FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2020

FAIR VALUE OF FINANCIAL INSTRUMENTS

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, 2020 and December 31, 2019:

			Quoted Prices
			in
			Active		Significant
			Markets		Other		Significant
	Fair		for Identical		Observable		Unobservable
	Value		Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
March 31, 2020
U.S. government agencies	$	8,100	$	—	$	8,100	$	—
U.S. government-sponsored enterprises		51,020		—		51,020		—
State and political subdivisions		47,914		—		47,914		—
Mortgage-backed securities -
U.S. government-sponsored enterprises		85,674		—		85,674		—
Private mortgage-backed securities		26,832		—		24,330		2,502
Corporate debt		12,665		—		11,651		1,014
Derivative instruments
Interest rate swaps
Liabilities		17,136		—		17,136		—
December 31, 2019
U.S. government agencies	$	8,679	$	—	$	8,679	$	—
U.S. government-sponsored enterprises		53,249		—		53,249		—
State and political subdivisions		32,214		—		32,214		—
Mortgage-backed securities -
U.S. government-sponsored enterprises		82,469		—		82,469		—
Private mortgage-backed securities		22,445		—		19,873		2,572
Corporate debt		13,125		—		12,096		1,029
Derivative instruments
Interest rate swaps
Assets		689		—		689		—
Liabilities		3,890		—		3,890		—

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, 2020 and December 31, 2019 are as follows:

			Quoted Prices
			in
			Active		Significant
			Markets		Other		Significant
	Fair		for Identical		Observable		Unobservable
	Value		Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
March 31, 2020
Impaired loans	$	1,555	$	—	$	—	$	1,555
December 31, 2019
Impaired loans	$	1,630	$	—	$	—	$	1,630
Foreclosed real estate		2,183		—		—		2,183

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
	Fair				Range
	Value		Valuation	Unobservable	(Weighted
(Dollars in thousands)	Estimate		Techniques	Input	Average)
March 31, 2020
Impaired loans	$	1,555	Appraisal of	Appraisal	0% to -72.0%
			collateral	adjustments (1)	(-3.6%)
December 31, 2019
Impaired loans	$	1,630	Appraisal of	Appraisal	0% to -72.0%
			collateral	adjustments (1)	(-3.6%)
Foreclosed real estate		2,183	Appraisal of collateral	Selling 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, 2020 and December 31, 2019, were as follows:

					Quoted Prices
					in Active		Significant
					Markets		Other		Significant
	March 31, 2020				for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Value		(Level I)		(Level II)		(Level III)
Financial assets:
Cash and cash equivalents	$	40,305	$	40,305	$	40,305	$	—	$	—
Time deposits with other banks		200		200		—		200		—
Securities available for sale		232,205		232,205		—		228,689		3,516
Securities held to maturity		6,339		6,399		—		3,265		3,134
Other bank stock		12,487		12,487		—		12,487		—
Loans receivable, net of allowance		1,674,271		1,750,798		—		—		1,750,798
Accrued interest receivable		6,856		6,856		—		6,856		—
Financial liabilities:
Non-maturity deposits		1,021,120		1,021,120		—		1,021,120		—
Time deposits		577,431		574,876		—		574,876		—
Short-term borrowings		196,145		196,609		196,609		—		—
Long-term borrowings		34,127		34,779		—		34,779		—
Subordinated debentures		27,871		28,884		—		28,884		—
Accrued interest payable		1,670		1,670		—		1,670		—
Interest rate swaps		17,136		17,136		—		17,136		—

					Quoted Prices
					in Active		Significant
					Markets		Other		Significant
	December 31, 2019				for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Value		(Level I)		(Level II)		(Level III)
Financial assets:
Cash and cash equivalents	$	43,686	$	43,686	$	43,686	$	—	$	—
Time deposits with other banks		200		200		—		200		—
Securities available for sale		212,181		212,181		—		208,580		3,601
Securities held to maturity		4,012		4,083		—		2,593		1,490
Other bank stock		12,498		12,498		—		12,498		—
Loans receivable, net of allowance		1,618,579		1,605,295		—		—		1,605,295
Accrued interest receivable		6,175		6,175		—		6,175		—
Interest rate swaps		689		689		—		689		—
Financial liabilities:
Non-maturity deposits		971,653		971,653		—		971,653		—
Time deposits		553,388		551,886		—		551,886		—
Short-term borrowings		193,000		193,081		193,081		—		—
Long-term borrowings		40,114		40,228		—		40,228		—
Subordinated debentures		27,869		26,930		—		26,930		—
Accrued interest payable		1,466		1,466		—		1,466		—
Interest rate swaps		3,890		3,890		—		3,890		—