v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Measurements [Abstract]  
Fair Value Measurements
8.
FAIR VALUE
MEASUREMENTS
Determination of Fair Value
The Company
uses
fair value
measurements
to record
fair-value
adjustments
to certain
assets
and liabilities
and to
determine fair value
disclosures. In accordance
with the fair
value measurements
accounting guidance, the
fair value of
a
financial instrument 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
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. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates
of future cash flows. Accordingly, the fair value estimates may not be realized in
an immediate settlement of the instrument.
The fair
value guidance provides
a consistent definition
of fair
value, which focuses
on exit
price in
an orderly transaction
(that is,
not a
forced
liquidation
or distressed
sale) between
market participants
at the
measurement
date
under current
market conditions.
If there
has been
a significant
decrease
in the
volume
and level
of activity
for the
asset
or liability,
a
change in
valuation technique or
the use
of multiple
valuation techniques may
be appropriate.
In such
instances, determining
the
price
at
which
willing
market
participants
would
transact
at
the
measurement
date
under
current
market
conditions
depends on the facts
and circumstances and
requires the use of
significant judgment. The fair
value is a reasonable
point
within the range that is most representative of fair value under
current market conditions.
Fair Value Hierarchy
In accordance with
this guidance, the
Company groups its
financial assets
and financial liabilities
generally measured
at fair
value in
three
levels, based
on the
markets
in which
the assets
and liabilities
are traded,
and the
reliability
of the
assumptions used to determine fair value.
Level 1
- Valuation
is based
on quoted
prices in
active markets
for identical
assets or
liabilities that
the reporting
entity has
the ability
to access
at the measurement
date. Level
1 assets
and liabilities
generally include
debt and
equity securities that
are traded in
an active exchange
market. Valuations are obtained from
readily available pricing
sources for market transactions involving identical assets
or liabilities.
Level 2
- Valuation
is based on inputs other
than quoted prices included
within Level 1 that are
observable for the
asset
or
liability,
either
directly
or
indirectly.
The
valuation
may
be
based
on
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
asset or liability.
Level 3
- Valuation
is based on
unobservable inputs that
are supported
by little or
no market activity
and that are
significant
to
the
fair
value
of
the
assets
or
liabilities.
Level
3
assets
and
liabilities
include
financial
instruments
whose value
is determined
using pricing
models, discounted
cash
flow
methodologies,
or similar
techniques,
as
well as instruments for which determination of fair value
requires significant management judgment or estimation.
A
financial
instrument's
categorization
within
the
valuation
hierarchy
is
based
upon
the
lowest
level
of
input
that
is
significant to the fair value measurement.
Items Measured at Fair Value
on a Recurring Basis
AFS investment securities:
When instruments are traded in
secondary markets and quoted market
prices do not exist
for such securities,
management generally relies
on prices obtained
from independent vendors
or third-party broker-dealers.
Management reviews pricing methodologies provided by the vendors and third-party broker-dealers in order to determine if
observable market information is being utilized. Securities measured with pricing provided by independent vendors or
third-
party broker-dealers
are classified within
Level 2 of
the hierarchy and
often involve using
quoted market
prices for similar
securities, pricing models or discounted cash flow analyses
utilizing inputs observable in the market where available.
Derivatives:
The
fair
values
of
derivatives
are
measured
with
pricing
provided
by
third-party
participants
and
are
classified within Level 2 of the hierarchy.
The
following
table
represents
the
Company's
assets
and
liabilities
measured
at
fair
value
on
a
recurring
basis
at
June 30, 2026 and December 31, 2025 for each of the
fair value hierarchy levels (in thousands):
Fair Value Measurements
on a Nonrecurring Basis
Collateral Dependent Loans Measured for Expected Credit Losses
: Fair values of collateral-dependent real estate
loans are
based on
recent real estate
appraisals less estimated
costs of
sale, repossession, and/or
holding costs. Appraisals
are performed by independent third-party appraisers and may utilize
a sales comparison approach, cost approach, income
approach, or a combination of these methodologies.
The following table presents quantitative information
about Level 3 fair value
measurements for assets measured at fair
value on a nonrecurring basis at June 30, 2026 and December
31, 2025:
At
June
30,
2026,
the
Company
measured
one
collateral-dependent
residential
real
estate
loan
at
fair
value
on
a
nonrecurring
basis.
The
fair
value
of
the
collateral-dependent
loan
was
determined
using
the
appraised
value
of
the
underlying real estate collateral,
adjusted for the estimated impact
of senior lien positions, SBA
participation interests, and
estimated costs to
sell. The application
of these adjustments
resulted in
a fair value
below the
amortized cost,
which was
recognized through
a charge-off
and reflected
in the
carrying value
of the
loan. The
resulting fair
value attributable
to the
Company's
exposure
was
approximately
of $
0
. The
loan had
an outstanding
amortized
cost
basis of
approximately
$
64
thousand and a specific reserve of $
64
thousand at June 30, 2026.
