Debt securities are summarized as follows:

The allowance for credit losses on held-to-maturity securities is a contra-asset valuation account that is deducted from the amortized cost basis of held-to-maturity securities to present the net amount expected to be collected. Management measures expected credit losses on held-to-maturity securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. With regard to securities issued by states and political subdivisions, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, and (iv) internal forecasts. Unrated bonds were underwritten similar to commercial loans and the financial condition of the issuer is monitored periodically. Expected credit losses on commercial loans are applied to unrated bonds.

The following table summarizes Moody's and/or Standard & Poor's bond ratings (Company’s primary credit quality indicator) for our portfolio of held-to-maturity securities issued by states and political subdivisions as of December 31, 2025 at amortized cost:

Historical loss rates associated with securities having similar grades as those in our portfolio have generally not been significant. Furthermore, as of December 31, 2025 and 2024, there were no past due principal or interest payments associated with these securities and none are on nonaccrual.

The following table details activity in the allowance for credit losses on held-to-maturity securities for the year ended December 31, 2025 and 2024:

Accrued interest receivable on available for sale securities totaled $267.3 thousand and $302.5 thousand and accrued interest receivable on held to maturity securities totaled $121.3 thousand and $122.0 thousand as of December 31, 2025 and 2024, respectively.  Both are grouped in accrued interest receivable on the balance sheet.

Contractual maturities, shown below, will differ from actual maturities because borrowers and issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Securities with a carrying value of $21.0 million and $26.3 million as of December 31, 2025 and 2024, respectively, were pledged as collateral for securities sold under repurchase agreements and other collateralized deposits.

There were no sales of securities for the year ended December 31, 2025. During the year ended December 31, 2024, there was one sale of an available for sale corporate bond with a principal balance of $521 thousand, resulting in a loss of $32 thousand. There was also the sale of five available for sale mortgage backed securities with an aggregate principal balance of $23.4 million resulting in a gain of $605 thousand. There was a fair value hedge associated with these securities that was unwound in connection with the sale resulting in a loss of $586 thousand. The net loss on all of the transactions in 2024 was $18 thousand.

The following table sets forth the Company’s gross unrealized losses on a continuous basis for available for sale investment securities, by category and length of time.

Management has the ability and intent to hold securities classified as held to maturity until they mature, at which time the Company should receive full value for the securities. As of December 31, 2025, management did not have the intent to sell any of the 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 as well as other market conditions for each particular security based upon the structure and remaining principal balance. The fair values of the investment securities are expected to recover as the securities approach their maturity dates or repricing dates or if market yields for such investments decline. Based on the these factors, as of December 31, 2025, management believes the unrealized losses detailed in the table above are temporary and, accordingly, none of these unrealized losses have been recognized in the Company’s consolidated statement of income.

There were no held to maturity security sales in 2025 or 2024.