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INVESTMENT SECURITIES
12 Months Ended
Dec. 31, 2025
INVESTMENT SECURITIES  
INVESTMENT SECURITIES

5. INVESTMENT SECURITIES

The cost basis and fair values of investment securities are summarized as follows:

Investment securities available for sale:

DECEMBER 31, 2025

GROSS

GROSS

ALLOWANCE

UNREALIZED

UNREALIZED

FOR CREDIT

FAIR

  ​ ​ ​

COST BASIS

  ​ ​ ​

GAINS

  ​ ​ ​

LOSSES

LOSSES

  ​ ​ ​

VALUE

(IN THOUSANDS)

U.S. Agency

$

5,162

$

$

(372)

$

$

4,790

U.S. Agency mortgage-backed securities

 

119,381

 

639

 

(9,164)

 

110,856

Municipal

 

10,155

 

140

 

(361)

 

9,934

Corporate bonds

 

51,473

 

387

 

(1,212)

 

50,648

Total

$

186,171

$

1,166

$

(11,109)

$

$

176,228

Investment securities held to maturity:

DECEMBER 31, 2025

ALLOWANCE

GROSS

GROSS

FOR CREDIT

CARRYING

UNREALIZED

UNREALIZED

FAIR

  ​ ​ ​

COST BASIS

  ​ ​ ​

LOSSES

VALUE

  ​ ​ ​

GAINS

LOSSES

  ​ ​ ​

VALUE

(IN THOUSANDS)

U.S. Agency

$

2,500

$

$

2,500

$

$

(216)

$

2,284

U.S. Agency mortgage-backed securities

36,592

36,592

210

(1,820)

34,982

Municipal

 

30,754

 

(1)

 

30,753

 

6

 

(1,415)

 

29,344

Corporate bonds and other securities

 

2,500

 

(89)

 

2,411

 

 

(105)

 

2,306

Total

$

72,346

$

(90)

$

72,256

$

216

$

(3,556)

$

68,916

Investment securities available for sale:

DECEMBER 31, 2024

GROSS

GROSS

ALLOWANCE

UNREALIZED

UNREALIZED

FOR CREDIT

FAIR

  ​ ​ ​

COST BASIS

  ​ ​ ​

GAINS

  ​ ​ ​

LOSSES

LOSSES

  ​ ​ ​

VALUE

(IN THOUSANDS)

U.S. Agency

$

5,345

$

$

(679)

$

$

4,666

U.S. Agency mortgage-backed securities

 

104,227

 

90

 

(12,783)

 

91,534

Municipal

 

9,031

 

2

 

(670)

 

8,363

Corporate bonds

 

54,254

 

94

 

(2,931)

(360)

 

51,057

Total

$

172,857

$

186

$

(17,063)

$

(360)

$

155,620

Investment securities held to maturity:

DECEMBER 31, 2024

ALLOWANCE

GROSS

GROSS

FOR CREDIT

CARRYING

UNREALIZED

UNREALIZED

FAIR

COST BASIS

  ​ ​ ​

LOSSES

VALUE

  ​ ​ ​

GAINS

LOSSES

  ​ ​ ​

VALUE

(IN THOUSANDS)

U.S. Agency

  ​ ​ ​

$

2,500

$

$

2,500

$

$

(365)

$

2,135

U.S. Agency mortgage-backed securities

  ​ ​ ​

26,966

26,966

28

(2,403)

24,591

Municipal

 

30,961

 

(2)

 

30,959

 

 

(2,553)

 

28,406

Corporate bonds and other securities

 

3,499

 

(87)

 

3,412

 

 

(73)

 

3,339

Total

$

63,926

$

(89)

$

63,837

$

28

$

(5,394)

$

58,471

The Company and its subsidiary, collectively, did not hold securities of any single issuer, excluding U.S. agencies, that exceeded 10% of shareholders’ equity at December 31, 2025. Management conducted a review of the investment

securities portfolio in order to identify exposures to issuers within foreign countries experiencing significant economic, fiscal, and/or political strains. Given the instability and continuing conflict between Israel and other Middle East nations, the nation of Israel has been identified by management as significantly strained. At December 31, 2025, the Company had a State of Israel Jubilee bond within the held to maturity portfolio with an amortized cost of $1.0 million and a fair value of $980,000. The 3-year bond was purchased prior to the start of the conflicts and is set to mature in August 2026.

The Company recognized no gross investment security gains or losses in 2025 and 2024. The Company sold no available for sale (AFS) securities during 2025 while the proceeds from the sale of AFS securities totaled $935,000 for 2024. The Company had established an allowance for credit losses on one of the AFS securities sold during 2024. In accordance with ASC 326, Financial Instruments – Credit Losses, once the Company decided to sell the security (i.e. intent to sell), the security was charged down, against the allowance, to fair value therefore resulting in the recognition of no gain or loss.

