v3.26.1
Note 3 - Investment Securities
6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Investment in Debt and Equity Securities and Other Trading Assets [Text Block]

NOTE 3 - INVESTMENT SECURITIES

 

Our investment portfolio is comprised primarily of U.S. government and SBA agency securities, mortgage-backed securities ("MBS") backed by government-sponsored entities, collateral mortgage obligations ("CMO") and commercial paper. The following table summarizes the amortized cost and fair value of investment securities available for sale (“AFS”) and held to maturity (“HTM”) and the corresponding amounts of gross unrealized gains and losses as of the dates indicated:

 

      

Gross

  

Gross

     
  Amortized  Unrealized  Unrealized  Fair 

June 30, 2026

 

Cost

  

Gains

  

Losses

  

Value

 

Available for sale

 

(dollars in thousands)

 

Government agency securities

 $20,496  $  $(214) $20,282 

SBA agency securities

  19,628      (309)  19,319 

MBS: Residential

  93,622   201   (5,013)  88,810 

MBS: Commercial

  9,993      (28)  9,965 

CMO: Residential

  115,089   159   (9,381)  105,867 

CMO: Commercial

  82,065   111   (2,141)  80,035 

Commercial paper

  49,672      (9)  49,663 

Corporate debt securities

  24,907   73   (1,518)  23,462 

Municipal tax-exempt securities

  12,550      (2,793)  9,757 

Total available for sale

 $428,022  $544  $(21,406) $407,160 
                 

Held to maturity

                

Municipal tax-exempt securities

 $4,181  $  $(103) $4,078 

Total held to maturity

 $4,181  $  $(103) $4,078 

 

      

Gross

  

Gross

     
  Amortized  Unrealized  Unrealized  Fair 

December 31, 2025

 

Cost

  

Gains

  

Losses

  

Value

 

Available for sale

 

(dollars in thousands)

 

Government agency securities

 $22,850  $34  $(179) $22,705 

SBA agency securities

  21,326   90   (236)  21,180 

MBS: Residential

  91,049   634   (4,505)  87,178 

MBS: Commercial

  5,010      (33)  4,977 

CMO: Residential

  120,475   760   (8,740)  112,495 

CMO: Commercial

  102,755   183   (2,161)  100,777 

Commercial paper

  19,948         19,948 

Corporate debt securities

  30,165   75   (1,811)  28,429 

Municipal tax-exempt securities

  12,567      (3,052)  9,515 

Total available for sale

 $426,145  $1,776  $(20,717) $407,204 
                 

Held to maturity

                

Municipal tax-exempt securities

 $4,184  $  $(81) $4,103 

Total held to maturity

 $4,184  $  $(81) $4,103 

 

At June 30, 2026 and December 31, 2025, investment securities with a fair value of $44.8 million and $48.7 million were pledged to secure certificates of deposit from the State of California. One security with a fair value of $30,000 and $36,000 was pledged to secure a local agency deposit at June 30, 2026 and December 31, 2025.

 

There were no sales of investment securities during the three months ended June 30, 2026, March 31, 2026, and June 30, 2025 and six months ended June 30, 2026 and 2025.

 

Accrued interest receivable for investment securities at June 30, 2026 and December 31, 2025 totaled $1.5 million and $1.6 million.

 

The following tables show the amortized cost and fair value of the investment securities portfolio, by expected maturity, as of the dates indicated. However, expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Accordingly, MBS and CMO are classified in accordance with their estimated average life.

 

  

One Year or Less

  

More than One Year to Five Years

  

More than Five Years to Ten Years

  

More than Ten Years

  

Total

 
  

Amortized Cost

  

Fair Value

  

Amortized Cost

  

Fair Value

  

Amortized Cost

  

Fair Value

  

Amortized Cost

  

Fair Value

  

Amortized Cost

  

Fair Value

 

June 30, 2026

 (dollars in thousands)

Government agency securities

 $  $  $20,496  $20,282  $  $  $  $  $20,496  $20,282 

SBA agency securities

        6,162   6,034   13,466   13,285         19,628   19,319 

MBS: Residential

        26,842   26,470   66,780   62,340         93,622   88,810 

MBS: Commercial

  4,983   4,974   5,010   4,991               9,993   9,965 

CMO: Residential

  785   784   70,587   69,335   43,717   35,748         115,089   105,867 

CMO: Commercial

  2,367   2,334   37,518   37,035   42,180   40,666         82,065   80,035 

Commercial paper

  49,672   49,663                     49,672   49,663 

Corporate debt securities

  2,007   2,001   12,422   12,132   7,900   7,442   2,578   1,887   24,907   23,462 

Municipal tax-exempt securities

              1,079   909   11,471   8,848   12,550   9,757 

Total AFS

 $59,814  $59,756  $179,037  $176,279  $175,122  $160,390  $14,049  $10,735  $428,022  $407,160 
                                         

Municipal tax-exempt securities

 $  $  $1,741  $1,719  $2,440  $2,359  $  $  $4,181  $4,078 

Total HTM

 $  $  $1,741  $1,719  $2,440  $2,359  $  $  $4,181  $4,078 
                                         

December 31, 2025

                                        

