FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2025

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis at June 30, 2025 are summarized below. There were no liabilities carried at fair value on a recurring basis at June 30, 2025.


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets
Investment securities available for sale	$	—	$	30,256	$	—	$	30,256

Government guaranteed loans HFI, at fair value	—		—		90,687		90,687

Assets measured at fair value on a recurring basis at December 31, 2024 are summarized below. There were no liabilities carried at fair value on a recurring basis at December 31, 2024.


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets
Investment securities available for sale	$	—	$	36,291	$	—	$	36,291

Government guaranteed loans HFI, at fair value	—		—		60,833		60,833

Schedule of Fair Value for Loans

The following tables provide more information about the fair value carrying amount and the unpaid principal outstanding of HFI government guaranteed loans measured at fair value at June 30, 2025 and December 31, 2024.


	June 30, 2025
	Total Loans						Nonaccrual(1)						90 Days or More Past Due(1)
	Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)		Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)		Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)
Real estate - commercial	$	16,408	$	16,293	$	115	$	163	$	167	$	(4)	$	—	$	—	$	—
Commercial and industrial	74,279		75,236		(957)		1,267		5,374		(4,107)		—		—		—
Total loans HFI, at fair value	$	90,687	$	91,529	$	(842)	$	1,430	$	5,541	$	(4,111)	$	—	$	—	$	—


	December 31, 2024
	Total Loans						Nonaccrual(1)						90 Days or More Past Due(1)
	Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)		Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)		Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)
Real estate - commercial	$	15,136	$	15,075	$	61	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial	45,697		46,981		(1,284)		1,491		2,630		(1,139)		—		—		—
Total loans HFI, at fair value	$	60,833	$	62,056	$	(1,223)	$	1,491	$	2,630	$	(1,139)	$	—	$	—	$	—

(1) The nonaccrual and 90 days or more past due loan balances do not include the portion of government guaranteed loan balances.

The total amount of net gains and losses from changes in fair value and interest income included in earnings for the six months ended June 30, 2025 and June 30, 2024 for government guaranteed loans HFI, at fair value, were as follows:


	Six Months Ended June 30,
	2025		2024
Interest income	$	3,447	$	4,623
Change in fair value	1,687		6,507
Total gain, net	$	5,134	$	11,130

Schedule of Valuation Technique and Unobservable Inputs Used in the Valuation of Government Guaranteed Loans HFI, at Fair Value

The table below presents a reconciliation of government guaranteed loans HFI, at fair value, which were valued on a recurring basis and used significant unobservable inputs (Level 3) for the six months ended June 30, 2025 and June 30, 2024:


	Six Months Ended June 30,
	2025		2024
Balance of government guaranteed loans HFI at fair value, beginning of period	$	60,833	$	91,508
New government guaranteed originations at fair value	44,349		74,210
Loans sold	(12,488)		(84,279)
Principal payments	(3,694)		(1,804)


Total fair value gains (losses) during the period	1,687		6,507
Balance of government guaranteed loans HFI at fair value, end of period	$	90,687	$	86,142

The following table provides information about the valuation techniques and unobservable inputs used in the valuation of government guaranteed loans HFI that fall within Level 3 of the fair value hierarchy at June 30, 2025 and December 31, 2024:

Fair Value

Valuation
Technique

Unobservable Inputs

Range (Weighted Average)

June 30, 2025

Government guaranteed loans HFI, at fair value

90,687

Discounted

Discount rate

5.59%-9.09% (9.00%)

cash flow

Conditional prepayment rate

0.00%-20.14% (10.27%)

December 31, 2024

Government guaranteed loans HFI, at fair value

60,833

Discounted

Discount rate

6.07%-9.57% (8.69%)

cash flow

Conditional prepayment rate

0.00%-18.13% (11.61%)

Schedule of Assets Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis (Level 3) at June 30, 2025 are summarized below:

Fair Value

Valuation Technique(s)

Significant
Unobservable
Input(s)

Discount % Amount

Individually evaluated loans

3,869

Discounted appraisals, estimated net realizable value of collateral

Collateral discounts

10%

Other real estate owned

400

Discounted appraisals, estimated net realizable value of collateral

Collateral discounts

10%

Assets measured at fair value on a nonrecurring basis (Level 3) at December 31, 2024 are summarized below:


	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Discount % Amount
Individually evaluated loans	$	2,709	Discounted appraisals, estimated net realizable value of collateral	Collateral discounts	10%
Other real estate owned	$	132	Discounted appraisals, estimated net realizable value of collateral	Collateral discounts	10%
Repossessed assets	$	36	Discounted appraisals, estimated net realizable value of collateral	Collateral discounts	10%

Schedule of the Carrying Values and Estimated Values of Financial Instruments Not Carried at Fair Value

The carrying values and estimated fair values of financial instruments not carried at fair value, at June 30, 2025 and December 31, 2024 are as follows:


		June 30, 2025				December 31, 2024
	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Cash and cash equivalents	1	$	77,299	$	77,299	$	77,788	$	77,788
Time deposits in banks	2	1,280		1,267		2,270		2,212
Investment securities held to maturity	2	2,491		2,369		2,488		2,346
Nonmarketable equity securities, at cost	2	6,551		6,551		4,526		4,526

Loans HFI, at amortized cost	3	1,018,071		1,030,879		990,214		986,406
Accrued interest receivable	2	9,495		9,495		9,155		9,155
Government guaranteed loan servicing rights	3	16,074		19,499		16,534		19,473

Liabilities:
Noninterest-bearing deposit accounts	2	$	109,698	$	109,698	$	101,743	$	101,743
Interest-bearing transaction accounts	2	238,215		238,215		256,793		256,793
Savings and money market deposit accounts	2	493,005		493,005		474,425		474,425
Time deposits	2	322,878		322,878		310,268		307,925
FHLB borrowings	2	40,000		40,000		—		—
Subordinated debentures	2	5,959		5,537		5,956		5,511
Notes payable	2	1,707		1,693		1,934		1,919
Accrued interest payable	2	1,148		1,148		1,036		1,036

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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