| INVESTMENT SECURITIES |
NOTE 3. INVESTMENT SECURITIES Investment securities have been classified according to management’s intent. The amortized cost of securities and their approximate fair values are as follows: | | | | | | | | | | | | | | | June 30, 2026 | (Dollars in thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | Securities available-for-sale | | | | | | | | | | | | | Mortgage-backed securities | | $ | 47,748 | | $ | 52 | | $ | (3,146) | | $ | 44,654 | Municipal obligations | | | 1,694 | | | 10 | | | (140) | | | 1,564 | Total available-for-sale | | $ | 49,442 | | $ | 62 | | $ | (3,286) | | $ | 46,218 | Securities held-to-maturity | | | | | | | | | | | | | U.S. Government and agency obligations | | $ | 13,000 | | $ | - | | $ | (1,479) | | $ | 11,521 | Municipal obligations | | | 1,822 | | | 8 | | | (42) | | | 1,788 | Corporate bonds | | | 6,022 | | | - | | | (13) | | | 6,009 | Total held-to-maturity | | $ | 20,844 | | $ | 8 | | $ | (1,534) | | $ | 19,318 |
| | | | | | | | | | | | | | | December 31, 2025 | (Dollars in thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | Securities available-for-sale | | | | | | | | | | | | | Mortgage-backed securities | | $ | 51,820 | | $ | 129 | | $ | (3,061) | | $ | 48,888 | Municipal obligations | | | 1,697 | | | 18 | | | (136) | | | 1,579 | Total available-for-sale | | $ | 53,517 | | $ | 147 | | $ | (3,197) | | $ | 50,467 | Securities held-to-maturity | | | | | | | | | | | | | U.S. Government and agency obligations | | $ | 13,000 | | $ | - | | $ | (1,423) | | $ | 11,577 | Municipal obligations | | | 1,917 | | | 83 | | | (10) | | | 1,990 | Total held-to-maturity | | $ | 14,917 | | $ | 83 | | $ | (1,433) | | $ | 13,567 |
There were no securities transferred between classifications during the six months ended June 30, 2026 or 2025. There were no sales of investment securities during the six months ended June 30, 2026 or 2025. Accrued interest receivable on the Company’s investment securities totaled $203,000 and $183,000 at June 30, 2026 and December 31, 2025, respectively. Investment securities with a carrying amount of $41.5 million and $25.3 million were pledged to secure public deposits as required or permitted by law at June 30, 2026 and December 31, 2025, respectively. The Company also uses a custodial letter of credit granted by the Federal Home Loan Bank of Dallas to collateralize public deposits. At June 30, 2026 and December 31, 2025, $5.0 million and $20.0 million, respectively, of the custodial letter of credit was pledged as collateral for public deposits. At June 30, 2026 and December 31, 2025, other than securities issued by U.S. Government agencies or government-sponsored enterprises, we had no investments in a single issuer which had an aggregate book value in excess of 10% of the Company’s shareholders’ equity. The following is a summary of maturities of securities available-for-sale and held-to-maturity at June 30, 2026: | | | | | | | | | | | | | | | June 30, 2026 | | | Available-for-Sale | | Held-to-Maturity | (Dollars in thousands) | | Amortized Cost | | Fair Value | | Amortized Cost | | Fair Value | Amounts maturing in: | | | | | | | | | | | | | One year or less | | $ | - | | $ | - | | $ | - | | $ | - | After one through five years | | | 636 | | | 646 | | | 9,431 | | | 8,579 | After five through ten years | | | 1,058 | | | 918 | | | 11,413 | | | 10,739 | After ten years | | | - | | | - | | | - | | | - | Subtotal | | | 1,694 | | | 1,564 | | | 20,844 | | | 19,318 | Mortgage-backed securities | | | 47,748 | | | 44,654 | | | - | | | - | Total | | $ | 49,442 | | $ | 46,218 | | $ | 20,844 | | $ | 19,318 |
