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Fair Value
 9 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Fair Value
Certain assets and liabilities are recorded at fair value to provide additional insight into the Company's quality of earnings. Some of these assets and liabilities are measured on a recurring basis while others are measured on a nonrecurring basis, with the determination based upon applicable existing accounting pronouncements. For example, securities available for sale are recorded at fair value on a recurring basis. Other assets, such as other real estate owned and IAL, are recorded at fair value on a nonrecurring basis using the lower of cost or market methodology to determine impairment of individual assets. The Company groups assets and liabilities, which are recorded at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement (with level 1 considered highest and level 3 considered lowest). A brief description of each level follows:
Level 1 - Valuation is based upon quoted prices for identical instruments in active markets.
Level 2 - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3 - Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates that market participants would use in pricing the asset or liability. Valuation includes use of discounted cash flow models and similar techniques.
The fair value methods and assumptions for the Company's financial instruments and other assets measured at fair value are set forth below.
Investment Securities The fair values of investment securities are estimated by independent providers using a market approach with observable inputs, including matrix pricing and recent transactions. In obtaining such valuation information from third parties, the Company has evaluated their valuation methodologies used to develop the fair values in order to determine whether the valuations are representative of an exit price in the Company's principal markets. The Company's principal markets for its securities portfolios are the secondary institutional markets, with an exit price that is predominantly reflective of bid level pricing in those markets. Fair values are calculated based on the value of one unit without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications, or estimated transaction costs. If these considerations had been incorporated into the fair value estimates, the aggregate fair value could have been changed. The carrying values of restricted equity securities approximate fair values. As such, the Company classifies investment securities as Level 2.
Loans
Fair values are estimated for portfolios of loans held for investment based on an exit pricing notion. The fair values of performing loans are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest risk inherent in the loan. The estimates of maturity are based on the Company's historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions, and the effects of estimated prepayments. Assumptions regarding credit risk, cash flows, and discount rates are judgmentally determined using available market information and specific borrower information. Management has made estimates of fair value using discount rates that it believes to be reasonable. However, because there is no market for many of these financial instruments, Management has no basis to determine whether the fair value presented above would be indicative of the value negotiated in an actual sale. As such, the Company classifies loans as Level 3, except for certain IAL. Fair values of IAL are based on estimated cash flows and are discounted using a rate commensurate with the risk associated with the estimated cash flows, or if collateral dependent, discounted to the appraised value of the collateral as determined by reference to sale prices of similar properties, less costs to sell. As such, the Company classifies IAL for which a specific reserve results in a fair value measure as Level 2. All other IAL are classified as Level 3. Management has elected to exclude loans held for sale from its fair value presentation. Loans held for sale typically consists solely of residential mortgage loans originated for sale in the secondary market which have been contracted to be sold at a specified price above par, and are assets of the Bank for a short period of time, generally less than ten business days.
Other Real Estate Owned
Real estate acquired through foreclosure is initially recorded at fair value. The fair value of other real estate owned is based on property appraisals and an analysis of similar properties currently available. As such, the Company records other real estate owned as nonrecurring Level 2.
Mortgage Servicing Rights
Mortgage servicing rights represent the value associated with servicing residential mortgage loans. Servicing assets and servicing liabilities are reported using the amortization method and compared to fair value for impairment. In evaluating the fair values of mortgage servicing rights, the Company obtains third party valuations based on loan level data including note rate, type, and term of the underlying loans. As such, the Company classifies mortgage servicing rights as Level 2.
Time Deposits
The fair value of maturity deposits is based on the discounted value of contractual cash flows using a replacement cost of funds approach. The discount rate is estimated using the cost of funds borrowing rate in the market. As such, the Company classifies time deposits as Level 2.
Borrowed Funds
The fair value of borrowed funds is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently available for borrowings of similar remaining maturities. As such, the Company classifies borrowed funds as Level 2.
Derivatives
The fair value of derivative instruments is determined using inputs that are observable in the market place obtained from third parties including yield curves, publicly available volatilities, and floating indexes and, accordingly, are classified as Level 2 inputs. The credit value adjustments associated with derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. As of September 30, 2025 and 2024, and December 31, 2024, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives due to collateral postings.
Customer Loan Derivatives
The valuation of the Company’s customer loan derivatives is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of master netting arrangements and any applicable credit enhancements, such as collateral postings.
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These values do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on Management's judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These
estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial instruments include the deferred tax asset, premises and equipment, and other real estate owned. In addition, tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The following tables present the balances of assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2025, December 31, 2024 and September 30, 2024.
At September 30, 2025
Level 1Level 2Level 3Total
Securities available for sale
   U.S. Treasury & Agency securities$— $17,882,000 $— $17,882,000 
   Mortgage-backed securities— 219,417,000 — 219,417,000 
   State and political subdivisions— 34,162,000 — 34,162,000 
   Asset-backed securities— 2,032,000 — 2,032,000 
Total securities available for sale— 273,493,000 — 273,493,000 
   Interest rate swap agreements— 23,000 — 23,000 
   Interest rate cap agreements— 209,000 — 209,000 
   Customer loan interest swap agreements— 4,298,000 — 4,298,000 
Total interest rate agreements— 4,530,000 — 4,530,000 
Total assets$— $278,023,000 $— $278,023,000 

