Securities Available-for-Sale

9 Months Ended

Sep. 30, 2024

Debt Securities, Available-for-Sale [Abstract]

Securities Available-for-Sale

The amortized cost and fair value of securities available-for-sale, and the corresponding amounts of gross unrealized gains and losses for which an allowance for credit losses has not been recorded, are as follows as of September 30, 2024 and December 31, 2023:


	September 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
U.S. Government-sponsored enterprises ("GSE") obligations	$	1,648	$	—	$	(216	)	$	1,432
U.S. Government agency small business administration pools guaranteed by SBA		14,537		33		(708	)		13,862
Collateralized mortgage obligations issued by the FHLMC, FNMA and GNMA		15,594		110		(441	)		15,263
Residential mortgage-backed GSE securities		42,166		857		(3,249	)		39,774
Municipal bonds		56,894		957		(3,274	)		54,577
Corporate debt		500		—		(13	)		487
Corporate subordinated debt		8,321		105		(817	)		7,609
	$	139,660	$	2,062	$	(8,718	)	$	133,004

	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
U.S. Government-sponsored enterprises ("GSE") obligations	$	1,668	$	—	$	(270	)	$	1,398
U.S. Government agency small business administration pools guaranteed by SBA		16,410		36		(863	)		15,583
Collateralized mortgage obligations issued by the FHLMC, FNMA and GNMA		2,958		—		(484	)		2,474
Residential mortgage-backed GSE securities		41,186		653		(3,618	)		38,221
Municipal bonds		57,192		1,087		(3,587	)		54,692
Corporate debt		500		—		(8	)		492
Corporate subordinated debt		10,074		3		(1,083	)		8,994
	$	129,988	$	1,779	$	(9,913	)	$	121,854

The amortized cost and fair values of securities available-for-sale at September 30, 2024 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	September 30, 2024
	Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	—	$	—
Due after one year through five years		500		487
Due after five years through ten years		10,917		9,938
Due after ten years		55,946		53,680
Total U.S. Government-sponsored enterprises obligations ("GSE"), municipal bonds, corporate debt and corporate subordinated debt		67,363		64,105
U.S. Government agency small business pools guaranteed by SBA(1)		14,537		13,862
Collateralized mortgage obligations issued by the FHLMC, FNMA, and GNMA(1)		15,594		15,263
Residential mortgage-backed GSE securities(1)		42,166		39,774
Total	$	139,660	$	133,004

(1) Actual maturities for these debt securities are dependent upon the interest rate environment and prepayments on the underlying loans.

The following is a summary of gross unrealized losses and fair value for those investments with unrealized losses for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, at September 30, 2024 and December 31, 2023.


	Less than 12 Months							More than 12 Months							Total
	Number of Securities		Fair Value		Unrealized Losses			Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
September 30, 2024
U.S. Government sponsored enterprises ("GSE") obligations		—	$	—	$	—			3	$	1,433	$	(216	)	$	1,433	$	(216	)
U.S. Government agency small business administration pools guaranteed by SBA		3		2,681		(39	)		5		3,827		(669	)		6,508		(708	)
Collateralized mortgage obligations issued by the FHLMC, FNMA and GNMA		2		6,500		(35	)		4		2,385		(406	)		8,885		(441	)
Residential mortgage backed GSE securities		5		3,647		(84	)		24		16,048		(3,165	)		19,695		(3,249	)
Municipal bonds		1		645		(6	)		50		32,631		(3,268	)		33,276		(3,274	)
Corporate debt		—		—		—			1		487		(13	)		487		(13	)
Corporate subordinated debt		—		—		—			5		4,700		(817	)		4,700		(817	)
		11	$	13,473	$	(164	)		92	$	61,511	$	(8,554	)	$	74,984	$	(8,718	)
December 31, 2023
U.S. Government sponsored enterprises ("GSE") obligations		—	$	—	$	—			3	$	1,398	$	(270	)	$	1,398	$	(270	)
U.S. Government agency small business administration pools guaranteed by SBA		8		8,432		(75	)		5		3,899		(788	)		12,331		(863	)
Collateralized mortgage obligations issued by the FHLMC, FNMA and GNMA		—		—		—			4		2,474		(484	)		2,474		(484	)
Residential mortgage backed GSE securities		5		4,806		(53	)		23		15,347		(3,565	)		20,153		(3,618	)
Municipal bonds		1		1,941		(10	)		49		30,729		(3,577	)		32,670		(3,587	)
Corporate debt		—		—		—			1		492		(8	)		492		(8	)
Corporate subordinated debt		4		4,080		(82	)		4		4,029		(1,001	)		8,109		(1,083	)
		18	$	19,259	$	(220	)		89	$	58,368	$	(9,693	)	$	77,627	$	(9,913	)

Management evaluates securities available-for-sale in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. At September 30, 2024, the Company had 103 securities available-for-sale in an unrealized loss position without an allowance for credit losses. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. 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. Accordingly, as of September 30, 2024, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in market interest rates and other market conditions, and therefore the Company carried no allowance for credit losses on securities available-for-sale as of September 30, 2024.

Proceeds from maturities and principal payments received on securities available-for-sale were $5,352 and $1,450 for the three months ended September 30, 2024 and 2023, respectively, and $8,055 and $3,661 for the nine months ended September 30, 2024 and 2023, respectively. There were no gross realized gains or losses on securities available-for-sale for the three and nine months ended September 30, 2024 and 2023.

At September 30, 2024 and December 31, 2023, $73.0 million and $74.1 million of securities available-for-sale were pledged as collateral for the Company's Bank Term Funding Program and Borrower-In-Custody secured credit facilities, respectively (see Note 6 Borrowings for more information). As of September 30, 2024 and December 31, 2023, there were no holdings of securities of any issuer, other than the SBA, FHLMC, GNMA and FNMA, whose aggregate carrying value exceeded 10% of stockholders’ equity.