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Fair Value Measurements and Disclosures
 9 Months Ended
Sep. 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 September 30, 2025 were as follows:

 

Description

 

(Level 1) Quoted
Price in Active
Markets for
Identical
Assets

 

 

(Level 2)
Significant Other
Observable
Inputs

 

 

(Level 3)
Significant
Unobservable
Inputs

 

 

Total Fair Value
September 30,
2025

 

 

(In thousands)

 

Mortgage-backed securities -U.S. government sponsored
   enterprise (GSEs)

 

$

—

 

 

$

155,266

 

 

$

—

 

 

$

155,266

 

U.S. government agency securities

 

 

—

 

 

 

10,469

 

 

 

—

 

 

 

10,469

 

Obligations of state and political subdivisions

 

 

—

 

 

 

39,918

 

 

 

—

 

 

 

39,918

 

Small Business Association (SBA) securities

 

 

—

 

 

 

1,346

 

 

 

—

 

 

 

1,346

 

U.S. treasury securities

 

 

2,929

 

 

 

—

 

 

 

—

 

 

 

2,929

 

Mortgage servicings rights

 

 

—

 

 

 

707

 

 

 

—

 

 

 

707

 

 

Note 7 – Fair Value Measurements and Disclosures (continued)

 

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:

 

Description

 

(Level 1)
Quoted Price
in Active
Markets for
Identical
Assets

 

 

(Level 2)
Significant
Other
Observable
Inputs

 

 

(Level 3)
Significant
Unobservable
Inputs

 

 

Total Fair Value
December 31,
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 September 30, 2025 or December 31, 2024.

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).

There were no assets measured at fair value on a nonrecurring basis at September 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:

 

Description

 

(Level 1)
Quoted Price
in Active
Markets for
Identical
Assets

 

 

(Level 2)
Significant
Other
Observable
Inputs

 

 

(Level 3)
Significant
Unobservable
Inputs

 

 

Total Fair Value
December 31,
2024

 

 

(In thousands)

 

Collateral dependent loan

 

$

—

 

 

$

—

 

 

$

16,223

 

 

$

16,223

 

Other real estate owned1

 

 

 

 

 

 

 

 

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.

 

Description

 

December 31,
2024

 

 

Valuation
Technique

 

Unobservable
Input

 

Range
(Weighted Average)

 

(Dollars in thousands)

Collateral dependent loan

 

$

16,223

 

 

Collateral1

 

Discount
adjustment

 

12.0%
12.0%

Other real estate owned2

 

$

295

 

 

Collateral1

 

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 nine months ended September 30, 2025 or 2024. The Company’s policy is to recognize transfers between levels as of the end of the reporting period.

Note 7 – Fair Value Measurements and Disclosures (continued)

 

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 September 30, 2025 are as follows:

 

 

September 30, 2025

 

 

Carrying
Amount

 

 

Estimated Fair
Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

(In thousands)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

72,892

 

 

$

72,892

 

 

$

72,892

 

 

$

—

 

 

$

—

 

Securities available-for-sale at fair value

 

 

209,928

 

 

 

209,928

 

 

 

2,929

 

 

 

206,999

 

 

 

—

 

Securities held-to-maturity

 

 

155

 

 

 

158

 

 

 

—

 

 

 

158

 

 

 

—

 

Loans receivable, net

 

 

1,773,346

 

 

 

1,799,516

 

 

 

—

 

 

 

—

 

 

 

1,799,516

 

Restricted investments in bank stock

 

 

2,341

 

 

 

2,341

 

 

 

—

 

 

 

2,341

 

 

 

—

 

Accrued interest receivable

 

 

7,566

 

 

 

7,566

 

 

 

—

 

 

 

7,566

 

 

 

—

 

Equity method investments

 

 

11,632

 

 

 

11,632

 

 

 

—

 

 

 

7,520

 

 

 

4,112

 

Mortgage servicing rights

 

 

707

 

 

 

707

 

 

 

—

 

 

 

707

 

 

 

—

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

1,928,585

 

 

 

1,863,539

 

 

$

—

 

 

$

1,863,539

 

 

$

—

 

Borrowings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Accrued interest payable

 

 

5,552

 

 

 

5,552

 

 

 

—

 

 

 

5,552

 

 

 

—

 

 

Note 7 – Fair Value Measurements and Disclosures (concluded)

 

The carrying amounts and estimated fair value of financial instruments at December 31, 2024 are as follows:

 

 

December 31, 2024

 

 

Carrying
Amount

 

 

Estimated 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.

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.