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Investment Securities
 9 Months Ended
Sep. 30, 2024
Investments, Debt and Equity Securities [Abstract]  
Investment Securities

Note 3 - Investment Securities

The amortized cost and estimated fair values of investment securities are summarized below. As of September 30, 2024 and December 31, 2023, there was no allowance for credit losses on available-for-sale securities. 

AVAILABLE-FOR-SALE:

       Gross   Gross     
   Amortized   Unrealized   Unrealized     
(Dollars in thousands)  Cost   Gains   Losses   Fair Value 
September 30, 2024                    
US Treasury securities  $15,815   $—   $(2,061)  $13,754 
Government Sponsored Enterprises   2,500    —    (289)   2,211 
Mortgage-backed securities   245,975    70    (13,264)   232,781 
Small Business Administration pools   13,199    27    (296)   12,930 
Corporate and other securities   8,757    —    (880)   7,877 
Total  $286,246   $97   $(16,790)  $269,553 
                     
       Gross   Gross     
   Amortized   Unrealized   Unrealized     
(Dollars in thousands)  Cost   Gains   Losses   Fair Value 
December 31, 2023                    
US Treasury securities  $20,791   $—   $(2,445)  $18,346 
Government Sponsored Enterprises   2,500    —    (371)   2,129 
Mortgage-backed securities   255,757    15    (17,613)   238,159 
Small Business Administration pools   16,108    24    (411)   15,721 
Corporate and other securities   8,759    —    (888)   7,871 
Total  $303,915   $39   $(21,728)  $282,226 

HELD-TO-MATURITY:

       Gross   Gross     
   Amortized   Unrealized   Unrealized     
(Dollars in thousands)  Cost   Gains   Losses   Fair Value 
September 30, 2024                    
Mortgage-backed securities  $108,094   $—   $(5,931)  $102,163 
State and local government   104,149    104    (1,771)   102,482 
Allowance for credit losses on Held-to-Maturity Securities   (24)   —    —    (24)
Total  $212,219   $104   $(7,702)  $204,621 
                     
(Dollars in thousands)  Amortized
Cost		   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Fair Value 
December 31, 2023                    
Mortgage-backed securities  $112,740    —    (8,490)  $104,250 
State and local government   104,460    283    (3,445)   101,298 
Allowance for credit losses on Held-to-Maturity Securities   (30)   —    —    (30)
Total  $217,170    283    (11,935)  $205,518 

 

There were no gross realized gains or gross realized losses from the sale of available-for-sale investment securities during the three and nine months ended September 30, 2024, and $1.2 million gross realized losses from the sale of available -for-sale securities during the three and nine months ended September 30, 2023.

For available-for-sale securities, management evaluates all investments in an unrealized loss position on a quarterly basis, or more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings.

If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive income.

Changes in the allowance for credit loss are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance for credit loss when management believes an available-for-sale security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met. At September 30, 2024 and December 31, 2023, there was no allowance for credit loss related to the available-for-sale securities portfolio.

The following tables show gross unrealized losses and fair values of available-for-sale securities for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous loss position, as of September 30, 2024.

 

                         
September 30, 2024  Less than 12 months   12 months or more   Total 
Available-for-sale securities:  Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
(Dollars in thousands)  Value   Loss   Value   Loss   Value   Loss 
US Treasury Securities  $—   $—   $13,754   $2,061   $13,754   $2,061 
Government Sponsored Enterprise   —    —    2,211    289    2,211    289 
Mortgage-backed securities   318    —    222,197    13,264    222,515    13,264 
Small Business Administration pools   700    —    9,104    296    9,804    296 
Corporate and other securities   1,495    263    6,377    617    7,872    880 
Total  $2,513   $263   $253,643   $16,527   $256,156   $16,790 

The following table shows gross unrealized losses by fair values of available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous loss position as of December 31, 2023.

                         
December 31, 2023  Less than 12 months   12 months or more   Total 
Available-for-sale securities:  Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
(Dollars in thousands)  Value   Loss   Value   Loss   Value   Loss 
US Treasury Securities  $—   $—   $18,346   $2,445   $18,346   $2,445 
Government Sponsored Enterprise   —    —    2,129    371    2,129    371 
Mortgage-backed securities   8,164    423    223,844    17,190    232,008    17,613 
Small Business Administration pools   4,253    45    7,638    366    11,891    411 
Corporate and other securities   1,880    115    4,236    773    6,116    888 
Total  $14,297   $583   $256,193   $21,145   $270,490   $21,728 

 

The following table shows a roll forward of the allowance for credit losses on held to maturity securities for the three and nine months ended September 30, 2024 and 2023.

