Fair Value and Interest Rate Risk (Tables)

6 Months Ended

Jun. 30, 2024

Schedule of Fair Value, by Balance Sheet Grouping

The following table provides a comparison of the carrying amounts and estimated fair values of Patriot’s financial assets and liabilities as of June 30, 2024 and December 31, 2023:


(In thousands)		June 30, 2024				December 31, 2023
	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Cash and noninterest bearing balances due from banks	Level 1	$	2,514	$	2,514	$	2,195	$	2,195
Interest-bearing deposits due from banks	Level 1	91,097		91,097		50,322		50,322
Restricted cash	Level 1	41		41		14,019		14,019
Available-for-sale securities	Level 2	76,302		76,302		78,925		78,925
Available-for-sale securities	Level 3	10,365		10,365		10,262		10,262
Other investments	Level 2	4,450		4,450		4,450		4,450
Federal Reserve Bank stock	Level 2	2,193		2,193		2,090		2,090
Federal Home Loan Bank stock	Level 2	3,571		3,571		4,202		4,202
Loans receivable, net	Level 3	761,313		735,140		832,934		812,856
Loans held for sale	Level 2	14,092		14,245		20,767		21,557
SBA servicing assets	Level 3	790		873		857		932
Other real estate owned	Level 2	2,843		2,843		2,843		2,843
Accrued interest receivable	Level 2	6,452		6,452		7,219		7,219
Interest rate swap receivable	Level 2	95		95		74		74

Financial assets, total		$	976,118	$	950,181	$	1,031,159	$	1,011,946

Financial Liabilities:
Demand deposits	Level 2	$	93,736	$	93,736	$	110,056	$	110,056
Negotiable order of withdrawal accounts	Level 2	26,354		26,354		33,035		33,035
Savings deposits	Level 2	39,456		39,456		44,104		44,104
Interest bearing DDA	Level 2	227,253		227,253		171,577		171,577
Money market deposits	Level 2	167,836		167,836		200,280		200,280
Time deposits	Level 2	225,065		221,396		240,733		239,655
Brokered deposits	Level 1	21,202		21,157		40,526		40,453
FHLB, FRB and correspondent bank borrowings	Level 2	156,900		156,693		171,000		170,171
Senior notes	Level 2	11,792		11,425		11,723		11,397
Subordinated debt	Level 2	9,883		9,792		9,869		10,102
Junior subordinated debt owed to unconsolidated trust	Level 2	8,142		8,142		8,137		8,137
Note payable	Level 3	270		265		376		362
Accrued interest payable	Level 2	3,105		3,105		1,235		1,235
Interest rate swap liability	Level 2	95		95		74		74

Financial liabilities, total		$	991,089	$	986,705	$	1,042,725	$	1,040,638

Schedule of Fair Value, Assets Measured on Recurring Basis

The following tables detail the financial assets measured at fair value on a recurring basis and the valuation techniques utilized relative to the fair value hierarchy, as of June 30, 2024 and December 31, 2023:


(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
June 30, 2024:
U. S. Government agency and mortgage-backed securities	$	—	$	64,287	$	—	$	64,287
Corporate bonds	—		3,518		10,365		13,883
Subordinated notes	—		4,327		—		4,327
SBA loan pools	—		3,703		—		3,703
Municipal bonds	—		467		—		467
Available-for-sale securities	$	—	$	76,302	$	10,365	$	86,667

Interest rate swap receivable	$	—	$	95	$	—	$	95

Interest rate swap liability	$	—	$	95	$	—	$	95

December 31, 2023:
U. S. Government agency and mortgage-backed securities	$	—	$	65,671	$	—	$	65,671
Corporate bonds	—		3,504		10,262		13,766
Subordinated notes	—		4,227		—		4,227
SBA loan pools	—		5,037		—		5,037
Municipal bonds	—		486		—		486
Available-for-sale securities	$	—	$	78,925	$	10,262	$	89,187

Interest rate swap receivable	$	—	$	74	$	—	$	74

Interest rate swap liability	$	—	$	74	$	—	$	74

Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The reconciliation of the beginning and ending balances during the three and six months ended June 30, 2024 and 2023 for Level 3 available-for-sale securities is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023
Level 3 fair value, beginning of period	$	10,189	$	10,205	$	10,262	$	9,427
Purchases	—		—		—		—
Realized gain (loss)	—		—		—		—
Unrealized (loss) gain	176		(323)		103		455
Transfers in and /or out of Level 3	—		—		—		—
Level 3 fair value, end of period	$	10,365	$	9,882	$	10,365	$	9,882

Schedule of Fair Value Measurement Inputs and Valuation Techniques

The table below presents the valuation methodology and unobservable inputs for level 3 assets measured at fair value on a non-recurring basis as of June 30, 2024 and December 31, 2023:


(In thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs
June 30, 2024:
Individually evaluated loans, net	$	30,173	Real Estate Appraisals	Discount for appraisal type	5.8	%	-	20%

SBA servicing assets	873		Discounted Cash Flows	Market discount rates	14.73	%	-	14.90%

December 31, 2023:
Impaired loans, net	$	12,928	Real Estate Appraisals	Discount for appraisal type	5.8	%	-	20%

SBA servicing assets	932		Discounted Cash Flows	Market discount rates	14.73	%	-	14.90%

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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