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Fair Value Measurements and Disclosures
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements and Disclosures
Note 7 – Fair Value Measurements and Disclosures
The Company follows the guidance on fair value measurements now codified as FASB ASC Topic 820, “
Fair Value Measurement”
(“Topic 820”)
.
 Fair value measurements are not adjusted for transaction costs. Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.
Management uses its best judgment in estimating the fair value of the Company’s financial instruments, however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in sales transactions on the dates indicated. The estimated fair value amounts have been measured as of their respective
period-end
and have not been
re-evaluated
or updated for the purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each
period-end.
The fair value measurement hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
 
Level
 1
: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level
 2
: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
Level
 3
: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2025 were as follows:
 
    
(Level 1)
                       
    
Quoted Price
     
(Level 2)
                
    
in Active
     
Significant
     
(Level 3)
     
Total Fair
  
    
Markets for
     
Other
     
Significant
     
Value
  
    
Identical
     
Observable
     
Unobservable
     
June 30,
  
Description
   
Assets
     
Inputs
     
Inputs
     
2025
  
     (In thousands)  
Mortgage-backed securities
-U.S.
government sponsored enterprise (GSEs)
    $ —       $ 170,445      $ —       $ 170,445  
U.S. government agency securities
      —         10,341        —         10,341  
Obligations of state and political subdivisions
      —         39,587        —         39,587  
Small Business Association (SBA) securities
      —         1,487        —         1,487  
U.S. treasury securities
      2,903        —         —         2,903  
Mortgage servicings rights
      —         835        —         835  
For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy, used at December 31, 2024 were as follows:
 
    
(Level 1)
                       
    
Quoted Price
     
(Level 2)
                
    
in Active
     
Significant
     
(Level 3)
     
Total Fair
  
    
Markets for
     
Other
     
Significant
     
Value
  
    
Identical
     
Observable
     
Unobservable
     
December 31,
  
Description
   
Assets
     
Inputs
     
Inputs
     
2024
  
     (In thousands)  
Mortgage-backed securities
-U.S.
government sponsored enterprise (GSEs)
    $ —       $ 190,545      $ —       $ 190,545  
U.S. government agency securities
      —         10,200        —         10,200  
Obligations of state and political subdivisions
      —         39,730        —         39,730  
Small Business Association (SBA) securities
      —         1,857        —         1,857  
U.S. treasury securities
      4,839        —         —         4,839  
Mortgage servicings rights
      —         1,060        —         1,060  
There were no liabilities measured at fair value on a recurring basis, at June 30, 2025 or December 31, 2024.
 
There were no assets measured at fair value on a nonrecurring basis, at June 30, 2025.
For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2024, were as follows:
 
    
(Level 1)
                       
    
Quoted Price
     
(Level 2)
                
    
in Active
     
Significant
     
(Level 3)
     
Total Fair
  
    
Markets for
     
Other
     
Significant
     
Value
  
    
Identical
     
Observable
     
Unobservable
     
December 31,
  
Description
   
Assets
     
Inputs
     
Inputs
     
2024
  
     (In thousands)  
Collateral dependent loan
    $ —       $ —       $ 16,223      $ 16,223  
Other real estate owned
1
           295        295  
  
 
 
     
 
 
     
 
 
     
 
 
  
   $ —       $ —       $ 16,518      $ 16,518  
  
 
 
     
 
 
     
 
 
     
 
 
  
 
1
 
The Bank charged off approximately $197,000 during the year ended December 31, 2024, prior to the property being transferred to other real estate owned.
The following table presents quantitative information using Level 3 fair value measurements at December 31, 2024.
 