The carrying value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits was $142.7 million at December 31, 2025 and $125.8 million at December 31, 2024. In addition, the Company has pledged $3.8 million of available for sale securities as collateral for a revolving line of credit from an unrelated financial institution.

The interest rate environment and market yields can have a significant impact on the yield earned on mortgage-backed securities (MBS). Prepayment speed assumptions are an important factor to consider when evaluating the returns on an MBS. Generally, as interest rates decline, borrowers have more incentive to refinance into a lower rate, so prepayments will rise. Conversely, as interest rates increase, prepayments will decline. When an MBS is purchased at a premium, the yield will decrease as prepayments increase and the yield will increase as prepayments decrease. As of December 31, 2025, the Company had low premium risk as the book value of our mortgage-backed securities purchased at a premium was only 100.6% of the par value.

The Company’s consolidated investment securities portfolio had an effective duration of approximately 3.76 years. The weighted average expected maturity for available for sale securities at December 31, 2025 for U.S. agency, U.S. agency mortgage-backed, corporate bond, and municipal securities was 5.06, 7.60, 4.14, and 5.19 years, respectively. The weighted average expected maturity for held to maturity securities at December 31, 2025 for U.S. agency, U.S. agency mortgage-backed, corporate bond/other securities, and municipal securities was 4.97, 6.65, 3.93, and 3.68 years, respectively. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. The following tables set forth the contractual maturity distribution of investment securities, cost basis for available for sale and carrying value for held to maturity as well as fair market values, as of December 31, 2025.

Investment securities available for sale:

AT DECEMBER 31, 2025

TOTAL

  ​ ​ ​

  ​ ​ ​

  ​ ​ ​

  ​ ​ ​

U.S. AGENCY

INVESTMENT

MORTGAGE-

SECURITIES

CORPORATE

BACKED

AVAILABLE

U. S. AGENCY

MUNICIPAL

BONDS

SECURITIES

FOR SALE

(IN THOUSANDS)

COST BASIS

 

  ​

 

  ​

 

  ​

 

  ​

 

  ​

Within 1 year

$

 

$

700

 

$

7,793

 

$

$

8,493

After 1 year but within 5 years

 

3,112

 

 

4,372

 

 

15,841

 

 

1,100

 

24,425

After 5 years but within 10 years

 

1,000

 

 

4,103

 

 

26,089

 

 

3,976

 

35,168

Over 10 years

 

1,050

 

 

980

 

 

1,750

 

 

114,305

 

118,085

Total

$

5,162

 

$

10,155

 

$

51,473

 

$

119,381

$

186,171

FAIR VALUE

 

  ​

 

 

  ​

 

 

  ​

 

 

  ​

 

 

 

Within 1 year

$

 

$

700

 

$

7,739

$

$

8,439

After 1 year but within 5 years

 

2,904

 

 

4,124

 

 

15,772

 

1,097

 

23,897

After 5 years but within 10 years

 

899

 

 

4,126

 

 

25,356

 

3,871

 

34,252

Over 10 years

 

987

 

 

984

 

 

1,781

 

105,888

 

109,640

Total

$

4,790

 

$

9,934

 

$

50,648

$

110,856

$

176,228

Investment securities held to maturity:

AT DECEMBER 31, 2025

  ​ ​ ​

  ​ ​ ​

  ​ ​ ​

TOTAL 

U.S. AGENCY

INVESTMENT

CORPORATE

MORTGAGE-

SECURITIES 

BONDS AND

BACKED

HELD TO

U.S. AGENCY

MUNICIPAL

OTHER

SECURITIES

MATURITY

(IN THOUSANDS)

CARRYING VALUE

 

  ​

 

  ​

 

  ​

 

  ​

 

Within 1 year

$

 

$

1,406

 

$

1,000

 

$

 

$

2,406

After 1 year but within 5 years

 

 

15,844

 

 

 

15,844

After 5 years but within 10 years

 

2,500

 

13,188

 

1,411

 

1,031

 

18,130

Over 10 years

 

 

315

 

 

35,561

 

35,876

Total

$

2,500

$

30,753

$

2,411

$

36,592

$

72,256

FAIR VALUE

 

  ​

 

 

  ​

 

 

  ​

 

 

  ​

 

 

  ​

Within 1 year

$

 

$

1,404

 

$

980

 

$

 

$

2,384

After 1 year but within 5 years

 

 

15,569

 

 

 

15,569

After 5 years but within 10 years

 

