The Company uses fair value measurements to record adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an “exit price”) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date.

Fair value is best determined using quoted market prices. However, in many instances, quoted market prices are not available for the Company’s financial instruments. In such cases, fair value is estimated using present value or other valuation techniques, which are significantly affected by the assumptions used, including discount rates and estimates of future cash flows. Accordingly, the estimated fair values may not be realized in an immediate settlement of the instrument.

The fair value guidance establishes a consistent framework for measuring fair value and requires consideration of market participant assumptions under current market conditions. In situations where there has been a significant decrease in the volume or level of activity for an asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such cases, determining fair value requires the use of significant judgment, and the selected value represents management’s best estimate within a range of reasonable outcomes.

In accordance with ASC Topic 820, Fair Value Measurement, the Company categorizes financial assets and financial liabilities measured at fair value into a three-level hierarchy based on the observability of inputs used in the valuation techniques. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable inputs.

Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company can access.

Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets.

Level 3 — Unobservable inputs that are significant to the fair value measurement. The Company’s Level 3 measurements consist of interest rate lock commitments (IRLCs) measured on a recurring basis and certain collateral-dependent loans measured on a non-recurring basis, each described below.

Note 5 – Fair Value Measurements (continued)

Fair Value on a Recurring Basis

Securities Available-for-Sale

The fair values of securities available-for-sale are primarily determined using quoted market prices or, when such prices are not available, by using valuation models, quoted prices of securities with similar characteristics, or discounted cash flow analyses.

Securities are classified within the fair value hierarchy based on the observability of inputs used in the valuation. Securities for which quoted prices in active markets are available for identical assets would be classified within Level 1 of the fair value hierarchy. However, the Company’s securities generally do not trade in active markets on a daily basis.

Accordingly, the Company’s securities available-for-sale are classified within Level 2 of the fair value hierarchy. Level 2 securities include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions, and certain corporate, asset-backed, and other securities. These valuations are based on observable inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, and benchmark securities.

In limited circumstances, where significant inputs are unobservable, securities would be classified within Level 3 of the fair value hierarchy. The Company had no securities classified as Level 3 at September 30, 2026 or December 31, 2025.

Derivatives Assets/Liabilities –IRLCs

The Company recognizes IRLCs at fair value. The fair value of IRLCs is estimated based on the price of the underlying loans obtained from investors for loans expected to be delivered on a best-efforts basis, adjusted for the probability that the commitments will fund.

IRLCs are classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs, including the estimated pull-through rate.

The below tables summarize the Company’s financial assets that were measured at fair value on a recurring basis during the period presented.



		Carrying Value at September 30, 2026
		Quoted Prices	Significant
		in Active	Other	Significant
	Balance as of	Markets for	Observable	Unobservable
(dollars in thousands)	September 30,	Identical Assets	Inputs	Inputs
Description	2026	(Level 1)	(Level 2)	(Level 3)
US agency obligations	$ 78,251	$ -	$ 78,251	$ -
Mortgage-backed securities	80,022	-	80,022	-
Municipals	55,244	-	55,244	-
Corporates	11,973	-	11,973	-

Total available-for-sale securities	$ 225,490	$ -	$ 225,490	$ -
IRLCs - asset	34	-	-	34
Total assets at fair value	$ 225,524	$ -	$ 225,490	$ 34
IRLCs - liability	$ 144	-	-	$ 144
Total liabilities at fair value	$ 144	-	-	$ 144

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Note 5 – Fair Value Measurements (continued)


		Carrying Value at December 31, 2025
		Quoted Prices	Significant
		in Active	Other	Significant
	Balance as of	Markets for	Observable	Unobservable
(dollars in thousands)	Dec 31,	Identical Assets	Inputs	Inputs
Description	2025	(Level 1)	(Level 2)	(Level 3)
US agency obligations	$ 85,363	$ -	$ 85,363	$ -
Mortgage-backed securities	61,040	-	61,040	-
Municipals	55,163	-	55,163	-
Corporates	12,562	-	12,562	-

Total available-for-sale securities	$ 214,128	$ -	$ 214,128	$ -
IRLCs - asset	99	-	-	99
Total assets at fair value	$ 214,227	$ -	$ 214,128	$ 99

The following table provides additional quantitative information about assets measured at fair value on a recurring basis and for which we utilize Level 3 inputs to determine fair value (dollars in thousands):


Quantitative information about Level 3 Fair Value Measurements at September 30, 2026
	Fair Value	Valuation Technique(s)	Unobservable Input	Range (Weighted Average) (1)
IRLCs- net liability	$ (110)	Market Approach	Range of pull through rate	70% - 100% (85%)

(1)Weighted based on the relative value of the instruments


Quantitative information about Level 3 Fair Value Measurements at December 31, 2025
	Fair Value	Valuation Technique(s)	Unobservable Input	Range (Weighted Average) (1)
IRLCs- asset	$ 99	Market Approach	Range of pull through rate	70% - 100% (85%)

(1) Weighted based on the relative value of the instruments

There were no transfers of financial assets between hierarchy levels during the three and nine months ended September 30, 2026.

As of September 30, 2026, the fair value of Level 3 instruments consisted entirely of IRLCs, which changed from a net asset of $99,000 at December 31, 2025 to a net liability of $110,000 at September 30, 2026; there were no purchases, sales, or settlements of Level 3 instruments during the period. The change reflects the net effect of new rate lock commitments issued and existing commitments closed or expired during the period.

