FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2019

Summary of Financial Assets Measured on a Recurring Basis

The following table summarizes the fair value of our financial instruments measured on a recurring basis by the above pricing observability levels as of March 31, 2019 and December 31, 2018:

໿



(Dollars in thousands)	Fair Value Measurements			Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level II)			Significant Unobservable Inputs (Level III)
March 31, 2019
U.S. government agencies	$	23,489		$	—	$	23,489		$	—
U.S. government-sponsored enterprises	22,733			—		22,733			—
State and political subdivisions	63,198			—		63,198			—
Mortgage-backed securities -
U.S. government-sponsored enterprises	79,590			—		79,590			—
Corporate debt	3,040			—		3,040			—
Derivative instruments
Interest rate swaps - asset	1,240			—		1,240			—
Interest rate swaps - liability	(1,639		)			(1,639		)



December 31, 2018
U.S. government agencies	$	24,794		$	—	$	24,794		$	—
U.S. government-sponsored enterprises	20,362			—		20,362			—
State and political subdivisions	60,362			—		60,362			—
Mortgage-backed securities -
U.S. government-sponsored enterprises	73,613			—		73,613			—
Corporate debt	3,008			—		3,008			—
Derivative instruments
Interest rate swaps - asset	2,114			—		2,114			—
Interest rate swaps - liability	(779		)			(779		)

Summary of Financial Assets Measured on a Nonrecurring Basis

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2019 and December 31, 2018 are as follows:

໿



(Dollars in thousands)	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)
March 31, 2019
Impaired loans	$	1,695	$	—	$	—	$	1,695



December 31, 2018
Impaired loans	$	1,785	$	—	$	—	$	1,785
Foreclosed real estate	730		—		—		730

Qualitative Information About Level 3 Fair Value Measurements

The following table presents additional qualitative information about assets measured at fair value on a nonrecurring basis and for which Level III inputs were used to determine fair value:

໿



	Qualitative Information about Level III Fair Value Measurements
(Dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
March 31, 2019
Impaired loans	$	1,695	Appraisal of	Appraisal	0% to (-100.0% )
			collateral	adjustments (1)	(-7.3%)



December 31, 2018
Impaired loans	$	1,785	Appraisal of	Appraisal	0% to (-100.0% )
			collateral	adjustments (1)	(-7.8%)

Foreclosed real estate	730		Appraisal of	Selling
			collateral	expenses ₍₁₎	-7.0% (-7.0%)

(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated selling expenses. The range and weighted average of selling expenses and other appraisal adjustments are presented as a percentage of the appraisal.

Estimated Fair Values of Financial Instruments

The fair values of our financial instruments at March 31, 2019 and December 31, 2018, were as follows:



	March 31, 2019				Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)
(Dollars in thousands)	Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	23,003	$	23,003	$	23,003	$	—	$	—
Time deposits with other banks	200		200		—		200		—
Securities available for sale	192,050		192,050		—		192,050		—
Securities held to maturity	4,031		4,117		—		4,117		—
Federal Home Loan Bank stock	9,347		9,347		—		9,347		—
Loans receivable, net of allowance	1,504,455		1,472,796		—		—		1,472,796
Accrued interest receivable	6,589		6,589		—		6,589		—
Interest rate swaps	1,240		1,240		—		1,240		—

Financial liabilities:
Non-maturity deposits	983,158		983,158		—		983,158		—
Time deposits	478,166		474,349		—		474,349		—
Short-term borrowings	114,800		114,919		114,919		—		—
Long-term borrowings	36,708		36,672		—		36,672		—
Subordinated debentures	27,862		26,840		—		26,840		—
Accrued interest payable	1,621		1,621		—		1,621		—
Interest rate swaps	1,639		1,639				1,639



	December 31, 2018				Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)
(Dollars in thousands)	Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	26,678	$	26,678	$	26,678	$	—	$	—
Time deposits with other banks	200		200		—		200		—
Securities available for sale	182,139		182,139		—		182,139		—
Securities held to maturity	4,078		4,152		—		4,152		—
Federal Home Loan Bank stock	11,764		11,764		—		11,764		—
Loans receivable, net of allowance	1,466,000		1,428,094		—		—		1,428,094
Accrued interest receivable	6,546		6,546		—		6,546		—
Interest rate swaps	2,114		2,114		—		2,114		—

Financial liabilities:
Non-maturity deposits	965,065		965,065		—		965,065		—
Time deposits	388,874		383,264		—		383,264		—
Short-term borrowings	175,295		175,366		175,366		—		—
Long-term borrowings	44,611		44,365		—		44,365		—
Subordinated debentures	27,859		26,840		—		26,840		—
Accrued interest payable	1,480		1,480		—		1,480		—
Interest rate swaps	779		779		—		779		—