INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

4.     INVESTMENT SECURITIES

Available-for-sale and held-to-maturity investment securities at March 31, 2024 and December 31, 2023 are summarized as follows:

	March 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-sale securities:
Debt securities:
Government-sponsored enterprise obligations	$	14,927	$	—	$	(3,095	)	$	11,832
State and municipal bonds		135		—		(1	)		134
Corporate bonds		5,000		—		(929	)		4,071
Total debt securities		20,062		—		(4,025	)		16,037
Mortgage-backed securities:
Government-sponsored mortgage-backed securities		143,410		—		(26,321	)		117,089
U.S. government guaranteed mortgage-backed securities		6,592		—		(1,356	)		5,236
Total mortgage-backed securities		150,002		—		(27,677	)		122,325
Total available-for-sale		170,064		—		(31,702	)		138,362
Held-to-maturity securities:
Debt securities:
U.S. Treasury securities		9,997		—		(534	)		9,463
U.S. government guaranteed obligations		1,100		3		—			1,103
Total debt securities		11,097		3		(534	)		10,566
Mortgage-backed securities:
Government-sponsored mortgage-backed securities		210,145		36		(39,068	)		171,113
Total mortgage-backed securities		210,145		36		(39,068	)		171,113
Total held-to-maturity		221,242		39		(39,602	)		181,679
Total	$	391,306	$	39	$	(71,304	)	$	320,041

	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-sale securities:
Debt securities:
Government-sponsored enterprise obligations	$	14,924	$	—	$	(2,898	)	$	12,026
State and municipal bonds		135		—		—			135
Corporate bonds		8,000		—		(1,038	)		6,962
Total debt securities		23,059		—		(3,936	)		19,123
Mortgage-backed securities:
Government-sponsored mortgage-backed securities		136,533		—		(23,976	)		112,557
U.S. government guaranteed mortgage-backed securities		6,689		—		(1,254	)		5,435
Total mortgage-backed securities		143,222		—		(25,230	)		117,992
Total available-for-sale		166,281		—		(29,166	)		137,115
Held-to-maturity securities:
Debt securities:
U.S. Treasury securities		9,995		—		(545	)		9,450
Total debt securities		9,995		—		(545	)		9,450
Mortgage-backed securities:
Government-sponsored mortgage-backed securities		213,375		107		(35,240	)		178,242
Total mortgage-backed securities		213,375		107		(35,240	)		178,242
Total held-to-maturity		223,370		107		(35,785	)		187,692
Total	$	389,651	$	107	$	(64,951	)	$	324,807

The following table presents the unrealized gains recognized on marketable equity securities for the periods indicated:

	Three Months Ended March 31
	2024		2023
	(In thousands)
Net gains recognized during the period on marketable equity securities	$	8	$	—
Net losses recognized during the period on equity securities sold during the period		—		—
Unrealized gains recognized during the period on marketable equity securities still held at end of period	$	8	$	—

At March 31, 2024, U.S. Treasury securities with a fair value of $9.5 million, government-sponsored enterprise obligations with a fair value of $7.8 million and mortgage-backed securities with a fair value of $169.4 million were pledged to secure public deposits, the Bank Term Funding Program (“BTFP”) and for other purposes as required or permitted by law. The securities collateralizing public deposits are subject to fluctuations in fair value. We monitor the fair value of the collateral on a periodic basis, and pledge additional collateral if necessary based on changes in fair value of collateral or the balances of such deposits.

The amortized cost and fair value of available-for-sale and held-to-maturity securities at March 31, 2024, by final maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations.

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Debt securities:
Due in one year or less	$	135	$	134	$	4,994	$	4,864
Due after one year through five years		—		—		5,003		4,599
Due after five years through ten years		19,927		15,903		—		—
Due after ten years		—		—		1,100		1,103
Total debt securities	$	20,062	$	16,037	$	11,097	$	10,566

Mortgage-backed securities:
Due after one year through five years	$	962	$	916	$	—	$	—
Due after five years through ten years		844		767		—		—
Due after ten years		148,196		120,642		210,145		171,113
Total mortgage-backed securities		150,002		122,325		210,145		171,113
Total securities	$	170,064	$	138,362	$	221,242	$	181,679

There were no sales of available-for-sale securities for the three months ended March 31, 2024 and 2023.

