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Fair Value of Assets and liabilities (Tables)

12 Months Ended

Dec. 31, 2020

Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Equity investments were recorded at cost less impairment plus or minus observable price changes. Commencing in 2020, the Company elected to measure equity investments at fair value on a non-recurring basis, which have been adjusted for all periods presented.

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019.

December 31, 2020 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Interest-bearing deposits	$	—	$	1,500	$	—	$	1,500
Available for sale investment securities		—		46,792		—		46,792
Total⁽¹⁾	$	—	$	48,292	$	—	$	48,292

(1)	Total unrealized gains of $1,013, net of tax, was included in accumulated other comprehensive income (loss) for the twelve months ended December 31, 2020 related to these assets.

December 31, 2019 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Available for sale investment securities ⁽¹⁾	$	—	$	48,998	$	—	$	48,998
Total	$	—	$	48,998	$	—	$	48,998

(1)	Total unrealized gains of $1,081, net of tax, was included in accumulated other comprehensive income (loss) for the twelve months ended December 31, 2019 related to these assets.

Summary of Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2020 and 2019.

December 31, 2020 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Equity investments	$	—	$	—	$	9,746	$	9,746
Impaired loans		—		—		62,174		62,174
Loan collateral in process of foreclosure		—		—		54,560		54,560
Total	$	—	$	—	$	126,480	$	126,480

December 31, 2019 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Equity investments	$	—	$	—	$	10,079	$	10,079
Impaired loans		—		—		34,915		34,915
Loan collateral in process of foreclosure		—		—		52,711		52,711
Total	$	—	$	—	$	97,705	$	97,705

Summary of Valuation Techniques and Significant Unobservable Inputs Used in Non-Recurring Level 3 Fair Value Measurements of Assets and Liabilities

The valuation techniques and significant unobservable inputs used in non-recurring level 3 fair value measurements of assets and liabilities as of December 31, 2020 and 2019.

(Dollars in thousands)	Fair Value at 12/31/20		Valuation Techniques	Unobservable Inputs	Range (Weighted Average)
Equity investments	$	8,291	Investee financial analysis	Financial condition and operating performance of the borrower ⁽¹⁾	N/A
				Collateral support	N/A
		1,455	Precedent market transaction	Offering price	$8.73 / share
Impaired loans		62,174	Market approach	Historical and actual loss experience	1.50% - 6.00%
					60% of balance
				Median transfer price ⁽²⁾	$0.6 - 108.7
				Collateral value	N/A
Loan collateral in process of foreclosure		53,128	Market approach	Median transfer price ⁽²⁾	$0.6 - 108.7
		1,432		Collateral value ⁽³⁾	$0.7 - 32.3

(1)

Includes projections based on revenue, EBITDA, leverage and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.

(2)	Represents amount net of liquidation costs.

(3)	Relates to the recreation portfolio.

(Dollars in thousands)	Fair Value at 12/31/19		Valuation Techniques	Unobservable Inputs	Range (Weighted Average)
Equity Investments	$	7,435	Investee financial analysis	Financial condition and operating performance of the borrower	N/A
				Collateral support	N/A
		1,189	Investee book value adjusted for market appreciation	Financial condition and operating performance of the investee	N/A
			Public company comparables	Business enterprise value	$4,855 – $6,120
				Business enterprise value/revenue multiples	1.59-5.98x
				Discount for lack of marketability	25%
		1,455	Precedent market transaction	Offering price	$8.73 / share