FAIR VALUE MEASUREMENT (Tables)

9 Months Ended

Sep. 30, 2022

FAIR VALUE MEASUREMENT

Fair Value Measurements by Level of Valuation Inputs

The following tables summarize financial assets and financial liabilities measured at fair value as of September 30, 2022 and December 31, 2021 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value. There were no assets measured at fair value on a non-recurring basis as of September 30, 2022 or December 31, 2021.

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
September 30, 2022	Assets		Inputs		Inputs		Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and corporations	$	—	$	41,950	$	—	$	41,950
Obligations of state and political subdivisions		—		7,681		—		7,681
Corporate debt securities		—		8,228		7,348		15,576
Mortgage-backed securities		—		222,044		—		222,044
Total debt securities available for sale	$	—	$	279,903	$	7,348	$	287,251
Equity securities	$	1,014	$	—	$	—	$	1,014
Mortgage servicing rights	$	—	$	—	$	96	$	96
Interest rate swaps	$	—	$	419	$	—	$	419

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
December 31, 2021	Assets		Inputs		Inputs		Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and corporations	$	—	$	40,526	$	—	$	40,526
Obligations of state and political subdivisions		—		9,220		—		9,220
Corporate debt securities		—		30,476		4,520		34,996
Mortgage-backed securities		—		250,682		—		250,682
Total debt securities available for sale	$	—	$	330,904	$	4,520	$	335,424
Equity securities	$	1,124	$	—	$	—	$	1,124
Mortgage servicing rights	$	—	$	—	$	120	$	120
Interest rate swaps	$	—	$	541	$	—	$	541

Reconciliation of Investment Securities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs

The table below presents a reconciliation of the beginning and ending balances of investment securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine month periods ended September 30, 2022 and 2021.

	Three Months Ended				Nine Months Ended
(Dollars in thousands)	September 30,				September 30,
	2022		2021		2022		2021
Investment Securities:
Beginning balance	$	7,788	$	4,500	$	4,520	$	2,000
Total gains (loss) included in OCI		(440)		20		(1,172)		20
Purchases		—		—		4,000		2,500
Principal payments and other		—		—		—		—
Sales		—		—		—		—
Balance, end of period	$	7,348	$	4,520	$	7,348	$	4,520

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments are as follows:

	Financial Instruments
(Dollars in thousands)	September 30, 2022				December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	13,325	$	13,325	$	12,928	$	12,928
Interest bearing deposits with banks		102		102		598		598
Interest bearing time deposits with banks		—		—		735		735
Securities		288,265		288,265		336,548		336,548
Restricted investment in bank stock		3,104		N/A		2,116		N/A
Loans, net of allowance for loan losses		458,525		458,754		414,795		414,984
Interest rate swaps		419		419		541		541
Accrued interest receivable		1,907		1,907		1,814		1,814
Financial liabilities:
Non-interest bearing deposits	$	202,493	$	202,493	$	182,022	$	182,022
Interest bearing deposits		515,341		512,082		526,425		528,952
Securities sold under agreements to repurchase		6,869		N/A		4,227		N/A
Short-term borrowings		20,000		19,995		—		—
Long-term debt		20,000		19,133		20,000		20,520
Other interest bearing liabilities		995		990		1,568		1,568
Accrued interest payable		215		215		252		252
Off-balance sheet financial instruments:
Commitments to extend credit	$	—	$	—	$	—	$	—
Letters of credit		—		—		—		—

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

The following tables present the carrying amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments not previously disclosed as of September 30, 2022 and December 31, 2021. The tables exclude financial instruments for which the carrying amount approximates fair value.

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
(Dollars in thousands)					Active Markets		Other		Other
	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
September 30, 2022
Financial instruments - Assets
Loans, net of allowance for loan losses	$	458,525	$	458,754	$	—	$	—	$	458,754
Financial instruments - Liabilities
Interest bearing deposits	$	515,341	$	512,082	$	—	$	512,082	$	—
Long-term debt		20,000		19,133		—		19,133		—
Other interest bearing liabilities		995		990		—		990		—

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
(Dollars in thousands)					Active Markets		Other		Other
	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
December 31, 2021
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		414,795		414,984		—		—		414,984
Financial instruments - Liabilities
Interest bearing deposits	$	526,425	$	528,952	$	—	$	528,952	$	—
Long-term debt		20,000		20,520		—		20,520		—
Other interest bearing liabilities		1,568		1,568		—		1,568		—