NOTE 2 SECURITIES

The amortized cost and estimated fair value of securities available for sale, along with gross unrealized gains and losses are summarized as follows (dollars in thousands):

The amortized cost and fair value of securities at June 30, 2026, by contractual maturity are shown below (dollars in thousands). 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.

The following table shows realized gains or losses on the sale of investment securities during the three and six months ended June 30, 2026 and 2025, respectively.

The sale of investment securities in the three months ended June 30, 2026 was part of a restructuring of the investment securities portfolio. During the restructuring, the Company sold $29.8 million in book value of available for sale securities (“AFS”) with a weighted average yield of 1.66%, representing approximately 8.2% of the entire securities portfolio, and purchased approximately $29.4 million of securities AFS with a weighted average yield of approximately 4.92%.

There were no sales of available for sale securities in the first quarter of 2026 or in the first or second quarters of 2025.

The following tables show the present fair value and gross unrealized losses (dollars in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates stated. The reference point for determining when securities are in an unrealized loss position is period-end; therefore, it is possible that a security’s market value exceeded its amortized cost on other days during the past twelve-month period. Excluded from the tables below were securities whose amortized cost equaled their fair value or were in an unrealized gain position as of the dates stated totaling $69.5 million and $95.6 million, as of June 30, 2026 and December 31, 2025, respectively.

At June 30, 2026 and December 31, 2025, the majority of securities in an unrealized loss position were of investment grade; however, a portion of the portfolio does not have a third-party investment grade available (securities with fair values of $19.2 million and $19.0 million, respectively). These securities were primarily subordinated debt instruments issued by bank holding companies and are classified as corporate debt securities in the tables above. The Company evaluated the issuers of these individually, observing that each issuer had strong capital ratios and profitability, thereby indicating limited exposure to asset quality or liquidity issues and resulted in no identifiable credit losses. Contractual cash flows for mortgage-backed securities and U.S. Treasury and agencies are guaranteed and/or funded by the U.S. government and government agencies. State and municipal securities showed no indication that the contractual cash flows would not be received when due. The Company does not intend to sell, nor does it believe that it will be required to sell, any of its impaired securities prior to the recovery of the amortized cost. As of June 30, 2026 and December 31, 2025, there was no allowance for credit losses (“ACL”) for the Company's securities AFS portfolio. Any impairment that has not been recorded through an ACL is recognized in accumulated other comprehensive income (loss).

The Company had securities with a collateral value of $88.3 million pledged to the Federal Reserve Discount Window as of June 30, 2026. The Discount Window provides access to funding to help depository institutions manage their liquidity risks. The Bank did not borrow from the Discount Window during the first six months of 2026. Additionally, the Company had securities with a market value of $9.4 million pledged to the Federal Reserve Bank of Richmond as collateral for deposits of the Department of Justice U.S. Bankruptcy Trustee.

As of June 30, 2026, other investments consisted of restricted stock in the Federal Reserve Bank (“FRB”) (carrying basis of $1.20 million at June 30, 2026 and $1.14 million at December 31, 2025), Federal Home Loan Bank (“FHLB”) (carrying basis of $975 thousand and $925 thousand at June 30, 2026 and December 31, 2025, respectively), and various other investments (carrying basis of $189 thousand at June 30, 2026 and December 31, 2025). Other investments are carried at cost.