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FAIR VALUE
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE FAIR VALUE
The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Fair value of financial instruments
Fair value estimates are based on financial instruments both on and off the balance sheet without attempting to estimate the value of anticipated future business, and the value of assets and liabilities that are not considered financial instruments. Additionally, tax consequences related to the realization of the unrealized gains and losses can have a potential effect on fair value estimates and have not been considered in many of the estimates. The following methods and assumptions were used to estimate the fair value of significant financial instruments:
Cash and Due from Banks: The carrying amounts of cash and short-term instruments approximate fair values because of the liquidity of these instruments.
Federal Funds Sold and Interest-Bearing Balances: The carrying amount is assumed to be the fair value given the short-term nature of these deposits.
Debt Securities Held to Maturity and Available for Sale: The fair values of securities held to maturity and available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.
Loans Held for Sale: The fair value of loans held-for-sale is based on commitments outstanding from investors as well as what secondary market investors are currently offering for portfolios with similar characteristics.
Loans Held for Investment, net: The fair value of loans, which is based on an exit price notion, is generally determined using an income based approach based on discounted cash flow analysis. This approach utilizes the contractual maturity of the loans and market indications of interest rates, prepayment speeds, defaults and credit risk in determining fair value. The fair value for PCD loans incorporated market-based loss rates used to estimate the expected life of loan credit losses. The noncredit discount resulting from the acquired PCD loans was allocated to each individual asset. If an individually evaluated loan has had a charge-off or if the fair value of the collateral is less than the recorded investment in the loan, we establish a specific reserve and report the loan as nonrecurring Level 3. Loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. For the fair value of collateral-dependent individually evaluated loans, an asset-based approach is applied to determine the estimated fair values of the underlying collateral based on recent real estate appraisals, less costs to sell. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. New appraisals are conducted in certain circumstances, including when there has been significant deterioration in the condition of the collateral, if the foreclosure process has begun, or if the existing valuation is deemed to be outdated. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Restricted Stock Investments: Investments in FHLB and Federal Reserve stocks are recorded at cost and measured for impairment. Ownership of FHLB and Federal Reserve stocks are restricted to member banks and the securities do not have a readily determinable market value. Purchases and sales of these securities are at par value with the issuer. The fair value of investments in FHLB and Federal Reserve stock is equal to the carrying amount.
Other Equity Securities: The fair value of equity securities is based on quoted prices in active markets for identical assets to determine the fair value. If quoted prices are not available to determine fair value, the Company estimates the fair values by using independent pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.
Other Real Estate Owned (“OREO”): Nonrecurring adjustments to certain commercial and residential real estate properties classified as OREO are measured at the lower of the carrying amount or fair value, less costs to sell. The fair value of OREO is generally based on recent real estate appraisals or broker opinions, obtained from independent third parties, which are frequently adjusted by management to reflect current conditions and estimated selling costs.
Accrued Interest Receivable: The fair value of accrued interest receivable approximates their carrying amounts.
Deposits: The fair values disclosed for demand deposits, including interest and non-interest demand accounts, savings, and certain types of money market accounts are by definition based on carrying value. Fair value for fixed-rate certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregate expected monthly maturities on time deposits. Early withdrawal of fixed-rate certificates of deposit is not expected to be significant.
Borrowings: The fair values of the Company’s overnight borrowings from the Federal Home Loan Bank approximates their carrying value as the advances were recently borrowed at market rate. The fair value of fixed-rated term borrowings is estimated using a discounted cash flow through the remaining maturity dates based on the current borrowing rates for similar types of borrowing arrangements. The fair values of subordinated debt are based on rates currently available to the Company for debt with similar terms and remaining maturities.
Accrued Interest Payable: The fair value of accrued interest payable approximates their carrying amounts.
Off-Balance Sheet Financial Instruments: The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements. The fair value of these financial instruments is not material.