Allowance for Credit Losses – Available-for-Sale Securities

The Company measures expected credit losses on available-for-sale debt securities based upon the gain or loss position of the security. For available-for-sale debt securities in an unrealized loss position which the Company does not intend to sell, and it is not more likely than not that the Company will be required to sell the security before recovery of the Company’s amortized cost, the Company evaluates qualitative criteria to determine any expected loss. This includes among other items the financial health of, and specific prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of the security. The Company also evaluates quantitative criteria including determining whether there has been an adverse change in expected future cash flows of the security. Available-for-sale securities which are guaranteed by government agencies do not currently have an allowance for credit loss as the Company determined these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise; Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”), Federal Farm Credit Bank (“FFCB”), or Federal Home Loan Bank (“FHLB”). Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. The Company will evaluate this position no less than annually, however, certain items which may cause the Company to change this methodology include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. Accrued interest receivable on available-for-sale securities guaranteed by government agencies totaled $360,000 at March 31, 2024 and $333,000 at December 31, 2023, and is excluded from the estimate of credit losses. If the Company does not expect to recover the entire amortized cost basis of the security, an allowance for credit losses would be recorded, with a related charge to earnings, limited by the amount of the fair value of the security less its amortized cost. If the Company intends to sell the security or it is more likely than not that the Company will be required to sell the debt security before recovery of its amortized cost basis, the Company recognizes the entire difference between the amortized cost basis of the security and its fair value in earnings. Any impairment that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. Accrued interest receivable on available-for-sale debt securities not guaranteed by government agencies totaled $51,000 at March 31, 2024 and $178,000 at December 31, 2023, and is excluded from the estimate of credit losses. There were no allowance for credit losses established on available-for-sale debt securities during the three months ended March 31, 2024.

Allowance for Credit Losses – Held-to-Maturity Securities

The Company measures expected credit losses on held-to-maturity debt securities on a collective basis by security type and risk rating where available. The reserve for each pool is calculated based on a Probability of Default/Loss Given Default basis taking into consideration the expected life of each security. Held-to-maturity securities which are issued by the United States Treasury or are guaranteed by government agencies do not currently have an allowance for credit loss as the Company determined these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise; FHLMC, FNMA, FFCB, or FHLB. Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. The Company will evaluate this position no less than annually, however, certain items which may cause the Company to change this methodology include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. Any expected credit losses on held-to-maturity securities would be presented as an allowance for credit loss. Accrued interest receivable on held-to-maturity securities totaled $482,000 at March 31, 2024 and $454,000 at December 31, 2023, and is excluded from the estimate of credit losses. There were no allowance for credit losses established on held-to-maturity securities during the three months ended March 31, 2024.

At March 31, 2024 and December 31, 2023, management attributed the unrealized losses to increases in current market yields compared to the yields at the time the investments were purchased by the Company and not due to credit quality. There was no credit loss during the three months ended March 31, 2024 and March 31, 2023, respectively. At March 31, 2024, there was one available-for-sale corporate bond that was rated below investment grade by one or more ratings agencies, while at December 31, 2023, there were two available-for-sale corporate bonds that were rated below investment grade by one or more ratings agencies. At March 31, 2024, the Company reviewed the financial strength of the one available-for-sale corporate bond below investment grade and concluded that the amortized cost remains supported by the expected future cash flows of the security.

Information pertaining to investment securities with gross unrealized losses as of March 31, 2024 and December 31, 2023 for which the Company did not recognize a provision for credit losses under CECL, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	March 31, 2024
	Less Than Twelve Months									Over Twelve Months
	Number of Securities		Fair Value		Gross Unrealized Loss		Depreciation from Amortized Cost Basis (%)			Number of Securities		Fair Value		Gross Unrealized Loss		Depreciation from Amortized Cost Basis (%)
	(Dollars in thousands)
Available-for-sale:
Government-sponsored mortgage-backed securities		2	$	9,295	$	13		0.1	%		70	$	107,794	$	26,308		19.6	%
U.S. government guaranteed mortgage-backed securities		—		—		—		—			9		5,236		1,356		20.6
Government-sponsored enterprise obligations		—		—		—		—			3		11,832		3,095		20.7
Corporate bonds		—		—		—		—			2		4,071		929		18.6
State and municipal bonds		1		134		1		0.7			—		—		—		—
Total available-for-sale		3		9,429		14					84		128,933		31,688
Held-to-maturity:
U.S. Treasury securities		—		—		—		—	%		2		9,463		534		5.3	%
Government-sponsored mortgage-backed securities		3		5,711		80		1.4			37		159,059		38,988		19.7
Total held-to-maturity		3		5,711		80					39		168,522		39,522
Total		6	$	15,140	$	94					123	$	297,455	$	71,210

	December 31, 2023
	Less Than Twelve Months									Over Twelve Months
	Number of Securities		Fair Value		Gross Unrealized Loss		Depreciation from Amortized Cost Basis (%)			Number of Securities		Fair Value		Gross Unrealized Loss		Depreciation from Amortized Cost Basis (%)
	(Dollars in thousands)
Available-for-sale:
Government-sponsored mortgage-backed securities		—	$	—	$	—		—	%		70	$	112,557	$	23,976		17.6	%
U.S. government guaranteed mortgage-backed securities		—		—		—		—			9		5,435		1,254		18.7
Government-sponsored enterprise obligations		—		—		—		—			3		12,026		2,898		19.4
Corporate bonds		—		—		—		—			3		6,962		1,038		13.0
Total available-for-sale		—		—		—					85		136,980		29,166
Held-to-maturity:
U.S. Treasury securities		—		—		—		—	%		2		9,450		545		5.5	%
Government-sponsored mortgage-backed securities		4		7,097		56		0.8			36		164,395		35,184		17.6
Total held-to-maturity		4		7,097		56					38		173,845		35,729
Total		4	$	7,097	$	56					123	$	310,825	$	64,895