| Fair Value |
Note 5 – Fair Value The fair value of a financial instrument is the current amount that would be exchanged between willing parties in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. 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. The three levels of input that may be used to measure fair value are as follows:
|
|
|
Level 1 – |
|
Valuation is based on quoted prices in active markets for identical assets and liabilities. |
Level 2 – |
|
Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. |
Level 3 – |
|
Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. |
The following tables present the balances of financial assets measured at fair value on a recurring basis as of the dates stated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 |
|
(Dollars in thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage backed securities |
|
$ |
178,612 |
|
|
$ |
— |
|
|
$ |
178,612 |
|
|
$ |
— |
|
U.S. Treasury and agencies |
|
|
70,988 |
|
|
|
— |
|
|
|
70,988 |
|
|
|
— |
|
State and municipals |
|
|
43,367 |
|
|
|
— |
|
|
|
43,367 |
|
|
|
— |
|
Corporate bonds |
|
|
34,991 |
|
|
|
— |
|
|
|
34,491 |
|
|
|
500 |
|
Total securities available for sale |
|
$ |
327,958 |
|
|
$ |
— |
|
|
$ |
327,458 |
|
|
$ |
500 |
|
Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights assets |
|
$ |
249 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
249 |
|
Rabbi trust assets |
|
|
643 |
|
|
|
643 |
|
|
|
— |
|
|
|
— |
|
Interest rate swap asset |
|
|
56 |
|
|
|
— |
|
|
|
56 |
|
|
|
— |
|
Other liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap liability |
|
|
57 |
|
|
|
— |
|
|
|
57 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
(Dollars in thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage backed securities |
|
$ |
164,438 |
|
|
$ |
— |
|
|
$ |
164,438 |
|
|
$ |
— |
|
U.S. Treasury and agencies |
|
|
69,455 |
|
|
|
— |
|
|
|
69,455 |
|
|
|
— |
|
State and municipals |
|
|
42,937 |
|
|
|
— |
|
|
|
42,937 |
|
|
|
— |
|
Corporate bonds |
|
|
35,205 |
|
|
|
— |
|
|
|
34,455 |
|
|
|
750 |
|
Total securities available for sale |
|
$ |
312,035 |
|
|
$ |
— |
|
|
$ |
311,285 |
|
|
$ |
750 |
|
Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights assets |
|
$ |
386 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
386 |
|
Rabbi trust assets |
|
|
600 |
|
|
|
600 |
|
|
|
— |
|
|
|
— |
|
Mortgage derivative asset |
|
|
140 |
|
|
|
— |
|
|
|
140 |
|
|
|
— |
|
Interest rate swap asset |
|
|
95 |
|
|
|
— |
|
|
|
95 |
|
|
|
— |
|
Other liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap liability |
|
$ |
95 |
|
|
$ |
— |
|
|
$ |
95 |
|
|
$ |
— |
|
As of June 30, 2025 and December 31, 2024, one corporate bond totaling $0.5 million and two corporate bonds totaling $0.8 million, respectively, were reported at their respective amortized cost basis and as Level 3 assets in the fair value hierarchy, as there were no observable market prices for similar investments. For the six months ended June 30, 2025, fair value adjustments to MSR assets totaling $0.1 million were recorded. The following tables summarize assets that were measured at fair value on a nonrecurring basis as of the dates stated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 |
|
(Dollars in thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Other equity investments |
|
$ |
4,641 |
|
|
$ |
— |
|
|
$ |
1,635 |
|
|
$ |
3,006 |
|
Collateral-dependent loans |
|
|
3,916 |
|
|
|
— |
|
|
|
— |
|
|
|
3,916 |
|
Loans held for sale |
|
|
12,380 |
|
|
|
— |
|
|
|
12,380 |
|
|
|
— |
|
Other non-real estate owned (1) |
|
|
222 |
|
|
|
— |
|
|
|
— |
|
|
|
222 |
|
|
|
(1) Included in other assets on the consolidated balance sheets. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
(Dollars in thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Other equity investments |
|
$ |
4,834 |
|
|
$ |
— |
|
|
$ |
1,828 |
|
|
$ |
3,006 |
|
Collateral-dependent loans |
|
|
6,954 |
|
|
|
— |
|
|
|
— |
|
|
|
6,954 |
|
Loans held for sale |
|
|
30,976 |
|
|
|
— |
|
|
|
30,976 |
|
|
|
— |
|
Other real estate owned ("OREO") (1) |
|
|
279 |
|
|
|
— |
|
|
|
— |
|
|
|
279 |
|
|
|
(1) Included in other assets on the consolidated balance sheets. |
|
The following tables present quantitative information about Level 3 fair value measurements of assets measured on a nonrecurring basis as of the dates stated.
