XML 54 R38.htm IDEA: XBRL DOCUMENT v3.22.0.1
Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2021
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis.
 Balance atFair Value Measurements Using:
Dollars in thousandsDecember 31, 2021Level 1Level 2Level 3
Debt securities available for sale    
U.S. Government sponsored agencies$36,629 $— $36,629 $— 
Mortgage backed securities:    
Government sponsored agencies62,211 — 62,211 — 
Nongovernment sponsored entities26,586 — 26,586 — 
State and political subdivisions137,786 — 137,786 — 
Corporate debt securities30,278 — 30,278 — 
Asset-backed securities24,883 — 24,883 — 
Tax-exempt state and political subdivisions82,730 — 82,730 — 
Total debt securities available for sale$401,103 $— $401,103 $— 
Derivative financial assets    
Interest rate caps$11,187 $— $11,187 $— 
Derivative financial liabilities
Interest rate swaps$1,124 $— $1,124 $— 

 Balance atFair Value Measurements Using:
Dollars in thousandsDecember 31, 2020Level 1Level 2Level 3
Debt securities available for sale    
U.S. Government sponsored agencies$35,157 $— $35,157 $— 
Mortgage backed securities:    
Government sponsored agencies59,046 — 59,046 — 
Nongovernment sponsored entities16,687 — 16,687 — 
State and political subdivisions50,905 — 50,905 — 
Corporate debt securities26,427 — 26,427 — 
Asset-backed securities46,126 — 46,126 — 
Tax-exempt state and political subdivisions51,779 — 51,779 — 
Total debt securities available for sale$286,127 $— $286,127 $— 
Derivative financial assets    
Interest rate caps$6,653 $— $6,653 $— 
Derivative financial liabilities
Interest rate swaps$2,747 $— $2,747 $— 
Fair Value Measurements, Nonrecurring
Loans Held for Sale:  Loans held for sale are carried at the lower of cost or fair value.  The fair value of loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics.  As such, we classify loans subject to nonrecurring fair value adjustments as Level 2.

Collateral Dependent Loans with an ACLL: In accordance with ASC 326 effective January 1, 2020, we may determine that an individual loan exhibits unique risk characteristics which differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the
collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. We reevaluate the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting collateral dependent loans is evaluated by appraisal services using a methodology that is consistent with the Uniform Standards of Professional Appraisal Practice.

Prior to adoption of ASC 326, we did not record loans at fair value on a recurring basis. However, from time to time, a loan was considered impaired and an allowance for credit loss was established.  Loans for which it is probable that payment of interest and principal will not be made in accordance with the original contractual terms of the loan agreement were considered impaired.  Once a loan was identified as individually impaired, management measured impairment using one of several methods, including collateral value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the discounted cash flows or collateral value exceeded the recorded investments in such loans. These loans were carried at recorded loan investment and therefore are not included in the following tables of loans measured at fair value. Impaired loans internally graded as substandard or doubtful were evaluated using the fair value of collateral method.  All other impaired loans were measured for impairment using the discounted cash flows method. Impaired loans where an allowance is established based on the fair value of collateral were included in the fair value hierarchy. When the fair value of the collateral was based on an observable market price or a current appraised value, we recorded the impaired loan as nonrecurring Level 2. When a current appraised value was not available and there was no observable market price, we recorded the impaired loan as nonrecurring Level 3.  

When impaired loans were deemed required to be included in the fair value hierarchy, management immediately began the process of evaluating the estimated fair value of the underlying collateral to determine if a related specific allowance for credit losses or charge-off is necessary.  Current appraisals were ordered once a loan was deemed impaired if the existing appraisal was more than twelve months old, or more frequently if there was known deterioration in value. For recently identified impaired loans, a current appraisal may not have been available at the financial statement date. Until the current appraisal was obtained, the original appraised value was discounted, as appropriate, to compensate for the estimated depreciation in the value of the loan’s underlying collateral since the date of the original appraisal.  Such discounts were generally estimated based upon management’s knowledge of sales of similar collateral within the applicable market area and its knowledge of other real estate market-related data as well as general economic trends.  When a new appraisal was received (which was generally within 3 months of a loan being identified as impaired), management then re-evaluated the fair value of the collateral and adjusted any specific allocated allowance for credit losses on loans, as appropriate.  In addition, management also assigned a discount of 7–10% for the estimated costs to sell the collateral.

