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 September 30, 2026 and December 31, 2025.

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Amortized cost and fair value exclude accrued interest receivable of $1.1 million at September 30, 2026 and $1.3 million at December 31, 2025, which is included in interest receivable and other assets in the condensed consolidated balance sheets.

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The Company sold securities AFS totaling $106.8 million, resulting in a net realized loss of $6.8 million, consisting of gross realized gains of $270,000 and gross realized losses of $7.1 million, during both the three and nine months ended September 30, 2026. There were no sales of securities AFS during the three and nine months ended September 30, 2025.

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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 September 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 September 30, 2026, the Company held 118 securities AFS, of which 36 were in an unrealized loss position for more than twelve months and 36 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 September 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 September 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 September 30, 2026.

Equity Securities

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The Company recognized a net loss on equity securities of $589,000 and $436,000 for the three and nine months ended September 30, 2026, and a net gain of $771,000 and $523,000 for the three and nine months ended September 30, 2025, respectively. Equity securities were $2.7 million at September 30, 2026 compared to $12.6 million at December 31, 2025. The decrease was primarily due to sale of $7.8 million of equity securities and the redemption of two equity securities for $1.7 million at par, with no gain or loss recognized on redemption.