Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 7 - FAIR VALUE MEASUREMENTS

ASC 820-10, Fair Value Measurement – Overall, provides a framework for measuring fair value under U.S. GAAP. This guidance also allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.

In accordance with ASC 820-10, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities.

Level 3 – Valuations for assets and liabilities that are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets and liabilities.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value for September 30, 2024 and December 31, 2023.

The Company’s investment in debt instruments available for sale are generally classified within Level 2 of the fair value hierarchy. For those securities, the Bank obtains fair value measurements from independent pricing services. The fair value measurements consider observable data that considers standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

The fair value of interest rate swaps was determined using discounted cash flow analysis on the expected cash flows of the interest rate swaps. This analysis reflects the contractual terms of the interest rate swaps, including the period of maturity, and uses observable market-based inputs including interest rate curves. The inputs used to value the Company’s interest rate swaps fall within Level 2 of the fair value hierarchy and as a result, the interest rate swaps were categorized as Level 2 within the fair value hierarchy.

As of September 30, 2024 and December 31, 2023, the following summarizes assets and liabilities measured at fair value on a recurring basis:

	Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices		Significant		Significant
			in Active		Other		Unobservable
			Markets for		Observable		Inputs
			Identical Assets		Inputs		Level 3
			Level 1		Level 2
			(in thousands)
September 30, 2024
Assets:
Available-for-sale securities
Agency mortgage-backed securities	$	4,163		—		4,163		—
Total assets measured at fair value on a recurring basis	$	4,163	$	—	$	4,163	$	—
Liabilities:
Derivative instruments	$	1,250	$	—	$	1,250	$	—
Total liabilities measured at fair value on a recurring basis	$	1,250	$	—	$	1,250	$	—
December 31, 2023
Assets:
Available-for-sale securities
Corporate bonds	$	5,003	$	—	$	5,003	$	—
Total assets measured at fair value on a recurring basis	$	5,003	$	—	$	5,003	$	—

Under certain circumstances, the Company makes adjustments to its assets and liabilities although they are not measured at fair value on an ongoing basis.

As of September 30, 2024 and December 31, 2023, the Bank had no assets or liabilities for which a nonrecurring change in fair value had been recorded.

ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. ASU 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The exit price notion is a market-based measurement of fair value that is represented by the price to sell an asset or transfer a liability in the principal market (or most advantageous market in the absence of a principal market) on the measurement date. At September 30, 2024 and December 31, 2023, fair values of loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.

The following table represents the fair value of financial instruments that are not measured at fair value at September 30, 2024 and December 31, 2023.

	September 30, 2024
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
			(in thousands)
Financial assets:
Cash and cash equivalents	$	119,630	$	119,630	$	119,630	$	-	$	-
Held-to-maturity securities		77,233		72,841		-		72,841		-
Federal Home Loan Bank stock		9,850		9,850		-		9,850		-
Loans, net		1,114,943		1,039,071		-		-		1,039,071
Loans held for sale		703		703		-		703		-
Accrued interest receivable		4,164		4,164		4,164		-		-
Financial liabilities:
Deposits, other than certificates of deposit	$	362,783	$	362,783	$	-	$	362,783	$	-
Certificates of deposit		581,542		583,113		-		583,113		-
Federal Home Loan Bank advances		234,000		237,619		-		237,619		-
Accrued interest payable		2,351		2,351		2,351		-		-

	December 31, 2023
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
			(in thousands)
Financial assets:
Cash and cash equivalents	$	119,036	$	119,036	$	119,036	$	-	$	-
Held-to-maturity securities		76,979		70,590		-		70,590		-
Federal Home Loan Bank stock		9,892		9,892		-		9,892		-
Loans, net		1,039,789		952,867		-		-		952,867
Accrued interest receivable		3,766		3,766		3,766		-		-
Financial liabilities:
Deposits, other than certificates of deposit	$	369,711	$	369,711	$	-	$	369,711	$	-
Certificates of deposit		498,503		495,551		-		495,551		-
Federal Home Loan Bank advances		234,000		233,878		-		233,878		-
Accrued interest payable		2,191		2,191		2,191		-		-