v3.26.1
Note 6 - Fair Value
 3 Months Ended
Mar. 31, 2026
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

NOTE 6. FAIR VALUE

 

Fair Value Measurements

 

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Company groups its assets and liabilities carried at fair value in three levels as follows:

 

Level 1 Input:

 

1)

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

Level 2 Inputs:

 

1)

Quoted prices for similar assets or liabilities in active markets.

2)

Quoted prices for identical or similar assets or liabilities in markets that are not active.

3)

Inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability (e.g., interest rates, yield curves, credit risks, prepayment speeds or volatilities) or “market corroborated inputs.”

 

Level 3 Inputs:

 

1)

Prices or valuation techniques that require inputs that are both unobservable (i.e. supported by little or no market activity) and that are significant to the fair value of the assets or liabilities.

2)

These assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

 

Fair Value on a Recurring Basis:

 

The following is a description of the Company’s valuation methodologies for assets carried at fair value on a recurring basis. These methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes that its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting measurement date.

 

Investments in Available for Sale Securities:

 

Where quoted prices are available in an active market, securities or other assets are classified in Level 1 of the valuation hierarchy. If quoted market prices are not available for the specific security or available for sale loans, then fair values are provided by independent third-party valuation services. These valuation services estimate fair values using pricing models and other accepted valuation methodologies, such as quotes for similar securities and observable yield curves and spreads. As part of the Company’s overall valuation process, management evaluates these third-party methodologies to ensure that they are representative of exit prices in the Company’s principal markets. Securities in Level 2 are mortgage-backed securities.

 

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis.

 

Financial Assets

 

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(Dollars in thousands)

 

Available for Sale Securities

                

As of March 31, 2026

                

Corporate debt obligations

 $—  $505  $—  $505 

Residential mortgage-backed securities

  —   3,861   —   3,861 

Total

 $—  $4,366  $—  $4,366 

As of December 31, 2025

                

Corporate debt obligations

 $—  $500  $—  $500 

Residential mortgage-backed securities

  —   4,246   —   4,246 

Total

 $—  $4,746  $—  $4,746 

 

For the three months ended March 31, 2026, there were no transfers between the levels within the fair value hierarchy. There were no level 3 assets or liabilities held during the three months ended March 31, 2026 and 2025.

 

Fair Value on a Non-recurring Basis:

 

Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

 

Financial Assets

 

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(Dollars in thousands)

 

As of March 31, 2026

                

Collateral-dependent loans

 $—  $—  $3,087  $3,087 

OREO

  —   —   2,862   2,862 

As of December 31, 2025

                

Collateral-dependent loans

 $—  $—  $2,672  $2,672 

OREO

  —   —   2,862   2,862 

 

Collateral-dependent loans are those loans that are accounted for under ASC 326, Financial Instruments - Credit Losses ("ASC 326"), in which the Bank has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties that collateralize the loans. If the loan balance exceeds the fair value of the collateral, a specific reserve is applied and these assets are generally classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

 

OREO consists of real estate properties that are recorded at fair value based upon current appraised value, or agreements of sale, less estimated disposition costs using level 3 inputs. Properties are reappraised annually.

 

Fair Value of Financial Instruments

 

The Company discloses estimated fair values for its significant financial instruments in accordance with FASB ASC (Topic 825), “Disclosures about Fair Value of Financial Instruments”. The methodologies for estimating the fair value of financial assets and liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above.

 

For certain financial assets and liabilities, carrying value approximates fair value due to the nature of the financial instrument. These instruments include cash and cash equivalents, accrued interest receivable, bank owned life insurance, Federal Home Loan Bank of New York ("FHLBNY") restricted stock, demand and other non-maturity deposits and accrued interest payable, and they are considered to be level 1 measurements.

 

The following table summarizes the carrying amounts and fair values for financial instruments that are not carried at fair value at March 31, 2026 and December 31, 2025:

 

  

Carrying

  

Fair Value

 

March 31, 2026

 

Amount

  

Total

  

Level 1

  

Level 2

  

Level 3

 
  

(Dollars in thousands)

 

Financial Assets:

                    

Investment securities HTM

 $8,760  $7,362  $—  $7,362  $— 

Loans, net

  2,008,375   2,020,336   —   2,010,930   9,406 
                     

Financial Liabilities:

                    

Time deposits

 $623,844  $623,928  $—  $623,928  $— 

Borrowings

  153,403   152,276   —   152,276   — 

 

 

  

Carrying

  

Fair Value

 

December 31, 2025

 

Amount

  

Total

  

Level 1

  

Level 2

  

Level 3

 
  

(Dollars in thousands)

 

Financial Assets:

                    

Investment securities HTM

 $8,777  $7,487  $—  $7,487  $— 

Loans, net

  2,000,578   2,020,810   —   2,010,017   10,793 
                     

Financial Liabilities:

                    

Time deposits

 $661,833  $662,947  $—  $662,947  $— 

Borrowings

  143,403   145,748   —   145,748   —