NOTE 2:INVESTMENT SECURITIES

The amortized cost, allowance for credit losses, and estimated fair value of investment securities available for sale with gross unrealized gains and losses at June 30, 2026 and December 31, 2025 follows:

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There was no allowance for credit losses on investment securities available for sale at June 30, 2026 and December 31, 2025.

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The following table shows the fair value and gross unrealized losses of investment securities available for sale with 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 unrealized loss position:

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The following table presents the number and aggregate depreciation from the Bank’s amortized cost basis of investment securities available for sale in a continuous unrealized loss position by security type at June 30, 2026 and December 31, 2025:

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These unrealized losses relate principally to the changes in interest rates and are not due to changes in the financial condition of the issuer, the quality of any underlying assets, or applicable credit enhancements.

In reaching the conclusion that an allowance for credit losses is unnecessary, management observed that the securities were issued by a government body or agency, the securities continue to be highly rated (AA or better) where applicable, the issuer continues to make contractual payments, and the quality of any underlying assets or credit enhancements has not changed. Since management has the ability to hold investment securities for the foreseeable future, the Bank expects to recover the amortized cost basis of these securities before they are sold or mature.

The amortized cost, allowance for credit losses, gross unrealized gains and losses, and estimated fair value of investment securities held to maturity at June 30, 2026 and December 31, 2025 follows:

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The Bank regularly evaluates various attributes of securities held to maturity to determine the appropriateness of the allowance for credit losses. The credit quality indicators monitored differ depending on the major security type.

The Bank evaluates securities issued by the U.S. government and U.S. government-sponsored agencies (e.g., FNMA (“Fannie Mae”), GNMA (“Ginnie Mae”), and FHLMC (“Freddie Mac”) mortgage-backed securities) by considering the creditworthiness and performance of the securities and the strength of guarantees. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. Based on this analysis, the Bank believes it will collect all amounts owed on these securities and has not recognized an allowance for credit losses on these securities.

Obligations of states and political subdivisions held to maturity are generally evaluated using credit ratings, which are a key indicator of an investment security’s probability of default. The Bank uses credit ratings issued by S&P or Moody’s (or both), consisting of the upper- and lower-case letters to identify an investment security’s credit quality rating. “AAA” and “AA” (high credit quality) and “A” and “BBB” (medium credit quality) are considered investment grade. Credit ratings for investment securities below these designations are considered low credit quality. These ratings are updated monthly. The Bank may also consider other relevant information that becomes known about the issuer’s or the security’s performance.

Information regarding credit ratings for investment securities held to maturity by major security type as of June 30, 2026 and December 31, 2025 follows:

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No accrued interest was written off during the three months ended June 30, 2026 and 2025. No investment securities held to maturity were past due or on nonaccrual as of June 30, 2026 and December 31, 2025.

Fair values of investment securities are generally estimated based on financial models or prices paid for similar securities. It is possible interest rates or other key inputs to the valuation estimate could change considerably, resulting in a material change in the estimated fair value of investment securities.

The following is a summary of amortized cost (or net carrying amount) and estimated fair value of investment securities by contractual maturity as of June 30, 2026. Contractual maturities will differ from expected maturities for mortgage-backed securities because borrowers may have the right to call or prepay obligations without penalties.

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

At June 30, 2026, the amortized cost and estimated fair value of investment securities pledged to secure public deposits was $1,000,000 and $936,010, respectively. At December 31, 2025, the amortized cost and estimated fair value of investment securities pledged to secure public deposits was $1,000,000 and $944,600, respectively.