NOTE 3 – INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities AFS at the dates indicated are summarized as follows:

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No allowance for credit losses was recognized on investment debt securities AFS in an unrealized loss position at both June 30, 2026 and December 31, 2025.

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Amortized cost and fair value exclude accrued interest receivable of $1.3 million at both June 30, 2026 and December 31, 2025, which is included in interest receivable and other assets in the condensed consolidated balance sheets.

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During the three and six months ended June 30, 2026 and 2025, the Company sold no securities AFS.

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The amortized cost and estimated fair value of securities AFS at the dates indicated by contractual maturity are shown below. Expected maturities may 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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At both June 30, 2026 and December 31, 2025, there were no securities pledged.

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The estimated fair value and gross unrealized losses for securities AFS aggregated by the length of time that individual securities have been in a continuous unrealized loss position at the dates indicated were as follows:

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At June 30, 2026, the Company held 314 securities AFS, of which 153 were in an unrealized loss position for more than twelve months and 51 were in an unrealized loss position for less than twelve months. The Company anticipates full recovery of amortized cost with respect to these securities at maturity or sooner in the event of a more favorable market interest rate environment.

Allowance for credit losses on investment debt securities available-for-sale

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Investment debt securities in an unrealized loss position as of June 30, 2026 were evaluated to determine whether the decline in fair value below amortized cost basis resulted from credit losses or changes in required yields by investors

in these types of securities, among other factors. This assessment first includes a determination of whether the Company intends to sell the security, or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, less any current-period credit losses. In making this assessment, management considers the nature of the security and any related government guarantees, any changes to the rating of the security by a rating agency, the creditworthiness of the issuers and guarantors, the underlying collateral, the financial conditions and prospects of the issuer, and any adverse conditions specifically related to the security, among other factors.

As of June 30, 2026, the Company expected to recover the amortized cost basis of its securities. The Company has no present intent to sell any investment securities with unrealized losses, and it is not more likely than not that the Company will be required to sell such securities before recovery of their amortized cost. The decline in fair value is largely attributed to changes in interest rates and other market conditions. The issuers of these securities continue to make timely principal and interest payments. No allowance for credit losses was recognized on investment debt securities AFS in an unrealized loss position, as management has determined that the decline in fair value is not attributable to credit losses at June 30, 2026.

Equity Securities

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The Company recognized a net gain on equity securities of $95,000 and $153,000 for the three and six months ended June 30, 2026 and a net gain of $7,000 and a net loss of $248,000 for the three and six months ended June 30, 2025, respectively. Equity securities were $11.7 million at June 30, 2026 compared to $12.6 million at December 31, 2025. The decrease primarily was due to the redemption of one equity security for $1.0 million at par in the current quarter, with no gain or loss recognized, partially offset by net unrealized gains recognized during the period.