Fair Value

6 Months Ended

Jun. 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 June 30, 2024:
Securities available-for-sale:
Federal agency mortgage-backed securities	$	–	$	57,035	$	–	$	57,035
Federal agency CMOs		–		21,736		–		21,736
Federal agency debt		–		43,800		–		43,800
Municipal bonds		–		4,335		–		4,335
U.S. Treasuries		125,284		–		–		125,284
SBA pools		–		9,264		–		9,264
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 six months ended June 30, 2024 and 2023.

As of June 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 June 30, 2024 and December 31, 2023.

			Fair Value Measurements at June 30, 2024
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	89,813	$	89,813	$	–	$	–	$	89,813
Securities available-for-sale		261,454		125,284		136,170		–		261,454
Loans receivable held for investment		938,736		–		–		916,566		916,566
Accrued interest receivable		5,228		319		966		3,943		5,228
Bank owned life insurance		3,297		3,297		–		–		3,297
Financial Liabilities:
Deposits	$	687,369	$	–	$	604,328	$	–	$	604,328
FHLB advances		209,242		–		208,437		–		208,437
BTFP borrowing		100,000		–		100,000		–		100,000
Securities sold under agreements to repurchase		72,658		–		71,438		–		71,438
Accrued interest payable		4,272		–		4,272		–		4,272

			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		306		1,301		3,331		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.