NEW INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY Notes to the Consolidated Financial Statements
NOTE 17.
CONCENTRATIONS OF CREDIT RISK
The Bank grants various types of loans to individuals and businesses located, primarily, in Clark and surrounding counties of Indiana. Circumstances having a negative impact on the economy of these counties could adversely affect customers’ ability to repay their loans.
The Bank maintains all of its cash and certificates of deposit at federally-insured financial institutions. At times, such balances may be in excess of the FDIC insurance limit. At December 31, 2025, the balance of funds in excess of the FDIC limit was $ 5,054,532.
NOTE 18.
OFF-BALANCE-SHEET ACTIVITIES
In the normal course of business, there are outstanding commitments, contingent liabilities, and other financial instruments that are not reflected in the consolidated financial statements. These include commitments to extend credit and letters of credit. These instruments involve, to varying degrees, elements of credit risk and interest rate expense in excess of the amounts recognized in the consolidated balance sheets.
The Bank evaluates the recipients of loan commitments and letters of credit using the same policies and criteria used to evaluate recipients of loans recorded on the consolidated balance sheets. Loan commitments and outstanding letters of credit at December 31, 2025, included a mix of unsecured amounts as well as amounts secured by real estate, equipment, inventory, and accounts receivable. Access to such security is obtained by the Bank under the same methods employed on loans reflected in the consolidated balance sheets.
The Bank was exposed to additional credit loss to the extent of the notional principal amount of commitments and lines of credit outstanding at December 31, 2025, of $ 93,235,499 including fixed rate commitments of $ 17,354,029 and variable rate commitments of $ 75,881,470. Commitments to extend credit generally have fixed expiration dates and many expire without being drawn upon, so the amounts reflected above do not necessarily represent future cash requirements. The market or interest rate risk associated with those instruments is, for all practical purposes, the same as for loans reflected on the consolidated balance sheets in that fluctuations in market rates will impact the value of the instruments.
NOTE 19.
FAIR VALUE MEASUREMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability( exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1- Valuation is based on quoted market prices in active markets for identical assets or liabilities.
Level 2- Valuation is based on observable inputs that include: quoted prices for similar assets or liabilities; quoted market prices that are not in an active market; or other inputs that are observable in the market and can be corroborated by observable market data for substantially the full term of the asset or liability.
52 | 2025 NWSB Annual Report