10.Fair Value of Financial Instruments

Financial instruments are classified within the fair value hierarchy using the methodologies described in Note 9 – Fair Value Measurements. The following disclosures include financial instruments that are carried at fair value as well as those that are not carried at fair value on the Consolidated Balance Sheets. The calculation of estimated fair values is based on market conditions at a specific point in time and may not reflect current or future fair values. 

Cash and Cash Equivalents

The carrying value of cash and cash equivalents is a reasonable estimate of fair value.

Certificates of Deposit in Other Financial Institutions

The carrying value of certificates of deposit is a reasonable estimate of fair value given the short term nature of instruments.

Other Investments

The carrying value of other investments includes FHLB Stock and Bankers Bank stock and approximates fair value and is classified as Level 3, as the stock is nonmarketable and has restrictions placed on its transferability.

Loans

For disclosure purposes, the fair value of fixed rate loans which are not considered individually evaluated is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For collectively evaluated variable rate loans, the carrying amount is a reasonable estimate of fair value for disclosure purposes.

10.Fair Value of Financial Instruments (continued)

Deposits

The fair value of passbook savings accounts, interest-bearing checking accounts, noninterest-bearing checking accounts and market rate checking accounts is the amount payable on demand at the reporting date, while the fair value of fixed maturity certificate of deposits is estimated by discounting the future cash flows using current rates at which comparable certificates would be issued.

The carrying amounts and estimated fair value (in thousands) of our financial instruments at June 30, 2026 and December 31, 2025 are as follows (in thousands):

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Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time of the entire holdings of a particular financial instrument. Because no market exists for a significant portion of our financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.