Fair Value Measurements and Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used as of December 31, 2021 and December 31, 2020 are as follows:

			December 31, 2021 Fair Value Measurements at Reporting Date Using
	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(dollars in thousands)
Recurring fair value measurements:
Assets
Investment securities:
Available-for-sale:
Federal agency obligations	$	50,360	$	-	$	50,360	$	-
Residential mortgage pass-through securities		316,095		-		316,095		-
Commercial mortgage pass-through securities		10,469		-		10,469		-
Obligations of U.S. states and political subdivision		145,625		-		137,060		8,565
Corporate bonds and notes		9,049		-		9,049		-
Asset-backed securities		2,564		-		2,564		-
Certificates of deposit		150		-		150		-
Other securities		195		195		-		-
Total available-for-sale	$	534,507	$	195	$	525,747	$	8,565

Equity securities		13,794		11,081		2,713		-
Derivatives		3,347		-		3,347		-
Total assets	$	551,648	$	11,276	$	531,807	$	8,565

There were no transfers between Level 1 and Level 2 during the years ended December 31, 2021 and 2020.

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Table of Contents

CONNECTONE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 20 – Fair Value Measurements and Fair Value of Financial Instruments – (continued)

				December 31, 2020 Fair Value Measurements at Reporting Date Using
	Total Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
(dollars in thousands)
Recurring fair value measurements:
Assets
Investment securities:
Available-for-sale:
Federal agency obligations	$	38,458		$	-	$	38,458		$	-
Residential mortgage pass-through securities		270,884			-		270,884			-
Commercial mortgage pass-through securities		6,922			-		6,922			-
Obligations of U.S. states and political subdivision		142,808			-		133,964			8,844
Corporate bonds and notes		25,095			-		25,095			-
Asset-backed securities		3,480			-		3,480			-
Certificates of deposit		151			-		151			-
Other securities		157			157		-			-
Total available-for-sale	$	487,955		$	157	$	478,954		$	8,844

Equity securities		13,387			13,387		-			-
Total assets	$	501,343		$	13,544	$	478,954		$	8,844

Liabilities
Derivatives	$	(2,119	)	$	-	$	(2,119	)	$	-
Total liabilities	$	(2,119	)	$	-	$	(2,119	)	$	-

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

For assets measured at fair value on a nonrecurring basis, the fair value measurements as of December 31, 2021 and December 31, 2020 are as follows:

			Fair Value Measurements at Reporting Date Using
Assets measured at fair value on a nonrecurring basis:	December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans:	(dollars in thousands)
Commercial	$	13,399	$	-	$	-	$	13,399
Commercial real estate		20,185		-		-		20,185
Residential real estate		2,794		-		-		2,794

			Fair Value Measurements at Reporting Date Using
Assets measured at fair value on a nonrecurring basis:	December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans:	(dollars in thousands)
Commercial	$	10,751	$	-	$	-	$	10,751
Commercial real estate		1,393		-		-		1,393

Fair Value, by Balance Sheet Grouping [Table Text Block]

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of December 31, 2021 and December 31, 2020:

					Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(dollars in thousands)
December 31, 2021
Financial assets:
Cash and due from banks	$	265,536	$	265,536	$	265,536	$	-	$	-
Investment securities available-for-sale		534,507		534,507		195		525,747		8,565
Restricted investment in bank stocks		27,826		n/a		n/a		n/a		n/a
Equity securities		13,794		13,794		11,081		2,713		-
Net loans		6,749,849		6,800,287		-		-		6,800,287
Derivatives		3,347		3,347		-		3,347		-
Accrued interest receivable		34,152		34,152		-		1,554		32,598

Financial liabilities:
Noninterest-bearing deposits		1,617,049		1,617,049		1,617,049		-		-
Interest-bearing deposits		4,715,904		4,716,358		3,565,795		1,150,563		-
Borrowings		468,193		469,671		-		469,671		-
Subordinated debentures		152,951		163,995		-		163,995		-
Accrued interest payable		2,716		2,716		-		2,716		-

December 31, 2020
Financial assets:
Cash and due from banks	$	303,756	$	303,756	$	303,756	$	-	$	-
Investment securities available-for-sale		487,955		487,955		157		478,954		8,844
Restricted investment in bank stocks		25,099		n/a		n/a		n/a		n/a
Equity securities		13,387		13,387		13,387		-		-
Net loans		6,157,081		6,244,037		-		-		6,244,037
Accrued interest receivable		35,317		35,317		-		1,764		33,553

Financial liabilities:
Noninterest-bearing deposits		1,339,108		1,339,108		1,339,108		-		-
Interest-bearing deposits		4,620,116		4,633,961		3,155,983		1,477,978		-
Borrowings		425,954		429,671		-		429,671		-
Subordinated debentures		202,648		214,113		-		214,113		-
Derivatives		2,119		2,119		-		2,119		-
Accrued interest payable		3,687		3,687		-		3,687		-
Cash and due from banks	$	303,756	$	303,756	$	303,756	$	-	$	-

Fair Value, Recurring basis [Table Text Block]

The tables below present a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2021 and year ended December 31, 2020:

	Municipal Securities
	(dollars in thousands)
Beginning balance, January 1, 2021	$	8,844
Principal paydowns		(279	)
Ending balance, December 31, 2021	$	8,565

	Municipal Securities
	(dollars in thousands)
Beginning balance, January 1, 2020	$	9,114
Principal paydowns		(270	)
Ending balance, December 31, 2020	$	8,844

Significant unobservable inputs used in fair value measurements [Table Text Block]

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis as of December 31, 2021 and December 31, 2020. The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 hierarchy.

December 31, 2021

Fair Value

Valuation

Techniques

Unobservable

Input

Range

Securities available-for-sale:

(dollars in thousands)

Municipal securities

8,565

Discounted cash flows

Discount rate

2.9%

December 31, 2020