2,284

 

12,085

 

1,326

 

1,014

 

16,709

Over 10 years

 

 

286

 

 

33,968

 

34,254

Total

$

2,284

$

29,344

$

2,306

$

34,982

$

68,916

The following tables summarize the available for sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded as of December 31, 2025 and 2024, aggregated by security type and length of time in a continuous loss position (in thousands):

DECEMBER 31, 2025

LESS THAN 12 MONTHS

12 MONTHS OR LONGER

TOTAL

FAIR

UNREALIZED

FAIR

UNREALIZED

FAIR

UNREALIZED

  ​ ​ ​

VALUE

  ​ ​ ​

LOSSES

  ​ ​ ​

VALUE

  ​ ​ ​

LOSSES

  ​ ​ ​

VALUE

  ​ ​ ​

LOSSES

U.S. Agency

$

$

$

4,790

$

(372)

$

4,790

$

(372)

U.S. Agency mortgage-backed securities

9,198

(28)

60,272

(9,136)

69,470

(9,164)

Municipal

 

5,670

(361)

5,670

(361)

Corporate bonds

 

5,086

(64)

20,416

(1,148)

25,502

(1,212)

Total

$

14,284

$

(92)

$

91,148

$

(11,017)

$

105,432

$

(11,109)

DECEMBER 31, 2024

LESS THAN 12 MONTHS

12 MONTHS OR LONGER

TOTAL

FAIR

UNREALIZED

FAIR

UNREALIZED

FAIR

UNREALIZED

  ​ ​ ​

VALUE

  ​ ​ ​

LOSSES

  ​ ​ ​

VALUE

  ​ ​ ​

LOSSES

  ​ ​ ​

VALUE

  ​ ​ ​

LOSSES

U.S. Agency

$

$

$

4,666

$

(679)

$

4,666

$

(679)

U.S. Agency mortgage-backed securities

16,104

(275)

63,323

(12,508)

79,427

(12,783)

Municipal

 

8,121

(670)

8,121

(670)

Corporate bonds

 

9,500

(675)

34,612

(2,256)

44,112

(2,931)

Total

$

25,604

$

(950)

$

110,722

$

(16,113)

$

136,326

$

(17,063)

At December 31, 2025, within the available for sale debt securities portfolio, the Company had six U.S. Agency mortgage-backed securities and ten corporate bonds that have been in a gross unrealized loss position for less than 12 months with depreciation of 0.6% from its amortized cost basis. Additionally, at December 31, 2025, within the available for sale debt securities portfolio, the Company had six U.S. Agency, 127 U.S. Agency mortgage-backed securities, 16 municipal, and 39 corporate bonds that have been in a gross unrealized loss position for greater than 12 months with depreciation of 10.8% from its amortized cost basis.

These unrealized losses are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the value of securities will decrease; as market yields decrease, the fair value of securities will increase. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, no allowance for credit losses has been recorded for these securities. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value or mature.

The following tables present the activity in the allowance for credit losses on available for sale debt securities by major security type for the years ended December 31, 2025 and 2024 (in thousands).

BALANCE AT DECEMBER 31, 2024

CHARGE-OFFS

RECOVERIES

PROVISION (RECOVERY)

BALANCE AT DECEMBER 31, 2025

Corporate bonds

$

360

$

(1,000)

$

$

640

$

Total

$

360

$

(1,000)

$

$

640

$

BALANCE AT DECEMBER 31, 2023

CHARGE-OFFS

RECOVERIES

PROVISION (RECOVERY)

BALANCE AT DECEMBER 31, 2024

Corporate bonds

$

926

$

(491)

$

$

(75)

$

360

Total

$

926

$

(491)

$

$

(75)

$

360

During 2025, the Company recognized the charge-off of a $1.0 million corporate bond within the available for sale debt securities portfolio. The security was charged off against an established allowance for credit losses due to further credit deterioration and heightened doubts surrounding the issuer’s ability to meet its payment obligations as well as substantial legal issues. The Company recognized a $640,000 provision for credit losses on available for sale debt securities in 2025 as a result of the establishment of a full reserve on the corporate bond discussed above after a partial reserve was established for the security last year. This compares to the recognition of a $75,000 provision for credit losses recovery in 2024. During 2024, the recognition of the provision recovery was due to the sale of the impaired subordinated debt investment issued by Signature Bank which was partially offset by the establishment of an allowance for credit losses on a corporate AFS security deemed to be credit impaired.

The following tables present the activity in the allowance for credit losses on held to maturity debt securities by major security type for the years ended December 31, 2025 and 2024 (in thousands).