                       
Range
  
    
December 31,
     
Valuation
     
Unobservable
   
(Weighted
  
Description
   
2024
     
Technique
     
Input
   
Average)
  
     (Dollars in thousands)  
Collateral dependent loan
    $ 16,223     
 
 Collateral
1 

 		    Discount
adjustment		      12.0%
12.0%		  
 
Other real estate owned
2
   $ 295     
 
 Collateral
1 

 		    Discount
adjustment		      0.0%
0.0%		  
 
 
1
 
Fair value is generally determined through independent appraisal of the underlying collateral, primarily using comparable sales.
2
 
The other real estate owned was written down to the estimated net realizable value.
There were no transfers between fair value hierarchy levels during the six months ended June 30, 2025 or 2024. The Company’s policy is to recognize transfers between levels as of the end of the reporting period.
The following methods and assumptions were used by the Company in estimating fair value disclosures:
Investment Securities
The fair value of securities
available-for-sale
(carried at fair value) and
held-to-maturity
(carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. Level 2 debt securities are valued by a third-party pricing service commonly used in the banking industry, and not adjusted by management. Level 2 fair value measurements consider observable data that may include dealer quotes, market spreads, cash
 
flows, the U.S. treasury yield curve, live trading levels, trade execution date, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things.
Individual evaluated loans
Individual loans carried at fair value are those loans in which the Company has measured for a reserve and are generally based on the fair value of the related loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds, discounted for estimated selling costs or other factors the Company determines will impact collection of proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.
The carrying amounts and estimated fair value of financial instruments at June 30, 2025 are as follows:
 
    
June 30, 2025
  
    
Carrying
     
Estimated
                       
    
Amount
     
Fair Value
     
Level 1
     
Level 2
     
Level 3
  
     (In thousands)  
Financial Assets:
   
Cash and cash equivalents
    $ 21,094      $ 21,094      $ 21,094      $ —       $ —   
Securities
available-for-sale
at fair value
      224,763        224,763        2,903        221,860        —   
Securities
held-to-maturity
      157        158        —         158        —   
Loans receivable, net
      1,818,214        1,838,173        —         —         1,838,173  
Restricted investments in bank stock
      2,816        2,816        —         2,816        —   
Accrued interest receivable
      7,868        7,868        —         7,868        —   
Equity method investments
      12,103        12,103        —         7,520        4,583  
Mortgage servicing rights
      835        835        —         835        —   
Financial Liabilities:
               
Deposits
    $  1,932,372        1,831,226      $ —       $  1,831,226      $ —   
Borrowings
      10,000        10,002        —         10,002        —   
Accrued interest payable
      9,655        9,655        —         9,655        —   
The carrying amounts and estimated fair value of financial instruments at December 31, 2024 are as follows:
 
    
December 31, 2024
  
    
Carrying
     
Estimated
                       
    
Amount
     
Fair Value
     
Level 1
     
Level 2
     
Level 3
  
     (In thousands)  
Financial Assets:
   
Cash and cash equivalents
    $ 117,348      $ 117,348      $ 117,348      $ —       $ —   
Securities
available-for-sale
at fair value
      247,171        247,171        4,389        242,782        —   
Securities
held-to-maturity
      161        162        —         162        —   
Loans receivable, net
      1,795,218        1,798,302        —         —         1,798,302  
Restricted investments in bank stock
      2,075        2,075        —         2,075        —   
Accrued interest receivable
      7,975        7,975        —         7,975        —   
Equity method investments
      11,160        11,160        —         6,850        4,310  
Mortgage servicing rights
      1,060        1,060        —         1,060        —   
Financial Liabilities:
               
Deposits
    $  2,032,625        1,934,884      $ —       $  1,934,884      $ —   
Accrued interest payable
      15,401        15,401        —         15,401        —   
The fair value of cash and cash equivalents, restricted bank stock, accrued interest receivable, equity method investments, and accrued interest payable are measured at the Company’s carrying amount.
The fair value of loans, deposits and borrowings are measured on a discounted cash flow basis using current rates and terms.
 
The Mortgage servicing rights are carried at estimated fair value. The estimated fair value is obtained through independent third-party valuations.
Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).
Limitations
The fair value estimates are made at a discrete point in time based on relevant market information and information about 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 and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Further, the foregoing estimates may not reflect the actual amount that could be realized if all or substantially all the financial instruments were offered for sale. This is due to the fact that no market exists for a sizable portion of the loan, deposit and
off-balance
sheet instruments.
In addition, the fair value estimates are based on existing on and
off-balance
sheet financial instruments without attempting to value anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.
Finally, reasonable comparability between financial institutions may not be practical due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.