Investment Securities Available-for-Sale and Held to Maturity

9 Months Ended

Sep. 30, 2025

Investments, Debt and Equity Securities [Abstract]

Investment Securities Available-for-Sale and Held to Maturity

Investment Securities Available-for-Sale and Held-to-Maturity

Investment securities have been classified in the consolidated balance sheets according to management’s intent. Securities available-for-sale represent those securities not classified as equity or held-to-maturity and are reported at fair value with unrealized gains and losses, net of applicable income taxes, reported in other comprehensive income. Securities held-to-maturity represent those securities for which we have the positive intent and ability to hold until maturity and are reported at cost, adjusted for amortization of premiums and accretion of discounts.

Management assesses securities in its investment portfolio for impairment on a quarterly basis or when events or circumstances suggest that the carrying amount of an investment may be impaired. In accordance with ASC 326, available-for-sale and held-to-maturity securities are evaluated as of each reporting date when the fair value is less than amortized cost, and credit losses are to be calculated

individually using a discounted cash flow method through which management compares the present value of the expected cash flows with the amortized costs. An allowance for credit losses is established to reflect the credit loss component of the decline in fair value.

Factors management considers in assessing whether a discounted cash flow method evaluation is needed for a security whose fair value is less than amortized costs include: (1) management will assess whether it intends to sell, or if it is more likely than not it will be required to sell, the security before recovery of the amortized cost basis; (2) the length of time (duration) and the extent (severity) to which the market value has been less than costs; (3) the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer, such as changes in technology that impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; and (4) changes in the rating of the security by a rating agency.

The carrying amount of securities available-for-sale and their approximate fair values as of September 30, 2025 and December 31, 2024 are as follows:


(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2025
Securities available-for-sale:
U.S government and agency securities	$	13,764	$	—	$	150	$	13,614
State and municipal securities		10,042		216		5		10,253
Mortgage-backed securities and collateralized mortgage obligations		219,173		3,312		245		222,240
Corporate bonds		129,005		2,480		873		130,612
	$	371,984	$	6,008	$	1,273	$	376,719


December 31, 2024
Securities Available-for-sale:
U.S. government and agency securities	$	17,548	$	—	$	129	$	17,419
State and municipal securities		1,700		3		4		1,699
Mortgage-backed securities and collateralized mortgage obligations		238,440		1,299		1,136		238,603
Corporate bonds		128,409		1,214		3,319		126,304
	$	386,097	$	2,516	$	4,588	$	384,025

Securitization of Commercial Real Estate Loans

During the second quarter of 2025, the Company completed two securitizations totaling $250 million of revolving commercial real estate loans secured by interests in 1-4 family residential dwellings located throughout the United States. In connection with the transactions, the Company purchased Class A-1 asset backed notes, Series 2025-1, for a total of $78 million on April 1, 2025; and Class A-1 asset backed notes, Series 2025-2 for a total of $127.5 million on June 3, 2025. The Company is not affiliated with the issuer of the notes. Further information regarding the securitization of commercial real estate loans is presented in Note 3 - Loans and Allowance for Credit Losses.

The Class A-1 Notes are classified as held-to-maturity investments. At September 30, 2025, the carrying amounts and approximate fair values are as follows:


(Dollars in thousands)	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2025
Securities held-to-maturity:
Asset-backed securities	$	206,037	$	—	$	—	$	206,037
	$	206,037	$	—	$	—	$	206,037

There were no securities held-to-maturity as of December 31, 2024.

Mortgage-backed securities are typically issued with stated principal amounts and are backed by pools of mortgages that have loans with varying maturities. The characteristics of the underlying pool of mortgages, such as prepayment risk, are passed on to the certificate holder. Accordingly, the term of mortgage-backed securities approximates the term of the underlying mortgages and can vary significantly due to prepayments. Therefore, schedules of maturities for mortgage-backed securities have been excluded from the below disclosure.

The amortized cost and estimated fair value of securities available-for-sale and held-to-maturity at September 30, 2025, by contractual maturity, are shown below.


	September 30, 2025				September 30, 2025
	Securities Available-for-Sale				Securities Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Estimated Fair Value		Carrying Value		Estimated Fair Value
Due from one year to five years	$	34,368	$	35,352	$	206,037	$	206,037
Due from five to ten years		99,699		100,282		—		—
Over ten years		18,744		18,845		—		—
		152,811		154,479		206,037		206,037
Mortgage-backed securities and collateralized mortgage obligations		219,173		222,240		—		—
	$	371,984	$	376,719	$	206,037	$	206,037

The following table summarizes securities available-for-sale with unrealized losses at September 30, 2025 and December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position:


	Less Than 12 Months				Greater Than 12 Months				Total
(Dollars in thousands)	Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value
September 30, 2025
Securities available-for-sale:
U.S. government and agency securities	$	21	$	6,540	$	129	$	7,074	$	150	$	13,614
State and municipal securities		5		1,839		—		—		5		1,839
Mortgage-backed securities and collateralized mortgage obligations		201		32,060		44		3,767		245		35,827
Corporate bonds		341		26,000		532		22,095		873		48,095
	$	568	$	66,439	$	705	$	32,936	$	1,273	$	99,375

December 31, 2024
Securities available-for-sale:
U.S. government and agency securities	$	79	$	13,688	$	50	$	3,731	$	129	$	17,419
State and municipal securities		4		995		—		—		4		995
Mortgage-backed securities and collateralized mortgage obligations		1,111		131,177		25		288		1,136		131,465
Corporate bonds		649		47,183		2,670		45,820		3,319		93,003
	$	1,843	$	193,043	$	2,745	$	49,839	$	4,588	$	242,882

There were 41 investments in an unrealized loss position at September 30, 2025, and 73 investments in an unrealized loss position at December 31, 2024. As of September 30, 2025 and December 31, 2024, no allowance for credit losses has been recognized on available-for-sale securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality. This is based upon our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our available-for-sale securities and in consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. In addition, a portion of our investments are guaranteed by the U.S. Government, Treasury, or municipalities. Furthermore, management does not have the intent to sell any of the securities classified as available-for-sale in the table above and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

There were no securities pledged as collateral as of September 30, 2025 and December 31, 2024.

The following table summarizes proceeds received from the sale of securities available-for-sale and their related gross gains and losses for the three and nine months ended September 30, 2025 and 2024:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
(Dollars in thousands)	2025		2024			2025			2024
Securities available-for-sale:
Proceeds from sales	$	—	$	15,572		$	53,407		$	30,074
Gross gain		—		—			402			280
Gross loss		—		480			740			480
Net loss	$	—	$	(480	)	$	(338	)	$	(200	)