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FAIR VALUE OF ASSETS AND LIABILITIES
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE OF ASSETS AND LIABILITIES FAIR VALUE OF ASSETS AND LIABILITIES
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The Company used the following methods and significant assumptions to estimate fair value:
Securities: For securities available-for-sale and equity securities, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third party data service providers or dealer market participants with which the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input as defined by ASC 820, is a mathematical technique used principally to value certain securities to benchmark or comparable securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. The Company also holds debt instruments issued by the U.S. government and U.S. government sponsored agencies that are traded in active markets with readily accessible quoted market prices that are considered Level 1 inputs.
Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). The Company’s derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.
Impaired loans: The fair value of collateral dependent impaired loans is generally based on 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.
Other real estate owned (OREO): Property acquired through foreclosure or deed in lieu of foreclosure is carried at fair value less estimated disposal costs of the acquired property. Fair value of OREO is based on the appraised value of the collateral using discount rates similar to those used in impaired loan valuation.
The following table summarizes the fair value of assets and liabilities as of September 30, 2024:
Fair Value Measurements at September 30, 2024, Using
Quoted Prices
in Active
Markets for
Identical Assets		Significant Other Observable InputsSignificant Unobservable Inputs
Total(Level 1)(Level 2)(Level 3)
(In thousands)
Measured on a recurring basis:
Financial assets
Securities available-for-sale:
U.S. Treasury notes$35,617 $35,617 $— $— 
Corporate bonds73,705 — 73,705 — 
U.S. Government agency obligations1,040 1,040 — — 
Obligations issued by U.S. states and their political subdivisions6,130 — 6,130 — 
Mortgage-backed securities:
Residential149,731 — 149,731 — 
Multifamily10,329 — 10,329 — 
Asset-backed securities14,254 — 14,254 — 
Total securities available-for-sale290,806 36,657 254,149 — 
Derivatives5,978 — 5,978 — 
Total financial assets measured on a recurring basis$296,784 $36,657 $260,127 $— 
Financial liabilities
Derivatives$1,975 $— $1,975 $— 
Measured on a nonrecurring basis:
Nonfinancial assets
Real estate owned$— $— $— $— 
The following table summarizes the fair value of assets and liabilities as of December 31, 2023:
Fair Value Measurements at
 December 31, 2023, Using
Quoted Prices
in Active
Markets for
Identical Assets		Significant Other Observable InputsSignificant Unobservable Inputs
Total(Level 1)(Level 2)(Level 3)
(In thousands)
Measured on a recurring basis:
Financial assets
Securities available-for-sale:
U.S. Treasury notes$35,060 $35,060 $— $— 
Corporate bonds76,623 — 76,623 — 
U.S. Government agency obligations11,140 11,140 — — 
Obligations issued by U.S. states and their political subdivisions6,195 — 6,195 — 
Mortgage-backed securities:
Residential128,542 — 128,542 — 
Multifamily11,523 — 11,523 — 
Asset-backed securities14,683 — 14,683 — 
Total securities available-for-sale283,766 46,200 237,566 — 
Derivatives9,047 — 9,047 — 
Total financial assets measured on a recurring basis$292,813 $46,200 $246,613 $— 
Financial liabilities
Derivatives$1,465 $— $1,465 $— 
Measured on a nonrecurring basis:
Nonfinancial assets
Real estate owned593 — — 593 
Other Fair Value Disclosures
Fair value estimates, methods and assumptions for the Company’s financial instruments that are not recorded at fair value on a recurring or non-recurring basis are set forth below.
Securities held-to-maturity: The Company’s securities held-to-maturity portfolio is carried at amortized cost less allowance for credit losses. The fair values of debt securities held-to-maturity are provided by a third-party pricing service. The pricing service may use quoted market prices of comparable instruments or a variety of other forms of analysis, incorporating inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include, but are not limited to, benchmark yields, credit spreads, default rates, prepayment speeds and non-binding broker quotes.
Loans, net: Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, such as residential mortgage and consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories. Estimated fair value of loans is determined using a discounted cash flow model that employs an exit discount rate that reflects the current market pricing for loans with similar characteristics and remaining maturity, adjusted for estimated credit losses inherent in the portfolio at the balance sheet date.
Time deposits: The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using rates for currently offered deposits of similar remaining maturities.
Federal Home Loan Bank advances: The fair value of borrowings is based on securities dealers’ estimated fair values, when available, or estimated using discounted cash flow analysis. The discount rates used approximate the rates offered for similar borrowings of similar remaining terms.
The following tables present the book value, fair value, and placement in the fair value hierarchy of financial instruments not recorded at fair values in their entirety on a recurring basis on the Company’s consolidated balance sheets at September 30, 2024 and December 31, 2023. The fair value measurements presented are consistent with Topic 820, Fair Value Measurement, in which fair value represents exit price.
These tables exclude financial instruments for which the carrying amount approximates fair value. Financial instruments for which the carrying amount approximates fair value include cash and cash equivalents, other investments, non-maturity deposits, overnight borrowings and accrued interest, which are excluded from the table below.
The carrying amounts and fair value of financial instruments not carried at fair value, at September 30, 2024 and December 31, 2023, are as follows:
Fair Value Measurements at September 30, 2024, Using
Quoted Prices in
Active Markets
for Identical Assets		Significant Other Observable InputsSignificant Unobservable Inputs
Book Value(Level 1)(Level 2)(Level 3)
(In thousands)
Measured on a non-recurring basis:
Financial assets
Securities held-to-maturity:
Corporate bonds$18,600 $— $15,611 $— 
Asset-backed securities14,641 — 13,646 — 
Securities held-to-maturity33,241 — 29,257 — 
Loans, net1,537,971 — — 1,453,472 
Financial liabilities
Time deposits701,262 — 700,725 — 
FHLB advances348,500 — 356,025 — 
Fair Value Measurements at December 31, 2023, Using
Quoted Prices in
Active Markets
for Identical Assets		Significant Other Observable InputsSignificant Unobservable Inputs
Book Value(Level 1)(Level 2)(Level 3)
(In thousands)
Measured on a non-recurring basis:
Financial assets
Securities held-to-maturity:
Corporate bonds$18,600 $— $15,007 $— 
Asset-backed securities14,812 — 13,316 — 
Securities held-to-maturity33,412 — 28,323 — 
Loans, net1,546,576 — — 1,332,138 
Financial liabilities
Time deposits596,624 — 592,676 — 
FHLB advances397,500 — 405,015 —