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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2020
Fair Value Measurements [Abstract] |
Fair Value Measurements | (9) Fair Value Measurements The Company reports certain assets at fair value in accordance with GAAP, which defines fair value and establishes a framework for measuring fair value in accordance with generally accepted accounting principles. Fair value is defined as 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. The guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values: Basis of Fair Value Measurements Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 - Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability; Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). An asset’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Fair Values of Assets Measured on a Recurring Basis The Company’s investments in state and municipal, asset-backed and government mortgage-backed debt securities available-for-sale are generally classified within Level 2 of the fair value hierarchy. For these investments, the Company obtains fair value measurements from independent pricing services. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms and conditions. The following summarizes financial instruments measured at fair value on a recurring basis at September 30, 2020 and December 31, 2019:
| Fair Value Measurements at Reporting Date Using
|  |  |  |  |  |  | Significant |  | Significant
|  |  |  |  |  |  | Other Observable |  | Unobservable
|  |  |  |  |  |  | Inputs |  | Inputs
(In thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
September 30, 2020 |  |  |  |  |  |  |  |  |  |  |
State and municipal securities | $ | 10,830 |  | $ | — |  | $ | 10,830 |  | $ | —
Asset-backed securities |  | 5,025 |  |  | — |  |  | 5,025 |  |  | —
Mortgage-backed securities |  | 18,566 |  |  | — |  |  | 18,566 |  |  | —
Totals | $ | 34,421 |  | $ | — |  | $ | 34,421 |  | $ | —
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |
State and municipal securities | $ | 11,206 |  | $ | — |  | $ | 11,206 |  | $ | —
Asset-backed securities |  | 5,500 |  |  | — |  |  | 5,500 |  |  | —
Mortgage-backed securities |  | 25,084 |  |  | — |  |  | 25,084 |  |  | —
Totals | $ | 41,790 |  | $ | — |  | $ | 41,790 |  | $ | —
Fair Values of Assets Measured on a Non-Recurring Basis The Company may also be required, from time to time, to measure certain other assets at fair value on a non-recurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from the application of lower-of-cost-or market accounting or write-downs of individual assets. Certain impaired loans were adjusted to fair value, less cost to sell, of the underlying collateral securing these loans resulting in losses. The loss is not recorded directly as an adjustment to current earnings, but rather as a component in determining the allowance for loan losses. Fair value was measured using appraised values of collateral and adjusted as necessary by management based on unobservable inputs for specific properties. The following summarizes assets measured at fair value on a nonrecurring basis at September 30, 2020 and December 31, 2019:
| Fair Value Measurements at Reporting Date Using:
|  |  |  | Quoted Prices in |  | Significant |  | Significant
|  |  |  | Active Markets for |  | Other Observable |  | Unobservable
|  |  |  | Identical Assets |  | Inputs |  | Inputs
(In thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
September 30, 2020 |  |  |  |  |  |  |  |  |  |  |
Impaired loans |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 158 |  | $ | — |  | $ | — |  | $ | 158
Commercial |  | 3,751 |  |  | — |  |  | — |  |  | 3,751
Totals | $ | 3,909 |  | $ | — |  | $ | — |  | $ | 3,909
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |
Impaired loans |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | $ | 215 |  | $ | — |  | $ | — |  | $ | 215
Commercial |  | 1,805 |  |  | — |  |  | — |  |  | 1,805
Totals | $ | 2,020 |  | $ | — |  | $ | — |  | $ | 2,020
The following is a summary of the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis at September 30, 2020 and December 31, 2019:
(In thousands) | Fair Value |  | Valuation Technique |  | Unobservable Input |  | Range
September 30, 2020 |  |  |  |  |  |  |  |
Impaired loans |  |  |  |  |  |  |  |
Commercial real estate | $ | 158 |  | Real estate appraisals |  | Discount for dated appraisals |  | 6 - 10%
Commercial |  | 3,751 |  | Business valuation |  | Comparable company evaluations |  | —
December 31, 2019 |  |  |  |  |  |  |  |
Impaired loans |  |  |  |  |  |  |  |
Commercial real estate | $ | 215 |  | Real estate appraisals |  | Discount for dated appraisals |  | 6 - 10%
Commercial |  | 1,805 |  | Business valuation |  | Comparable company evaluations |  | —
Fair Values of Financial Instruments GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Certain financial instruments and all nonfinancial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The carrying amounts and estimated fair values of the Company's financial instruments, all of which are held or issued for purposes other than trading, are as follows at September 30, 2020 and December 31, 2019:
| Carrying |  | Fair Value
(In thousands) | Amount |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 47,444 |  | $ | 47,444 |  | $ | — |  | $ | — |  | $ | 47,444
Available-for-sale debt securities |  | 34,421 |  |  | — |  |  | 34,421 |  |  | — |  |  | 34,421
Federal Home Loan Bank of Boston stock |  | 895 |  |  | N/A |  |  | N/A |  |  | N/A |  |  | N/A
Loans, net |  | 1,341,341 |  |  | — |  |  | — |  |  | 1,352,938 |  |  | 1,352,938
Accrued interest receivable |  | 6,118 |  |  | — |  |  | 6,118 |  |  | — |  |  | 6,118
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | 1,168,234 |  |  | — |  |  | 1,168,962 |  |  | — |  |  | 1,168,962
Borrowings |  | 73,500 |  |  | — |  |  | 74,132 |  |  | — |  |  | 74,132
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 59,658 |  | $ | 59,658 |  | $ | — |  | $ | — |  | $ | 59,658
Available-for-sale debt securities |  | 41,790 |  |  | — |  |  | 41,790 |  |  | — |  |  | 41,790
Federal Home Loan Bank of Boston stock |  | 1,416 |  |  | N/A |  |  | N/A |  |  | N/A |  |  | N/A
Loans, net |  | 959,286 |  |  | — |  |  | — |  |  | 958,270 |  |  | 958,270
Accrued interest receivable |  | 2,854 |  |  | — |  |  | 2,854 |  |  | — |  |  | 2,854
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | 849,905 |  |  | — |  |  | 850,774 |  |  | — |  |  | 850,774
Borrowings |  | 24,998 |  |  | — |  |  | 25,351 |  |  | — |  |  | 25,351

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- References No definition available. + Details
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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 -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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