Fair Value and Interest Rate Risk (Tables)

12 Months Ended

Dec. 31, 2022

The following table provides a comparison of the carrying amounts and estimated fair values of Patriot’s financial assets and liabilities as of December 31, 2022 and 2021:


(In thousands)		December 31, 2022				December 31, 2021
	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Cash and noninterest bearing balances due from banks	Level 1	$	5,182	$	5,182	$	3,264	$	3,264
Interest-bearing deposits due from banks	Level 1	33,311		33,311		43,781		43,781
Available-for-sale securities	Level 2	75,093		75,093		81,161		81,161
Available-for-sale securities	Level 3	9,427		9,427		13,180		13,180
Other investments	Level 2	4,450		4,450		4,450		4,450
Federal Reserve Bank stock	Level 2	2,627		2,627		2,843		2,843
Federal Home Loan Bank stock	Level 2	3,874		3,874		4,184		4,184
Loans receivable, net	Level 3	838,006		818,960		729,583		727,733
Loans held for sale	Level 2	5,211		5,534		3,129		3,506
SBA servicing assets	Level 3	886		1,013		584		617

Accrued interest receivable	Level 2	7,267		7,267		5,822		5,822
Interest rate swap receivable	Level 2	203		203		738		738

Financial assets, total		$	985,537	$	966,941	$	892,719	$	891,279

Financial Liabilities:
Demand deposits	Level 2	$	269,636	$	269,636	$	226,713	$	226,713
Savings deposits	Level 2	71,002		71,002		109,744		109,744
Money market deposits	Level 2	211,000		211,000		164,518		164,518
Negotiable order of withdrawal accounts	Level 2	34,440		34,440		34,741		34,741
Time deposits	Level 2	225,670		221,353		195,830		195,048
Brokered deposits	Level 1	48,698		47,684		17,016		17,003
FHLB borrowings	Level 2	85,000		83,853		90,000		93,643
Senior notes	Level 2	11,640		11,103		12,000		12,045
Subordinated debt	Level 2	9,840		9,680		9,811		9,947
Junior subordinated debt owed to unconsolidated trust	Level 2	8,128		8,128		8,119		8,119
Note payable	Level 3	585		544		791		775
Accrued interest payable	Level 2	585		585		343		343
Interest rate swap liability	Level 2	203		203		738		738

Financial liabilities, total		$	976,427	$	969,211	$	870,364	$	873,377

Fair Value, Assets Measured on Recurring Basis

The following tables detail the financial assets measured at fair value on a recurring basis and the valuation techniques utilized relative to the fair value hierarchy, as of December 31, 2022 and 2021.


(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
December 31, 2022:
U. S. Government agency and mortgage-backed securities	$	—	$	59,046	$	—	$	59,046
Corporate bonds	—		5,228		9,427		14,655
Subordinated notes	—		4,602		—		4,602
SBA loan pools	—		5,718		—		5,718
Municipal bonds	—		499		—		499

Available-for-sale securities	$	—	$	75,093	$	9,427	$	84,520

Interest rate swap receivable	$	—	$	203	$	—	$	203

Interest rate swap liability	$	—	$	203	$	—	$	203

December 31, 2021:
U. S. Government agency and mortgage-backed securities	$	—	$	66,629	$	—	$	66,629
Corporate bonds	—		3,741		13,180		16,921
Subordinated notes	—		4,626		—		4,626
SBA loan pools	—		5,603		—		5,603
Municipal bonds	—		562		—		562

Available-for-sale securities	$	—	$	81,161	$	13,180	$	94,341

Interest rate swap receivable	$	—	$	738	$	—	$	738

Interest rate swap liability	$	—	$	738	$	—	$	738

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The reconciliation of the beginning and ending balances for Level 3 available-for-sale securities for the years ended December 31, 2022 and 2021 is as follows:


(In thousands)	Year Ended December 31,
	2022		2021
Level 3 fair value, beginning of year	$	13,180	$	—
Purchases	—		14,000
Realized gain (loss)	—		—
Unrealized loss	(3,753)		(820)
Transfers in and /or out of Level 3	—		—
Level 3 fair value, end of year	$	9,427	$	13,180

Fair Value Measurement Inputs and Valuation Techniques

The table below presents the valuation methodology and unobservable inputs for level 3 assets measured at fair value on a non-recurring basis as of December 31, 2022 and 2021:


(In thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs
December 31, 2022:

Impaired loans, net	$	12,873	Real Estate Appraisals	Discount for appraisal type	5.8%		-	20%

SBA servicing assets	1,013		Discounted Cash Flows	Market discount rates	14.73%		-	14.90%

December 31, 2021:

Impaired loans, net	$	20,920	Real Estate Appraisals	Discount for appraisal type	5.8%		-	20%

SBA servicing assets	617		Discounted Cash Flows	Market discount rates	14.73	%	-	14.90	%