FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2020

Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized in the table below as of the dates indicated (dollars in thousands).



	Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2020
Assets:
Obligations of U.S. government agencies and corporations	$	44,009	$	—	$	44,009	$	—
Obligations of state and political subdivisions	31,983		—		15,110		16,873
Corporate bonds	23,094		—		23,094		—
Residential mortgage-backed securities	103,682		—		103,682		—
Commercial mortgage-backed securities	73,513		—		73,513		—
Equity securities	1,270		1,270		—		—
Total assets	$	277,551	$	1,270	$	259,408	$	16,873
Liabilities:
Derivative financial instruments	$	2,500	$	—	$	2,500	$	—

December 31, 2019
Assets:
Obligations of U.S. government agencies and corporations	$	33,651	$	—	$	33,651	$	—
Obligations of state and political subdivisions	33,449		—		14,074		19,375
Corporate bonds	19,163		—		19,163		—
Residential mortgage-backed securities	101,946		—		101,946		—
Commercial mortgage-backed securities	71,596		—		71,596		—
Equity securities	2,097		2,097		—		—
Derivative financial instruments	687		—		687		—
Total assets	$	262,589	$	2,097	$	241,117	$	19,375

Summary of Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs

The tables below provide a reconciliation for assets measured at fair value on a recurring basis using significant unobservable inputs, or level 3 inputs, for the three months ended March 31, 2020 and March 31, 2019 (dollars in thousands).



	Obligations of State and Political Subdivisions
Balance at December 31, 2019	$	19,375
Realized gains (losses) included in earnings	—
Unrealized losses included in other comprehensive (loss) income	(2,502		)
Purchases	—
Sales	—
Maturities, prepayments, and calls	—
Transfers into level 3	—
Transfers out of level 3	—
Balance at March 31, 2020	$	16,873



	Obligations of State and Political Subdivisions			Corporate Bonds			Total
Balance at December 31, 2018	$	18,808		$	1,335		$	20,143
Realized gains (losses) included in earnings	—			—			—
Unrealized gains (losses) included in other comprehensive (loss) income	116			(8		)	108
Purchases	—			—			—
Sales	—			—			—
Maturities, prepayments, and calls	(23		)	—			(23		)
Transfers into level 3	—			—			—
Transfers out of level 3	—			—			—
Balance at March 31, 2019	$	18,901		$	1,327		$	20,228

Quantitative Information About Significant Unobservable Inputs Used In Fair Value Measurements

Quantitative information about assets measured at fair value on a nonrecurring basis based on significant unobservable inputs (level 3) is summarized below as of the dates indicated; there were no liabilities measured on a nonrecurring basis at March 31, 2020 or December 31, 2019 (dollars in thousands).

Estimated
Fair Value

Valuation Technique

Unobservable Inputs

Range of Discounts

Weighted Average Discount

March 31, 2020

Impaired loans

101

Discounted cash flows, Underlying collateral value

Collateral discounts and estimated costs to sell

0% - 100%

36%

December 31, 2019

Impaired loans

Discounted cash flows, Underlying collateral value

Collateral discounts and estimated costs to sell

0% - 100%

31%

The following table provides quantitative information about significant unobservable inputs used in fair value measurements of Level 3 assets measured at fair value on a recurring basis at March 31, 2020 or December 31, 2019 (dollars in thousands):



	Estimated Fair Value		Valuation Technique	Unobservable Inputs	Range of Discounts
March 31, 2020
Obligations of State and Political Subdivisions	$	16,873	Option-adjusted discounted cash flow model; present value of expected future cash flow model	Bond Appraisal Adjustment⁽¹⁾	1% - 18%

⁽¹⁾ Fair values determined through valuation analysis using coupon, yield (discount margin), liquidity and expected repayment dates.

Summary of Estimated Fair Values of Company's Financial Instruments

The estimated fair values of the Company’s financial instruments are summarized in the table below as of the dates indicated (dollars in thousands).



	March 31, 2020
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	38,495	$	38,495	$	38,495	$	—	$	—
Federal funds sold	47		47		47		—		—
Investment securities	290,534		290,462		—		264,481		25,981
Equity securities	17,653		17,653		1,270		16,383		—
Loans, net of allowance	1,715,561		1,729,202		—		—		1,729,202

Financial liabilities:
Deposits, noninterest-bearing	$	339,379	$	339,379	$	—	$	339,379	$	—
Deposits, interest-bearing	1,389,447		1,437,552		—		—		1,437,552
FHLB short-term advances and repurchase agreements	92,954		92,954		—		92,954		—
FHLB long-term advances	78,500		79,758		—		—		79,758
Junior subordinated debt	5,910		4,593		—		—		4,593
Subordinated debt	43,600		41,510		—		41,510		—
Derivative financial instruments	2,500		2,500		—		2,500		—



	December 31, 2019
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	44,308	$	44,308	$	44,308	$	—	$	—
Federal funds sold	387		387		387		—		—
Investment securities	274,214		274,285		—		245,410		28,875
Equity securities	19,315		19,316		2,097		17,219		—
Loans, net of allowance	1,681,275		1,680,364		—		—		1,680,364
Derivative financial instruments	687		687		—		687		—

Financial liabilities:
Deposits, noninterest-bearing	$	351,905	$	351,905	$	—	$	351,905	$	—
Deposits, interest-bearing	1,355,801		1,368,194		—		—		1,368,194
FHLB short-term advances and repurchase agreements	56,095		56,095		—		56,095		—
FHLB long-term advances	78,500		76,635		—		—		76,635
Junior subordinated debt	5,897		7,747		—		—		7,747
Subordinated debt	43,600		56,399		—		56,399		—