FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2021

FAIR VALUE

Schedule of fair value assets and liabilities measured on recurring basis

The following presents assets and liabilities measured on a recurring basis as of December 31, 2021 and December 31, 2020 (in thousands):

	Quoted
	Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs		Reported
December 31, 2021	(Level 1)		(Level 2)		(Level 3)		Balance
Investment securities available-for-sale:
U.S. Treasury debt	$	247	$	—	$	—	$	247
U.S. Government Agency		—		3,522		—		3,522
Corporate bonds		—		6,212		2,113		8,325
GNMA mortgage-backed securities - residential		—		26,650		—		26,650
FNMA mortgage-backed securities - residential		—		14,443		—		14,443
Government CMO and MBS		—		878		—		878
Corporate CMO and MBS		—		1,497		—		1,497
Other		—		649		—		649
Total securities available-for-sale	$	247	$	53,851	$	2,113	$	56,211
Equity securities	$	709	$	—	$	—	$	709
Guarantee asset	$	—	$	—	$	237	$	237
IRLC, net	$	—	$	—	$	1,473	$	1,473
Forward commitments and FSC	$	—	$	(65)	$	(9)	$	(74)
Mortgage loans held for sale	$	—	$	30,620	$	—	$	30,620

	Quoted
	Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs		Reported
December 31, 2020	(Level 1)		(Level 2)		(Level 3)		Balance
Investment securities available-for-sale:
U.S. Treasury debt	$	254	$	—	$	—	$	254
Corporate bonds		—		6,044		—		6,044
GNMA mortgage-backed securities - residential		—		24,604		—		24,604
FNMA mortgage-backed securities - residential		—		1,677		—		1,677
Corporate CMO and MBS		—		4,087		—		4,087
Total securities available-for-sale	$	254	$	36,412	$	—	$	36,666
Equity securities	$	730	$	—	$	—	$	730
Guarantee asset	$	—	$	—	$	232	$	232
IRLC, net	$	—	$	—	$	9,841	$	9,841
Forward commitments and FSC	$	—	$	(2,534)	$	(89)	$	(2,623)
Mortgage loans held for sale	$	—	$	161,843	$	—	$	161,843

Summary of assets and liability for level 3 instruments measured at fair value on recurring basis

The following presents a reconciliation for Level 3 instruments measured at fair value on a recurring basis (in thousands):

Year Ended December 31, 2021	Corporate Bonds		Guarantee Asset		IRLC		FSC
Beginning balance	$	—	$	232	$	9,841	$	(89)
Acquisitions		2,113		—		19,526		(182)
Originations		—		2		(25,804)		—
Gains (losses) in net income, net		—		3		(2,090)		262
Ending balance	$	2,113	$	237	$	1,473	$	(9)

Year Ended December 31, 2020	Corporate Bonds		Guarantee Asset		IRLC		FSC
Beginning balance	$	—	$	—	$	1,184	$	—
Acquisitions		—		—		34,345		(278)
Originations		—		—		(27,944)		—
Sales		—		245		—		—
Gains (losses) in net income, net		—		55		2,256		189
Other settlements		—		(68)		—		—
Ending balance	$	—	$	232	$	9,841	$	(89)

Summary of assets measured at fair value on nonrecurring basis

The following presents assets measured on a nonrecurring basis as of December 31, 2021 and December 31, 2020 (in thousands):

	Quoted
	Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs		Reported
December 31, 2021	(Level 1)		(Level 2)		(Level 3)		Balance
Impaired loans(1):
Commercial and Industrial	$	—	$	—	$	439	$	439

	Quoted
	Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs		Reported
December 31, 2020	(Level 1)		(Level 2)		(Level 3)		Balance
Other real estate owned:
Commercial properties	$	—	$	—	$	194	$	194
Impaired loans(1):
Commercial and Industrial	$	—	$	—	$	1,800	$	1,800

______________________________________

⁽¹⁾ One immaterial Cash, Securities and Other loan was fully reserved for using a specific allowance as of December 31, 2021 and December 31, 2020.

Summary of assets and liabilities measured at fair value on a recurring or nonrecurring, the significant unobservable inputs

The following presents quantitative information about Level 3 assets measured on a recurring and nonrecurring basis as of December 31, 2021 and 2020 (in thousands):

	Quantitative Information about Level 3 Fair Value Measurements as of December 31, 2021
			Valuation		Significant		Range
	Fair Value		Technique		Unobservable Input		(Weighted Average)
Recurring fair value
Corporate Bonds	$	2,113		Discounted cash flow		Discount rate		7% (7%)
Guarantee asset		237		Discounted cash flow		Discount rate Prepayment rate		3% (3%) 18% (18%)
IRLC, net		1,473		Best execution model		Pull through		71% to 100% (88%)
FSC		(9)		Internal pricing model		Market Differential		-14bps to -2 bps (-6bps)
Nonrecurring fair value
Impaired loans(1):
Commercial and Industrial		439		Sales comparison, Market approach - guideline transaction method		Management discount for asset/property type		17% - 45% (39%)

	Quantitative Information about Level 3 Fair Value Measurements as of December 31, 2020
			Valuation		Significant		Range
	Fair Value		Technique		Unobservable Input		(Weighted Average)
Recurring fair value
Guarantee asset	$	232		Discounted cash flow		Discount rate Prepayment rate		3% (3%) 25% (25%)
IRLC, net		9,841		Best execution model		Pull through		55% to 100% (86%)
FSC		(89)		Internal pricing model		Market Differential		-59 bps to -17 bps (-31 bps)
Nonrecurring fair value
Other real estate owned:
Commercial properties		194		Sales contract		Commission, cost to sell, closing costs		5% (5%)
Impaired loans(1):
Commercial and Industrial		1,800		Sales comparison, Market approach - guideline transaction method		Management discount for asset/property type		17% - 35% (26%)

______________________________________

⁽¹⁾ One immaterial Cash, Securities and Other loan was fully reserved for using a specific allowance as of December 31, 2021 and December 31, 2020.

Schedule of Carrying Amounts and Estimated Fair Value of Financial Instruments Not Carried At Fair Value

The following presents carrying amounts and estimated fair values for financial instruments not carried at fair value as of December 31, 2021 and December 31, 2020 (in thousands):

	Carrying		Fair Value Measurements Using:
December 31, 2021	Amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	386,983	$	386,983	$	—	$	—
Loans, net		1,935,405		—		—		1,919,625
Accrued interest receivable		7,151		—		10		7,141
Liabilities:
Deposits		2,205,703		—		2,207,452		—
Borrowings:
FHLB borrowings – fixed rate		15,000		—		14,990		—
Federal Reserve borrowings – fixed rate		23,629		—		23,629		—
Subordinated notes – fixed-to-floating rate		39,031		—		—		40,325
Accrued interest payable		355		—		156		199

	Carrying		Fair Value Measurements Using:
December 31, 2020	Amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	155,989	$	155,989	$	—	$	—
Loans, net		1,520,294		—		—		1,512,699
Accrued interest receivable		6,618		—		90		6,528
Liabilities:
Deposits		1,619,910		—		1,621,648		—
Borrowings:
FHLB borrowings – fixed rate		15,000		—		15,099		—
Federal Reserve borrowings – fixed rate		134,563		—		134,563		—
Subordinated notes – fixed-to-floating rate		24,291		—		—		25,750
Accrued interest payable		453		—		124		329