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Investments

3 Months Ended

Mar. 31, 2025

2. Investments

A summary of the Company’s investment securities classified as available-for-sale and held-to-maturity as of March 31, 2025 and December 31, 2024 is as follows:

(Dollars in thousands)	As of March 31, 2025
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	58,836	$	278	$	(690	)	$	58,424
Municipal obligations, tax exempt		106,240		29		(4,457	)		101,812
Municipal obligations, taxable		73,962		132		(3,480	)		70,614
Agency mortgage-backed securities		134,076		135		(9,069	)		125,142
Total available-for-sale	$	373,114	$	574	$	(17,696	)	$	355,992

Held-to-maturity:
Other	$	3,701	$	-	$	(262	)	$	3,439
Total held-to-maturity	$	3,701	$	-	$	(262	)	$	3,439

	As of December 31, 2024
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	65,349	$	53	$	(944	)	$	64,458
Municipal obligations, tax exempt		111,196		47		(4,115	)		107,128
Municipal obligations, taxable		76,200		70		(4,555	)		71,715
Agency mortgage-backed securities		140,651		40		(11,480	)		129,211
Total available-for-sale	$	393,396	$	210	$	(21,094	)	$	372,512

Held-to-maturity:
Other	$	3,672	$	-	$	(382	)	$	3,290
Total held-to-maturity	$	3,672	$	-	$	(382	)	$	3,290

The amortized cost of the above held-to-maturity investment securities has been further reduced by the allowance for credit losses of $91,000 at both March 31, 2025 and December 31, 2024.

The tables above show that some of the securities in the Company’s available-for-sale and held-to-maturity investment portfolios had unrealized losses, or were temporarily impaired, as of both March 31, 2025 and December 31, 2024. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date.

The following table summarizes 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 along with the length of time each category of securities has been in a continuous loss position:

			As of March 31, 2025
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Available-for-sale:	securities		value		losses			value		losses			value		losses
U.S. treasury securities		22	$	688	$	(2	)	$	39,801	$	(688	)	$	40,489	$	(690	)
Municipal obligations, tax exempt		243		12,812		(299	)		85,040		(4,158	)		97,852		(4,457	)
Municipal obligations, taxable		104		18,548		(308	)		45,921		(3,172	)		64,469		(3,480	)
Agency mortgage-backed securities		98		5,301		(97	)		102,371		(8,972	)		107,672		(9,069	)
Total for available-for-sale		467	$	37,349	$	(706	)	$	273,133	$	(16,990	)	$	310,482	$	(17,696	)

			As of December 31, 2024
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Available-for-sale:	securities		value		losses			value		losses			value		losses
U.S. treasury securities		22	$	1,558	$	-		$	43,327	$	(944	)	$	44,885	$	(944	)
Municipal obligations, tax exempt		254		16,754		(311	)		86,409		(3,804	)		103,163		(4,115	)
Municipal obligations, taxable		107		22,201		(726	)		45,285		(3,829	)		67,486		(4,555	)
Agency mortgage-backed securities		102		18,875		(223	)		105,615		(11,257	)		124,490		(11,480	)
Total for available-for-sale		485		59,388		(1,260	)		280,636		(19,834	)		340,024		(21,094	)

The Company’s U.S. treasury portfolio consists of securities issued by the United States Department of the Treasury (“U.S. treasury”). The receipt of principal and interest on U.S. treasury securities is guaranteed by the full faith and credit of the U.S. government. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of its cost basis, the Company believed that the available-for-sale U.S. treasury securities identified in the table above were temporarily impaired as of March 31, 2025 and December 31, 2024.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of March 31, 2025, the Company did not intend to sell and it was more likely than not that the Company would not be required to sell its municipal obligations in an unrealized loss position until the recovery of its cost basis. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired as of March 31, 2025 and December 31, 2024.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of Federal Home Loan Mortgage Corporation, Federal National Mortgage Association and the Government National Mortgage Association. The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the table above were temporarily impaired as of March 31, 2025 and December 31, 2024.

The Company’s other investment securities portfolio consists of seven subordinated debentures issued by financial institutions. These investment securities were acquired in the Freedom Bank acquisition in 2022 and classified as held-to-maturity. The securities were issued in 2021 and 2022 with a 10 year maturity and a fixed rate for five years. The securities are callable after the end of the fixed rate term, beginning September 3, 2026. The following table provides information regarding the Company’s allowance for credit losses related to held-to-maturity investment securities for the period presented:


	Three months ended
	March 31,
(Dollars in thousands)	2025		2024
Balance at January 1,	$	91	$	91
Provision for credit losses		-		-
Balance at March 30,	$	91	$	91

The table below sets forth the amortized cost and fair value of investment securities at March 31, 2025. The table includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

(Dollars in thousands)	Amortized		Estimated
Available-for-sale:	cost		fair value
Due in less than one year	$	29,015	$	28,812
Due after one year but within five years		210,155		201,011
Due after five years but within ten years		104,394		98,476
Due after ten years		29,550		27,693
Total available-for-sale	$	373,114	$	355,992

Held-to-maturity:
Due after one year but within five years		3,701		3,439
Total held-to-maturity	$	3,701	$	3,439

Sale proceeds and gross realized gains and losses on sales of available-for-sale securities were as follows for the three months ended March 31, 2025 and March 31, 2024:

Schedule of Realized Gain (loss)

	2025			2024
(Dollars in thousands)	Three months ended March 31,
	2025			2024

Sales proceeds	$	3,394		$	-

Realized gains	$	22		$	-
Realized losses		(24	)		-
Net realized losses	$	(2	)	$	-

Securities with carrying values of $295.1 million and $305.3 million were pledged to secure public funds on deposits, repurchase agreements and as collateral for borrowings at March 31, 2025 and December 31, 2024, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10.0% of consolidated stockholders’ equity.