GBank Financial Holdings Inc. Fair Value Disclosure
Note 14. Fair Value Measurements
The Company uses a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1: Valuations for assets and liabilities traded in active exchange markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.
Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker-traded transactions. Level 3 valuations incorporate certain unobservable assumptions and projections in determining the fair value assigned to such assets.
There were no transfers between Levels 1, 2, and 3 during the twelve months ended years ended December 31, 2025 or 2024.
Assets Measured at Fair Value on a Recurring Basis
Securities Available for Sale - The fair value of investment securities classified as available for sale is measured using information from a third-party pricing service. The pricing service uses quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.
The table below presents the balance of financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of the dates indicated:
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Fair Value Measurements at December 31, 2025 Using: |
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Quoted Prices In |
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Significant Other |
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Significant |
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(Dollars in thousands) |
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Carrying |
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|
Active |
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Observable |
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Unobservable |
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December 31, 2025 |
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|
(Level 1) |
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(Level 2) |
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(Level 3) |
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Assets: |
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Available for sale debt securities: |
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Residential mortgage-backed securities |
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$ |
71,038 |
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|
$ |
- |
|
|
$ |
71,038 |
|
|
$ |
- |
|
|
|
|
|
|
Fair Value Measurements at December 31, 2024 Using: |
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Quoted Prices In |
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Significant Other |
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Significant |
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(Dollars in thousands) |
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Carrying |
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Active |
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Observable |
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Unobservable |
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December 31, 2024 |
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(Level 1) |
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(Level 2) |
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(Level 3) |
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Assets: |
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Available for sale debt securities: |
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Residential mortgage-backed securities |
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$ |
65,609 |
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$ |
- |
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$ |
65,609 |
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|
$ |
- |
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Assets Measured at Fair Value on a Nonrecurring Basis
Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on a recurring basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).
Individually Evaluated Loans, Net of Allowance for Credit Losses - Individually evaluated loans, net of allowance for credit losses, are valued based on the fair value of the loan’s collateral, generally determined based upon independent third-party appraisals of the properties. These loans are included as Level 3 fair values, based on the lowest level of input that is significant to the fair value measurements.
Other real estate owned - The fair value of other real estate owned is determined using independent appraisal values less estimated cost to sell.
The table below presents the balance of financial assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of the dates indicated:
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Fair Value Measurements at December 31, 2025 Using: |
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Quoted Prices In |
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Significant Other |
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Significant |
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(Dollars in thousands) |
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Carrying |
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Active |
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Observable |
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Unobservable |
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December 31, 2025 |
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(Level 1) |
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(Level 2) |
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(Level 3) |
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Assets: |
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Individually evaluated loans: |
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Commercial real estate - non-owner occupied |
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$ |
12,873 |
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$ |
- |
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$ |
- |
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$ |
12,873 |
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Commercial real estate - owner occupied |
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|
468 |
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|
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- |
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- |
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|
468 |
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Other real estate owned: |
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Commercial real estate - non-owner occupied |
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1,800 |
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- |
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- |
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1,800 |
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Commercial real estate - owner occupied |
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2,061 |
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- |
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- |
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2,061 |
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Commercial and industrial |
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|
540 |
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|
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- |
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- |
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|
540 |
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Fair Value Measurements at December 31, 2024 Using: |
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Quoted Prices In |
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Significant Other |
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Significant |
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(Dollars in thousands) |
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Carrying |
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Active |
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Observable |
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Unobservable |
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December 31, 2024 |
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(Level 1) |
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(Level 2) |
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(Level 3) |
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Assets: |
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Individually evaluated loans: |
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|
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Commercial and industrial |
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$ |
634 |
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|
$ |
- |
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$ |
- |
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$ |
634 |
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Commercial real estate - non-owner occupied |
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10,468 |
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- |
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- |
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10,468 |
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The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine the fair value as of the dates indicated.
