INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2024

INVESTMENT SECURITIES

INVESTMENT SECURITIES

NOTE 4. INVESTMENT SECURITIES

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

	September 30, 2024
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale
Mortgage-backed securities	$	32,182	$	136	$	(3,402)	$	28,916
U.S. Government and agency obligations		1,000		-		(5)		995
Municipal obligations		2,407		26		(148)		2,285
Total available-for-sale	$	35,589	$	162	$	(3,555)	$	32,196
Securities held-to-maturity
U.S. Government and agency obligations	$	13,000	$	-	$	(1,733)	$	11,267
Municipal obligations		450		-		(18)		432
Total held-to-maturity	$	13,450	$	-	$	(1,751)	$	11,699

	December 31, 2023
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale
Mortgage-backed securities	$	65,704	$	14	$	(8,206)	$	57,512
U.S. Government and agency obligations		7,999		-		(611)		7,388
Municipal obligations		5,998		7		(365)		5,640
Total available-for-sale	$	79,701	$	21	$	(9,182)	$	70,540
Securities held-to-maturity
U.S. Government and agency obligations	$	13,003	$	-	$	(2,210)	$	10,793
Municipal obligations		458		-		(24)		434
Total held-to-maturity	$	13,461	$	-	$	(2,234)	$	11,227

There were no securities transferred between classifications during the nine months ended September 30, 2024 or 2023. During the nine months ended September 30, 2024, the Company sold 50 available-for-sale investment securities for a total loss of $5.5 million. Proceeds from the sales totaled $42.6 million, inclusive of accrued interest.

Accrued interest receivable on the Company’s investment securities totaled $153,000 and $241,000 at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024 and December 31, 2023, investment securities totaling $14.4 million and $44.6 million, respectively, were pledged to secure public deposits as required or permitted by law. During the nine months ended September 30, 2024, the Company used a custodial letter of credit granted by the Federal Home Loan Bank of Dallas to collateralize public fund deposits as we executed the investment securities sales. At September 30, 2024, $19.0 million of the custodial letter of credit was pledged as collateral for pubic deposits.

Investment securities totaling $18.9 million and $11.1 million were pledged to the Federal Reserve Bank as collateral for borrowings at September 30, 2024 and December 31, 2023, respectively.  

The following is a summary of maturities of securities available-for-sale and held-to-maturity at September 30, 2024 and December 31, 2023:

	September 30, 2024
	Available-for-Sale				Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	1,700	$	1,693	$	-	$	-
After one through five years		3,870		3,965		2,450		2,277
After five through ten years		2,583		2,606		7,000		6,051
After ten years		27,436		23,932		4,000		3,371
Total	$	35,589	$	32,196	$	13,450	$	11,699

	December 31, 2023
	Available-for-Sale				Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	1,700	$	1,643	$	-	$	-
After one through five years		10,676		10,226		2,334		2,095
After five through ten years		14,909		13,673		7,124		5,899
After ten years		52,416		44,998		4,003		3,233
Total	$	79,701	$	70,540	$	13,461	$	11,227

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, 2024 and December 31, 2023 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	September 30, 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	$	2,973	$	(13)	$	19,523	$	(3,389)	$	22,496	$	(3,402)
U.S. Government and agency obligations		-		-		995		(5)		995		(5)
Municipal obligations		-		-		1,282		(148)		1,282		(148)
Total available-for-sale	$	2,973	$	(13)	$	21,800	$	(3,542)	$	24,773	$	(3,555)
Securities held-to-maturity
U.S. Government and agency obligations	$	-	$	-	$	11,267	$	(1,733)	$	11,267	$	(1,733)
Municipal obligations		-		-		432		(18)		432		(18)
Total held-to-maturity	$	-	$	-	$	11,699	$	(1,751)	$	11,699	$	(1,751)
Total	$	2,973	$	(13)	$	33,499	$	(5,293)	$	36,472	$	(5,306)

	December 31, 2023
	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	$	554	$	(1)	$	55,959	$	(8,205)	$	56,513	$	(8,206)
U.S. Government and agency obligations		-		-		7,388		(611)		7,388		(611)
Municipal obligations		-		-		3,992		(365)		3,992		(365)
Total available-for-sale	$	554	$	(1)	$	67,339	$	(9,181)	$	67,893	$	(9,182)
Securities held-to-maturity
U.S. Government and agency obligations	$	-	$	-	$	10,793	$	(2,210)	$	10,793	$	(2,210)
Municipal obligations		-		-		434		(24)		434		(24)
Total held-to-maturity	$	-	$	-	$	11,227	$	(2,234)	$	11,227	$	(2,234)
Total	$	554	$	(1)	$	78,566	$	(11,415)	$	79,120	$	(11,416)

At September 30, 2024 and December 31, 2023, the Company held 42 and 92 securities, respectively, with an unrealized loss. The securities with unrealized losses consisted of government-sponsored mortgage-backed securities 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. 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, 2024 or December 31, 2023.