Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2025

Investments, All Other Investments [Abstract]

(12) FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB ASC Topic 825, “Financial Instruments,” requires disclosure of fair value information about certain financial instruments, whether assets, liabilities, or off-balance-sheet commitments, if practicable. The following methods and assumptions were used to estimate the fair value of each class of financial instrument. Fair value estimates that were derived from broker quotes cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.

(a) Cash and cash equivalents – Book value equals fair value.

(b) Investment securities – The Company’s investments are recorded at the estimated fair value of such investments.

(c) Loans receivable – A discounted cash flow method under the income approach is utilized to estimate the market value of the loan portfolio. The discounted cash flow method relies upon assumptions about the amount and timing of scheduled principal and interest payments, principal prepayments, and current market rates. The loan portfolio is aggregated into categories based on loan type and credit quality. For each loan category, weighted average statistics, such as coupon rate, age, and remaining term are calculated. These are Level 3 valuations. Prior to the second quarter of 2024, fair value was reported as approximating book value.

(d) Loans held for sale – Loans held for sale consist of recreation loans and strategic partnership loans intended to be sold on the secondary market. Loans held for sale are recorded at the lower of amortized cost or fair value.

(e) Accrued interest receivable – Book value equals market value.

(f) Floating rate borrowings – Due to the short-term nature of these instruments, the carrying amount approximates fair value.

(g) Fixed rate borrowings – The fair value for certificates of deposit is estimated by using discounted cash flow analyses, based on market spreads to benchmark rates, and are considered Level 2 valuations. Prior to the second quarter of 2024, fair value was reported as approximating book value.

(h) Accrued interest payable – Due to the short-term nature of these instruments, the carrying amount approximates fair value.

(i) Commitments to extend credit – The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and present creditworthiness of the counter parties. For fixed rate loan commitments, fair value also includes a consideration of the difference between the current levels of interest rates and the committed rates. As of June 30, 2025 and December 31, 2024, the estimated fair value of these off-balance-sheet instruments was not material.

The following tables present the carrying amounts and fair values of the Company’s financial instruments as of June 30, 2025 and December 31, 2024.


	June 30, 2025
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash, cash equivalents, and federal funds sold (1)	$	151,994	$	151,994	$	151,244	$	750	$	—
Investment securities		61,529		61,529		—		61,529		—
Loans held for investment, net of allowance		2,305,665		2,255,160		—		—		2,255,160
Loans held for sale, at lower of amortized cost or fair value		72,490		75,573		—		—		75,573
Accrued interest receivable (2)		15,294		15,294		15,294		—		—
Equity securities		1,763		1,763		1,763		—		—
Financial liabilities
Funds borrowed (3)		2,304,317		2,318,531		—		2,318,531		—
Accrued interest payable		5,746		5,746		5,746		—		—

(1)

Includes federal funds sold and interest bearing deposits in other banks.

(2)

Included within other assets on the balance sheet.

(3)

Excludes deferred financing costs of $8.5 million.


	December 31, 2024
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash, cash equivalents, and federal funds sold (1)	$	169,572	$	169,572	$	168,322	$	1,250	$	—
Investment securities		54,805		54,805		—		54,805		—
Loans held for investment, net of allowance		2,265,428		2,238,645		—		—		2,238,645
Loans held for sale, at lower of amortized cost or fair value		128,226		133,244		—		—		133,244
Accrued interest receivable (2)		15,314		15,314		15,314		—		—
Equity securities		1,732		1,732		1,732		—		—
Financial liabilities
Funds borrowed (3)		2,379,413		2,371,434		—		2,371,434		—
Accrued interest payable		8,231		8,231		8,231		—		—

(1)

Includes federal funds sold and interest bearing deposits in other banks.

(2)

Included within other assets on the balance sheet.

(3)

Excludes deferred financing costs of $8.2 million.