The estimated fair value hierarchy level and estimated fair value of financial instruments at March 31, 2025 and December 31, 2024, is summarized as follows:
March 31, 2025December 31, 2024
EstimatedEstimated
Fair ValueCarryingFairCarryingFair
(dollars in thousands)HierarchyValueValue ValueValue
Financial assets:
Cash and due from banksLevel 1$80,441 $80,441 $60,471 $60,471 
Fed funds and interest-bearing balancesLevel 1358,800 358,800 327,691 327,691 
Debt securities available for saleLevel 1/2131,593 131,593 142,001 142,001 
Debt securities held to maturityLevel 253,194 47,329 53,280 47,823 
Loans held for saleLevel 24,625 4,898 17,180 17,855 
Loans held for investment, netLevel 33,022,935 3,010,316 3,088,625 3,080,175 
Restricted stock, at costLevel 230,845 30,845 30,829 30,829 
Other equity securitiesLevel 27,870 7,870 13,691 13,691 
Accrued interest receivableLevel 211,390 11,390 12,824 12,824 
Financial liabilities:
DepositsLevel 23,342,503 3,342,202 3,398,760 3,398,447 
BorrowingsLevel 270,308 71,699 69,725 69,876 
Accrued interest payableLevel 21,397 1,397 4,342 4,342 
Recurring fair value measurements
The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value on a recurring basis at the periods indicated:
Recurring Fair Value Measurements
(dollars in thousands)Level 1Level 2Level 3Total
March 31, 2025
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities$— $77,898 $— $77,898 
SBA securities— 4,615 — 4,615 
U.S. Treasury7,419 — — 7,419 
U.S. Agency— 1,728 — 1,728 
Collateralized mortgage obligations— 38,187 — 38,187 
Taxable municipals— 918 — 918 
Tax exempt bank-qualified municipals— 828 — 828 
$7,419 $124,174 $— $131,593 
December 31, 2024
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities$— $83,274 $— $83,274 
SBA securities— 5,333 — 5,333 
U.S. Treasury12,326 — — 12,326 
U.S. Agency— 1,670 — 1,670 
Collateralized mortgage obligations— 37,663 — 37,663 
Taxable municipals— 909 — 909 
Tax exempt bank-qualified municipals— 826 — 826 
$12,326 $129,675 $— $142,001 
Nonrecurring fair value measurements
The Company may also be required, from time to time, to measure certain other assets and liabilities on a nonrecurring basis in accordance with generally accepted accounting principles.
Collateral-dependent loans. For the valuation of the collateral-dependent loans, the Company relies primarily on third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales. Depending on the type of underlying collateral, valuations may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of these possible adjustments may vary. At March 31, 2025, the Company’s individual evaluated collateral-dependent loans were evaluated based on the estimated fair value of the underlying collateral from the Company’s internal reviews, including reviews of the most recent appraisals and the current sale market condition. There were no partial charge-offs on certain individually evaluated loans based on recent real estate or property appraisals and no related specific reserves were recorded the during the three months ended March 31, 2025.
Other real estate owned, net (“OREO”). Subsequent to foreclosure, it may be necessary to record nonrecurring fair value adjustments for declines in fair value of OREO. Fair value, when recorded, is determined
based on appraisals by qualified licensed appraisers and adjusted for management’s estimates of costs to sell. Accordingly, values for OREO are classified as Level 3.
The following tables summarize the fair value of assets and liabilities measured at fair value on a nonrecurring basis as of March 31, 2025 and December 31, 2024. OREO is presented net of an allowance of $614 thousand as of March 31, 2025 and December 31, 2024. Only individually evaluated collateral-dependent loans with a related specific ACL or a partial charge off are included in the following table for purposes of fair value disclosures.
Fair Value Measurement Level
Quoted Prices in
Active Markets forSignificant OtherSignificant
FairIdentical AssetsObservable InputsUnobservable Inputs
(dollars in thousands)Value(Level 1)(Level 2)(Level 3)
March 31, 2025
Collateral dependent loans (1):
Construction and Land$9,708 $— $— $9,708 
Total collateral dependent loans$9,708 $— $— $9,708 
Foreclosed assets:
Other real estate owned, net$4,083 $— $— $4,083 
December 31, 2024
Collateral dependent loans (1):
Construction and Land$9,708 $— $— $9,708 
1-4 Family Residential4,191 — — 4,191 
Commercial real estate and other14,316 — — 14,316 
Commercial and industrial6,476 — — 6,476 
$34,691 $— $— $34,691 
Foreclosed assets:
Other real estate owned, net$4,083 $— $— $4,083 
(1) Collateral-dependent loans whose fair value is based upon appraisals.
Quantitative information about Level 3 fair value measurements measured on a non-recurring basis are summarized below as of March 31, 2025 and December 31, 2024.

Asset FairValuationUnobservableRange %
(dollars in thousands)ValueTechniqueInput(Weighted Average)
March 31, 2025
Collateral dependent loans
Construction and Land$9,708 Fair value of propertyCost to sell
7.50% - 7.50%
(7.50%)
Total collateral dependent loans$9,708 
Other real estate owned, net$4,083 Market approachCost to sell
7.50% – 7.50%
(7.50%)
December 31, 2024
Collateral dependent loans
Construction and Land$9,708 Fair value of propertyCost to sell
7.50% – 7.50%
(7.50%)
1-4 Family Residential4,191 Fair value of propertyCost to sell
7.50% – 7.50%
(7.50%)
Commercial real estate and other14,316 Fair value of propertyDiscount to appraised values
18.13% – 30.00%
(19.70%)
Costs to sell
7.50% – 7.50%
(7.50%)
14,316 
Commercial and industrial5,582 Fair value of collateralDiscount to appraised values
20.00% – 80.00%
(54.04%)
Costs to sell
7.50% - 7.50%
(7.50%)
894 Fair value of propertyCosts to sell
8.00% – 10.00%
(8.62%)
6,476 
Total collateral dependent loans$34,691 
Other real estate owned, net$4,083 Market approachCost to sell
7.50% – 7.50%
(7.50%)