Fair Value Disclosures

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Disclosures Text Block

NOTE 13: FAIR VALUE 

Fair Value Hierarchy

“Fair value” is defined by ASC 820,

Fair Value Measurements and Disclosures

, as the price that would be received to sell

an asset or paid to transfer a liability in an orderly transaction occurring in the principal market (or most advantageous

market in the absence of a principal market) for an asset or liability at the measurement date. GAAP establishes a fair

value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or

liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1—inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active

markets. 

Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,

quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that are observable for the

asset or liability, either directly or indirectly. 

Level 3—inputs to the valuation methodology are unobservable and reflect the Company’s own assumptions about the

inputs market participants would use in pricing the asset or liability. 

Level changes in fair value measurements

Transfers between levels of the fair value hierarchy are generally recognized at the end of the reporting period. The

Company monitors the valuation techniques utilized for each category of financial assets and liabilities to ascertain when

transfers between levels have been affected. The nature of the Company’s financial assets and liabilities generally is such

that transfers in and out of any level are expected to be infrequent. For the years ended December 31, 2024 and 2023, there

were no transfers between levels and no changes in valuation techniques for the Company’s financial assets and liabilities.

Assets and liabilities measured at fair value on a recurring basis

Securities available-for-sale

Fair values of securities available for sale were primarily measured using Level 2 inputs. For these securities, the Company

obtains pricing from third party pricing services. These third-party pricing services consider observable data that may

include broker/dealer quotes, market spreads, cash flows, market consensus prepayment speeds, benchmark yields, reported

trades for similar securities, credit information and the securities’ terms and conditions. On a quarterly basis, management

reviews the pricing received from the third-party pricing services for reasonableness given current market conditions. As

part of its review, management may obtain non-binding third party broker quotes to validate the fair value measurements. 

In addition, management will periodically submit pricing provided by the third-party pricing services to another

independent valuation firm on a sample basis. This independent valuation firm will compare the price provided by the

third-party pricing service with its own price and will review the significant assumptions and valuation methodologies used

with management.

The following table presents the balances of the assets and liabilities measured at fair value on a recurring as of December

31, 2024 and 2023, respectively, by caption, on the accompanying consolidated balance sheets by ASC 820 valuation

hierarchy (as described above).

Quoted Prices in

Significant

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

December 31, 2024:

Securities available-for-sale:

Agency obligations 

$

52,411

—

52,411

—

Agency MBS

173,676

—

173,676

—

State and political subdivisions

16,925

—

16,925

—

Total securities available -for-sale

243,012

—

243,012

—

Total assets at fair value

$

243,012

—

243,012

—

December 31, 2023:

Securities available-for-sale:

Agency obligations 

$

53,879

—

53,879

—

Agency MBS

198,289

—

198,289

—

State and political subdivisions

18,742

—

18,742

—

Total securities available -for-sale

270,910

—

270,910

—

Total assets at fair value

$

270,910

—

270,910

—

Assets and liabilities measured at fair value on a nonrecurring basis

Collateral Dependent Loans

Collateral dependent loans are measured at the fair value of the collateral securing loan less estimated selling costs. The

fair value of real estate collateral is determined based on real estate appraisals which are generally based on recent sales of

comparable properties which are then adjusted for property specific factors. Non-real estate collateral is valued based on

various sources, including third party asset valuations and internally determined values based on cost adjusted for

depreciation and other judgmentally determined discount factors. Collateral dependent loans are classified within Level 3

of the hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the

borrower’s underlying financial condition.

Mortgage servicing rights, net

Mortgage servicing rights, net, included in other assets on the accompanying consolidated balance sheets, are carried at the

lower of cost or estimated fair value. MSRs do not trade in an active market with readily observable prices. To determine

the fair value of MSRs, the Company engages an independent third party. The independent third party’s valuation model

calculates the present value of estimated future net servicing income using assumptions that market participants would use

in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to

service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. Periodically, the

Company will review broker surveys and other market research to validate significant assumptions used in the model. The

significant unobservable inputs include prepayment speeds or the constant prepayment rate (“CPR”) and the weighted

average discount rate. Because the valuation of MSRs requires the use of significant unobservable inputs, all of the

Company’s MSRs are classified within Level 3 of the valuation hierarchy.

The following table presents the balances of the assets and liabilities measured at fair value on a nonrecurring basis as of

December 31, 2024 and 2023, respectively, by caption, on the accompanying consolidated balance sheets and by ASC 820

valuation hierarchy (as described above):

Quoted Prices in

Active Markets

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

(Dollars in thousands)

Amount

(Level 1)

(Level 2)

(Level 3)

December 31, 2024:

Loans, net

(1)

$

503

—

—

503

Other assets

(2)

892

—

—

892

Total assets at fair value

$

1,395

—

—

1,395

December 31, 2023:

Loans, net

(1)

$

783

—

—

783

Other assets

(2)

992

—

—

992

Total assets at fair value

$

1,775

—

—

1,775

(1)

Loans considered collateral dependent under ASC 326.

(2)

Represents MSRs, net carried at lower of cost or estimated fair value.

Quantitative Disclosures for Level 3 Fair Value Measurements

At December 31, 2024 and 2023, the Company had no Level 3 assets measured at fair value on a recurring basis. For Level

3 assets measured at fair value on a non-recurring basis as of December 31, 2024 and 2023, the significant unobservable

inputs used in the fair value measurements are presented below.

Weighted

Carrying

Significant

Average

(Dollars in thousands)

Amount

Valuation Technique

 Unobservable Input

Range

of Input

December 31, 2024:

Collateral dependent loans

$

503

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

892

Discounted cash flow

Prepayment speed or CPR

6.7

-

11.2

%

7.3

%

Discount rate

10.0

-

12.0

%

10.0

%

December 31, 2023:

Collateral dependent loans

$

783

Appraisal

Appraisal discounts

10.0

-

10.0

%

10.0

%

Mortgage servicing rights, net

992

Discounted cash flow

Prepayment speed or CPR

5.9

-

10.6

%

6.0

%

Discount rate

10.5

-

12.5

%

10.5

%

Fair Value of Financial Instruments

ASC 825,

Financial Instruments

, requires disclosure of fair value information about financial instruments, whether or not

recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the

estimation of the fair value of the Company’s financial instruments are explained below. Where quoted market prices are

not available, fair values are based on estimates using discounted cash flow analyses. Discounted cash flows can be

significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The

following fair value estimates cannot be substantiated by comparison to independent markets and should not be considered

representative of the liquidation value of the Company’s financial instruments, but rather are good faith estimates of the fair

value of financial instruments held by the Company. ASC 825 excludes certain financial instruments and all nonfinancial

instruments from its disclosure requirements. 

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments: 

Loans, net

Fair values for loans were calculated using discounted cash flows. The discount rates reflected current rates at which similar

loans would be made for the same remaining maturities. Expected future cash flows were projected based on contractual

cash flows, adjusted for estimated prepayments. The fair value of loans was measured using an exit price notion.

Time Deposits

Fair values for time deposits were estimated using discounted cash flows. The discount rates were based on rates currently

offered for deposits with similar remaining maturities.

The carrying value, related estimated fair value, and placement in the fair value hierarchy of the Company’s financial

instruments at December 31, 2024 and 2023 are presented below. This table excludes financial instruments for which the

carrying amount approximates fair value. Financial assets for which fair value approximates carrying value included cash

and cash equivalents. Financial liabilities for which fair value approximates carrying value included noninterest-bearing

demand deposits, interest-bearing demand deposits, and savings deposits. Fair value approximates carrying value in these

financial liabilities due to these products having no stated maturity. Additionally, financial liabilities for which fair value

approximates carrying value included overnight borrowings such as federal funds purchased and securities sold under

agreements to repurchase.

The following table summarizes our fair value estimates:

Fair Value Hierarchy

Carrying 

Estimated

Level 1

Level 2

Level 3

(Dollars in thousands)

amount

fair value

inputs

inputs

Inputs

December 31, 2024:

Financial Assets:

Loans, net (1)

$

557,146

$

532,344

$

—

$

—

$

532,344

Financial Liabilities:

Time Deposits

$

191,247

$

190,363

$

—

$

190,363

$

—

December 31, 2023:

Financial Assets:

Loans, net (1)

$

550,431

$

526,372

$

—

$

—

$

526,372

Financial Liabilities:

Time Deposits

$

198,215

$

195,171

$

—

$

195,171

$

—

(1) Represents loans, net and the allowance for credit losses. The fair value of loans was measured using an exit price notion.