   Three Months 
   Ended 
(Dollars in thousands)  September 30, 2024 
Allowance for Credit Losses on Held-to-Maturity Securities:     
State and local government     
Beginning balance, June 30, 2024  $27 
Provision for credit losses   (3)
Ending balance, September 30, 2024  $24 
      
   Three Months 
   Ended 
(Dollars in thousands)  September 30, 2023 
Allowance for Credit Losses on Held-to-Maturity Securities:     
State and local government     
Beginning balance, June 30, 2023  $37 
Provision for credit losses   (5)
Ending balance, September 30, 2023  $32 
      
   Nine Months 
   Ended 
(Dollars in thousands)  September 30, 2024 
Allowance for Credit Losses on Held-to-Maturity Securities:     
State and local government     
Beginning balance, December 31, 2023  $30 
Provision for credit losses   (6)
Ending balance, September 30, 2024  $24 
      
   Nine Months 
   Ended 
(Dollars in thousands)  September 30, 2023 
Allowance for Credit Losses on Held-to-Maturity Securities:     
State and local government     
Beginning balance, December 31, 2022  $— 
Adjustment for adoption of ASC 326   43 
Provision for credit losses   (11)
Ending balance, September 30, 2023  $32 

At September 30, 2024, the Company had no securities held-to-maturity that were past due 30 days or more as to principal or interest payments. The Company had no securities held-to-maturity classified as non-accrual at September 30, 2024.

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type. The held-to-maturity portfolio consists of mortgage-backed and municipal securities. Securities are generally rated BBB- or higher. Securities are analyzed individually to establish a CECL reserve.

The estimate of expected credit losses is primarily based on the ratings assigned to the securities by debt rating agencies and the average of the annual historical loss rates associated with those ratings. The Company then multiplies those loss rates, as adjusted for any modifications to reflect current conditions and reasonable and supportable forecasts as considered necessary, by the remaining lives of each individual security to arrive at a lifetime expected loss amount. Management classifies the held-to-maturity portfolio into the following major security types: mortgage-backed securities or state and local governments.

All the mortgage-backed securities (“MBS”) held by the Company are issued by government-sponsored corporations. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. As a result, no allowance for credit losses was recorded on held-to-maturity MBS as of September 30, 2024 and December 31, 2023. The state and local governments securities held by the Company are highly rated by major rating agencies.

The Company monitors the credit quality of the debt securities held to maturity through the use of credit ratings (Moody’s) on a quarterly basis. In the event that Moody’s does not provide a rating, the comparable S&P rating is used and converted to a Moody’s rating. The following table summarizes the amortized cost of debt securities held to maturity at September 30, 2024 and December 31, 2023, aggregated by credit quality indicators.

   As of   As of 
(Dollars in thousands)  September 30, 2024   December 31, 2023 
Rating:          
Aaa  $153,394   $156,749 
Aa1/Aa2/Aa3   53,792    55,388 
A1/A2   5,057    5,063 
Allowance for Credit Losses on Held-to-Maturity Securities   (24)   (30)
Total  $212,219   $217,170 
           

The following table shows the amortized cost and fair value of investment securities at September 30, 2024, by expected maturity. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay the obligations with or without prepayment penalties. Mortgage-backed securities are included in the year corresponding with the remaining expected life.

   Available-for-sale 
September 30, 2024  Amortized   Fair 
(Dollars in thousands)  Cost   Value 
Due in one year or less  $244   $240 
Due after one year through five years   12,505    12,315 
Due after five years through ten years   33,492    30,028 
Due after ten years   240,005    226,970 
Total  $286,246   $269,553 
           
   Held-To-Maturity 
September 30, 2024  Amortized   Fair 
(Dollars in thousands)  Cost   Value 
Due in one year or less  $4,665   $4,631 
Due after one year through five years   56,606    55,635 
Due after five years through ten years   60,346    59,285 
Due after ten years   90,626    85,094 
Allowance for Credit Losses on Held-to-Maturity Securities   (24)   (24)
Total  $212,219   $204,621