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Fair Value Measurements | 3 Months Ended
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Mar. 31, 2024
Fair Value Measurements |
Fair Value Measurements |
Note 8. | Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an 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. To measure fair value, accounting guidance has established a hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows: Level 1    Quoted prices for identical assets or liabilities in instruments traded 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 reporting entity’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 input that is significant to the fair value measurement. Assets and Liabilities Measured on a Recurring Basis The following describes the hierarchy designation, valuation methodology, and key inputs to measure fair value on a recurring basis for designated financial instruments: Investment Securities Available-for-Sale Where available, fair value estimates for available-for-sale securities are based on quoted market prices in an active market (Level 1). If quoted market prices are not available, fair values are based on quoted market prices of securities with similar characteristics, quoted prices of identical securities in less active markets, discounted cash flow techniques or matrix pricing models (Level 2). In certain cases where Level 1 or Level 2 are not available, securities are classified as Level 3 of the hierarchy. The carrying amount of accrued interest on securities approximates its fair value. Assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 are summarized below (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Total
​ | ​ | Fair Value Measurements | ​ | Estimated
March 31, 2024 |  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
Investment Securities Available-for-Sale |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
U.S. Government Agencies | ​ | $ | — | ​ | $ | 1,460 | ​ | $ | — | ​ | $ | 1,460
Mortgage-Backed Securities | ​ |  | — | ​ |  | 50,796 | ​ |  | — | ​ |  | 50,796
Collateralized Mortgage Obligations | ​ |  | — | ​ |  | 1,518 | ​ |  | — | ​ |  | 1,518
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total | ​ | $ | — | ​ | $ | 53,774 | ​ | $ | — | ​ | $ | 53,774
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Total
​ | ​ | Fair Value Measurements | ​ | Estimated
December 31, 2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
Investment Securities Available-for-Sale |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
U.S. Government Agencies | ​ | $ | — | ​ | $ | 966 | ​ | $ | — | ​ | $ | 966
Mortgage-Backed Securities | ​ |  | — | ​ |  | 65,328 | ​ |  | — | ​ |  | 65,328
Collateralized Mortgage Obligations | ​ |  | — | ​ |  | 1,607 | ​ |  | — | ​ |  | 1,607
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total | ​ | $ | — | ​ | $ | 67,901 | ​ | $ | — | ​ | $ | 67,901
​ The Bank did not record any liabilities at fair market value for which measurement of the fair value was made on a recurring basis at March 31, 2024 and December 31, 2023. There were no transfers into, out of, purchases, or sales of Level 3 securities during the three months ended March 31, 2024 and 2023. Assets and Liabilities Measured on a Non-Recurring Basis The following describes the hierarchy designation, valuation methodologies, and key inputs for those assets that are measured at fair value on a non-recurring basis: ​ Collateral Dependent Loans For collateral dependent loans, fair value is measured based on the value of the collateral securing these loans and is classified at a Level 3 in the fair value hierarchy. Collateral dependent loans consist of one-to-four family mortgages secured by residential properties. The value of residential property collateral is determined based on appraisal by qualified licensed appraisers hired by the Bank. 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 independent appraisers to adjust for differences between the comparable sales and income data available. Foreclosed Assets and Real Estate Owned Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired and classified at a Level 3 in the fair value hierarchy. These assets are subsequently accounted for at the lower of cost or fair value less estimated cost to sell. Fair value is commonly 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 independent appraisers to adjust for differences between the comparable sales and income data available. The following tables present the Bank’s assets and liabilities measured at fair value on a non-recurring basis at March 31, 2024 and December 31, 2023 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Total
​ | ​ | Fair Value Measurements | ​ | Estimated
March 31, 2024 |  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
Assets |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Collateral Dependent Loans | ​ | $ | — | ​ | $ | — | ​ | $ | 212 | ​ | $ | 212
Real Estate Owned | ​ |  | — | ​ |  | — | ​ |  | 42 | ​ |  | 42
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total | ​ | $ | — | ​ | $ | — | ​ | $ | 254 | ​ | $ | 254
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Total
​ | ​ | Fair Value Measurements | ​ | Estimated
December 31, 2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
Assets |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Collateral Dependent Loans | ​ | $ | — | ​ | $ | — | ​ | $ | 153 | ​ | $ | 153