(Dollars in thousands) |
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Quantitative Information About Level 3 Fair Value Measurements |
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Fair Value |
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Valuation |
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Unobservable |
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Weighted |
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December 31, 2025 |
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Estimate |
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Technique |
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Input |
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Range |
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Average |
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Assets: |
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Individually evaluated loans: |
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|
|
|
|
|
|
|
|
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Commercial real estate - non-owner occupied |
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$ |
12,873 |
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Appraisal (1) |
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Appraisal adjustments (2) |
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15%-29% |
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24% |
Commercial real estate - owner occupied |
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|
468 |
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Appraisal (1) |
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Appraisal adjustments (2) |
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39%-39% |
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39% |
Other real estate owned: |
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Commercial real estate - non-owner occupied |
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1,800 |
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Appraisal (1) |
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Appraisal adjustments (2) |
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10%-10% |
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10% |
Commercial real estate - owner occupied |
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2,061 |
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Appraisal (1) |
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Appraisal adjustments (2) |
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10%-10% |
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10% |
Commercial and industrial |
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|
540 |
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Appraisal (1) |
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Appraisal adjustments (2) |
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10%-10% |
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10% |
(Dollars in thousands) |
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Quantitative Information About Level 3 Fair Value Measurements |
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Fair Value |
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Valuation |
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Unobservable |
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Weighted |
|
December 31, 2024 |
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Estimate |
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Technique |
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Input |
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Range |
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Average |
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Assets: |
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|
|
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Individually evaluated loans: |
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|
|
|
|
|
|
|
|
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Commercial and industrial |
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$ |
634 |
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Appraisal (1) |
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Appraisal adjustments (2) |
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43%-43% |
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43% |
Commercial real estate - non-owner occupied |
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|
10,468 |
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Appraisal (1) |
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Appraisal adjustments (2) |
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21%-59% |
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43% |
Carrying amounts and estimated fair values of financial instruments were as follows as of the dates indicated:
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December 31, 2025 |
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December 31, 2024 |
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Fair Value |
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Carrying |
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Estimated |
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Carrying |
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Estimated |
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(Dollars in thousands) |
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Level |
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Amount |
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Fair Value |
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Amount |
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Fair Value |
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Financial instruments - assets |
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Cash and due from banks |
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1 |
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$ |
5,326 |
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$ |
5,326 |
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$ |
9,262 |
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$ |
9,262 |
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Interest-bearing deposits with other financial institutions |
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1 |
|
|
192,538 |
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|
192,538 |
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|
|
114,860 |
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|
|
114,860 |
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Investment securities available for sale |
|
2 |
|
|
71,038 |
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|
|
71,038 |
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|
|
65,609 |
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|
|
65,609 |
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Investment securities held to maturity |
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2 |
|
|
- |
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- |
|
|
|
40,569 |
|
|
|
40,392 |
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Loans held for sale |
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3 |
|
|
46,009 |
|
|
|
47,676 |
|
|
|
32,649 |
|
|
|
33,930 |
|
Loans, net |
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3 |
|
|
949,379 |
|
|
|
957,194 |
|
|
|
806,844 |
|
|
|
812,674 |
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Loan servicing assets |
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3 |
|
|
11,140 |
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|
|
20,169 |
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|
|
8,976 |
|
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|
15,546 |
|
Federal Home Loan Bank stock |
|
2 |
|
|
5,513 |
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|
5,513 |
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|
4,652 |
|
|
|
4,652 |
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Accrued interest receivable |
|
2 |
|
|
7,840 |
|
|
|
7,840 |
|
|
|
7,184 |
|
|
|
7,184 |
|
Financial instruments - liabilities |
|
|
|
|
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Deposits |
|
2 |
|
|
1,142,695 |
|
|
|
1,122,810 |
|
|
|
935,080 |
|
|
|
899,360 |
|
Short-term borrowings |
|
2 |
|
|
371 |
|
|
|
371 |
|
|
|
- |
|
|
|
- |
|
Subordinated debt |
|
2 |
|
|
26,163 |
|
|
|
25,559 |
|
|
|
26,088 |
|
|
|
24,830 |
|
Accrued interest payable |
|
2 |
|
|
3,884 |
|
|
|
3,884 |
|
|
|
3,063 |
|
|
|
3,063 |
|
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.