Investment Securities

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Investment Securities

2. INVESTMENT SECURITIES

The following table summarizes the amortized cost and estimated fair value of securities available for sale and held to maturity at March 31, 2024 and December 31, 2023.

(Dollars in thousands)	Amortized Cost		Gross Unrealized / Unrecognized Gains		Gross Unrealized / Unrecognized Losses			Estimated Fair Value
At March 31, 2024:
Mortgage backed securities	$	12,288	$	22	$	(787	)	$	11,523
Government agencies		19,941		—		(386	)		19,555
Total available for sale securities	$	32,229	$	22	$	(1,173	)	$	31,078
Mortgage backed securities	$	51,997	$	76	$	(6,718	)	$	45,355
Government agencies		3,070		—		(507	)		2,563
Corporate bonds		40,773		—		(3,978	)		36,795
Total held to maturity securities, net	$	95,840	$	76	$	(11,203	)	$	84,713
At December 31, 2023:
Mortgage backed securities	$	15,882	$	25	$	(758	)	$	15,149
Government agencies		29,916		—		(505	)		29,411
Total available for sale securities	$	45,798	$	25	$	(1,263	)	$	44,560
Mortgage backed securities	$	56,928	$	—	$	(6,140	)	$	50,788
Government agencies		3,072		—		(513	)		2,559
Corporate bonds		40,841		—		(4,158	)		36,683
Total held to maturity securities, net	$	100,841	$	—	$	(10,811	)	$	90,030

The Company did not purchase or sell any investment securities during the three months ended March 31, 2024 and 2023.

The following table summarizes the scheduled maturities of our available for sale and held to maturity investment securities as of March 31, 2024.

	Available for Sale				Held to Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Less that one year	$	18,372	$	18,100	$	13,673	$	13,640
One to five years		4,976		4,846		14,480		14,044
Five to ten years		—		—		19,593		16,885
Beyond ten years		1,448		1,328		20,094		16,036
Securities not due at a single maturity date		7,433		6,804		28,000		24,108
Total investment securities	$	32,229	$	31,078	$	95,840	$	84,713

The amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. As such, certain securities are not included in the specific maturity categories above and instead are shown separately as securities not due at a single maturity date.

Management monitors the credit quality of held to maturity investment securities through the use of credit ratings by major credit agencies and analysis of issuer financial information, if available. Additionally, securities issued by government-sponsored agencies, such as FNMA, FHLMC and SBA, have implicit and/or explicit credit guarantees by the United States Federal Government which protect us from credit losses on the contractual cash flows of the securities. The following table reflects the amortized cost and fair value of held to maturity investment securities as of March 31, 2024 and December 31, 2023, aggregated by credit quality indicators.

	March 31, 2024				December 31, 2023
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Aaa	$	11,261	$	9,179	$	11,382	$	9,473
Aa1/Aa2/Aa3		3,069		2,563		3,072		2,559
A1/A2/A3		4,774		3,466		4,770		3,543
Not rated		76,736		69,505		81,617		74,455
Total held to maturity securities	$	95,840	$	84,713	$	100,841	$	90,030

At March 31, 2024, the Company had 51 securities in an unrealized loss position. At December 31, 2023, the Company had 55 securities in an unrealized loss position. The following table summarizes the unrealized losses for those investment securities, at the respective reporting dates, aggregated by major security type and length of time in a continuous unrealized loss position.

	Less Than 12 Months				More Than 12 Months					Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
At March 31, 2024:
Mortgage backed securities	$	—	$	—	$	9,783	$	(787	)	$	9,783	$	(787	)
Government agencies		—		—		19,555		(386	)		19,555		(386	)
Total available for sale securities	$	—	$	—	$	29,338	$	(1,173	)	$	29,338	$	(1,173	)
Mortgage backed securities	$	—	$	—	$	42,113	$	(6,718	)	$	42,113	$	(6,718	)
Government agencies		—		—		2,563		(507	)		2,563		(507	)
Corporate bonds		—		—		36,795		(3,978	)		36,795		(3,978	)
Total held to maturity securities	$	—	$	—	$	81,472	$	(11,203	)	$	81,472	$	(11,203	)
At December 31, 2023:
Mortgage backed securities	$	—	$	—	$	13,314	$	(758	)	$	13,314	$	(758	)
Government agencies		—		—		29,411		(505	)		29,411		(505	)
Total available for sale securities	$	—	$	—	$	42,725	$	(1,263	)	$	42,725	$	(1,263	)
Mortgage backed securities	$	—	$	—	$	50,788	$	(6,140	)	$	50,788	$	(6,140	)
Government agencies		—		—		2,559		(513	)		2,559		(513	)
Corporate bonds		—		—		36,683		(4,158	)		36,683		(4,158	)
Total held to maturity securities	$	—	$	—	$	90,030	$	(10,811	)	$	90,030	$	(10,811	)

At March 31, 2024 and December 31, 2023, management determined that it did not intend to sell any available for sale investment securities with unrealized losses, and it was unlikely that the Company would be required to sell any of those securities with unrealized losses before recovery of their amortized cost. No allowances for credit losses were recognized, individually or collectively, on available for sale securities in an unrealized loss position, as management did not believe any of the securities were impaired due to reasons of credit quality at March 31, 2024 and December 31, 2023.

The Company measures expected credit losses on held to maturity securities collectively by major security type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions along with reasonable and supportable forecasts. At March 31, 2024 and December 31, 2023, the Company determined that an allowance for credit losses of $75,000 and $55,000, respectively, was required for held to maturity securities. The allowance for credit losses pertained to corporate bonds and was presented as a reduction to the amortized cost of held to maturity securities outstanding.

The following table presents the balance and activity in the allowance for credit losses on held to maturity securities for the three months ended March 31, 2024 and 2023.

	Three Months Ended March 31,
(Dollars in thousands)	2024		2023
Beginning balance	$	55	$	—
Adoption of new accounting standard		—		110
Provision for credit losses		20		—
Net charge-offs		—		—
Ending balance	$	75	$	110

On a quarterly basis, the Company utilizes a comprehensive risk assessment which includes an external rating methodology to identify, measure, and monitor risks associated with our held to maturity loan portfolio. The provision for credit losses in the first quarter of 2024 was primarily driven by an increase in the risk of default pertaining to certain securities in the held to maturity portfolio, and was identified as part of the comprehensive quarterly analysis.