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Investment Securities

9 Months Ended

Sep. 30, 2025

(4) Investment Securities

(a) Debt Securities available for sale

The amortized cost and fair value of the debt securities available for sale are as follows:

	September 30, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value

U.S. government sponsored enterprises	$	51,916	$	30	$	389	$	51,557
State and political subdivisions		18		-		-		18
Mortgage backed securities and collateralized mortgage obligations - residential		232,672		528		17,734		215,466
Corporate bonds		39,970		40		210		39,800
Small Business Administration - guaranteed participation securities		13,138		-		808		12,330
Other		689		12		-		701
Total Securities Available for Sale	$	338,403	$	610	$	19,141	$	319,872

	December 31, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value

U.S. government sponsored enterprises	$	86,833	$	4	$	1,220	$	85,617
State and political subdivisions		18		-		-		18
Mortgage backed securities and collateralized mortgage obligations - residential		239,420		114		26,406		213,128
Corporate bonds		45,033		-		452		44,581
Small Business Administration - guaranteed participation securities		15,471		-		1,330		14,141
Other		688		12		-		700

Total Securities Available for Sale	$	387,463	$	130	$	29,408	$	358,185

The following table categorizes the debt securities included in the available for sale portfolio as of September 30, 2025, based on the securities’ final maturity. Actual maturities may differ because of securities prepayments and the right of certain issuers to call or prepay their obligations without penalty. Debt securities not due at a single maturity date are presented separately:

	Amortized		Fair
(dollars in thousands)	Cost		Value

Due in one year or less	$	24,961	$	24,622
Due after one year through five years		45,652		45,594
Due after five years through ten years		21,980		21,860
Mortgage backed securities and collateralized mortgage obligations - residential		232,672		215,466
Small Business Administration - guaranteed participation securities		13,138		12,330
	$	338,403	$	319,872

Gross unrealized losses on debt securities available for sale and the related fair values aggregated by the length of time that individual securities have been in an unrealized loss position, were as follows:

	September 30, 2025
	Less than				12 months
	12 months				or more				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss

U.S. government sponsored enterprises	$	6,987	$	13	$	34,537	$	376	$	41,524	$	389
Mortgage backed securities and collateralized mortgage obligations - residential		-		-		184,496		17,734		184,496		17,734
Corporate bonds		24,770		210		-		-		24,770		210
Small Business Administration - guaranteed participation securities		-		-		12,330		808		12,330		808

Total	$	31,757	$	223	$	231,363	$	18,918	$	263,120	$	19,141

	December 31, 2024
	Less than				12 months
	12 months				or more				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss

U.S. government sponsored enterprises	$	11,961		38	$	68,651	$	1,182	$	80,612	$	1,220
Mortgage backed securities and collateralized mortgage obligations - residential		12,346		280		194,636		26,126		206,982		26,406
Corporate bonds		-		-		44,581		452		44,581		452
Small Business Administration - guaranteed participation securities		-		-		14,141		1,330		14,141		1,330

Total	$	24,307		318	$	322,009	$	29,090	$	346,316	$	29,408

There was no allowance for credit losses recorded for debt securities available for sale during the three and nine months ended September 30, 2025 and 2024.

The proceeds from sales and calls and maturities of debt securities available for sale, gross realized gains and gross realized losses from sales and calls during the three and nine months ended September 30, 2025 and 2024 are as follows:

	Three months ended September 30,
(dollars in thousands)	2025		2024

Proceeds from sales	$	-	$	-
Proceeds from calls/paydowns		30,105		33,992
Proceeds from maturities		10,000		5,000
Gross realized gains		-		-
Gross realized losses		-		-

	Nine months ended September 30,
	2025		2024
(dollars in thousands)

Proceeds from sales		-		-
Proceeds from calls/paydowns		54,469		54,486
Proceeds from maturities		70,050		60,000
Gross realized gains		-		-
Gross realized losses		-		-

There were no transfers of debt securities available for sale during the three and nine months ended September 30, 2025 and 2024.