Real Estate Owned | ​ |  | — | ​ |  | — | ​ |  | 42 | ​ |  | 42
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total | ​ | $ | — | ​ | $ | — | ​ | $ | 195 | ​ | $ | 195
​ ​ The following tables show significant unobservable inputs used in the fair value measurement of Level 3 assets: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Valuation | ​ | Unobservable | ​ | Range of | ​ | Weighted Average
March 31, 2024 |  | Technique |  | Inputs |  | Discount |  | Discount
Collateral Dependent Loans |  | Third-party appraisals and discounted cash flows |  | Collateral discounts and estimated costs to sell |  | 6% - 10% | ​ | 6%
Real Estate Owned |  | Third-party appraisals, sales contracts or brokered price options |  | Collateral discounts and estimated costs to sell |  | 6% - 10% | ​ | 6%
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Valuation | ​ | Unobservable | ​ | Range of | ​ | Weighted Average
December 31, 2023 |  | Technique |  | Inputs |  | Discount |  | Discount
Collateral Dependent Loans |  | Third-party appraisals and discounted cash flows |  | Collateral discounts and estimated costs to sell |  | 6% - 10% | ​ | 6%
Real Estate Owned |  | Third-party appraisals, sales contracts or brokered price options |  | Collateral discounts and estimated costs to sell |  | 6% - 10% | ​ | 6%
​ The following methods and assumptions were used by the Bank to estimate fair value of financial instruments. Cash and Cash Equivalents - Fair value approximates carrying value. Certificates of Deposit at Other Financial Institutions - Fair value approximates carrying value. Investment Securities Available-for-Sale - Fair value is obtained from an independent pricing service based on quoted market prices or quoted market prices of securities with similar characteristics, quoted prices of identical securities in less active markets, discounted cash flow techniques, or matrix pricing models. Restricted Stock - Consists of stock held as required by the respective institutions for membership and are carried at cost. While a fixed stock amount is required, the Federal Home Loan Bank stock requirement increases or decreases with the level of borrowing activity. Loans Receivable, Net – Fair value is estimated by discounting the future cash flows using the current rate at which similar loans would be made to borrowers with similar credit rating and for the same remaining maturity. The fair value of loans is measured using an exit price notion. Bank Owned Life Insurance - Fair value approximates carrying value. Deposits - For NOW, savings and certain money market fund accounts, fair value is equal to the amount payable on demand or carrying value. For time deposits, fair value is estimated using a discounted cash flow method. ​ The carrying amount and estimated fair value of the Bank’s financial instruments are as follows (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Carrying | ​ | Fair Value Measurements
March 31, 2024 |  | Value |  | Level 1 |  | Level 2 |  | Level 3
Financial Assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash and Cash Equivalents | ​ | $ | 36,625 | ​ | $ | 36,625 | ​ | $ | — | ​ | $ | —
Investment Securities Available-for-Sale | ​ |  | 53,774 | ​ |  | — | ​ |  | 53,774 | ​ |  | —
Restricted Stock | ​ |  | 888 | ​ |  | — | ​ |  | — | ​ |  | 888
Loans Receivable, Net | ​ |  | 365,403 | ​ |  | — | ​ |  | — | ​ |  | 308,698
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial Liabilities | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Deposits | ​ |  | 400,386 | ​ |  | — | ​ |  | — | ​ |  | 331,905
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Carrying | ​ | Fair Value Measurements
December 31, 2023 |  | Value |  | Level 1 |  | Level 2 |  | Level 3
Financial Assets |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Cash and Cash Equivalents | ​ | $ | 19,306 | ​ | $ | 19,306 | ​ | $ | — | ​ | $ | —
Investment Securities Available-for-Sale | ​ |  | 67,901 | ​ |  | — | ​ |  | 67,901 | ​ |  | —
Restricted Stock | ​ |  | 881 | ​ |  | — | ​ |  | — | ​ |  | 881
Loans Receivable, Net | ​ |  | 365,038 | ​ |  | — | ​ |  | — | ​ |  | 303,183
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial Liabilities | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Deposits | ​ |  | 390,003 | ​ |  | — | ​ |  | — | ​ |  | 327,412
Short-Term Federal Home Loan Bank Advances | ​ |  | 4,000 | ​ |  | — | ​ |  | 4,000 | ​ |  | —
​ Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument. Fair value estimates may not be realizable in an immediate settlement of the instrument. In some instances, there are no quoted market prices for the Bank’s various financial instruments, in which case fair values may be based on estimates using the present value or other valuation techniques, or based on judgements regarding future expected loss experience, current economic conditions, risk characteristics of financial instruments, or other factors. Those techniques are significantly affected by assumptions used, including the discount rate and estimate of future cash flows. Subsequent changes in assumptions could significantly affect the estimates.

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- 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/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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