Government agency securities

 $65  $65  $22,785  $22,640  $  $  $  $  $22,850  $22,705 

SBA agency securities

        6,496   6,456   14,830   14,724         21,326   21,180 

MBS: Residential

        26,636   26,537   64,413   60,641         91,049   87,178 

MBS: Commercial

        5,010   4,977               5,010   4,977 

CMO: Residential

  6,198   6,248   68,422   68,100   45,855   38,147         120,475   112,495 

CMO: Commercial

  6,629   6,591   51,805   51,365   44,321   42,821         102,755   100,777 

Commercial paper

  19,948   19,948                     19,948   19,948 

Corporate debt securities

  4,022   4,006   8,903   8,733   14,650   13,756   2,590   1,934   30,165   28,429 

Municipal tax-exempt securities

              1,081   921   11,486   8,594   12,567   9,515 

Total AFS

 $36,862  $36,858  $190,057  $188,808  $185,150  $171,010  $14,076  $10,528  $426,145  $407,204 
                                         

Municipal tax-exempt securities

 $  $  $860  $857  $2,817  $2,742  $507  $504  $4,184  $4,103 

Total HTM

 $  $  $860  $857  $2,817  $2,742  $507  $504  $4,184  $4,103 

 

The following tables show the fair value and gross unrealized losses of our investment securities, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position, as of the dates indicated:

 

  

Less than Twelve Months

  

Twelve Months or More

  

Total

 
  

Fair Value

  

Unrealized Losses

  

# of Issuances

  

Fair Value

  

Unrealized Losses

  

# of Issuances

  

Fair Value

  

Unrealized Losses

  

# of Issuances

 

June 30, 2026

 

(dollars in thousands)

 

Government agency securities

 $11,027  $(56)  3  $5,301  $(158)  2  $16,328  $(214)  5 

SBA agency securities

  16,551   (163)  6   2,768   (146)  5   19,319   (309)  11 

MBS: Residential

  42,983   (594)  12   25,644   (4,419)  15   68,627   (5,013)  27 

MBS: Commercial

  9,965   (28)  2            9,965   (28)  2 

CMO: Residential

  27,637   (275)  8   48,563   (9,106)  23   76,200   (9,381)  31 

CMO: Commercial

  14,891   (34)  4   42,155   (2,107)  19   57,046   (2,141)  23 

Commercial paper

  19,786   (9)  2            19,786   (9)  2 

Corporate debt securities

  986   (13)  2   16,604   (1,505)  18   17,590   (1,518)  20 

Municipal tax-exempt securities

           9,757   (2,793)  11   9,757   (2,793)  11 

Total AFS

 $143,826  $(1,172)  39  $150,792  $(20,234)  93  $294,618  $(21,406)  132 
                                     

Municipal tax-exempt securities

 $1,173  $(17)  3  $2,465  $(86)  5  $3,638  $(103)  8 

Total HTM

 $1,173  $(17)  3  $2,465  $(86)  5  $3,638  $(103)  8 

  

 

  

Less than Twelve Months

  

Twelve Months or More

  

Total

 
  

Fair Value

  

Unrealized Losses

  

# of Issuances

  

Fair Value

  

Unrealized Losses

  

# of Issuances

  

Fair Value

  

Unrealized Losses

  

# of Issuances

 

December 31, 2025

 

(dollars in thousands)

 

Government agency securities

 $1,749  $(6)  1  $6,572  $(173)  3  $8,321  $(179)  4 

SBA agency securities

  7,654   (93)  3   2,962   (143)  5   10,616   (236)  8 

MBS: Residential

  14,196   (91)  4   27,573   (4,414)  15   41,769   (4,505)  19 

MBS: Commercial

  4,977   (33)  1            4,977   (33)  1 

CMO: Residential

  3,130   (1)  1   53,195   (8,739)  24   56,325   (8,740)  25 

CMO: Commercial

  13,947   (31)  4   49,366   (2,130)  21   63,313   (2,161)  25 

Corporate debt securities

           22,577   (1,811)  24   22,577   (1,811)  24 

Municipal tax-exempt securities

           9,515   (3,052)  11   9,515   (3,052)  11 

Total AFS

 $45,653  $(255)  14  $171,760  $(20,462)  103  $217,413  $(20,717)  117 
                                     

Municipal tax-exempt securities

 $  $     $3,663  $(81)  8  $3,663  $(81)  8 

Total HTM

 $  $     $3,663  $(81)  8  $3,663  $(81)  8 

 

The securities that were in an unrealized loss position at June 30, 2026 and December 31, 2025, were evaluated to determine whether the decline in fair value below the amortized cost basis resulted from a credit loss or other factors. We concluded that the unrealized losses were primarily attributed to yield curve movement. All SBA agency securities, mortgage-backed securities, and collateralized mortgage obligations are issued by government or government sponsored entities and have the support of the U.S. federal government. The issuers have not, to our knowledge, established any cause for default on these securities. We expect to recover the amortized cost basis of our securities and have no present intent to sell and do not expect to be required to sell securities that have declined below their cost before their anticipated recovery. As of June 30, 2026 and December 31, 2025, all of our HTM securities were rated “AA-” or above. Accordingly, no ACL was recorded as of June 30, 2026 and December 31, 2025, against HTM or AFS securities, and there was no provision for credit losses recognized for the three months and six months ended June 30, 2026 and 2025