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FAIR VALUE ACCOUNTING
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE ACCOUNTING FAIR VALUE ACCOUNTING
ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The topic describes three levels of inputs that may be used to measure fair value:
Level 1- Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company 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 the Company’s assumptions about the factors that market participants would use in pricing an asset or liability.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement.
The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available (Level 1 inputs); or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Where such quotes are not available, we utilize independent third party valuation analysis to support our own estimates and judgments in determining fair value (Level 3 inputs).
Assets Measured on a Recurring Basis
The following tables present the financial instruments measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:
Fair
Value		Quoted Prices in
Active Markets
for Identical
Instruments
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
September 30, 2024
Investment securities:
U.S. government agency obligations$14,457 $— $14,457 $— 
Mortgage-backed securities74,020 — 74,020 — 
Corporate debt securities41,051 — 41,051 — 
Asset-backed securities19,904 — 19,904 — 
Total investment securities149,432 — 149,432 — 
Equity Investments:
Farmer Mac equity securities 540 540 — — 
Preferred equity1,812 — — 1,812 
Equity investments measured at NAV(1)2,744 — — — 
Total equity investments5,096 540 — 1,812 
Total$154,528 $540 $149,432 $1,812 
December 31, 2023
Investment securities:
U.S. government agency obligations$16,576 $— $16,576 $— 
Mortgage-backed securities73,480 — 73,480 — 
Corporate debt securities41,174 — 41,174 — 
Corporate asset backed securities24,513 — 24,513 — 
Total investment securities155,743 — 155,743 — 
Equity Investments:
Farmer Mac equity securities557 557 — — 
Equity investments measured at NAV(1)2,727 — — — 
Total equity investments3,284 557 — — 
Total$159,027 $557 $155,743 $— 
(1) Investments valued at NAV are excluded from being reported under the fair value hierarchy but are presented to permit reconciliation with the balance sheet in accordance with ASC 820-10-35-54B.
During the three months ended June 30, 2024, senior debt of a community development financial institution, classified as available-for-sale securities was exchanged for preferred equity of the financial institution’s operating subsidiary. At September 30, 2024, the Company owned $1,812 preferred equity investments for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value. For the twelve months ended December 31, 2023, the Company did not own any securities for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.
During the three and nine months ended September 30, 2024, $0 and $2,082 of senior debt, previously measured as a Level 1 instrument, was exchanged for preferred equity, now measured as a Level 3 instrument, resulting in a transfer out of Level 1 fair value measurement to Level 3 fair value measurement. The exchange resulted in the recognition of $0 and $168 of unrealized losses on available-for-sale securities during the three and nine months ended September 30, 2024, previously included in other comprehensive income, as well as an additional $270 loss, for a total loss of $438. This total loss of $438 was recognized on the consolidated statement of operations as net losses on equity securities. There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements relating to the available-for-sale securities above during the twelve months ended December 31, 2023. There were no losses included in earnings attributable to the change in unrealized gains or
losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the twelve months ended December 31, 2023, respectively.
Assets Measured on Nonrecurring Basis
The following tables present the financial instruments measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023:
Carrying ValueQuoted Prices in
Active Markets
for Identical
Instruments
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
September 30, 2024
Foreclosed and repossessed assets, net$1,572 $— $— $1,572 
Collateral dependent loans1,805 — — 1,805 
Mortgage servicing rights3,696 — — 5,025 
Total$7,073 $— $— $8,402 
December 31, 2023
Foreclosed and repossessed assets, net$1,795 $— $— $1,795 
Collateral dependent loans3,499 — — 3,499 
Mortgage servicing rights3,865 — — 5,589 
Total$9,159 $— $— $10,883 
The fair value of collateral dependent loans with allowances was determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting impaired loans.
The fair value of foreclosed and repossessed assets was determined by obtaining market price valuations from independent third parties wherever such quotes were available for other collateral owned. The Company utilized independent third party appraisals to support the Company’s estimates and judgments in determining fair value for other real estate owned.
The fair value of mortgage servicing rights was estimated using discounted cash flows based on current market rates and other factors.
The following table represents additional quantitative information about assets measured at fair value on a
recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine their fair value at
September 30, 2024.
Fair
Value		Valuation Techniques (1)Significant Unobservable Inputs (2)Range
September 30, 2024
Foreclosed and repossessed assets, net$1,572 Appraisal valueEstimated costs to sell
10% - 15%
Collateral dependent loans$1,805 Appraisal value / Internal Collateral valuationsEstimated costs to sell
10% - 15%
Mortgage servicing rights$5,025 Discounted cash flowsDiscounted rates
9.125% - 12.125%
December 31, 2023
Foreclosed and repossessed assets, net$1,795 Appraisal valueEstimated costs to sell
10% - 15%
Collateral dependent loans$3,499 Appraisal value / Internal Collateral valuationsEstimated costs to sell
10% - 15%
Mortgage servicing rights$5,589 Discounted cash flowsDiscounted rates
9.375% - 12.375%
(1)     Fair value is generally determined through independent third-party appraisals of the underlying
collateral, which generally includes various level 3 inputs which are not observable.
(2)     The fair value basis of collateral depended loans, and real estate owned may be adjusted to reflect management                                                                                             estimates of disposal costs including, but not limited to, real estate brokerage commissions, legal fees, and delinquent property taxes.
The table below represents what we would receive to sell an asset or what we would have to pay to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amount and estimated fair value of the Company’s financial instruments as of the dates indicated below were as follows:
 September 30, 2024December 31, 2023
 Valuation Method UsedCarrying
Amount		Estimated
Fair
Value		Carrying
Amount		Estimated
Fair
Value
Financial assets:
Cash and cash equivalents(Level I)$36,632 $36,632 $37,138 $37,138 
Securities available for sale “AFS”(Level II)149,432 149,432 155,743 155,743 
Securities held to maturity “HTM”(Level II)87,033 71,046 91,229 73,262 
Farmer Mac equity securities(Level I)540 540 557 557 
Preferred equity(Level III)1,812 1,812 — — 
Equity investments valued at NAV(1)N/A2,744 N/A2,727 N/A
Other investments(Level II)12,311 12,311 15,725 15,725 
Loans receivable, net(Level III)1,403,828 1,379,680 1,437,884 1,374,387 
Loans held for sale - Residential mortgage(Level I)535 535 1,134 1,134 
Loans held for sale - SBA /FSA(Level II)162 162 4,639 4,639 
Mortgage servicing rights(Level III)3,696 5,025 3,865 5,589 
Accrued interest receivable(Level I)6,235 6,235 5,409 5,409 
Financial liabilities:
Deposits(Level III)$1,520,667 $1,520,399 $1,519,092 $1,517,361 
FHLB advances(Level II)21,000 20,915 79,530 79,087 
Other borrowings(Level II)61,548 57,225 67,465 59,743 
Accrued interest payable(Level I)6,887 6,887 3,175 3,175 
(1) Investments valued at NAV are excluded from being reported under the fair value hierarchy but are presented to permit reconciliation with the balance sheet in accordance with ASC 820-10-35-54B.