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Fair Value (Q3) | 9 Months Ended
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Sep. 30, 2020
Fair Value [Abstract] |
Fair Value | NOTE (9) – 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 Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total |
|  | (In thousands) |
At September 30, 2020: |  |  |  |  |  |  |  |  |  |  |  |
Securities available-for-sale – federal agency mortgage-backed |  | $ | - |  |  | $ | 6,460 |  |  | $ | - |  |  | $ | 6,460 |
Securities available-for-sale – federal agency debt |  |  | - |  |  |  | 3,058 |  |  |  | - |  |  |  | 3,058 |
Municipal bonds |  |  | - |  |  |  | 854 |  |  |  | - |  |  |  | 854 |
At December 31, 2019: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available-for-sale – federal agency mortgage-backed |  | $ | - |  |  | $ | 7,956 |  |  | $ | - |  |  | $ | 7,956 |
Securities available-for-sale – federal agency debt |  |  | - |  |  |  | 3,050 |  |  |  | - |  |  |  | 3,050 |
There were no transfers between Level 1, Level 2, or Level 3 during the three and nine months ended September 30, 2020 and 2019. 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 statements of financial 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.
|  | September 30, 2020 |  |  | December 31, 2019 |
|  | (In thousands) |
Impaired loans carried at fair value of collateral |  | $ | - |  |  | $ | 130 |
Fair Values of Financial Instruments The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments not recorded at fair value on a recurring basis as of September 30, 2020 and December 31, 2019. This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and due from banks, interest-bearing deposits in other banks, and accrued interest receivable/payable, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For non-marketable equity securities such as Federal Home Loan Bank stock, the carrying amount is a reasonable estimate of fair value as these securities can only be redeemed or sold at their par value and only to the respective issuing government supported institution or to another member institution. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.
|  |  |  |  | Fair Value Measurements at September 30, 2020 |
|  | Carrying Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (In thousands) |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans receivable held for sale |  | $ | 40,653 |  |  | $ | - |  |  | $ | 40,667 |  |  | $ | - |  |  | $ | 40,667 |
Loans receivable held for investment |  |  | 361,793 |  |  |  | - |  |  |  | - |  |  |  | 366,160 |  |  |  | 366,160 |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time Deposits |  | $ | 147,703 |  |  | $ | - |  |  | $ | 148,380 |  |  | $ | - |  |  | $ | 148,380 |
Federal Home Loan Bank advances |  |  | 115,500 |  |  |  | - |  |  |  | 119,334 |  |  |  | - |  |  |  | 119,334 |
Junior subordinated debentures |  |  | 3,570 |  |  |  | - |  |  |  | - |  |  |  | 3,029 |  |  |  | 3,029 |
|  |  |  |  | Fair Value Measurements at December 31, 2019 |
|  | Carrying Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (In thousands) |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans receivable held for sale |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Loans receivable held for investment |  |  | 397,847 |  |  |  | - |  |  |  | - |  |  |  | 404,923 |  |  |  | 404,923 |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time Deposits |  | $ | 190,235 |  |  | $ | - |  |  | $ | 190,353 |  |  | $ | - |  |  | $ | 190,353 |
Federal Home Loan Bank advances |  |  | 84,000 |  |  |  | - |  |  |  | 84,997 |  |  |  | - |  |  |  | 84,997 |
Junior subordinated debentures |  |  | 4,335 |  |  |  | - |  |  |  | - |  |  |  | 3,734 |  |  |  | 3,734 |
In accordance with ASU No. 2016-01, the fair value of certain financial assets and liabilities, including loans, time deposits, and junior subordinated debentures, as of September 30, 2020 and December 31, 2019 was measured using an exit price notion. Although the exit price notion represents the value that would be received to sell an asset or paid to transfer a liability, the actual price received for a sale of assets or paid to transfer liabilities could be different from exit price disclosed.

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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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