CASH 2018 Annual Report

165 The following sets forth the methods and assumptions used in determining the fair value estimates for the Company’s financial instruments at September 30, 2018 and 2017. CASH AND CASH EQUIVALENTS The carrying amount of cash and short-term investments is assumed to approximate the fair value. SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY Securities available for sale are recorded at fair value on a recurring basis and securities held to maturity are carried at amortized cost. Fair values for investment securities are based on obtaining quoted prices on nationally recognized securities exchanges, 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. LOANS HELD FOR SALE The carrying amount of loans held for sale is assumed to approximate the fair value. LOANS AND LEASES RECEIVABLE, NET The fair value of loans and leases is estimated using a historical or replacement cost basis concept ( i.e., an entrance price concept). The fair value of loans and leases was estimated by discounting the future cash flows using the current rates at which similar loans and leases would be made to borrowers and for similar remaining maturities. When using the discounting method to determine fair value, loans and leases were grouped by homogeneous loans and leases with similar terms and conditions and discounted at a target rate at which similar loans and leases would be made to borrowers at September 30, 2018 and 2017. In addition, when computing the estimated fair value for all loans and leases, allowances for loan and lease losses have been subtracted from the calculated fair value as a result of the discounted cash flow which approximates the fair value adjustment for the credit quality component. FHLB STOCK The fair value of such stock is assumed to approximate book value since the Company is generally able to redeem this stock at par value. ACCRUED INTEREST RECEIVABLE The carrying amount of accrued interest receivable is assumed to approximate the fair value. DEPOSITS The carrying values of non-interest-bearing checking deposits, interest-bearing checking deposits, savings, money markets, and wholesale non-maturing deposits are assumed to approximate fair value, since such deposits are immediately withdrawable without penalty. The fair value of time certificates of deposit and wholesale certificates of deposit were estimated by discounting expected future cash flows by the current rates offered on certificates of deposit with similar remaining maturities. In accordance with ASC 825, Financial Instruments , no value has been assigned to the Company’s long-term relationships with its deposit customers (core value of deposits intangible) since such intangible is not a financial instrument as defined under ASC 825. ADVANCES FROM FHLB The fair value of such advances was estimated by discounting the expected future cash flows using current interest rates for advances with similar terms and remaining maturities. FEDERAL FUNDS PURCHASED The carrying amount of federal funds purchased is assumed to approximate the fair value.