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Fair Value | 12 Months Ended
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Dec. 31, 2018
Fair Value |
Fair Value | Note 5 – Fair Value The Company used the following methods and significant assumptions to estimate fair value: The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique 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 inputs). The fair value of impaired loans that are collateral dependent is generally based upon the fair value of the collateral, which is obtained from 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. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Assets acquired through or by transfer in lieu of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated every nine months. 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. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly. 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 the Company. Once received, an independent third-party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing 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. Assets Measured on a Recurring Basis Assets measured at fair value on a recurring basis are summarized below:
|  | Fair Value Measurement
|  | Quoted Prices |  |  |  |  |  |  |  |  |
|  | in Active |  | Significant |  |  |  |  |  |
|  | Markets for |  | Other |  | Significant |  |  |
|  | Identical |  | Observable |  | Unobservable |  |  |
|  | Assets |  | Inputs |  | Inputs |  |  |
|  | (Level 1) |  | (Level 2) |  | (Level 3) |  | Total
|  | (In thousands)
At December 31, 2018: |  |  |  |  |  |  |  |  |  |  |  |
Securities available-for-sale – federal agency mortgage-backed |  | $ | — |  | $ | 9,508 |  | $ | — |  | $ | 9,508
Securities available-for-sale – federal agency debt |  |  | 1,979 |  |  | 3,235 |  |  | — |  |  | 5,214
At December 31, 2017: |  |  |  |  |  |  |  |  |  |  |  |
Securities available-for-sale – federal agency mortgage-backed |  | $ | — |  | $ | 12,008 |  | $ | — |  | $ | 12,008
Securities available-for-sale – federal agency debt |  |  | 1,976 |  |  | 3,510 |  |  | — |  |  | 5,486
There were no transfers between Level 1, Level 2, or Level 3 during the years ended December 31, 2018 and 2017. Assets Measured on a Non-Recurring Basis Assets are considered to be reflected at fair value on a non-recurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the statement of condition. Generally, a non-recurring valuation is the result of the application of other accounting pronouncements that require assets to be assessed for impairment or recorded at the lower of cost or fair value. The following table provides information regarding the carrying values of our assets measured at fair value on a non-recurring basis as of the periods indicated. The fair value measurement for all of these assets falls within Level 3 of the fair value hierarchy.
|  | December 31, 2018 |  | December 31, 2017
|  | (In thousands)
Impaired loans carried at fair value of collateral |  | $ | 591 |  | $ | 742
Real estate owned |  |  | 833 |  |  | 878
The following table provides information regarding losses recognized on assets measured at fair value on a non-recurring basis for the years ended December 31, 2018 and 2017.
|  | For the year ended December 31,
|  | 2018 |  |  | 2017
|  | (In thousands)
Impaired loans carried at fair value of collateral |  | $ | — |  | $ | —
Real estate owned |  |  | 45 |  |  | 80
Total |  | $ | 45 |  | $ | 80
The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis as of December 31, 2018 and 2017:
|  |  |  |  |  |  |  | Weighted
|  | Valuation Technique(s) |  | Unobservable Input(s) |  | Range |  | Average
December 31, 2018: |  |  |  |  |  |  |  |
Impaired loans |  | Third Party Appraisals |  | Adjustment for differences between the comparable sales |  | -3% to -1% |  | -2.83%
Real estate owned – church |  | Third Party Appraisals |  | Adjustment for differences between the comparable sales |  | -11% |  | -10.85%
December 31, 2017: |  |  |  |  |  |  |  |
Impaired loans |  | Third Party Appraisals |  | Adjustment for differences between the comparable sales |  | -16% to 7% |  | -4%
Real estate owned – church |  | Third Party Appraisals |  | Adjustment for differences between the comparable sales |  | -6% |  | -6%
Fair Values of Financial Instruments The carrying amounts and estimated fair values of financial instruments as of the periods indicated were as follows:
|  |  |  |  | Fair Value Measurements at December 31, 2018
|  | Carrying Value |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  |  | (In thousands)
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 16,651 |  | $ | 16,651 |  | $ | — |  | $ | — |  | $ | 16,651
Securities available-for-sale |  |  | 14,722 |  |  | 1,979 |  |  | 12,743 |  |  | — |  |  | 14,722
Loans receivable held for sale |  |  | 6,231 |  |  | — |  |  | 6,270 |  |  | — |  |  | 6,270
Loans receivable held for investment (1) |  |  | 355,556 |  |  | — |  |  | — |  |  | 354,792 |  |  | 354,792
Accrued interest receivable |  |  | 1,143 |  |  | 78 |  |  | 43 |  |  | 1,022 |  |  | 1,143
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 281,414 |  | $ | — |  | $ | 269,418 |  | $ | — |  | $ | 269,418
Federal Home Loan Bank advances |  |  | 70,000 |  |  | — |  |  | 69,933 |  |  | — |  |  | 69,933
Junior subordinated debentures |  |  | 5,100 |  |  | — |  |  | — |  |  | 4,481 |  |  | 4,481
Accrued interest payable |  |  | 334 |  |  | — |  |  | 324 |  |  | 10 |  |  | 334
|  |  |  |  | Fair Value Measurements at December 31, 2017
|  | Carrying Value |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  |  | (In thousands)
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 22,219 |  | $ | 22,219 |  | $ | — |  | $ | — |  | $ | 22,219
Securities available-for-sale |  |  | 17,494 |  |  | 1,976 |  |  | 15,518 |  |  | — |  |  | 17,494
Loans receivable held for sale |  |  | 22,370 |  |  | — |  |  | 22,626 |  |  | — |  |  | 22,626
Loans receivable held for investment |  |  | 334,851 |  |  | — |  |  | — |  |  | 333,231 |  |  | 333,231
Accrued interest receivable |  |  | 1,073 |  |  | 58 |  |  | 91 |  |  | 924 |  |  | 1,073
Federal Home Loan Bank stock |  |  | 2,916 |  |  | 2,916 |  |  | — |  |  | — |  |  | 2,916
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 291,290 |  | $ | — |  | $ | 280,761 |  | $ | — |  | $ | 280,761
Federal Home Loan Bank advances |  |  | 65,000 |  |  | — |  |  | 64,887 |  |  | — |  |  | 64,887
Junior subordinated debentures |  |  | 5,100 |  |  | — |  |  | — |  |  | 4,503 |  |  | 4,503
Accrued interest payable |  |  | 304 |  |  | — |  |  | 296 |  |  | 8 |  |  | 304
| (1) |  | The estimated value of loans held for investment for December 31, 2018 reflects an exit price assumption. The December 31, 2017 fair value estimate is not based on an exit price assumption.

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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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