FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2022

Investments, All Other Investments [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments require disclosure of fair value information, whether or not recognized in the consolidated balance sheets, when it is practical to estimate the fair value. A financial instrument is defined as cash, evidence of an ownership interest in an entity or a contractual obligation which requires the exchange of cash. Certain items are specifically excluded from the financial instrument fair value disclosure requirements, including the Company’s common stock, OREO, premises and equipment and other assets and liabilities.

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Therefore, any aggregate unrealized gains or losses should not be interpreted as a forecast of future earnings or cash flows. Furthermore, the fair values disclosed should not be interpreted as the aggregate current value of the Company.

The Company’s estimated fair values of financial instruments are presented in the following tables.


June 30, 2022	Carrying Amount		Fair Value		Fair Value Measurements
Description of Asset (dollars in thousands)					Level 1		Level 2		Level 3
Assets
Investment securities - AFS	$	485,456	$	485,456	$	—	$	485,456	$	—

Equity securities carried at fair value through income	4,423		4,423		—		4,423		—
Non-marketable equity securities in other financial institutions	207		207		—		207		—
FHLB Stock	1,234		1,234		—		1,234		—

Net loans receivable	1,636,077		1,573,581		—		—		1,573,581
Accrued interest receivable	6,099		6,099		—		6,099		—
Investment in BOLI	39,363		39,363		—		39,363		—


Liabilities
Savings, NOW and money market accounts	$	1,771,068	$	1,771,068	$	—	$	1,771,068	$	—
Time deposits	314,308		314,330		—		314,330		—


TRUPs	12,000		11,048		—		11,048		—
Subordinated notes	19,538		19,463		—		19,463		—

See the Company’s methodologies disclosed in Note 21 of the Company’s 2021 Form 10-K for the fair value methodologies used as of December 31, 2021:


December 31, 2021	Carrying Amount		Fair Value		Fair Value Measurements
Description of Asset (dollars in thousands)					Level 1		Level 2		Level 3
Assets
Investment securities - AFS	$	497,839	$	497,839	$	—	$	497,839	$	—

Equity securities carried at fair value through income	4,772		4,772		—		4,772		—
Non-marketable equity securities in other financial institutions	207		207		—		207		—
FHLB Stock	1,472		1,472		—		1,472		—

Net loans receivable	1,586,791		1,578,032		—		—		1,578,032
Accrued interest receivable	5,588		5,588		—		5,588		—
Investment in BOLI	38,932		38,932		—		38,932		—
Mortgage ranking derivatives	28		28		—		—		28

Liabilities
Savings, NOW and money market accounts	$	1,728,743	$	1,728,743	$	—	$	1,728,743	$	—
Time deposits	327,421		328,083		—		328,083		—

Long-term debt	12,231		12,391		—		12,391		—
TRUPs	12,000		11,589		—		11,589		—
Subordinated notes	19,510		20,979		—		20,979		—

At June 30, 2022 and December 31, 2021, the Company had outstanding loan commitments and standby letters of credit with customers of $90.1 million and $64.4 million, respectively, and $19.9 million and $22.0 million, respectively. Additionally, at June 30, 2022 and December 31, 2021, customers had $240.2 million and $241.7 million, respectively, available and unused on lines of credit, which include lines of credit for commercial customers, home equity loans as well as builder and construction lines. Based on the short-term lives of these instruments, the Company does not believe that the fair value of these instruments differs significantly from their carrying values.

The fair value estimates presented herein are based on pertinent information available to management as of June 30, 2022 and December 31, 2021. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these Consolidated Financial Statements since that date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.