At September 30, 2025
Level 1Level 2Level 3Total
Interest rate swap agreements $— $958,000 $— $958,000 
Customer loan interest swap agreements — 4,298,000 — 4,298,000 
Total liabilities$— $5,256,000 $— $5,256,000 

At December 31, 2024
Level 1Level 2Level 3Total
Securities available for sale
   U.S. Treasury & Agency securities$— $19,796,000 $— $19,796,000 
   Mortgage-backed securities— 219,382,000 — 219,382,000 
   State and political subdivisions— 33,252,000 — 33,252,000 
   Asset-backed securities— 2,250,000 — 2,250,000 
Total securities available for sale— 274,680,000 — 274,680,000 
   Interest rate swap agreements— 198,000 — 198,000 
   Customer loan interest swap agreements— 4,859,000 — 4,859,000 
Total interest rate swap agreements— 5,057,000 — 5,057,000 
Total assets$— $279,737,000 $— $279,737,000 
At December 31, 2024
Level 1Level 2Level 3Total
Interest rate swap agreements$— $758,000 $— $758,000 
Customer loan interest swap agreements— 4,859,000 — 4,859,000 
Total liabilities$— $5,617,000 $— $5,617,000 

At September 30, 2024
Level 1Level 2Level 3Total
Securities available for sale
   U.S. Treasury & Agency securities$— $20,735,000 $— $20,735,000 
   Mortgage-backed securities— 227,374,000 — 227,374,000 
   State and political subdivisions— 34,608,000 — 34,608,000 
   Asset-backed securities— 2,304,000 — 2,304,000 
Total securities available for sale— 285,021,000 — 285,021,000 
   Customer loan interest swap agreements— 3,752,000 — 3,752,000 
Total interest swap agreements— 3,752,000 — 3,752,000 
Total assets$— $288,773,000 $— $288,773,000 

At September 30, 2024
Level 1Level 2Level 3Total
Interest rate swap agreements$— $2,634,000 $— $2,634,000 
Customer loan interest swap agreements— 3,752,000 — 3,752,000 
Total liabilities$— $6,386,000 $— $6,386,000 

Assets Recorded at Fair Value on a Non-Recurring Basis
The following tables include assets measured at fair value on a nonrecurring basis that have had a fair value adjustment since their initial recognition. Mortgage servicing rights are presented at fair value with no impairment reserve at September 30, 2025 and December 31, 2024, and presented at fair value with a $5,000 impairment reserve at September 30, 2024. There was no OREO or related allowance at September 30, 2025. OREO is presented net of an allowance of $35,000 at December 31, 2024 and September 30, 2024. Only collateral-dependent IAL with a related specific ACL or a partial charge off are included in IAL for purposes of fair value disclosures. IAL below are presented net of specific allowances of $826,000 and $821,000 at September 30, 2025 and December 31, 2024, respectively. There were no collateral-dependent IAL with a related specific ACL or a partial charge off at September 30, 2024.

At September 30, 2025
Level 1Level 2Level 3Total
Mortgage servicing rights$— $2,775,000 $— $2,775,000 
Individually analyzed loans— 430,000 — 430,000 
Total assets$— $3,205,000 $— $3,205,000 