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
Balance as of June 30, 2025 |
|
|
Unobservable Input |
|
Range |
|
Other equity investments |
|
|
|
|
|
|
|
|
Probability weighted expected return technique |
|
$ |
3,006 |
|
|
Discount Rate |
|
|
20 |
% |
Collateral-dependent loans |
|
|
|
|
|
|
|
|
Discounted appraised value technique |
|
|
3,916 |
|
|
Selling Costs |
|
5% - 7% |
|
Other non-real estate owned (1) |
|
|
|
|
|
|
|
|
Discounted cash flows technique |
|
|
222 |
|
|
Discount Rate |
|
|
20 |
% |
|
|
(1) Included in other assets on the consolidated balance sheets. |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
Balance as of December 31, 2024 |
|
|
Unobservable Input |
|
Range |
|
Other equity investments |
|
|
|
|
|
|
|
|
Probability weighted expected return technique |
|
$ |
3,006 |
|
|
Discount Rate |
|
|
20 |
% |
Collateral-dependent loans |
|
|
|
|
|
|
|
|
Discounted appraised value technique |
|
|
6,954 |
|
|
Selling Costs |
|
7% - 15% |
|
OREO (1) |
|
|
|
|
|
|
|
|
Discounted sales price technique |
|
|
279 |
|
|
Selling Costs |
|
|
7 |
% |
|
|
(1) Included in other assets on the consolidated balance sheets. |
|
The following tables present the estimated fair values, related carrying amounts, and valuation level of the financial instruments as of the dates stated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 |
|
|
|
|
|
|
|
|
|
Fair Value Measurements |
|
(Dollars in thousands) |
|
Carrying Value |
|
|
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
131,199 |
|
|
$ |
131,199 |
|
|
$ |
131,199 |
|
|
$ |
— |
|
|
$ |
— |
|
Federal funds sold |
|
|
628 |
|
|
|
628 |
|
|
|
628 |
|
|
|
— |
|
|
|
— |
|
Securities available for sale |
|
|
327,958 |
|
|
|
327,958 |
|
|
|
— |
|
|
|
327,458 |
|
|
|
500 |
|
Restricted equity investments |
|
|
18,925 |
|
|
|
18,925 |
|
|
|
— |
|
|
|
18,925 |
|
|
|
— |
|
Other equity investments |
|
|
4,641 |
|
|
|
4,641 |
|
|
|
— |
|
|
|
1,635 |
|
|
|
3,006 |
|
Other investments |
|
|
20,938 |
|
|
|
20,938 |
|
|
|
— |
|
|
|
— |
|
|
|
20,938 |
|
Loans held for sale |
|
|
12,380 |
|
|
|
12,380 |
|
|
|
— |
|
|
|
12,380 |
|
|
|
— |
|
Loans held for investment, net |
|
|
1,956,611 |
|
|
|
1,880,118 |
|
|
|
— |
|
|
|
— |
|
|
|
1,880,118 |
|
Accrued interest receivable |
|
|
11,711 |
|
|
|
11,711 |
|
|
|
— |
|
|
|
11,711 |
|
|
|
— |
|
Bank owned life insurance |
|
|
887 |
|
|
|
887 |
|
|
|
— |
|
|
|
887 |
|
|
|
— |
|
MSR assets |
|
|
249 |
|
|
|
