Fair Value Measurements

3 Months Ended

Mar. 31, 2025

Note 13. Fair Value Measurements

Fair Value Hierarchy

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 — Quoted market prices (unadjusted) for identical instruments traded 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 an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The estimated carrying and fair values of the Company’s financial instruments not carried at fair value are as follows (in thousands):


	March 31, 2025
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	35,710	$	35,710	$	—	$	—	$	35,710
Interest-earning deposits in other banks	112,682		112,682		—		—		112,682

Held-to-maturity investment securities	301,160		—		274,114		—		274,114
Loans, net	2,320,802		—		—		2,278,998		2,278,998

Financial liabilities:
Time deposits	453,460		—		450,936		—		450,936
Borrowings	134,377		—		134,545		—		134,545
Senior debt and subordinated debentures	69,925		—		—		63,566		63,566


	December 31, 2024
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	28,029	$	28,029	$	—	$	—	$	28,029
Interest-earning deposits in other banks	92,369		92,369		—		—		92,369

Held-to-maturity investment securities	301,359		—		274,568		—		274,568

Loans, net	2,308,418		—		—		2,252,462		2,252,462

Financial liabilities:
Time deposits	443,284		—		440,046		—		440,046
Borrowings	133,442		—		133,743		—		133,743
Senior debt and subordinated debentures	69,889		—		—		62,535		62,535

The methods and assumptions used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents — The carrying amounts of cash and due from banks, interest-earning deposits in other banks, and Federal funds sold approximate fair values and are classified as Level 1.

(b) Investment securities — The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

(c) Loans — Fair values of loans are estimated as follows: fixed and variable loans are estimated using discounted cash flow analyses, taking into consideration various factors including loan type, credit loss and prepayment expectations. The loan cash flows are discounted to present value using a combination of existing market rates and liquidity spreads as well as underlying index rates and margins on variable rate loans resulting in a Level 3 classification.

(d) Time Deposits — Fair value for fixed and variable rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities resulting in a Level 2 classification.

(e) Borrowings — The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification.

(f) Subordinated Debentures and Senior Debt — The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

Assets Recorded at Fair Value

The Company is required or permitted to record the following assets at fair value on a recurring basis. The following tables present information about the Company’s assets measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 (in thousands):


	Fair Value Measurements Using
March 31, 2025	Fair Value		Level 1		Level 2		Level 3
Available-for-sale debt securities:
U.S. Treasury securities	$	9,224	$	9,224	$	—	$	—
U.S. Government agencies	66		—		66		—
Obligations of states and political subdivisions	162,235		—		162,235		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	70,594		—		70,594		—
Private label mortgage and asset backed securities	226,427		—		226,427		—
Corporate debt securities	487		—		487		—
Equity securities	6,684		6,684		—		—
Total assets measured at fair value on a recurring basis	$	475,717	$	15,908	$	459,809	$	—


	Fair Value Measurements Using
December 31, 2024	Fair Value		Level 1		Level 2		Level 3
Available-for-sale debt securities:
U.S. Treasury securities	$	9,058	$	9,058	$	—	$	—
U.S. Government agencies	65		—		65		—
Obligations of states and political subdivisions	164,640		—		164,640		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	72,302		—		72,302		—
Private label mortgage and asset backed securities	230,555		—		230,555		—
Corporate debt securities	493				493
Equity securities	6,586		6,586		—		—
Total assets measured at fair value on a recurring basis	$	483,699	$	15,644	$	468,055	$	—

There were no liabilities measured on a recurring basis at March 31, 2025 and December 31, 2024.

There were no changes in valuation techniques used during the periods ended March 31, 2025 or December 31, 2024. There were no assets or liabilities measured on a non-recurring basis at March 31, 2025 and December 31, 2024.