XML 24 R15.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Fair Value | 9 Months Ended
--- | ---
Sep. 30, 2022
Fair Value [Abstract] |
Fair Value | NOTE 6 - FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability 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. The Company used the following methods and significant assumptions to estimate the fair value of each type of asset and liability: Securities available for sale: The fair value of securities available for sale is determined using pricing models that vary based on asset class and include available trade, bid and other market information or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2). Derivatives: The fair value of derivatives, which includes yield maintenance provisions, interest rate lock commitments and interest rate swaps, is based on valuation models using observable market data as of the measurement date (Level 2). TBA mortgage – back securities: To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into either a forward sales contract to sell loans to investors when using best efforts or a trade of “to be announced (TBA)” mortgage-backed securities for mandatory delivery. The forward sales contracts lock in a price for the sale of loans with similar characteristics to the specific rate lock commitments based on a valuation model using observable market data for pricing commitments (Level 2). Impaired loans: The fair value of impaired loans with specific allocations of the ALLL is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by a third-party appraisal management company approved by the Board of Directors annually. Once received, the loan officer or a member of the credit department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals are updated as needed based on facts and circumstances associated with the individual properties. Real estate appraisals typically incorporate measures such as recent sales prices for comparable properties. Appraisers may make adjustments to the sales prices of the comparable properties as deemed appropriate based on the age, condition or general characteristics of the subject property. Management applies an additional discount to real estate appraised values, typically to reflect changes in market conditions since the date of the appraisal if warranted and to cover disposition costs (including selling expenses) based on the intended disposition method of the property. Non-real estate collateral may be valued 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 client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Loans held for sale: Loans held for sale are carried at fair value, as determined by outstanding commitments from third party investors (Level 2). Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below:
| Fair Value Measurements at ‎ September 30, 2022 using Significant ‎Other Observable Inputs
| (Level 2)
| (unaudited)
Financial Assets: |  |
Securities available for sale: |  |
Corporate debt | $ | 8,000
Issued by U.S. government-sponsored entities and agencies: |  |
U.S. Treasury |  | 3,415
Mortgage-backed securities - residential |  | 21
Total securities available for sale | $ | 11,436
Derivative assets | $ | 4,316
Financial Liabilities: |  |
Derivative liabilities | $ | 4,316
| Fair Value Measurements at ‎ December 31, 2021 using Significant ‎Other Observable Inputs
| (Level 2)
Financial Assets: |  |
Securities available for sale: |  |
Corporate debt | $ | 9,750
Issued by U.S. government-sponsored entities and agencies: |  |
U.S. Treasury |  | 6,561
Mortgage-backed securities - residential |  | 36
Total securities available for sale | $ | 16,347
Loans held for sale | $ | 27,988
Derivative assets | $ | 538
Interest rate lock commitments | $ | 555
Financial Liabilities: |  |
Derivative liabilities |  | 538
TBA Mortgage-backed securities | $ | 73
The Company had no assets or liabilities measured at fair value on a recurring basis that were measured using Level 1 or Level 3 inputs at September 30, 2022 or December 31, 2021. There were no transfers of assets or liabilities measured at fair value between levels during the periods ended September 30, 2022 and December 31, 2021. There were no assets or liabilities measured at fair value on a non-recurring basis at September 30, 2022 and December 31, 2021. There were no write-downs of impaired collateral dependent loans during the three or nine months ended September 30, 2022 or 2021. Financial Instruments Recorded Using Fair Value Option The Company has elected the fair value option for loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment. No ne of these loans were 90 days or more past due or on nonaccrual as of September 30, 2022 or December 31, 2021. As of September 30, 2022 and December 31, 2021, the aggregate fair value, contractual balance and gain or loss on loans held for sale were as follows:
| September 30, 2022 |  | December 31, 2021
| (unaudited) |  |  |
Aggregate fair value | $ | - |  | $ | 27,988
Contractual balance |  | - |  |  | 27,632
Gain (loss) | $ | - |  | $ | 356
The total amount of gains and losses from changes in fair value included in earnings for the three and nine months ended September 30, 2022 and 2021 for loans held for sale were:
| Three months ended September 30, |  | Nine months ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (unaudited) |  | (unaudited)
Interest income | $ | - |  | $ | 1,008 |  | $ | 165 |  | $ | 5,347
Interest expense |  | - |  |  | - |  |  | - |  |  | -
Change in fair value |  | - |  |  | (1,916) |  |  | (356) |  |  | (7,841)
Total change in fair value | $ | - |  | $ | (908) |  | $ | (191) |  | $ | (2,494)
