Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2025

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate such value:

Loans

Fair values are estimated for portfolios with similar financial characteristics. Loans are segregated by type, such as commercial, real estate, and consumer. Each loan category is further segmented into fixed and variable interest rate categories. The fair value of loans, or exit price, is estimated by using the future value of discounted cash flows using comparable market rates for similar types of loan products and adjusted for market factors. The discount rates used are estimated using comparable market rates for similar types of loan products adjusted to be commensurate with the credit risk, overhead costs, and optionality of such instruments.

Federal funds Sold, Cash, and Due from Banks

The carrying amounts of short-term federal funds sold, interest-earning deposits with banks, and cash and due from banks approximate fair value. Federal funds sold classified as short-term generally mature in 90 days or less.

Certificates of Deposit in Other Banks

Certificates of deposit are other investments made by the Company with other financial institutions that are carried at cost, which is equal to fair value.

Accrued Interest Receivable and Payable

For accrued interest receivable and payable, the carrying amount is a reasonable estimate of fair value because of the short maturity for these financial instruments.

Deposits

The fair value of deposits with no stated maturity, such as non-interest-bearing demand, NOW accounts, savings, and money market, is equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.

Federal funds Purchased and Securities Sold Under Agreements to Repurchase

For Federal funds purchased and securities sold under agreements to repurchase, the carrying amount is a reasonable estimate of fair value, as such instruments reprice in a short time period.

Subordinated Notes and Other Borrowings

The fair value of subordinated notes and other borrowings is based on the discounted value of contractual cash-flows. The discount rate is estimated using the rates currently offered for other borrowed money of similar remaining maturities.

A summary of the carrying amounts and fair values of the Company’s financial instruments at March 31, 2025 and December 31, 2024 is as follows:


					March 31, 2025
					Fair Value Measurements
	March 31, 2025				Quoted Prices in Active Markets for Identical Assets		Other Observable Inputs		Net Significant Unobservable Inputs
(dollars in thousands)	Carrying amount		Fair value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and due from banks	$	21,558	$	21,558	$	21,558	$	—	$	—
Federal funds sold and overnight interest-bearing deposits	80,700		80,700		80,700		—		—
Certificates of deposit in other banks	1,000		1,000		1,000		—		—

Other investment securities	6,862		6,862		—		6,862		—
Loans, net	1,448,543		1,416,761		—		—		1,416,761




Accrued interest receivable	8,074		8,074		8,074		—		—

Liabilities:
Deposits:
Non-interest bearing demand	$	427,107	$	427,107	$	427,107	$	—	$	—
Savings, interest checking and money market	818,894		818,894		818,894		—		—
Time deposits	297,887		296,675		—		—		296,675

FHLB advances and other borrowings	124,100		124,174		—		124,174		—
Subordinated notes	49,486		42,097		—		42,097		—


Accrued interest payable	1,630		1,630		1,630		—		—


					December 31, 2024
					Fair Value Measurements
	December 31, 2024				Quoted Prices in Active Markets for Identical Assets		Other Observable Inputs		Net Significant Unobservable Inputs
(dollars in thousands)	Carrying amount		Fair value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and due from banks	$	23,668	$	23,668	$	23,668	$	—	$	—
Federal funds sold and overnight interest-bearing deposits	27,326		27,326		27,326		—		—
Certificates of deposit in other banks	1,000		1,000		1,000		—		—

Other investment securities	5,075		5,075		—		5,075		—
Loans, net	1,444,116		1,380,252		—		—		1,380,252




Accrued interest receivable	8,221		8,221		8,221		—		—

Liabilities:
Deposits:
Non-interest bearing demand	$	385,022	$	385,022	$	385,022	$	—	$	—
Savings, interest checking and money market	846,339		846,339		846,339		—		—
Time deposits	301,821		300,386		—		—		300,386

FHLB advances and other borrowings	81,525		81,585		—		81,585		—
Subordinated notes	49,486		41,602		—		41,602		—


Accrued interest payable	1,754		1,754		1,754		—		—

Off-Balance Sheet Financial Instruments

The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the likelihood of the counterparties drawing on such financial instruments, and the present creditworthiness of such counterparties. The Company believes such commitments have been made on terms that are competitive in the markets in which it operates.

Limitations

The fair value estimates provided are made at a point in time based on market information and information about the financial instruments. Because no market exists for a portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. 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 fair value estimates.