Note 4. Investment Securities

All of the Company’s investment securities were classified as available-for-sale as of  September 30, 2026 and  December 31, 2025. Available-for-sale securities are reported at fair value, with unrealized gains and losses, net of tax, included in accumulated other comprehensive income (loss) within stockholders’ equity. Fair value is determined using quoted market prices or, in instances of limited market activity, based on various assumptions. See Note 8 of the Notes to Consolidated Financial Statements for further discussion regarding the valuation of the Company’s investment securities. 

The following tables present the amortized cost and estimated fair value of the Company’s portfolio of available-for-sale securities as of the dates indicated.

The Company did not have any securities classified as held-to-maturity at  September 30, 2026 and  December 31, 2025.

Investment securities with a carrying value of approximately $624.5 million and $771.2 million at  September 30, 2026 and  December 31, 2025, respectively, were pledged to secure public deposits, borrowings and for other purposes required or permitted by law. As of  September 30, 2026 and  December 31, 2025, there were no holdings of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

The following table presents the amortized cost and fair value of available-for-sale securities by contractual maturity as of  September 30, 2026. Actual maturities can be expected to differ from contractual maturities due to prepayment or early call options of the issuer. Securities not due at a single maturity date, such as mortgage-backed securities, are shown separately.

There were no sales of available-for-sale securities during the three and nine months ended September 30, 2026. During the nine months ended September 30, 2025, immediately following the merger with FLIC, the Company sold a significant portion of the available-for-sale securities acquired from FLIC for proceeds of $277.5 million, with no gross gains or losses realized upon sale. 

The following tables set forth securities with unrealized losses at the dates indicated presented by the length of time the securities have been in a continuous unrealized loss position.

The Company has elected to exclude accrued interest from the amortized cost of its available-for-sale securities. Accrued interest receivable for available-for-sale securities totaled $6.0 million and $5.2 million as of  September 30, 2026 and  December 31, 2025, respectively.

The Company evaluates securities in an unrealized loss position for impairment related to credit losses on at least a quarterly basis. Securities in unrealized loss positions are first assessed as to whether we intend to sell, or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If one of the criteria is met, the security’s amortized cost basis is written down to fair value through current earnings. For securities that do not meet these criteria, the Company evaluates whether the decline in fair value resulted from credit losses or other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Unrealized losses on asset backed securities and state and municipal securities have not been recognized into income because the issuers are of high credit quality and we do not intend to sell and it is likely that we will not be required to sell the securities prior to their anticipated recovery. The decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an ACL is recognized in OCI, net of applicable taxes. The Company has not recognized an ACL for available-for-sale securities as of  September 30, 2026 and  December 31, 2025.

Federal agency obligations, residential and commercial mortgage-backed pass-through securities are issued by U.S. Government agencies and U.S. Government sponsored enterprises. Although a government guarantee exists on these investments, these entities are not legally backed by the full faith and credit of the federal government, and the current support they receive is subject to a cap as part of the agreement entered into in 2008. Nonetheless, at this time we do not foresee any set of circumstances in which the government would not fund its commitments on these investments as the issuers are an integral part of the U.S. housing market in providing liquidity and stability. Therefore, we concluded that a zero-allowance approach for these investment securities is appropriate.