Note 6 – Securities (continued)

The following tables present the fair value of securities available-for-sale as of September 30, 2026 and December 31, 2025, and the related unrealized losses. Management uses month-end valuations in determining whether securities are in an unrealized loss position (dollars in thousands).

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Note 6 – Securities (continued)

At September 30, 2026, the Company held 158 securities in an unrealized loss position, consisting of 155 available-for-sale securities and 3 held-to-maturity securities. Of these securities, 35 were rated AAA, 107 were rated AA, 3 were rated A, 3 were rated BBB, and 10 were not rated. In addition, 79 of these securities were municipal obligations, 71 were backed directly or indirectly by the U.S. government or its agencies, 6 were issued by publicly traded U.S. corporations, and 2 were issued by non-publicly traded U.S. corporations.

The Company monitors the credit quality of its municipal and corporate securities through periodic reviews of the issuers’ financial condition, including cash flow and revenue performance, as well as other economic factors that may affect the issuers’ ability to service and repay the debt.

The Company evaluated available-for-sale securities in an unrealized loss position at September 30, 2026 and determined that the decline in fair value was not attributable to credit-related factors. This conclusion was based on several factors, including: (i) the high credit quality of the securities; (ii) unrealized losses being primarily attributable to changes in market interest rates; (iii) the contractual terms of the securities do not permit settlement at amounts less than amortized cost; (iv) issuers continuing to make timely principal and interest payments; and (v) the Company’s intent and ability to hold the securities until recovery of their amortized cost basis. Accordingly, no allowance for credit losses was recorded on available-for-sale securities at September 30, 2026.

The Company’s held-to-maturity securities consist primarily of obligations issued or guaranteed by the U.S. government or its agencies and are rated investment grade or higher. Accordingly, no allowance for credit losses was recorded on held-to-maturity securities at September 30, 2026 or December 31, 2025.

During the nine months ended September 30, 2026, the Company sold four available-for-sale securities receiving proceeds of $5,588,000 and recognizing gross realized gains of $11,000 and gross realized losses of $10,000, for net realized gains of $1,000. There were no sales of available-for-sale securities during the three months ended September 30, 2026. During the third quarter of 2026, $2,000,000 of subordinated debt securities were called, with $1,500,000 of one of those securities in the process of settlement at quarter end, with no gain or loss recognized. Sales of available-for-sale securities totaled $4,227,000 during the three and nine months ended September 30, 2025, resulting in gross realized gains of $27,000.

As of September 30, 2026 and December 31, 2025, the Company had pledged approximately (market values):

$36,534,000 and $38,893,000 of our available-for-sale securities as collateral with correspondent banks, including the Federal Home Loan Bank of Atlanta (FHLBA), for collateralized lines of credit; and

$48,287,000 and $50,500,000, respectively, of our available-for-sale securities as collateral for public deposits; and

$22,788,000 and $26,342,000 of our available-for-sale securities as collateral for advances at the Federal Reserve Bank’s discount window.

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