(b) Held to maturity securities

The amortized cost and fair value of the held to maturity securities are as follows:

	September 30, 2025
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value

Mortgage backed securities and collateralized mortgage obligations - residential	$	4,593	$	84	$	48	$	4,629
Total held to maturity	$	4,593	$	84	$	48	$	4,629

	December 31, 2024
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value


Mortgage backed securities and collateralized mortgage obligations - residential	$	5,365	$	45	$	104	$	5,306
Total held to maturity	$	5,365	$	45	$	104	$	5,306

The following table categorizes the debt securities included in the held to maturity portfolio as of September 30, 2025, based on the securities’ final maturity. Actual maturities may differ because of securities prepayments and the right of certain issuers to call or prepay their obligations without penalty. Debt securities not due at a single maturity date are presented separately:

(dollars in thousands)	Amortized		Fair
	Cost		Value
Mortgage backed securities and collateralized mortgage obligations - residential	$	4,593	$	4,629
	$	4,593	$	4,629

Gross unrecognized losses on held to maturity securities and the related fair values aggregated by the length of time that individual securities have been in an unrecognized loss position, were as follows:

	September 30, 2025
	Less than				12 months
(dollars in thousands)	12 months				or more				Total
			Gross				Gross				Gross
	Fair		Unrec.		Fair		Unrec.		Fair		Unrec.
	Value		Loss		Value		Loss		Value		Loss
Mortgage backed securities and collateralized mortgage obligations - residential	$	-	$	-	$	1,764	$	48	$	1,764	$	48

Total	$	-	$	-	$	1,764	$	48	$	1,764	$	48

	December 31, 2024
	Less than				12 months
(dollars in thousands)	12 months				or more				Total
			Gross				Gross				Gross
	Fair		Unrec.		Fair		Unrec.		Fair		Unrec.
	Value		Loss		Value		Loss		Value		Loss

Mortgage backed securities and collateralized mortgage obligations - residential	$	592	$	7	$	2,047	$	97	$	2,639	$	104

Total	$	592	$	7	$	2,047	$	97	$	2,639	$	104

There were no sales or transfers of held to maturity securities during the three and nine months ended September 30, 2025 and 2024.

There was no allowance for credit losses recorded for held to maturity securities as of September 30, 2025 and December 31, 2024. There was no credit loss expense recorded for held to maturity securities for the three and nine months ended September 30, 2025 and 2024. As of September 30, 2025, there were no securities on non-accrual status and all securities were performing in accordance with contractual terms.

During the second quarter of 2024, Visa Inc. accepted the Company’s tender of its 6,528 shares of Visa Class B-1 common stock in exchange for a combination of Visa Class B-2 common stock and Visa Class C common stock. As a result of the exchange, the Company marked its Visa Class C common stock to fair value and recorded a gain of $1.4 million based on the conversion privilege of the Visa Class C common stock and the closing price of Visa Class A common stock on June 28, 2024 of $262.47 per share. In 2024, Company’s Visa Class C shares were marked to fair value on a recurring basis using the Visa Class A shares as evidence of orderly transactions between market participants for similar securities issued by Visa. The Company originally obtained the shares in 2008. The carrying value of the Visa Class B-2 shares is nominal as of September 30, 2025 and there was no activity during the three and nine months ended September 30, 2025.

(d) Securities in an unrealized loss position

As of September 30, 2025, the Company’s securities portfolio included certain securities which were in an unrealized loss position, and are discussed below.

U.S. government sponsored enterprises:

In the case of unrealized losses on U.S. government sponsored enterprises, because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the third quarter of 2025. As of September 30, 2025, 8 out of 10 securities were in an unrealized loss position. All securities are performing.

Mortgage-backed securities and collateralized mortgage obligations – residential:

At September 30, 2025, all mortgage-backed securities and collateralized mortgage obligations held by the Company were issued by U.S. government sponsored entities and agencies, primarily Ginnie Mae, Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the third quarter of 2025. As of September 30, 2025, 108 out of 120 securities were in an unrealized loss position. All securities are performing.

Small Business Administration (SBA) - guaranteed participation securities:

At September 30, 2025, all of the SBA securities held by the Company were issued and guaranteed by the U.S. Small Business Administration. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the third quarter of 2025. As of September 30, 2025, 8 out of 8 securities were in an unrealized loss position. All securities are performing.

Corporate Bonds:

At September 30, 2025, corporate bonds held by the Company are investment grade quality. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the third quarter of 2025. As of September 30, 2025, 3 out of 7 securities were in an unrealized loss position. All securities are performing.