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Note 7 - Fair Value
 3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

NOTE 7 - FAIR VALUE

 

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:

 

 

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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.

   
 

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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.

 

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

 

Securities: The fair value for investment securities is determined by quoted market prices, if available (Level 1).  The fair values of debt securities are generally determined by matrix pricing, which is a mathematical technique widely used in the industry to value 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).

 

 

Loans Evaluated Individually: The Company does not record portfolio loans at fair value on a recurring basis. However, periodically, a loan is evaluated individually and is reported at the fair value of the underlying collateral, less estimated costs to sell, if repayment is expected solely from the collateral. If the collateral value is not sufficient, a specific reserve is recorded. Collateral values are estimated using a combination of observable inputs, including recent appraisals, and unobservable inputs based on customized discounting criteria. Due to the significance of unobservable inputs, fair values of individually evaluated collateral dependent loans have
been classified as Level 3.

 

Foreclosed assets: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach with data from comparable properties. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Foreclosed assets are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

 

The following table sets forth the Company’s financial assets that were accounted for at fair value and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

  

Fair Value Measurements Using

     
  

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

  

Significant Observable Inputs (Level 2)

  

Significant Unobservable Inputs (Level 3)

  

Fair Value

 

March 31, 2025

                

Securities:

                

Municipal securities

 $—  $706  $—  $706 

U.S. Treasury Bills and Notes

  342,855   —   —   342,855 

U.S. government-sponsored agencies

  —   9,981   —   9,981 

Mortgage-backed securities - residential

  —   2,800   —   2,800 

Collateralized mortgage obligations - residential

  —   823   —   823 
  $342,855  $14,310  $—  $357,165 

December 31, 2024

                

Securities:

                

Municipal securities

 $—  $706  $—  $706 

U.S. Treasury Bills and Notes

  246,290   —   —   246,290 

U.S. government-sponsored agencies

  —   109,773   —   109,773 

Mortgage-backed securities - residential

  —   2,911   —   2,911 

Collateralized mortgage obligations - residential

  —   850   —   850 
  $246,290  $114,240  $—  $360,530 

 

At  March 31, 2025 and  December 31, 2024, there were no individually evaluated loans that were measured using the fair value of the collateral for collateral–dependent loans and which had specific valuation allowances.

 

 

Foreclosed assets are carried at the lower of cost or fair value less costs to sell.  At  March 31, 2025 and  December 31, 2024 there were no foreclosed assets with valuation allowances.  There were no valuation adjustments of foreclosed assets recorded for the three months ended  March 31, 2025 and 2024.

 

The carrying amount and estimated fair value of financial instruments are as follows:

 

      

Fair Value Measurements at March 31, 2025 Using:

     
  

Carrying Amount

  

Level 1

  

Level 2

  

Level 3

  

Total

 

Financial assets

                    

Cash and cash equivalents

 $144,403  $143,436  $967  $—  $144,403 

Interest-bearing time deposits in other financial institutions

  33,862   —   33,862   —   33,862 

Securities

  357,165   342,855   14,310   —   357,165 

Loans receivable, net of allowance for credit losses

  841,055   —   —   798,798   798,798 

FHLB and FRB stock

  7,490   —   —   —   N /A 

Accrued interest receivable

  5,327   591   442   4,294   5,327 

Financial liabilities

                    

Certificates of deposit

  238,892   —   237,708   —   237,708 

Borrowings

  15,000   —   15,022   —   15,022 

Subordinated notes

  18,253   —   17,020   —   17,020 

 

      

Fair Value Measurements at December 31, 2024 Using:

     
  

Carrying Amount

  

Level 1

  

Level 2

  

Level 3

  

Total

 

Financial assets

                    

Cash and cash equivalents

 $84,829  $84,399  $430  $—  $84,829 

Interest-bearing time deposits in other financial institutions

  34,156   —   34,156   —   34,156 

Securities

  360,530   246,290   114,240   —   360,530 

Loans receivable, net of allowance for credit losses

  887,586   —   —   845,303   845,303 

FHLB and FRB stock

  7,490   —   —   —   N /A 

Accrued interest receivable

  6,401   158   1,452   4,791   6,401 

Financial liabilities

                    

Certificates of deposit

  234,979   —   233,639   —   233,639 

Borrowings

  20,000   —   19,990   —   19,990 

Subordinated notes

  18,736   —   17,571   —   17,571