Note 4 - Securities

A summary of the amortized cost and fair value of securities, with gross unrealized gains and losses, follows:

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Note 4 –Securities (continued)

The following tables summarize the fair value of securities available for sale as of December 31, 2025 and 2024 and the corresponding amounts of unrealized losses. Management uses the valuation as of year-end in determining when securities are in an unrealized loss position (amounts in thousands):

The unrealized losses on the Company’s investment securities are attributable to changes in market interest rates and are not credit-related. As of December 31, 2025, the Company does not intend to sell any of the securities in an unrealized loss position, and it is not more likely than not that the Company will be required to sell any such security before recovery of its amortized cost basis. Accordingly, no allowance for credit losses has been recognized on any investment security in an unrealized loss position.

U.S. government and agency securities / mortgage-backed securities. Of the 115 securities in an unrealized loss position, 50 are backed by the U.S. government or its agencies, including mortgage-backed securities issued and guaranteed by the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac), as well as U.S. agency debentures. These securities carry either an explicit or implicit guarantee of the U.S. government, are rated at the highest investment grade, and have a history of no credit losses. Because the contractual cash flows on these obligations are either explicitly guaranteed or

Note 4 –Securities (continued)

effectively backed by the full faith and credit of the U.S. government, no credit loss allowance is considered necessary regardless of the extent of unrealized loss.

Municipal securities. Fifty-six of the securities in an unrealized loss position are obligations of state or local governmental entities. The Company evaluates these securities by reviewing the issuer’s financial condition, available cash flows, revenue streams, and other economic factors relevant to the issuer’s ability to service and repay the obligation. Of the 56 municipal issues in an unrealized loss position, 28 carry an S&P rating of AAA and 26 carry an S&P rating of AA or A, reflecting strong credit quality. The unrealized losses are driven by the interest rate environment rather than any deterioration in issuer credit quality or cash flows, and the Company has concluded that no credit loss allowance is warranted.

Corporate securities. Nine of the securities in an unrealized loss position are obligations of domestic corporations — seven issued by publicly traded entities and two issued by non-publicly traded entities. The Company monitors these securities by periodically reviewing the issuer’s financial condition, cash flows, and other economic factors that could affect the issuer’s ability to service and repay the debt. Of the nine corporate issues, two carry an S&P rating of BBB, reflecting investment-grade credit quality, and the remaining issues carry higher ratings. The unrealized losses are attributable to changes in market interest rates and spreads rather than credit deterioration, and no credit loss allowance is considered necessary.

Non-rated securities. Six of the securities in an unrealized loss position carry no S&P rating. The Company evaluates these securities through a review of the issuer’s financial condition, revenue sources, and other relevant economic factors. Based on that review, the Company has concluded that the unrealized losses on non-rated securities are not credit-related and that no allowance for credit losses is required.

The Company has evaluated available for sale securities in an unrealized loss position for credit related impairment at December 31, 2025 and 2024 and concluded no impairment existed based on a combination of factors, which included: (1) the securities are of high credit quality (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuers to settle the securities at a price less than the par value of each investment, (4) issuers continue to make timely principal and interest payments, and

(5) the Company does not intend to sell any of the investments before recovery of its amortized cost basis, nor is it likely that management will be required to sell the securities. There was not an allowance for credit losses on available-for-sale securities at December 31, 2025 or 2024.

The Company’s held-to-maturity portfolio is covered by the explicit or implied guarantee of the United States government or one of its agencies and rated investment grade or higher. As a result, the Company did not have an allowance for credit losses on held-to-maturity securities as of December 31, 2025 or December 31, 2024.

All held-to-maturity and available for sale securities were current with no securities past due or on non-accrual as of December 31, 2025 and 2024.

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