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Fair Value of Financial Instruments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2021

The carrying amount, estimated fair values, and placement in the fair value hierarchy of the Company’s financial instruments as of September 30, 2021 and December 31, 2020 are as follows:


	Fair Value Measurements
(dollars in thousands)	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
September 30, 2021
Assets
Cash and short-term investments	$	176,997	$	176,997	$	176,997	$	—	$	—
Investment securities available for sale	820,625		820,625		42,382		778,243		—
Other investments, at cost	13,977		13,977		—		13,977		—
Loans held for sale	26,697		26,697		—		26,697		—
Loans, net	1,296,983		1,303,994		—		—		1,303,994

Liabilities
Deposits	2,195,122		2,195,624		—		2,195,624		—

Federal Home Loan Bank advances	51,601		50,528		—		50,528		—
Other borrowings	37,042		36,767		—		36,767		—


	Fair Value Measurements
(dollars in thousands)	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
December 31, 2020
Assets
Cash and short-term investments	$	183,506	$	183,506	$	183,506	$	—	$	—
Investment securities available for sale	380,814		380,814		245		380,569		—
Other investments, at cost	3,296		3,296		—		3,296		—
Loans held for sale	52,386		52,386		—		52,386		—
Loans, net	1,047,376		1,063,785		—		—		1,063,785

Liabilities
Deposits	1,445,027		1,445,984		—		1,445,984		—
Paycheck Protection Program Liquidity Facility	106,789		106,789		—		106,789
Federal Home Loan Bank advances	22,500		20,817		—		20,817		—
Other borrowings	37,792		37,792		—		37,792		—

Fair Value Measurements, Recurring and Nonrecurring

The following table presents the recorded amount of the Company’s assets measured at fair value on a recurring and nonrecurring basis as of September 30, 2021 and December 31, 2020, aggregated by the level in the fair value hierarchy within which those measurements fall. The table below includes only impaired loans with a specific reserve and only other real estate properties with a valuation allowance at September 30, 2021 and December 31, 2020. Those impaired loans and other real estate properties are shown net of the related specific reserves and valuation allowances.


			Fair Value Measurements at Reporting Date Using
(dollars in thousands)	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2021
Nonrecurring
Collateral dependent impaired loans	$	4,590	$	—	$	—	$	4,590
Other real estate owned	807		—		—		807
Total nonrecurring assets	$	5,397	$	—	$	—	$	5,397


			Fair Value Measurements at Reporting Date Using
(dollars in thousands)	Total Fair Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2020
Nonrecurring
Collateral dependent impaired loans	$	5,939	$	—	$	—	$	5,939
Other real estate owned	1,006		—		—		1,006
Total nonrecurring assets	$	6,945	$	—	$	—	$	6,945

Fair Value Measurement Inputs and Valuation Techniques

The following table presents quantitative information about the significant unobservable inputs used in the fair value measurements for assets in level 3 of the fair value hierarchy measured on a nonrecurring basis at September 30, 2021 and December 31, 2020. This table is comprised primarily of collateral dependent impaired loans and other real estate owned:


(dollars in thousands)	September 30, 2021		Valuation Techniques	Unobservable Inputs	Range Weighted Avg
Collateral dependent impaired loans	$	4,590	Appraised Value	Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell	25	%	100	%
Other real estate owned	807		Appraised Value/Comparable Sales	Discounts to reflect current market conditions and estimated costs to sell	—	%	20	%


(dollars in thousands)	December 31, 2020		Valuation Techniques	Unobservable Inputs	Range Weighted Avg
Collateral dependent impaired loans	$	5,939	Appraised Value	Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell	25	%	100	%
Other real estate owned	1,006		Appraised Value/Comparable Sales	Discounts to reflect current market conditions and estimated costs to sell	—	%	20	%

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The table below presents a reconciliation and statement of income classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (level 3) for the nine months ended September 30, 2020.


	Available for Sale Securities
(dollars in thousands)	September 30, 2020
Balance, Beginning	$	2,022
Transfers out of Level 3	—
Sales	—
Paydowns	—
Realized Loss on Sale of Security	—
Unrealized gains (losses) included in Other Comprehensive Income	(20)
Balance, Ending	$	2,002

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details