit loss or other factors. For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 2 Summary of Significant Accounting Policies - Allowance for Credit Losses on Available-for-Sale Securities and Held-to-Maturity Securities. At December 31, 2023 and 2022, there was no reserve of credit losses on the HTM securities portfolio.

Based on the Company’s review of its debt securities in an unrealized loss position, the Company concluded the unrealized losses were due to non-credit factors primarily attributed to yield curve movement, together with widened liquidity spreads. The issuers have not, to the Company's knowledge, established any cause for default on these securities. All the securities that the Company owned were investment grade at December 31, 2023. At December 31, 2023, unrealized losses of $28.7 million comprised of $18.1 million, or 62.8%, residential mortgage-backed securities and collateralized mortgage obligations, $4.1 million, or 14.3%, corporate debt securities, $3.1 million, or 10.9%, municipal securities, $2.7 million, or 9.3%, commercial collateralized mortgage obligations, and $760,000, or 2.6%, government agency securities and SBA securities. The Company expects to recover the amortized cost basis of its securities and has no present intent to sell and will not be required to sell securities that have declined below their cost before their anticipated recovery based on the Company’s current financial condition.

The following tables show the related fair value and the gross unrealized losses of the Company's investment securities, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2023, and December 31, 2022:

		*Less than Twelve Months*								*Twelve Months or More*								*Total*
*(dollars in thousands)*		*Fair Value*				*Unrealized Losses*				*Fair Value*				*Unrealized Losses*				*Fair Value*				*Unrealized Losses*
December 31, 2023
Government agency securities		$	4,238			$	(72	)		$	3,923			$	(472	)		$	8,161			$	(544	)
SBA securities			5,102				(18	)			2,094				(198	)			7,196				(216	)
Mortgage-backed securities: residential			—				—				34,652				(5,855	)			34,652				(5,855	)
Collateralized mortgage obligations: residential			2,597				(37	)			60,275				(12,161	)			62,872				(12,198	)
Collateralized mortgage obligations: commercial			18,463				(70	)			35,077				(2,594	)			53,540				(2,664	)
Commercial paper (1)			53,211				(16	)			—				—				53,211				(16	)
Corporate debt securities			—				—				30,691				(4,109	)			30,691				(4,109	)
Municipal securities			—				—				9,509				(3,127	)			9,509				(3,127	)
Total available for sale		$	83,611			$	(213	)		$	176,221			$	(28,516	)		$	259,832			$	(28,729	)

Municipal securities		$	1,397			$	(19	)		$	3,196			$	(96	)		$	4,593			$	(115	)
Total held to maturity		$	1,397			$	(19	)		$	3,196			$	(96	)		$	4,593			$	(115	)

(1)	The Company held $19.9 million of commercial paper where the recorded value and fair value are equal as of December 31, 2023.

		*Less than Twelve Months*								*Twelve Months or More*								*Total*
*(dollars in thousands)*		*Fair Value*				*Unrealized Losses*				*Fair Value*				*Unrealized Losses*				*Fair Value*				*Unrealized Losses*
December 31, 2022
Government agency securities		$	354			$	(24	)		$	4,141			$	(493	)		$	4,495			$	(517	)
SBA securities			2,411				(223	)			—				—				2,411				(223	)
Mortgage-backed securities: residential			5,535				(362	)			32,522				(6,390	)			38,057				(6,752	)
Mortgage-backed securities: commercial			4,871				(16	)			—				—				4,871				(16	)
Collateralized mortgage obligations: residential			27,050				(1,842	)			39,815				(11,014	)			66,865				(12,856	)
Collateralized mortgage obligations: commercial			18,741				(790	)			22,949				(2,111	)			41,690				(2,901	)
Commercial paper (1)			39,624				(16	)			—				—				39,624				(16	)
Corporate debt securities			22,977				(1,843	)			10,330				(2,322	)			33,307				(4,165	)
Municipal securities			—				—				8,854				(3,815	)			8,854				(3,815	)
Total available for sale		$	121,563			$	(5,116	)		$	118,611			$	(26,145	)		$	240,174			$	(31,261	)

Municipal taxable securities		$	498			$	(3	)		$	—			$	—			$	498			$	(3	)
Municipal securities			4,556				(170	)			—				—				4,556				(170	)
Total held to maturity		$	5,054			$	(173	)		$	—			$	—			$	5,054			$	(173	)

(1)	The Company held $9.9 million of commercial paper where the recorded value and fair value are equal as of December 31, 2022.