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Fair Value of Financial Instruments | 6 Months Ended
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Jun. 30, 2024
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | Fair Value of Financial Instruments 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: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of valuation methodologies used for assets recorded at fair value. As of both June 30, 2024 and December 31, 2023, the Company did not have any liabilities recorded at fair value. The methods of determining the fair value of assets and liabilities presented in this note are consistent with the methodologies disclosed in Note 20 of the 2023 Form 10-KT. Financial Assets Recorded at Fair Value The following table presents financial assets measured at fair value on a recurring basis at the dates indicated:
| June 30, 2024
| Total |  | Level 1 |  | Level 2 |  | Level 3
Debt securities available for sale |  |  |  |  |  |  |
MBS, residential | $ | 126,582 |  |  | $ | — |  |  | $ | 126,582 |  |  | $ | — |
Municipal bonds | 3,378 |  |  | — |  |  | 3,378 |  |  | — |
Corporate bonds | 4,175 |  |  | — |  |  | 4,175 |  |  | — |
Total debt securities available for sale | $ | 134,135 |  |  | $ | — |  |  | $ | 134,135 |  |  | $ | — |
Loans held for sale | $ | 1,614 |  |  | $ | — |  |  | $ | 1,614 |  |  | $ | — |
| December 31, 2023
| Total |  | Level 1 |  | Level 2 |  | Level 3
Debt securities available for sale |  |  |  |  |  |  |
MBS, residential | $ | 104,499 |  |  | $ | — |  |  | $ | 104,499 |  |  | $ | — |
Municipal bonds | 3,409 |  |  | — |  |  | 3,409 |  |  | — |
Corporate bonds | 19,042 |  |  | — |  |  | 19,042 |  |  | — |
Total debt securities available for sale | $ | 126,950 |  |  | $ | — |  |  | $ | 126,950 |  |  | $ | — |
Loans held for sale | $ | 3,359 |  |  | $ | — |  |  | $ | 3,359 |  |  | $ | — |
Debt securities available for sale are valued on a recurring basis at quoted market prices where available. If quoted market prices are not available, fair values are based on quoted prices of comparable securities. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange or U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include MBS and debentures issued by GSEs, municipal bonds and corporate debt securities. The Company has no Level 3 securities. Loans held for sale carried at fair value are valued at the individual loan level using quoted secondary market prices. There were no transfers between levels during the six months ended June 30, 2024 or December 31, 2023. The following table presents financial assets measured at fair value on a non-recurring basis at the dates indicated:
| June 30, 2024
| Total |  | Level 1 |  | Level 2 |  | Level 3
Collateral dependent loans |  |  |  |  |  |  |
Commercial real estate loans |  |  |  |  |  |  |
Commercial real estate – owner occupied | $ | 890 |  |  | $ | — |  |  | $ | — |  |  | $ | 890 |
Commercial real estate – non-owner occupied | 3,186 |  |  | — |  |  | — |  |  | 3,186 |
Commercial loans |  |  |  |  |  |  |
Commercial and industrial | 391 |  |  | — |  |  | — |  |  | 391 |
Equipment finance | 1,693 |  |  | — |  |  | — |  |  | 1,693 |
Total | $ | 6,160 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,160 |
| December 31, 2023
| Total |  | Level 1 |  | Level 2 |  | Level 3
Collateral dependent loans |  |  |  |  |  |  |
Commercial real estate loans |  |  |  |  |  |  |
Commercial real estate – owner occupied | $ | 438 |  |  | $ | — |  |  | $ | — |  |  | $ | 438 |
Commercial loans |  |  |  |  |  |  |
Commercial and industrial | 108 |  |  | — |  |  | — |  |  | 108 |
Equipment finance | 578 |  |  | — |  |  | — |  |  | 578 |
Total | $ | 1,124 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,124 |
A loan is considered to be collateral dependent when, based on current information and events, the Company expects repayment of the financial assets to be provided substantially through the operation or sale of the collateral and the Company has determined that the borrower is experiencing financial difficulty as of the measurement date. For real estate loans, the fair value of the loan's collateral is determined by a third-party appraisal, which is then adjusted for the estimated selling and closing costs related to liquidation of the collateral (typically ranging from 8% to 12% of the appraised value). For this asset class, the actual valuation methods (income, sales comparable or cost) vary based on the status of the project or property. Additional discounts of 5% to 