At December 31, 2024
Level 1Level 2Level 3Total
Mortgage servicing rights$— $3,054,000 $— $3,054,000 
Other real estate owned— 173,000 — 173,000 
Individually analyzed loans— 538,000 — 538,000 
Total assets$— $3,765,000 $— $3,765,000 
At September 30, 2024
Level 1Level 2Level 3Total
Mortgage servicing rights$— $3,074,000 $— $3,074,000 
Other real estate owned— 173,000 — 173,000 
Total assets$— 3,247,000 $— $3,247,000 
Fair Value of Financial Instruments
FASB ASC Topic 825 "Financial Instruments" requires disclosures of fair value information about financial instruments, whether or not recognized in the balance sheet if the fair values can be reasonably determined. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques using observable inputs when available. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
This summary excludes financial assets and liabilities for which carrying value approximates fair values and financial instruments that are recorded at fair value on a recurring basis. Financial instruments for which carrying values approximate fair value include cash equivalents, interest-bearing deposits in other banks, demand, NOW, savings, and money market deposits. The estimated fair value of demand, NOW, savings, and money market deposits is the amount payable on demand at the reporting date. Carrying value is used because the accounts have no stated maturity and the customer has the ability to withdraw funds immediately.
The carrying amount and estimated fair values for financial instruments as of September 30, 2025 were as follows:
Carrying valueEstimated fair valueLevel 1Level 2Level 3
Financial assets
Securities to be held to maturity (net of allowance for credit losses)$362,552,000 $316,574,000 $— $316,574,000 $— 
Loans (net of allowance for credit losses)
Commercial
   Real estate779,849,000 761,198,000 — — 761,198,000 
   Construction51,334,000 50,106,000 — — 50,106,000 
   Other561,646,000 559,233,000 — 430,000 558,803,000 
Municipal68,305,000 64,726,000 — — 64,726,000 
Residential
   Term725,201,000 673,863,000 — — 673,863,000 
   Construction32,343,000 32,084,000 — — 32,084,000 
Home equity line of credit136,169,000 135,993,000 — — 135,993,000 
Consumer18,918,000 16,672,000 — — 16,672,000 
Total loans2,373,765,000 2,293,875,000 — 430,000 2,293,445,000 
Mortgage servicing rights1,716,000 2,775,000 — 2,775,000 — 
Financial liabilities
Local certificates of deposit$400,172,000 $375,001,000 $— $375,001,000 $— 
National certificates of deposit671,355,000 699,204,000 — 699,204,000 — 
Total certificates of deposit1,071,527,000 1,074,205,000 — 1,074,205,000 — 
Repurchase agreements57,468,000 57,365,000 — 57,365,000 — 
Federal Home Loan Bank advances95,500,000 95,837,000 — 95,837,000 — 
Total borrowed funds152,968,000 153,202,000 — 153,202,000 — 
The carrying amounts and estimated fair values for financial instruments as of December 31, 2024 were as follows:
Carrying valueEstimated fair valueLevel 1Level 2Level 3
Financial assets
Securities to be held to maturity (net of allowance for credit losses)$369,704,000 $314,993,000 $— $314,993,000 $— 
Loans (net of allowance for credit losses)
Commercial
   Real estate752,613,000 720,898,000 — — 720,898,000 
   Construction98,773,000 94,611,000 — — 94,611,000 
   Other519,560,000 513,417,000 — 538,000 512,879,000 
Municipal61,565,000 57,657,000 — — 57,657,000 
Residential
   Term705,566,000 643,402,000 — — 643,402,000 
   Construction35,007,000 34,631,000 — — 34,631,000 
Home equity line of credit122,377,000 119,930,000 — — 119,930,000 
Consumer20,608,000 18,274,000 — — 18,274,000 
Total loans2,316,069,000 2,202,820,000 — 538,000 2,202,282,000 
Mortgage servicing rights1,894,000 3,054,000 — 3,054,000 — 
Financial liabilities
Local certificates of deposit$385,897,000 $365,937,000 $— $365,937,000 $— 
National certificates of deposit728,914,000 747,681,000 — 747,681,000 — 
Total certificates of deposit1,114,811,000 1,113,618,000 — 1,113,618,000 — 
Repurchase agreements51,278,000 51,181,000 — 51,181,000 — 
Federal Home Loan Bank advances95,000,000 95,066,000 — 95,066,000 — 
Total borrowed funds146,278,000 146,247,000 — 146,247,000 — 
The carrying amount and estimated fair values for financial instruments as of September 30, 2024 were as follows:
Carrying valueEstimated fair valueLevel 1Level 2Level 3
Financial assets
Securities to be held to maturity (net of allowance for credit losses)$377,635,000 $333,575,000 $— $333,575,000 $— 
Loans (net of allowance for credit losses)
Commercial
   Real estate746,558,000 714,398,000 — — 714,398,000 
   Construction87,185,000 83,429,000 — — 83,429,000 
   Other523,624,000 516,977,000 — — 516,977,000 
Municipal62,678,000 57,578,000 — — 57,578,000 
Residential
   Term693,017,000 633,247,000 — — 633,247,000 
   Construction34,203,000 33,869,000 — — 33,869,000 
Home equity line of credit116,365,000 116,058,000 — — 116,058,000 
Consumer19,624,000 17,375,000 — — 17,375,000 
Total loans2,283,254,000 2,172,931,000 — — 2,172,931,000 
Mortgage servicing rights1,940,000 3,074,000 — 3,074,000 — 
Financial liabilities
Local certificates of deposit$377,750,000 $360,988,000 $— $360,988,000 $— 
National certificates of deposit747,576,000 768,270,000 — 768,270,000 — 
Total certificates of deposit1,125,326,000 1,129,258,000 — 1,129,258,000 — 
Repurchase agreements56,027,000 55,910,000 — 55,910,000 — 
Federal Home Loan Bank advances95,000,000 94,914,000 — 94,914,000 — 
Total borrowed funds151,027,000 150,824,000 — 150,824,000 —