Fair Value on a Non-recurring Basis

Collateral Dependent Loans with an ACL

In accordance with ASC 326, the Company may determine that an individual loan exhibits unique risk characteristics which differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay, collateral deficiencies, the relative risk grade of the loan, and economic conditions affecting the borrower’s industry, among other factors.

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Note 5 – Fair Value Measurements (continued)

A loan is considered collateral dependent when, based on management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.

In these cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The Company reevaluates the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting such loans is evaluated by appraisal services using methodologies consistent with the Uniform Standards of Professional Appraisal Practice.

Based on management’s evaluation, no fair value adjustment was recorded on collateral-dependent loans during the three and nine months ended September 30, 2026. As of September 30, 2026 and December 31, 2025, the Company had $10.09 million and $10.24 million, respectively, in collateral-dependent loans with associated allowances for credit losses of $72 thousand at each period end.

The following table provides additional quantitative information about assets measured at fair value on a nonrecurring basis and for which we utilize Level 3 inputs to determine fair value (dollars in thousands):


	Quantitative information about Level 3 Fair Value Measurements for
	September 30, 2026
	(dollars in thousands)
	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Loans individually evaluated*	$	136	Discounted appraised value	Selling cost	0% - 10% (8%)
				Discount for lack of marketability and age of appraisal	0% - 20% (6%)
Other real estate owned	$	191	Third-party purchase offer, net of estimated selling costs	Non-binding offer price; selling costs	N/A (single property)

*Includes loans charged down to the net realizable value of the collateral.


	Quantitative information about Level 3 Fair Value Measurements for
	December 31, 2025
	(dollars in thousands)
	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Loans individually evaluated*	$	136	Discounted appraised value	Selling cost	0% - 10% (8%)
				Discount for lack of marketability and age of appraisal	0% - 20% (6%)

*Includes loans charged down to the net realizable value of the collateral.

Loans Held for Sale

Loans held for sale are carried at the lower of cost or fair value. These loans consist primarily of one-to-four family residential mortgage loans originated for sale in the secondary market. Fair value is based on prices currently offered by secondary market investors for similar loans using observable market data. Due to the short duration between origination and sale, the carrying value of loans held for sale approximates fair value. These loans are classified within Level 2 of the fair value hierarchy. At September 30, 2026 and December 31, 2025, the Company had loans held for sale of $2.67

Note 5 – Fair Value Measurements (continued)

million and $3.47 million, respectively. No nonrecurring fair value adjustments were recorded on loans held for sale at September 30, 2026 or December 31, 2025. Gains and losses on the sale of loans are recorded in “Gain on sales of loans held for sale” in the Consolidated Statements of Income.

Financial Instruments

ASC Topic 825, Financial Instruments, requires disclosure of the estimated fair value of financial instruments, including those financial assets and financial liabilities that are not measured at fair value on a recurring or nonrecurring basis. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments and their placement in the fair value hierarchy at September 30, 2026, and December 31, 2025, were as follows (dollars in thousands):


		Fair Value Measurements at September 30, 2026 using
		Quoted Prices	Significant
		in Active	Other	Significant
		Markets for	Observable	Unobservable
	Carrying	Identical Assets	Inputs	Inputs
Assets	Amounts	(Level 1)	(Level 2)	(Level 3)	Balance
Cash and due from banks	$ 20,706	$ 20,706	$ -	$ -	$ 20,706
Federal funds sold	41,049	41,049	-	-	41,049
Securities
Available-for-sale	225,490	-	225,490	-	225,490
Held-to-maturity, net	3,577	-	3,114	-	3,114
Restricted stock	1,872	-	1,872	-	1,872
Loans, net (1)	694,033	-	-	671,386	671,386
Loans held for sale	2,674	-	2,674	-	2,674
Interest receivable	3,286	-	3,286	-	3,286
Cash value - bank owned life insurance	24,319	-	24,319	-	24,319
Derivatives - IRLCs	34	-	-	34	34

Liabilities
Deposits	$ 963,595	$ -	$ 956,925	$ -	$ 956,925
Other borrowings	8,606	-	8,257	-	8,257
Interest payable	1,193	-	1,193	-	1,193
Derivatives - IRLCs	144	-	-	144	144

(1) Carrying amount is net of unearned income and the ACL.

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		Fair Value Measurements at December 31, 2025 using
		Quoted Prices	Significant
		in Active	Other	Significant
		Markets for	Observable	Unobservable
	Carrying	Identical Assets	Inputs	Inputs
Assets	Amounts	(Level 1)	(Level 2)	(Level 3)	Balance
Cash and due from banks	$ 28,538	$ 28,538	$ -	$ -	$ 28,538
Federal funds sold	55,937	55,937	-	-	55,937
Securities					-
Available-for-sale	214,128	-	214,128	-	214,128
Held-to-maturity	3,590	-	3,315	-	3,315
Restricted stock	1,828	-	1,828	-	1,828
Loans, net (1)	661,357	-	-	652,335	652,335
Loans held for sale	3,472	-	3,472	-	3,472
Interest receivable	3,380	-	3,380	-	3,380
Cash value - bank owned life insurance	23,676	-	23,676	-	23,676
Derivatives - IRLCs	99	-	-	99	99

Liabilities
Deposits	$ 937,129	$ -	$ 936,880	$ -	$ 936,880
Other borrowings	8,796	-	8,511	-	8,511
Interest payable	1,167	-	1,167	-	1,167