249 |
|
|
|
— |
|
|
|
— |
|
|
|
249 |
|
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand |
|
$ |
432,939 |
|
|
$ |
432,939 |
|
|
$ |
432,939 |
|
|
$ |
— |
|
|
$ |
— |
|
Interest-bearing demand and money market |
|
|
624,108 |
|
|
|
624,108 |
|
|
|
— |
|
|
|
624,108 |
|
|
|
— |
|
Savings |
|
|
101,560 |
|
|
|
101,560 |
|
|
|
— |
|
|
|
101,560 |
|
|
|
— |
|
Time |
|
|
851,659 |
|
|
|
852,616 |
|
|
|
— |
|
|
|
— |
|
|
|
852,616 |
|
FHLB borrowings |
|
|
150,000 |
|
|
|
150,659 |
|
|
|
— |
|
|
|
150,659 |
|
|
|
— |
|
Subordinated notes, net |
|
|
24,928 |
|
|
|
23,996 |
|
|
|
— |
|
|
|
— |
|
|
|
23,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
|
|
|
|
|
|
|
|
Fair Value Measurements |
|
(Dollars in thousands) |
|
Carrying Value |
|
|
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
173,533 |
|
|
$ |
173,533 |
|
|
$ |
173,533 |
|
|
$ |
— |
|
|
$ |
— |
|
Restricted cash |
|
|
2,459 |
|
|
|
2,459 |
|
|
|
2,459 |
|
|
|
— |
|
|
|
— |
|
Federal funds sold |
|
|
838 |
|
|
|
838 |
|
|
|
838 |
|
|
|
— |
|
|
|
— |
|
Securities available for sale |
|
|
312,035 |
|
|
|
312,035 |
|
|
|
— |
|
|
|
311,285 |
|
|
|
750 |
|
Restricted equity investments |
|
|
19,275 |
|
|
|
19,275 |
|
|
|
— |
|
|
|
19,275 |
|
|
|
— |
|
Other equity investments |
|
|
4,834 |
|
|
|
4,834 |
|
|
|
— |
|
|
|
1,828 |
|
|
|
3,006 |
|
Other investments |
|
|
19,405 |
|
|
|
19,405 |
|
|
|
— |
|
|
|
— |
|
|
|
19,405 |
|
Loans held for sale |
|
|
30,976 |
|
|
|
30,976 |
|
|
|
— |
|
|
|
30,976 |
|
|
|
— |
|
Loans held for investment, net |
|
|
2,088,774 |
|
|
|
1,998,668 |
|
|
|
— |
|
|
|
— |
|
|
|
1,998,668 |
|
Accrued interest receivable |
|
|
12,537 |
|
|
|
12,537 |
|
|
|
— |
|
|
|
12,537 |
|
|
|
— |
|
Bank owned life insurance |
|
|
1,083 |
|
|
|
1,083 |
|
|
|
— |
|
|
|
1,083 |
|
|
|
— |
|
MSR assets |
|
|
386 |
|
|
|
386 |
|
|
|
— |
|
|
|
— |
|
|
|
386 |
|
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand |
|
$ |
452,690 |
|
|
$ |
452,690 |
|
|
$ |
452,690 |
|
|
$ |
— |
|
|
$ |
— |
|
Interest-bearing demand and money market |
|
|
598,875 |
|
|
|
598,875 |
|
|
|
— |
|
|
|
598,875 |
|
|
|
— |
|
Savings |
|
|
100,857 |
|
|
|
100,857 |
|
|
|
— |
|
|
|
100,857 |
|
|
|
— |
|
Time |
|
|
1,027,020 |
|
|
|
1,029,199 |
|
|
|
— |
|
|
|
— |
|
|
|
1,029,199 |
|
FHLB borrowings |
|
|
150,000 |
|
|
|
152,782 |
|
|
|
— |
|
|
|
152,782 |
|
|
|
— |
|
Subordinated notes, net |
|
|
39,789 |
|
|
|
38,765 |
|
|
|
— |
|
|
|
— |
|
|
|
38,765 |
|
|