Fair Value and Interest Rate Risk (Tables)

9 Months Ended

Sep. 30, 2024

Schedule of Fair Value, by Balance Sheet Grouping

The following table provides a comparison of the carrying amounts and estimated fair values of Patriot’s financial assets and liabilities as of September 30, 2024 and December 31, 2023:


(In thousands)		September 30, 2024				December 31, 2023
	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Cash and noninterest bearing balances due from banks	Level 1	$	2,718	$	2,718	$	2,195	$	2,195
Interest-bearing deposits due from banks	Level 1	70,013		70,013		50,322		50,322
Restricted cash	Level 1	41		41		14,019		14,019
Available-for-sale securities	Level 2	78,437		78,437		78,925		78,925
Available-for-sale securities	Level 3	11,141		11,141		10,262		10,262
Other investments	Level 2	4,450		4,450		4,450		4,450
Federal Reserve Bank stock	Level 2	2,109		2,109		2,090		2,090
Federal Home Loan Bank stock	Level 2	3,473		3,473		4,202		4,202
Loans receivable, net	Level 3	740,687		719,395		832,934		812,856
Loans held for sale	Level 2	13,658		13,658		20,767		21,557
SBA servicing assets	Level 3	791		848		857		932
Other real estate owned	Level 2	2,843		2,843		2,843		2,843
Accrued interest receivable	Level 2	5,932		5,932		7,219		7,219
Interest rate swap receivable	Level 2	50		50		74		74

Financial assets, total		$	936,343	$	915,108	$	1,031,159	$	1,011,946

Financial Liabilities:
Demand deposits	Level 2	$	91,583	$	91,583	$	110,056	$	110,056
Negotiable order of withdrawal accounts	Level 2	27,984		27,984		33,035		33,035
Savings deposits	Level 2	38,824		38,824		44,104		44,104
Interest bearing DDA	Level 2	183,132		183,132		171,577		171,577
Money market deposits	Level 2	178,479		178,479		200,280		200,280
Time deposits	Level 2	232,810		232,294		240,733		239,655
Brokered deposits	Level 1	72,077		70,995		40,526		40,453
FHLB, FRB and correspondent bank borrowings	Level 2	93,800		93,800		171,000		170,171
Senior notes	Level 2	11,827		11,669		11,723		11,397
Subordinated debt	Level 2	9,891		9,888		9,869		10,102
Junior subordinated debt owed to unconsolidated trust	Level 2	8,144		8,144		8,137		8,137
Note payable	Level 3	216		210		376		362
Accrued interest payable	Level 2	525		525		1,235		1,235
Interest rate swap liability	Level 2	50		50		74		74

Financial liabilities, total		$	949,342	$	947,577	$	1,042,725	$	1,040,638

Schedule of Fair Value, Assets Measured on Recurring Basis

The following tables detail the financial assets measured at fair value on a recurring basis and the valuation techniques utilized relative to the fair value hierarchy, as of September 30, 2024 and December 31, 2023:


(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2024:
U. S. Government agency and mortgage-backed securities	$	—	$	66,289	$	—	$	66,289
Corporate bonds	—		3,564		11,141		14,705
Subordinated notes	—		4,399		—		4,399
SBA loan pools	—		3,698		—		3,698
Municipal bonds	—		487		—		487
Available-for-sale securities	$	—	$	78,437	$	11,141	$	89,578

Interest rate swap receivable	$	—	$	50	$	—	$	50

Interest rate swap liability	$	—	$	50	$	—	$	50

December 31, 2023:
U. S. Government agency and mortgage-backed securities	$	—	$	65,671	$	—	$	65,671
Corporate bonds	—		3,504		10,262		13,766
Subordinated notes	—		4,227		—		4,227
SBA loan pools	—		5,037		—		5,037
Municipal bonds	—		486		—		486
Available-for-sale securities	$	—	$	78,925	$	10,262	$	89,187

Interest rate swap receivable	$	—	$	74	$	—	$	74

Interest rate swap liability	$	—	$	74	$	—	$	74

Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The reconciliation of the beginning and ending balances during the three and nine months ended September 30, 2024 and 2023 for Level 3 available-for-sale securities is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Level 3 fair value, beginning of period	$	10,365	$	9,882	$	10,262	$	9,427
Purchases	—		—		—		—
Realized gain (loss)	—		—		—		—
Unrealized (loss) gain	776		(11)		879		444
Transfers in and /or out of Level 3	—		—		—		—
Level 3 fair value, end of period	$	11,141	$	9,871	$	11,141	$	9,871

Schedule of Fair Value Measurement Inputs and Valuation Techniques

The table below presents the valuation methodology and unobservable inputs for level 3 assets measured at fair value on a non-recurring basis as of September 30, 2024 and December 31, 2023:


(In thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs
September 30, 2024:
Individually evaluated loans, net	$	27,979	Real Estate Appraisals	Discount for appraisal type	5.8	%	-	20%

SBA servicing assets	848		Discounted Cash Flows	Market discount rates	14.73	%	-	14.90%

December 31, 2023:
Individually evaluated loans, net	$	12,928	Real Estate Appraisals	Discount for appraisal type	5.8	%	-	20%

SBA servicing assets	932		Discounted Cash Flows	Market discount rates	14.73	%	-	14.90%

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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