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Note 6 - Fair Value
 9 Months Ended
Sep. 30, 2025
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

NOTE 6 – 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:

 

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.

 

Level 3 – Significant unobservable inputs that reflect a bank’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

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

 

The Bank’s available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income/loss in stockholders’ equity. The securities available-for-sale portfolio consists of corporate bonds and mortgage-backed securities. The fair values of these securities are obtained from an independent nationally recognized pricing service. An independent pricing service provides prices which are categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the securities. The Bank’s derivatives are carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income/loss in stockholders’ equity. The derivatives consist of both cash flow and fair value hedges. The fair values of these hedges are obtained from an independent nationally recognized pricing service. An independent pricing service provides prices which are categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the derivatives.

 

 

Assets measured at fair value on a recurring basis are summarized below:

 

      

Quoted Prices

         
      

in Active

  

Significant

     
      

Markets for

  

Other

  

Significant

 
      

Identical

  

Observable

  

Unobservable

 
  

Carrying

  

Assets

  

Inputs

  

Inputs

 
  

Value

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

As of September 30, 2025

                

Assets:

                

Securities available for sale:

                

U.S. government and agency obligations

 $2,929,179  $—  $2,929,179  $— 

Corporate bonds

  46,330,900   —   46,330,900   — 

Municipal obligations

  424,280   —   424,280   — 

MBS - residential

  99,331,011   —   99,331,011   — 

MBS - commercial

  11,731,869   —   11,731,869   — 

Fair value hedge

  51,606   —   51,606   — 

Liabilities:

                

Cash flow hedge

  187,703   —   187,703   — 

Fair value hedge

  51,606   —   51,606   — 
  $160,559,536  $—  $160,559,536  $— 

As of December 31, 2024

                

Assets:

                

Securities available for sale:

                

U.S. government and agency obligations

 $12,792,540  $—  $12,792,540  $— 

Corporate bonds

  38,229,775   —   38,229,775   — 

Municipal obligations

  398,275   —   398,275   — 

MBS - residential

  74,552,809   —   74,552,809   — 

MBS - commercial

  14,334,048   —   14,334,048   — 
                 

Cash flow hedge

  651,340   —   651,340   — 

Fair value hedge

  109,594   —   109,594   — 
  $141,068,381  $—  $141,068,381  $— 

 

There were no transfers between level 1 and level 2 during the three or nine months ended September 30, 2025.

 

The carrying amounts and estimated fair values of financial instruments not measured at fair value, at September 30, 2025 and December 31, 2024, were as follows:

 

  

Carrying

  

Fair

  

Fair Value Measurement Placement

 
  

Amount

  

Value

  

(Level 1)

  

(Level 2)

  

(Level 3)

 
  

(In thousands)

 

September 30, 2025

                    

Financial instruments - assets

                    

Loans

 $671,772  $648,287  $—  $—  $648,287 

Financial instruments - liabilities

                    

Certificates of deposit

  502,537   503,120   —   503,120   — 

Borrowings

  119,413   120,045   —   120,045   — 

 

  

Carrying

  

Fair

  

Fair Value Measurement Placement

 
  

Amount

  

Value

  

(Level 1)

  

(Level 2)

  

(Level 3)

 
  

(In thousands)

 

December 31, 2024

                    

Financial instruments - assets

                    

Loans

 $714,337  $686,977  $—  $—  $686,977 

Financial instruments - liabilities

                    

Certificates of deposit

  493,280   493,769   —   493,769   — 

Borrowings

  172,173   172,575   —   172,575   — 

 

Carrying amount is the estimated fair value for cash and cash equivalents. Other balance sheet instruments such as cash and cash equivalents, accrued interest receivable, accrued interest payable and Bank owned life insurance holding costs approximate fair value. The fair value of off-balance sheet items is not considered material.