v3.25.2
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability on the measurement date and is determined using an exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis, such as AFS securities, equity investments and derivatives. Additionally, from time to time, the Company records fair value adjustments on a nonrecurring basis. These nonrecurring adjustments typically involve application of lower of cost or fair value accounting and write-downs of individual assets.
The Company classifies its assets and liabilities recorded at fair value as one of the following three categories and a financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement:
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 company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy.
AFS Debt Securities —The fair values of investment securities are determined by matrix pricing, which is a mathematical technique used 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). Management obtains the fair values of investment securities on a monthly basis from a third-party pricing service.
Equity Investments — The Company has an equity investment with readily determinable fair value. The fair value is obtained from unadjusted quoted prices in active markets on the date of measurement and classified as Level 1.
Derivatives —The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2).
Assets and liabilities measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024 are summarized below:
Fair Value Measure on a Recurring Basis
($ in thousands)Total
Fair Value		Quoted
Prices in
Active Markets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
June 30, 2025
AFS debt securities:
U.S. Government agencies or sponsored agency securities:
Residential mortgage-backed securities$34,806 $— $34,806 $— 
Residential collateralized mortgage obligations134,873 — 134,873 — 
Municipal securities - tax exempt5,321 — 5,321 — 
Other investments:
Mutual fund - CRA qualified3,651 3,651 — — 
Derivative assets:
Interest rate products6 — 6 — 
Derivative liabilities:
Interest rate products945 — 945 — 
December 31, 2024
AFS debt securities:
U.S. Government agencies or sponsored agency securities:
Residential mortgage-backed securities$37,076 $— $37,076 $— 
Residential collateralized mortgage obligations143,041 — 143,041 — 
Municipal securities - tax exempt5,792 — 5,792 — 
Other investments:
Mutual fund - CRA qualified3,532 3,532 — — 
Derivative assets:
Interest rate products368 — 368 — 
Derivative liabilities:
Interest rate products579 — 579 — 
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or fair value and write-downs of individual assets.
Collateral-dependent loans —Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale of the underlying collateral and there are no other available and reliable sources of repayment. Fair value for collateral-dependent loans are measured based on the value of the collateral securing these loans and are classified as Level 3. Collateral may include real estate, or business assets including equipment, inventory and accounts receivable. The fair value of real estate collateral is determined based on third-party appraisals. The fair value of business equipment is based on third-party appraisals if significant, or the equipment’s net book value on the business’ financial statements. The fair value of inventory and accounts receivable collateral are determined based on independent field examiner review or aging reports. Appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying
such loans. Appraised values are reviewed by management using historical knowledge, market considerations, and knowledge of the client and client’s business.

Other real estate owned — Fair value of OREO is determined primarily based on third-party appraisals, less costs to sell and therefore, is classified as Level 3. Appraisals are required annually and may be updated more frequently when circumstances require and the fair value adjustments are made to OREO based on the updated appraised value of the property.

The following table presents the fair value hierarchy and fair value of assets that were still held and had fair value adjustments measured on a nonrecurring basis as of June 30, 2025 and December 31, 2024:
Fair Value Measure on a Nonrecurring Basis
($ in thousands)Total
Fair Value		Quoted
Prices in
Active Markets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
June 30, 2025
Collateral-dependent loans:
SBA—real estate1,437 — — 1,437 
Total$1,437 $— $— $1,437 
December 31, 2024
Collateral-dependent loans:
CRE$173 $— $— $173 
SBA—real estate952 — — 952 
OREO1,237 — — 1,237 
Total$2,362 $— $— $2,362 
Total

The following table presents the increase (decrease) in the fair value of certain assets held at the end of the reporting periods presented for which a nonrecurring fair value adjustment was recognized during the respective periods:
Three Months Ended June 30,Six Months Ended June 30,
($ in thousands)2025202420252024
Collateral-dependent loans:
SBA—real estate(160)— 113 — 
Total$(160)$— $113 $— 
The following table presents information about significant unobservable inputs utilized in the Company’s nonrecurring Level 3 fair value measurements as of June 30, 2025 and December 31, 2024:
($ in thousands)Fair Value
Measurements
(Level 3)		Valuation
Techniques		Unobservable
Inputs		Range of
Inputs
Weighted-
Average of
Inputs(1)
June 30, 2025
Collateral-dependent loans:
SBA—real estate1,126 
Income approach - income capitalization
Capitalization rate
5.5% to 11.0%
8.2%
SBA—real estate311 Sales comparison approachMarket data comparison
0.0% to 35.0%
4.5%
December 31, 2024
Collateral-dependent loans:
CRE$173 Income approach - income capitalizationCapitalization rate
5.5% to 7.3%
6.0%
SBA—real estate539 Income approach - income capitalizationCapitalization rate
5.5% to 7.3%
10.4%
SBA—real estate413 Sales comparison approachMarket data / purchase pricen/an/a
OREO$1,237 Sales comparison approachMarket data comparison
(3.7)% to 2.2%
(0.5)%
(1)Weighted-average of inputs is based on the relative fair value of the respective assets as of June 30, 2025 and December 31, 2024.

Financial Instruments

The carrying amounts and estimated fair values of financial instruments that are not carried at fair value on a recurring basis as of June 30, 2025 and December 31, 2024 are as follows. These financial assets and liabilities are measured at amortized cost basis on the Company’s Consolidated Balance Sheets:
June 30, 2025
($ in thousands)Carrying
Amount		Level 1Level 2Level 3Fair Value
Financial assets:
Cash and cash equivalents$205,388 $205,388 $— $— $205,388 
Loans held for sale20,016 — 21,541 — 21,541 
Net loans2,045,294 — — 2,122,054 2,122,054 
Accrued interest receivable, net9,991 527 854 8,610 9,991 
Other investments:
FHLB and PCBB stock13,345 N/AN/AN/AN/A
Time deposits placed105 — 105 — 105 
Financial liabilities:
Deposits2,254,728 — 2,255,465 — 2,255,465 
FHLB advances50,000 — 50,281 — 50,281 
Accrued interest payable15,720 — 15,720 — 15,720 
December 31, 2024
($ in thousands)Carrying
Amount		Level 1Level 2Level 3Fair Value
Financial assets:
Cash and cash equivalents$134,943 $134,943 $— $— $134,943 
Loans held for sale4,581 — 4,946 — 4,946 
Net loans1,932,056 — — 1,986,813 1,986,813 
Accrued interest receivable, net9,188 181 888 8,119 9,188 
Other investments:
FHLB and PCBB stock12,805 N/AN/AN/AN/A
Time deposits placed100 — 100 — 100 
Financial liabilities:
Deposits2,027,285 — 2,026,092 — 2,026,092 
FHLB advances95,000 — 94,986 — 94,986 
Accrued interest payable16,067 — 16,067 — 16,067