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Fair Value
 9 Months Ended
Sep. 30, 2024
Fair Value [Abstract]  
Fair Value
NOTE 7 – 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 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. Collateral dependent loans are evaluated on a quarterly basis for additional required calculation adjustments (taken as part of the ACL) and adjusted accordingly.

Appraisals for collateral-dependent loans and assets acquired through or by transfer of in lieu of foreclosure 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, 2024:
                        
Securities available-for-sale:
                        
Federal agency mortgage-backed securities
  
$
–
     $ 57,208    
$
–
     $ 57,208  
Federal agency CMOs
    
–
       21,308      
–
       21,308  
Federal agency debt
    
–
       44,164      
–
       44,164  
Municipal bonds
     –       4,455      
–
       4,455  
U.S. Treasuries
    
101,738
       –      
–
       101,738  
SBA pools
    
–
       9,616      
–
       9,616  
                                 
At December 31, 2023:
                                
Securities available-for-sale:
                                
Federal agency mortgage-backed securities
  
$
–
    
$
66,778
    
$
–
    
$
66,778
  
Federal agency CMOs
    
–
      
23,339
      
–
      
23,339
  
Federal agency debt
    
–
      
47,836
      
–
      
47,836
  
Municipal bonds
    
–
      
4,373
      
–
      
4,373
  
U.S. Treasuries
    
163,880
      
–
      
–
      
163,880
  
SBA pools
    
–
      
10,744
      
–
      
10,744
  


There were no transfers between Level 1, Level 2, or Level 3 during the nine months ended September 30, 2024 and 2023.



As of September 30, 2024 and December 31, 2023, the Bank did not have any assets or liabilities carried at fair value on a nonrecurring basis.


Fair Values of Financial Instruments



The following tables present the carrying amount, fair value, and level within the fair value hierarchy of the Company’s financial instruments not recorded at fair value on a recurring basis as of September 30, 2024 and December 31, 2023.

         
Fair Value Measurements at September 30, 2024
  
   
Carrying Value
    
Level 1
    
Level 2
    
Level 3
    
Total
  
   
(In thousands)
  
Financial Assets:
                              
Cash and cash equivalents   $ 97,079     $ 97,079     $ –     $ –     $ 97,079  
Securities available-for-sale
     238,489
       101,738
       136,751
       –
       238,489
  
Loans receivable held for investment
    
966,788
      
–
      
–
      
958,934
      
958,934
  
Accrued interest receivable
     5,744
       5,744
       –
       –
       5,744
  
Bank owned life insurance
     3,309       3,309       –       –       3,309  
                                         
Financial Liabilities:
                                        
Deposits
  
$
672,248
    
$
–
    
$
608,374
     $ –    
$
608,374
  
FHLB advances
    208,568       –       208,202       –       208,202  
BTFP borrowing     100,000       –       100,000       –       100,000  
Securities sold under agreements to repurchase
    
89,798
      
–
      
89,671
      
–
      
89,671
  
Accrued interest payable
     4,885
       –
       4,885
       –
       4,885
  

         
Fair Value Measurements at December 31, 2023
  
   
Carrying Value
    
Level 1
    
Level 2
    
Level 3
    
Total
  
   
(In thousands)
  
Financial Assets:
                              
Cash and cash equivalents
  
$
105,195
    
$
105,195
    
$
–
    
$
–
    
$
105,195
  
Securities available-for-sale
    
316,950
      
163,880
      
153,070
      
–
      
316,950
  
Loans receivable held for investment
    
880,457
      
–
      
–
      
746,539
      
746,539
  
Accrued interest receivable
    
4,938
      
4,938
      
–
      
–
      
4,938
  
Bank owned life insurance
     3,275       3,275       –       –       3,275  
                                         
Financial Liabilities:
                                        
Deposits
  
$
682,635
    
$
–
    
$
536,171
    
$
–
    
$
536,171
  
FHLB advances
    
209,319
      
–
      
208,107
      
–
      
208,107
  
BTFP borrowing
     100,000       –       100,000       –       100,000  
Securities sold under agreements to repurchase     73,475       –       72,597       –       72,597  
Notes payable
    
14,000
      
–
      
–
      
14,000
      
14,000
  
Accrued interest payable
     1,420       –       1,420       –       1,420  


In accordance with ASC 820, the fair value of financial assets and liabilities 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.