Securities, other than mortgage-backed securities, are classified according to their contractual maturities without consideration of principal amortization, potential prepayments, or call options. The expected maturities may differ from contractual maturities because of the exercise of call options and potential paydowns. Accordingly, actual maturities may differ from contractual maturities. 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, follows: | | | | | | | | | | | | | | | | | | | | | June 30, 2026 | | | Less than 12 Months | | 12 Months or Greater | | Total | (Dollars in thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | Securities available-for-sale | | | | | | | | | | | | | | | | | | | Mortgage-backed securities | | $ | 16,215 | | $ | (115) | | $ | 16,132 | | $ | (3,031) | | $ | 32,347 | | $ | (3,146) | Municipal obligations | | | - | | | - | | | 918 | | | (140) | | | 918 | | | (140) | Total available-for-sale | | $ | 16,215 | | $ | (115) | | $ | 17,050 | | $ | (3,171) | | $ | 33,265 | | $ | (3,286) | Securities held-to-maturity | | | | | | | | | | | | | | | | | | | U.S. Government and agency obligations | | $ | - | | $ | - | | $ | 11,521 | | $ | (1,479) | | $ | 11,521 | | $ | (1,479) | Municipal obligations | | | 1,001 | | | (35) | | | 425 | | | (7) | | | 1,426 | | | (42) | Corporate bonds | | | 3,008 | | | (13) | | | - | | | - | | | 3,008 | | | (13) | Total held-to-maturity | | $ | 4,009 | | $ | (48) | | $ | 11,946 | | $ | (1,486) | | $ | 15,955 | | $ | (1,534) | Total | | $ | 20,224 | | $ | (163) | | $ | 28,996 | | $ | (4,657) | | $ | 49,220 | | $ | (4,820) |
| | | | | | | | | | | | | | | | | | | | | December 31, 2025 | | | Less than 12 Months | | 12 Months or Greater | | Total | (Dollars in thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | Securities available-for-sale | | | | | | | | | | | | | | | | | | | Mortgage-backed securities | | $ | 18,992 | | $ | (49) | | $ | 19,793 | | $ | (3,012) | | $ | 38,785 | | $ | (3,061) | Municipal obligations | | | - | | | - | | | 928 | | | (136) | | | 928 | | | (136) | Total available-for-sale | | $ | 18,992 | | $ | (49) | | $ | 20,721 | | $ | (3,148) | | $ | 39,713 | | $ | (3,197) | Securities held-to-maturity | | | | | | | | | | | | | | | | | | | U.S. Government and agency obligations | | $ | - | | $ | - | | $ | 11,577 | | $ | (1,423) | | $ | 11,577 | | $ | (1,423) | Municipal obligations | | | - | | | - | | | 427 | | | (10) | | | 427 | | | (10) | Total held-to-maturity | | $ | - | | $ | - | | $ | 12,004 | | $ | (1,433) | | $ | 12,004 | | $ | (1,433) | Total | | $ | 18,992 | | $ | (49) | | $ | 32,725 | | $ | (4,581) | | $ | 51,717 | | $ | (4,630) |
At June 30, 2026 and December 31, 2025, the Company held 52 and 47 securities, respectively, with an unrealized loss. The securities with unrealized losses primarily consisted of mortgage-backed securities guaranteed by the government-sponsored enterprises that have a credit rating consistent with the U.S. Government, and debt obligations guaranteed by federal, state and local government entities and are generally considered to be risk-free. The corporate bonds held by the Company consisted of subordinated debt issued by bank
holding companies. The corporate issuers are financially strong, publicly traded bank holding companies based in the southern United States. The unrealized losses on investment securities relate principally to noncredit related factors, including changes in current interest rates for similar types of securities. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost basis. Based on management’s evaluation of the securities portfolio, the Company did not establish an allowance for credit losses for its available-for-sale or held-to-maturity securities at June 30, 2026 or December 31, 2025.
|