NOTE 3 – INVESTMENT SECURITIES

The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale as of June 30, 2026 and December 31, 2025 are summarized as follows:

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The amortized costs and estimated fair values of investment securities available for sale at June 30, 2026 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

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Accrued interest receivable for securities available for sale totaled $167,000 and $214,000 as of June 30, 2026 December 31, 2025, respectively. This accrued interest receivable is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets.

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As of June 30, 2026 and December 31, 2025, the Company had securities pledged to the Federal Reserve Bank Discount Window with a carrying amount of $12.3 million and $12.8 million, respectively. For the six months ended June 30, 2026, the Company had proceeds from the sale of investment securities of $19.3 million which resulted in gross gains of $10,000. There were no securities sold during the three months ended June 30, 2026 and the three and six months ended June 30, 2025.

Information pertaining to securities with gross unrealized losses at June 30, 2026 and December 31, 2025 aggregated by investment category and length of time that individual securities have been in a continuous loss position, are summarized in the table below.

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At June 30, 2026 the thirty-one securities available for sale (11 municipal securities and 20 mortgage-backed securities) with an unrealized loss have depreciated 11.60% from the Company’s amortized cost basis. Eighteen of these securities have been in a loss position for greater than twelve months.

The Company does not believe that the securities available for sale that were in an unrealized loss position as of June 30, 2026 represent a credit loss impairment. As of June 30, 2026, there have been no payment defaults, nor do we currently expect any future payment defaults. Furthermore, the Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity.

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Equity Securities

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As of June 30, 2026 and December 31, 2025, the Company had equity securities with carrying values totaling $18.5 million and $18.6 million, respectively. The equity securities consist of our investment in a market-rate bond mutual fund that invests in high quality fixed income bonds, mainly government agency securities whose proceeds are designed to positively impact community development throughout the United States. The mutual fund focuses exclusively on providing affordable housing to low- and moderate-income borrowers and renters, including those in Majority Minority Census Tracts.

During the three months ended June 30, 2026 and 2025, we recognized an unrealized loss of $82,000 and an unrealized gain of $41,000, respectively, in net income on our equity securities. During the six months ended June 30, 2026 and 2025, we recognized an unrealized loss of $165,000 and an unrealized gain of $181,000, respectively. These unrealized gains and losses are recorded in “Other Income” on the Consolidated Statements of Income.