FAIR VALUE MEASUREMENTS (Table)

12 Months Ended

Dec. 31, 2018

Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis

Equity Securities

Fair value measurement for equity securities is based on quoted market prices retrieved by the Company via on-line resources. Although these securities have readily available fair market values, the Company deems that they be classified as level 2 investments in the fair value hierarchy due to not being considered traded in a highly active market.

The tables below present the recorded amount of assets measured at fair value on a recurring basis at December 31, 2018 and 2017. No assets were transferred from one hierarchy level to another during 2018 or 2017.


					Significant
					Other		Significant
			Quoted		Observable		Unobservable
			Prices		Inputs		Inputs
(Dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2018
Securities available for sale:
U.S. Government agencies	$	33,636	$	-	$	33,636	$	-
Mortgage-backed		120,796		-		120,796		-
		154,432		-		154,432		-

Equity		1,269		-		1,269		-
Total	$	155,701	$	-	$	155,701	$	-

					Significant
					Other		Significant
			Quoted		Observable		Unobservable
			Prices		Inputs		Inputs
(Dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2017
Securities available for sale:
U.S. Government agencies	$	45,332	$	-	$	45,332	$	-
Mortgage-backed		150,965		-		150,965		-
Equity		658		-		658		-
Total	$	196,955	$	-	$	196,955	$	-

Fair Value of Assets Measured on Nonrecurring Basis

The following tables set forth the Company’s financial assets subject to fair value adjustments (impairment) on a nonrecurring basis at December 31, 2018 and 2017, that are valued at the lower of cost or market. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.


	Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands)	Fair Value		Valuation Technique			Unobservable Input			Range
December 31, 2018
Nonrecurring measurements:

Impaired loans	$	3,839		Appraisal of collateral	1		Appraisal adjustments	2		0% - 17%
							Liquidation expense	2		0% - 10%

Impaired loans	$	5,902		Discounted cash flow analysis	1		Discount rate			4% - 7.25%

Other real estate owned	$	1,222		Appraisal of collateral	1		Appraisal adjustments	2		15% - 40%
							Liquidation expense	2		5% - 10%


	Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands)	Fair Value		Valuation Technique			Unobservable Input			Range
December 31, 2017
Nonrecurring measurements:

Impaired loans	$	510		Appraisal of collateral	1		Liquidation expense	2		10%

Impaired loans	$	6,005		Discounted cash flow analysis	1		Discount rate			4% - 8.5%

Other real estate owned	$	1,794		Appraisal of collateral	1		Appraisal adjustments	2		20% - 30%
							Liquidation expense	2		5% - 10%


					(1)	Fair value is generally determined through independent appraisals of the underlying collateral (impaired loans and OREO) or discounted cash flow analyses (impaired loans), which generally include various level III inputs which are not identifiable.
					(2)	Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Schedule of Estimated Fair Values of Financial Assets and Liabilities

The carrying amounts and estimated fair values of the Company’s financial instruments are presented in the following tables. Fair values for December 31, 2018 were estimated using an exit price notion in accordance with the prospective adoption of ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” Fair values for December 31, 2017 were estimated using the guidance in effect for that period, which permitted the use of an entry price notion in the compilation of this disclosure.


	December 31, 2018				December 31, 2017
			Estimated				Estimated
	Carrying		Fair		Carrying		Fair
(Dollars in thousands)	Amount		Value		Amount		Value
Financial assets
Level 1 inputs
Cash and cash equivalents	$	67,225	$	67,225	$	31,820	$	31,820

Level 2 inputs
Investment securities held to maturity	$	6,043	$	6,000	$	6,247	$	6,391
Restricted securities		6,476		6,476		3,735		3,735
Cash surrender value on life insurance		3,726		3,726		3,637		3,637

Level 3 inputs
Loans, net		1,185,012		1,150,418		1,083,733		1,072,951

Financial liabilities
Level 2 inputs
Deposits:
Noninterest-bearing demand	$	330,466	$	330,466	$	328,322	$	328,322
Checking plus interest		239,809		239,809		231,898		231,898
Money market		232,613		232,613		223,123		223,123
Savings		148,723		148,723		156,623		156,623
Club		387		387		398		398
Brokered Deposits		22,084		22,075		-		-
Certificates of deposit, $100,000 or more		97,905		96,435		107,343		105,691
Other time		140,354		136,292		155,074		151,339
Short-term borrowings		60,812		60,812		21,734		21,734
Long-term borrowings		15,000		15,012		-		-