BALANCE AT DECEMBER 31, 2024

CHARGE-OFFS

RECOVERIES

PROVISION (RECOVERY)

BALANCE AT DECEMBER 31, 2025

Municipal

$

2

$

$

$

(1)

$

1

Corporate bonds and other securities

87

2

89

Total

$

89

$

$

$

1

$

90

BALANCE AT DECEMBER 31, 2023

CHARGE-OFFS

RECOVERIES

PROVISION (RECOVERY)

BALANCE AT DECEMBER 31, 2024

Municipal

$

2

$

$

$

$

2

Corporate bonds and other securities

35

52

87

Total

$

37

$

$

$

52

$

89

The Company’s agency and mortgage-backed securities are issued by U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. As such, no allowance for credit losses has been established for these securities. The allowance for credit losses on the municipal, corporate, and other bonds within the held to maturity securities portfolio is calculated using the PD/LGD method. The calculation is completed on a quarterly basis using the default studies provided by an industry leading source.

Maintaining investment quality is a primary objective of the Company’s Investment Policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s or Standard & Poor’s rating of A. The Company monitors the credit ratings of its debt securities on a quarterly basis. At December 31, 2025, 1.7% of the portfolio was rated AAA as compared to 59.2% at December 31, 2024. The steep decline in securities rated AAA resulted from the Moody’s downgrade of the United States rating to Aa1 during 2025 which impacted the Company’s U.S. Agency and U.S. Agency mortgage-backed securities. At December 31, 2025, 76.5% of the total investment securities portfolio was rated AA or higher compared to 72.8% at December 31, 2024. Approximately 13.5% of the portfolio was rated below A or unrated at December 31, 2025 compared to 14.7% at December 31, 2024.

Specifically, the following table summarizes the carrying value of held to maturity debt securities at December 31, 2025, aggregated by credit quality indicator (in thousands).

DECEMBER 31, 2025

CREDIT RATING

AAA/AA/A

BBB/BB/B

UNRATED

TOTAL

U.S. Agency

  ​ ​ ​

$

2,500

$

  ​ ​ ​

$

  ​ ​ ​

$

2,500

U.S. Agency mortgage-backed securities

36,592

36,592

Municipal

30,753

30,753

Corporate bonds and other securities

1,000

1,411

2,411

Total

$

70,845

$

$

1,411

$

72,256

The Company had no held to maturity debt securities in non-accrual status or past due 90 days still accruing interest at December 31, 2025 and 2024. The underlying issuers continue to make timely principal and interest payments on the securities.

Trading Securities

The following table presents the Company’s trading securities, at estimated fair value.

AT DECEMBER 31, 

  ​ ​ ​

2025

  ​ ​ ​

2024

(IN THOUSANDS)

U.S. Treasury

$

3,401

$

Municipal

 

3,852

Total

$

7,253

$

The following table presents the net gain on trading securities included in trading securities revenue for the years ended December 31, 2025 and 2024.

YEAR ENDED DECEMBER 31, 

  ​ ​ ​

2025

  ​ ​ ​

2024

(IN THOUSANDS)

Net realized gain on sales

$

213

$

Net unrealized gain

 

29

 

Net gain on trading securities

 

242

 

Less: Portfolio expenses and management fees

 

124

 

Trading securities revenue

$

118

$

Equity Securities

As of December 31, 2025 and 2024, the Company reported $183,000 and $350,000, respectively, of equity securities within other assets on the Consolidated Balance Sheets. These equity securities are held within a non-qualified deferred compensation plan in which a select group of executives of the Company can participate. An eligible executive can defer a certain percentage of their current salary to be placed into the plan and held within a rabbi trust. The assets of the rabbi trust are invested in various publicly listed mutual funds. The gain or loss on the equity securities (both realized and unrealized) is reported within other income on the Consolidated Statements of Operations. No gain or loss on the equity securities (both realized and unrealized) was recorded during 2025 and 2024. Additionally, the Company has recognized a deferred compensation liability, which is equal to the balance of the equity securities and is reported within other liabilities on the Consolidated Balance Sheets.

Additionally, the Company previously entered into a Registration Rights Agreement with a borrower who, upon emergence from bankruptcy, issued ordinary shares in satisfaction of debt previously contracted. The shares are not listed on any stock exchange. At December 31, 2025 and 2024, the carrying value of these equity securities without readily determinable fair values was $600,000, which is included in other assets on the Consolidated Balance Sheets. During 2025, the Company received additional shares of restricted common stock due to the spin-off of a portion of the issuer’s business. The shares cannot be sold or transferred and are not listed on any stock exchange. The restricted shares have no carrying value on the Company’s Consolidated Balance Sheets as of December 31, 2025.