v3.26.1
Disclosures About Fair Value of Assets and Liabilities
 3 Months Ended
Mar. 31, 2026
Disclosures about Fair Value of Assets and Liabilities [Abstract]  
Disclosures about Fair Value of Assets and Liabilities
Note 9: Disclosures About Fair Value of Assets and Liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs.  There is a hierarchy of three levels of inputs that may be used to measure fair value:


 Level 1
Quoted prices in active markets for identical assets or liabilities


Level 2
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 for substantially the full term of the assets or liabilities


Level 3
Unobservable inputs supported by little or no market activity and significant to the fair value of the assets or liabilities

Recurring Measurements

Assets and liabilities measured at fair value on a recurring basis include the following:

Available-for-sale securities: Debt securities classified as available-for-sale, as discussed in Note 4, are reported at fair value utilizing Level 2 inputs. For those debt securities classified as Level 2, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data for similar securities, market consensus prepayments speeds, credit information and the security’s terms and conditions, among other things.
Nonrecurring Measurements

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2026 and December 31, 2025 (dollars in thousands):

   
Fair Value
    
(Level 1)
    
(Level 2)
    
(Level 3)
  
March 31, 2026
                        
Collateral-dependent loans
  
$
956
    
$
-
    
$
-
    
$
956
  
                                 
December 31, 2025
                                
Collateral-dependent loans
  
$
369
    
$
-
    
$
-
    
$
369
  

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.  For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Collateral-Dependent Loans, Net of Allowance for Credit Losses

The estimated fair value of collateral-dependent loans is based on fair value, less estimated cost to sell.  Collateral-dependent loans are classified within Level 3 of the fair value hierarchy.

The Company considers appraisal analysis as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value.  Values of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by executive management and loan administration.  Values are reviewed for accuracy and consistency by executive management and loan administration.  The ultimate collateral values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral.
Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at March 31, 2026 and December 31, 2025 (dollars in thousands):

       
 Valuation
  
 Unobservable
   
Fair Value
  
Technique
  
Inputs
March 31, 2026
      
 
  
     
Collateral-dependent loans
   $ 956  
Estimated cash to be received pending liquidation of collateral
  
Estimated cost to sell
         
 
  
        
December 31, 2025
        
 
  
      
Collateral-dependent loans
   $ 369  
Estimated cash to be received pending liquidation of collateral
  
Estimated cost to sell

The following table presents estimated fair values of the Company’s financial instruments not recorded at fair value at March 31, 2026 and December 31, 2025 (dollars in thousands):

   
Carrying
    
Fair Value Measurements
  
   
Amount
    
Level 1
    
Level 2
    
Level 3
    
Total
  
March 31, 2026
                              
                               
Financial Assets
                              
Cash and due from banks
  
$
246,701
    
$
246,701
    
$
-
    
$
-
    
$
246,701
  
Interest-bearing time deposits in other banks
    
3,735
      
-
      
3,735
      
-
      
3,735
  
Loans, net
    
1,574,376
      
-
      
1,592,653
      
956
      
1,593,609
  
Loans held for sale
    
3,865
      
-
      
3,865
      
-
      
3,865
  
Nonmarketable equity securities
    
1,158
      
-
      
1,158
      
-
      
1,158
  
Interest receivable
    
8,576
      
-
      
8,576
      
-
      
8,576
  
                                         
Financial Liabilities
                                        
Deposits
  
$
1,671,381
    
$
-
    
$
1,670,512
    
$
-
    
$
1,670,512
  
Interest payable
    
1,157
      
-
      
1,157
      
-
      
1,157
  
                                         
December 31, 2025
                                        
                                         
Financial Assets
                                        
Cash and due from banks
  
$
244,635
    
$
244,635
    
$
-
    
$
-
    
$
244,635
  
Interest-bearing time deposits in other banks
    
10,457
      
-
      
10,457
      
-
      
10,457
  
Loans, net
    
1,587,024
      
-
      
1,605,518
      
369
      
1,605,887
  
Loans held for sale
    
2,078
      
-
      
2,078
      
-
      
2,078
  
Nonmarketable equity securities
    
1,165
      
-
      
1,165
      
-
      
1,165
  
Interest receivable
    
8,822
      
-
      
8,822
      
-
      
8,822
  
                                         
Financial Liabilities
                                        
Deposits
  
$
1,700,833
    
$
-
    
$
1,700,646
    
$
-
    
$
1,700,646
  
Interest payable
    
1,122
      
-
      
1,122
      
-
      
1,122
  
The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value:

Cash and Due from Banks, Interest-Bearing Time Deposits in Other Banks, Nonmarketable Equity Securities, Interest Receivable, Interest Payable

The carrying amount approximates fair value.

Loans

The Company determines fair value of loans by using exit market price assumptions including factors such as liquidity, credit quality and risk of nonperformance. The fair value is estimated by discounting the future cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.  Loans with similar characteristics were aggregated for purposes of the calculations.

Loans Held for Sale

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Because these loans are typically sold shortly after origination, their carrying value generally approximates fair value.

Deposits

Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount of these deposits approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

Commitments to Extend Credit, Lines of Credit and Standby Letters of Credit

The fair values of unfunded commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The fair values of standby letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. The estimated fair values of the Company’s commitments to extend credit, lines of credit and standby letters of credit were not material at March 31, 2026 and December 31, 2025.