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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2025

INVESTMENT SECURITIES

INVESTMENT SECURITIES

NOTE 3. INVESTMENT SECURITIES

Investment securities have been classified according to management’s intent. The amortized cost of securities and their fair values are as follows:


		September 30, 2025
(Dollars in thousands)		Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale
Mortgage-backed securities		$	46,507		$	116		$	(3,321)		$	43,302
Municipal obligations			1,699			18			(166)			1,551
Total available-for-sale		$	48,206		$	134		$	(3,487)		$	44,853
Securities held-to-maturity
U.S. Government and agency obligations		$	13,000		$	-		$	(1,547)		$	11,453
Municipal obligations			1,945			77			(11)			2,011
Total held-to-maturity		$	14,945		$	77		$	(1,558)		$	13,464


		December 31, 2024
(Dollars in thousands)		Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale
Mortgage-backed securities		$	31,511		$	18		$	(4,327)		$	27,202
Municipal obligations			1,704			4			(198)			1,510
Total available-for-sale		$	33,215		$	22		$	(4,525)		$	28,712
Securities held-to-maturity
U.S. Government and agency obligations		$	13,000		$	-		$	(2,140)		$	10,860
Municipal obligations			447			-			(23)			424
Total held-to-maturity		$	13,447		$	-		$	(2,163)		$	11,284

There were no securities transferred between classifications during the nine months ended September 30, 2025 or 2024. There were no sales of investment securities during the nine months ended September 30, 2025. During the nine months ended September 30, 2024, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million.

Accrued interest receivable on the Company’s investment securities totaled $169,000 and $142,000 at September 30, 2025 and December 31, 2024, respectively.

Investment securities with a carrying amount of $25.5 million and $15.1 million were pledged to secure public deposits as required or permitted by law at September 30, 2025 and December 31, 2024, respectively. The Company also uses a custodial letter of credit granted by the Federal Home Loan Bank of Dallas to collateralize public fund deposits. At September 30, 2025 and December 31, 2024, $20.0 million and $25.0 million, respectively, of the custodial letter of credit was pledged as collateral for public deposits.

At September 30, 2025 and December 31, 2024, other than securities issued by U.S. Government agencies or government-sponsored enterprises, we had no investments in a single issuer which had an aggregate book value in excess of 10% of the Company’s shareholders’ equity.

The following is a summary of maturities of securities available-for-sale and held-to-maturity at September 30, 2025:


		September 30, 2025
		Available-for-Sale						Held-to-Maturity
(Dollars in thousands)		Amortized Cost			Fair Value			Amortized Cost			Fair Value
Amounts maturing in:
One year or less		$	-		$	-		$	-		$	-
After one through five years			632			650			9,439			8,512
After five through ten years			-			-			5,506			4,952
After ten years			1,067			901			-			-
Subtotal			1,699			1,551			14,945			13,464
Mortgage-backed securities			46,507			43,302			-			-
Total		$	48,206		$	44,853		$	14,945		$	13,464

Securities, other than mortgage-backed securities, are classified according to their contractual maturities without consideration of principal amortization, potential prepayments, or call options. The expected maturities may differ from contractual maturities because of the exercise of call options and potential paydowns. Accordingly, actual maturities may differ from contractual maturities.

Information pertaining to securities with gross unrealized losses at September 30, 2025 and December 31, 2024 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


		September 30, 2025
		Less than 12 Months						12 Months or Greater						Total
(Dollars in thousands)		Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses
Securities available-for-sale
Mortgage-backed securities		$	15,706		$	(63)		$	20,158		$	(3,258)		$	35,864		$	(3,321)
Municipal obligations			-			-			901			(166)			901			(166)
Total available-for-sale		$	15,706		$	(63)		$	21,059		$	(3,424)		$	36,765		$	(3,487)
Securities held-to-maturity
U.S. Government and agency obligations		$	-		$	-		$	11,452		$	(1,547)		$	11,452		$	(1,547)
Municipal obligations			-			-			428			(11)			428			(11)
Total held-to-maturity		$	-		$	-		$	11,880		$	(1,558)		$	11,880		$	(1,558)
Total		$	15,706		$	(63)		$	32,939		$	(4,982)		$	48,645		$	(5,045)


		December 31, 2024
		Less than 12 Months						12 Months or Greater						Total
(Dollars in thousands)		Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses
Securities available-for-sale
Mortgage-backed securities		$	3,274		$	(90)		$	18,135		$	(4,237)		$	21,409		$	(4,327)
Municipal obligations			-			-			878			(198)			878			(198)
Total available-for-sale		$	3,274		$	(90)		$	19,013		$	(4,435)		$	22,287		$	(4,525)
Securities held-to-maturity
U.S. Government and agency obligations		$	-		$	-		$	10,860		$	(2,140)		$	10,860		$	(2,140)
Municipal obligations			-			-			424			(23)			424			(23)
Total held-to-maturity		$	-		$	-		$	11,284		$	(2,163)		$	11,284		$	(2,163)
Total		$	3,274		$	(90)		$	30,297		$	(6,598)		$	33,571		$	(6,688)

At September 30, 2025 and December 31, 2024, the Company held 48 and 41 securities, respectively, with an unrealized loss. The securities with unrealized losses consisted of mortgage-backed securities guaranteed by the government-sponsored enterprises that have a credit rating consistent with the U.S. Government, and debt obligations guaranteed by federal, state and local government entities. These unrealized losses relate principally to noncredit related factors, including changes in current interest rates for similar types of securities. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost basis. Based on management’s evaluation of the securities portfolio, the Company did not establish an allowance for credit losses for its available-for-sale or held-to-maturity securities at September 30, 2025 or December 31, 2024.