As
of
December
31,
2025,
collateral-dependent
loans
classified
within
Level
3
of
the
fair
value
hierarchy
had
an
aggregate fair
value of
$
2.6
million and
no
specific reserve,
as the
appraised value
of the
underlying collateral
exceeded
the outstanding loan balance.
As of June 30, 2026 and December 31, 2025, the Company did
no
t have any other assets or liabilities measured at fair
value on a nonrecurring basis.
Items Not Measured at Fair Value
The following table
presents the carrying
amounts and estimated
fair values of
financial instruments
not carried at fair
value as of June 30, 2026 and December 31, 2025 (in
thousands):
June 30, 2026
December 31, 2025
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Investment securities available for sale:
U.S. Government Agency
$
-
$
10,855
$
-
$
10,855
$
-
$
14,144
$
-
$
14,144
Collateralized mortgage obligations
-
67,099
-
67,099
-
75,828
-
75,828
Mortgage-backed securities - residential
-
28,991
-
28,991
-
29,917
-
29,917
Mortgage-backed securities - commercial
-
206,999
-
206,999
-
168,108
-
168,108
Municipal securities
-
4,225
-
4,225
-
4,263
-
4,263
Bank subordinated debt securities
-
14,690
-
14,690
-
15,230
-
15,230
Total
-
332,859
-
332,859
-
307,490
-
307,490
Derivative assets
-
6,707
-
6,707
-
9,767
-
9,767
Total assets at fair value
$
-
$
339,566
$
-
$
339,566
$
-
$
317,257
$
-
$
317,257
Derivative liabilities
$
-
$
6,615
$
-
$
6,615
$
-
$
9,786
$
-
$
9,786
Total liabilities at fair value
$
-
$
6,615
$
-
$
6,615
$
-
$
9,786
$
-
$
9,786
June 30, 2026
Range
Weighted
Financial Instrument
Fair Value
Valuation Technique(s)
Unobservable Input(s)
Minimum
Maximum
average
Collateral dependent loans -
residential loans
$
-
Sales comparison approach
Third-party appraisals and
estimated valuation
adjustments for disposition
costs, senior liens, and SBA
participation interests.
10.0%
100.0%
100%
December 31, 2025
Range
Weighted
Financial Instrument
Fair Value
Valuation Technique(s)
Unobservable Input(s)
Minimum
Maximum
average
Collateral dependent loans -
residential loans
$
2,583
Sales comparison approach
Third party appraisals
0%
0%
0%
Fair Value Hierarchy
Carrying
Amount
Level 1
Level 2
Level 3
Fair Value
Amount
June 30, 2026:
Financial Assets:
Cash and due from banks
$
7,892
$
7,892
$
-
$
-
$
7,892
Interest-bearing deposits in banks
$
110,262
$
110,262
$
-
$
-
$
110,262
Investment securities held to maturity, net
$
136,127
$
-
$
124,177
$
-
$
124,177
Loans held for investment, net
$
2,295,684
$
-
$
-
$
2,335,350
$
2,335,350
Accrued interest receivable
$
11,670
$
-
$
1,512
$
10,158
$
11,670
Financial Liabilities:
Non-interest bearing demand deposits
$
618,062
$
618,062
$
-
$
-
$
618,062
Savings and money market deposits
$
1,251,598
$
1,251,598
$
-
$
-
$
1,251,598
Interest-bearing demand deposits
$
49,721
$
49,721
$
-
$
-
$
49,721
Time deposits
$
532,890
$
-
$
531,300
$
-
$
531,300
FHLB advances
$
240,900
$
-
$
240,622
$
-
$
240,622
Subordinated notes, net
$
39,376
$
-
$
35,785
$
-
$
35,785
Accrued interest payable
$
3,334
$
-
$
3,334
$
-
$
3,334
December 31, 2025:
Financial Assets:
Cash and due from banks
$
6,027
$
6,027
$
-
$
-
$
6,027
Interest-bearing deposits in banks
$
32,450
$
32,450
$
-
$
-
$
32,450
Investment securities held to maturity, net
$
153,941
$
-
$
142,508
$
-
$
142,508
Loans held for investment, net
$
2,163,757
$
-
$
-
$
2,210,781
$
2,210,781
Accrued interest receivable
$
11,661
$
-
$
1,443
$
10,218
$
11,661
Financial Liabilities:
Non-interest bearing demand deposits
$
583,860
$
583,860
$
-
$
-
$
583,860
Savings and money market deposits
$
1,186,422
$
1,186,422
$
-
$
-
$
1,186,422
Interest-bearing demand deposits
$
46,989
$
46,989
$
-
$
-
$
46,989
Time deposits
$
527,809
$
-
$
527,575
$
-
$
527,575
FHLB advances
$
158,250
$
-
$
158,342
$
-
$
158,342
Subordinated notes, net
$
39,300
$
-
$
40,131
$
-
$
40,131
Accrued interest payable
$
3,984
$
-
$
3,984
$
-
$
3,984