The carrying amounts and estimated fair values of financial instruments at September 30, 2022 were as follows:
| Fair Value Measurements at September 30, 2022 Using:
| Carrying |  |  |  |  |  |  |  |  |  |  |  |
(unaudited) | Value |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 198,066 |  | $ | 198,066 |  | $ | - |  | $ | - |  | $ | 198,066
Interest-bearing deposits in other financial institutions |  | 100 |  |  | 100 |  |  | - |  |  | - |  |  | 100
Securities available for sale |  | 11,436 |  |  | - |  |  | 11,436 |  |  | - |  |  | 11,436
Equity Securities |  | 5,000 |  |  | - |  |  | 5,000 |  |  | - |  |  | 5,000
Loans and leases, net |  | 1,473,883 |  |  | - |  |  | - |  |  | 1,431,042 |  |  | 1,431,042
FHLB and FRB stock |  | 7,633 |  |  | n/a |  |  | n/a |  |  | n/a |  |  | n/a
Accrued interest receivable |  | 7,179 |  |  | 154 |  |  | 223 |  |  | 6,802 |  |  | 7,179
Other assets held for sale |  | 1,930 |  |  | - |  |  | - |  |  | 1,930 |  |  | 1,930
Derivative assets |  | 4,316 |  |  | - |  |  | 4,316 |  |  | - |  |  | 4,316
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits | $ | (1,489,983) |  | $ | (889,986) |  | $ | (586,002) |  | $ | - |  | $ | (1,475,988)
FHLB advances and other borrowings |  | (102,803) |  |  | - |  |  | (98,503) |  |  | - |  |  | (98,503)
Advances by borrowers for taxes and insurance |  | (2,573) |  |  | - |  |  | - |  |  | (2,573) |  |  | (2,573)
Subordinated debentures |  | (14,912) |  |  | - |  |  | (13,508) |  |  | - |  |  | (13,508)
Accrued interest payable |  | (638) |  |  | - |  |  | (638) |  |  | - |  |  | (638)
Derivative liabilities |  | (4,316) |  |  | - |  |  | (4,316) |  |  | - |  |  | (4,316)
The carrying amounts and estimated fair values of financial instruments at December 31, 2021 were as follows:
| Fair Value Measurements at December 31, 2021 Using:
| Carrying |  |  |  |  |  |  |  |  |  |  |  |
| Value |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 166,591 |  | $ | 166,591 |  | $ | - |  | $ | - |  | $ | 166,591
Interest-bearing deposits in other financial institutions |  | 100 |  |  | 100 |  |  | - |  |  | - |  |  | 100
Securities available for sale |  | 16,347 |  |  | - |  |  | 16,347 |  |  | - |  |  | 16,347
Equity Securities |  | 5,000 |  |  | - |  |  | 5,000 |  |  | - |  |  | 5,000
Loans held for sale |  | 27,988 |  |  | - |  |  | 27,988 |  |  | - |  |  | 27,988
Loans and leases, net |  | 1,214,149 |  |  | - |  |  | - |  |  | 1,231,228 |  |  | 1,231,228
FHLB and FRB stock |  | 7,315 |  |  | n/a |  |  | n/a |  |  | n/a |  |  | n/a
Accrued interest receivable |  | 4,143 |  |  | 2 |  |  | 91 |  |  | 3,947 |  |  | 4,040
Derivative assets |  | 538 |  |  | - |  |  | 538 |  |  | - |  |  | 538
Interest rate lock commitments |  | 555 |  |  | - |  |  | 555 |  |  | - |  |  | 555
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits | $ | (1,246,352) |  | $ | (661,818) |  | $ | (585,214) |  | $ | - |  | $ | (1,247,032)
FHLB advances and other borrowings |  | (89,727) |  |  | - |  |  | (90,670) |  |  | - |  |  | (90,670)
Advances by borrowers for taxes and insurance |  | (2,752) |  |  | - |  |  | - |  |  | (2,752) |  |  | (2,752)
Subordinated debentures |  | (14,883) |  |  | - |  |  | (16,051) |  |  | - |  |  | (16,051)
Accrued interest payable |  | (228) |  |  | - |  |  | (228) |  |  | - |  |  | (228)
Derivative liabilities |  | (538) |  |  | - |  |  | (538) |  |  | - |  |  | (538)
TBA mortgage-backed securities |  | (73) |  |  | - |  |  | (73) |  |  | - |  |  | (73)
The methods and assumptions, not previously presented, used to estimate fair values are described below. Cash and Cash Equivalents and Interest-Bearing Deposits in Other Financial Institutions The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1. FHLB and FRB Stock It is not practical to determine the fair value of FHLB and FRB stock due to restrictions placed on its transferability. Loans and Leases Fair values of loans and leases as of September 30, 2022, excluding loans held for sale, are estimated utilizing an exit pricing methodology as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. The discount rate for the discounted cash flow analyses includes a credit quality adjustment. Impaired loans are valued at the lower of cost or fair value as described previously. Other Assets Held for Sale The carrying amount of other assets held for sale approximates fair value and is classified as Level 3. Deposits The fair values disclosed for demand deposits (e.g., interest and noninterest bearing checking, passbook savings, and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification. FHLB Advances and Other Debt The fair values of the Company’s long-term FHLB and credit facility advances are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification. The fair values of the Company’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification. The PPPLF funding has a fixed rate of 0.35% for all participants; thus the carrying value approximates the estimated fair value and represents a Level 2 measurement. Accrued Interest Receivable/Payable The carrying amounts of accrued interest approximate fair value resulting in a Level 1, 2 or 3 classification, consistent with the asset or liability with which they are associated. Advances by Borrowers for Taxes and Insurance The carrying amount of advances by borrowers for taxes and insurance approximates fair value resulting in a Level 3 classification, consistent with the liability with which they are associated. Off-Balance-Sheet Instruments The fair value of off-balance-sheet items is not considered material.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration