Note 3 – Securities

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The Company's available-for-sale (“AFS”) securities are carried at fair value. For AFS securities in an unrealized loss position, management will first evaluate whether there is intent to sell, or if it is more likely than not that the Company will be required to sell a security prior to anticipated recovery of its amortized cost basis. If either of these criteria are met, the Company will record a write-down of the security's amortized cost basis to fair value through income. For those AFS securities which do not meet the intent or requirement to sell criteria, management will evaluate whether the decline in fair value is a result of credit related matters or other factors.

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In performing this assessment, management considers the creditworthiness of the issuer including whether the security is guaranteed by the U.S. Federal Government or other government agency, the extent to which fair value is less than amortized cost, and changes in credit rating during the period, among other factors. If this assessment indicates the existence of credit losses, the security will be written down to fair value, as determined by a discounted cash flow analysis. To the extent the estimated cash flows do not support the amortized cost, the deficiency is considered to be due to credit loss and is recognized in earnings.

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Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when the uncollectibility of a security is confirmed, or when either of the aforementioned criteria surrounding intent or requirement to sell have been met.

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Securities have been classified on the consolidated balance sheets according to management’s intent.

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The following tables summarize the amortized cost, allowance for credit losses, and fair value of securities and their corresponding amounts of unrealized gains and losses at the dates indicated:

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The Company did not record a provision for estimated credit losses on any AFS securities for the three months ended March 31, 2026 and 2025. Excluded from the table above is accrued interest on AFS securities of $2.1 million and $1.8 million at March 31, 2026 and December 31, 2025, respectively, which is included within accrued interest receivable on the consolidated balance sheets. Additionally, the Company did not record any write-offs of accrued interest income on AFS securities for the three months ended March 31, 2026 and 2025. No securities held by the Company were delinquent on contractual payments at March 31, 2026 or December 31, 2025, nor were any securities placed on non-accrual status during the three months ended March 31, 2026 and 2025.

The following is a summary of actual maturities of certain AFS securities as of March 31, 2026. The amortized cost and fair values are based on the contractual maturity dates. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.

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Agency mortgage-backed securities and collateralized mortgage obligations are presented as separate lines as paydowns are expected to occur before contractual maturity dates.

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When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. There were no sales of AFS securities during the three months ended March 31, 2026 and 2025.

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The carrying value of AFS securities pledged to secure advances from the FHLB were $216.4 million and $111.5 million as of March 31, 2026 and December 31, 2025, respectively.

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The following tables present fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates stated.

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Management evaluates securities for expected credit losses at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

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Included in corporate bonds are investments in senior and subordinated debt of banks and bank holding companies, some of which do not have investment ratings.

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At March 31, 2026, AFS debt securities had unrealized losses with aggregate depreciation of 2.7% from the Company’s amortized cost basis. These unrealized losses relate to changes in market interest rates since acquiring the securities. As management has the intent and ability to hold these securities until maturity or cost recovery, no allowance for credit losses on securities is deemed necessary as of March 31, 2026 and December 31, 2025.