15% may be applied depending on the age of the appraisals. The unobservable inputs may vary depending on the age of the appraisals. The unobservable inputs may vary depending on the individual asset with no one of the three methods being the predominant approach. For non-real estate loans, the fair value of the loan's collateral may be determined using an appraisal, net book value per the borrower's financial statements or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation and management's expertise and knowledge of the customer and customer's business. The stated carrying value and estimated fair value amounts of financial instruments as of June 30, 2024 and December 31, 2023, are summarized below:
| June 30, 2024
| Carrying Value |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Assets |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 294,190 |  |  | $ | 294,190 |  |  | $ | 294,190 |  |  | $ | — |  |  | $ | — |
Certificates of deposit in other banks | 32,131 |  |  | 32,131 |  |  | — |  |  | 32,131 |  |  | — |
Debt securities available for sale, at fair value | 134,135 |  |  | 134,135 |  |  | — |  |  | 134,135 |  |  | — |
FHLB and FRB stock | 19,637 |  |  | N/A |  | N/A |  | N/A |  | N/A
SBIC investments, at cost | 15,462 |  |  | 15,462 |  |  | — |  |  | — |  |  | 15,462 |
Loans held for sale, at fair value | 1,614 |  |  | 1,614 |  |  | 1,614 |  |  | — |  |  | — |
Loans held for sale, at the lower of cost or fair value | 224,976 |  |  | 227,063 |  |  | — |  |  | — |  |  | 227,063 |
Loans, net | 3,652,231 |  |  | 3,513,709 |  |  | — |  |  | — |  |  | 3,513,709 |
Accrued interest receivable | 18,412 |  |  | 18,412 |  |  | 84 |  |  | 647 |  |  | 17,681 |
Liabilities |  |  |  |  |  |  |  |  |
Noninterest-bearing and NOW deposits | 1,245,135 |  |  | 1,245,135 |  |  | — |  |  | 1,245,135 |  |  | — |
Money market accounts | 1,311,940 |  |  | 1,311,940 |  |  | — |  |  | 1,311,940 |  |  | — |
Savings accounts | 185,499 |  |  | 185,499 |  |  | — |  |  | 185,499 |  |  | — |
Certificates of deposit | 965,205 |  |  | 961,838 |  |  | — |  |  | 961,838 |  |  | — |
Junior subordinated debt | 10,070 |  |  | 9,613 |  |  | — |  |  | 9,613 |  |  | — |
Borrowings | 364,513 |  |  | 364,819 |  |  | — |  |  | 364,819 |  |  | — |
Accrued interest payable | 9,208 |  |  | 9,208 |  |  | — |  |  | 9,208 |  |  | — |
| December 31, 2023
| Carrying Value |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Assets |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 347,140 |  |  | $ | 347,140 |  |  | $ | 347,140 |  |  | $ | — |  |  | $ | — |
Certificates of deposit in other banks | 34,722 |  |  | 34,722 |  |  | — |  |  | 34,722 |  |  | — |
Debt securities available for sale, at fair value | 126,950 |  |  | 126,950 |  |  | — |  |  | 126,950 |  |  | — |
FHLB and FRB stock | 18,393 |  |  | N/A |  | N/A |  | N/A |  | N/A
SBIC investments, at cost | 13,789 |  |  | 13,789 |  |  | — |  |  | — |  |  | 13,789 |
Loans held for sale, at fair value | 3,359 |  |  | 3,359 |  |  | 3,359 |  |  | — |  |  | — |
Loans held for sale, at the lower of cost or fair value | 198,433 |  |  | 200,869 |  |  | — |  |  | — |  |  | 200,869 |
Loans, net | 3,591,381 |  |  | 3,472,491 |  |  | — |  |  | — |  |  | 3,472,491 |
Accrued interest receivable | 16,902 |  |  | 16,902 |  |  | 107 |  |  | 656 |  |  | 16,139 |
Liabilities |  |  |  |  |  |  |  |  |
Noninterest-bearing and NOW deposits | 1,376,220 |  |  | 1,376,220 |  |  | — |  |  | 1,376,220 |  |  | — |
Money market accounts | 1,246,807 |  |  | 1,246,807 |  |  | — |  |  | 1,246,807 |  |  | — |
Savings accounts | 194,486 |  |  | 194,486 |  |  | — |  |  | 194,486 |  |  | — |
Certificates of deposit | 843,860 |  |  | 839,501 |  |  | — |  |  | 839,501 |  |  | — |
Junior subordinated debt | 10,021 |  |  | 9,767 |  |  | — |  |  | 9,767 |  |  | — |
Borrowings | 433,763 |  |  | 433,747 |  |  | — |  |  | 433,747 |  |  | — |
Accrued interest payable | 6,849 |  |  | 6,849 |  |  | — |  |  | 6,849 |  |  | — |
The Company had off-balance sheet financial commitments, which included approximately $996,439 and $982,397 of commitments to originate loans, undisbursed portions of construction loans, unused lines of credit and standby letters of credit at June 30, 2024 and December 31, 2023, respectively (see "Note 12 – Commitments and Contingencies"). Since these commitments are based on current rates, the carrying amount approximates the fair value.

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//820/tableOfContent + Details
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