Property Held for Sale:  Property held for sale consists of real estate acquired in foreclosure or other settlement of loans. Foreclosed assets are initially recorded at fair value, less estimated selling costs, when acquired establishing a new cost basis. Such assets are carried on the balance sheet at the lower of the investment in the real estate or its fair value less estimated selling costs.  The fair value of foreclosed properties is determined on a nonrecurring basis generally utilizing current appraisals performed by an independent, licensed appraiser applying an income or market value approach using observable market data (Level 2).  Updated appraisals of foreclosed properties are generally obtained if the existing appraisal is more than 18 months old or more frequently if there is a known deterioration in value.  However, if a current appraisal is not available, the original appraised value is discounted, as appropriate, to compensate for the estimated depreciation in the value of the real estate since the date of its original appraisal.  Such discounts are generally estimated based upon management’s knowledge of sales of similar property within the applicable market area and its knowledge of other real estate market-related data as well as general economic trends (Level 3).  Upon foreclosure, any fair value adjustment is charged against the allowance for credit losses on loans.  Subsequent fair value adjustments are recorded in the period incurred and included in other noninterest expense in the consolidated statements of income.

Assets measured at fair value on a nonrecurring basis are included in the tables below.
 Balance atFair Value Measurements Using:
Dollars in thousandsDecember 31, 2021Level 1Level 2Level 3
Residential mortgage loans held for sale$227 $— $227 $— 
Collateral-dependent loans with an ACLL    
Commercial real estate$2,417 $— $2,417 $— 
Construction and development693 — 693 — 
Residential real estate528 — 528 — 
Total collateral-dependent loans with an ACLL$3,638 $— $3,638 $— 
Property held for sale    
Commercial real estate$1,170 $— $1,170 $— 
Construction and development7,893 — 7,893 — 
Residential real estate27 — 27 — 
Total property held for sale$9,090 $— $9,090 $— 

 Balance atFair Value Measurements Using:
Dollars in thousandsDecember 31, 2020Level 1Level 2Level 3
Residential mortgage loans held for sale$1,998 $— $1,998 $— 
Collateral-dependent impaired loans
Commercial$8 — $8 $— 
Commercial real estate9,914 — 9,914 — 
Construction and development1,576 — 1,576 — 
Residential real estate597 — 597 — 
Total collateral-dependent impaired loans$12,095 $— $12,095 $— 
Property held for sale    
Commercial real estate$1,557 $— $1,557 $— 
Construction and development11,595 — 10,974 621 
Residential real estate476 — 476 — 
Total property held for sale$13,628 $— $13,007 $621 
Fair Value, by Balance Sheet Grouping
The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of our financial instruments as of December 31, 2021 and December 31, 2020.
 At December 31,
2021Fair Value Measurements Using:
Dollars in thousandsCarrying
Value		Estimated
Fair
Value		Level 1Level 2Level 3
Financial assets  
Cash and cash equivalents$78,458 $78,458 $21,006 $57,452 $— 
Debt securities available for sale401,103 401,103 — 401,103 — 
Debt securities held to maturity98,060 101,242 — 101,242 — 
Equity investments20,202 20,202 — 20,202 — 
Other investments11,304 11,304 — 11,304 — 
Loans held for sale, net227 227 — 227 — 
Loans, net2,729,093 2,726,959 — 3,638 2,723,321 
Accrued interest receivable10,578 10,578 — 10,578 — 
Cash surrender value of life insurance policies and
  annuities		60,613 60,613 — 60,613 — 
Derivative financial assets11,187 11,187 — 11,187 — 
 $3,420,825 $3,421,873 $21,006 $677,546 $2,723,321 
Financial liabilities  
Deposits$2,943,089 $2,944,722 $— $2,944,722 $— 
Short-term borrowings140,146 140,146 — 140,146 — 
Long-term borrowings679 795 — 795 — 
Subordinated debentures102,891 103,623 — — 103,623 
Subordinated debentures owed to unconsolidated subsidiary trusts
19,589 19,589 — 19,589 — 
Accrued interest payable788 788 — 788 — 
Derivative financial liabilities1,124 1,124 — 1,124 — 
 $3,208,306 $3,210,787 $— $3,107,164 $103,623 
At December 31
 2020Fair Value Measurements Using:
Dollars in thousandsCarrying
Value		Estimated
Fair
Value		Level 1Level 2Level 3
Financial assets  
Cash and cash equivalents$99,787 $99,787 $19,522 $80,265 $— 
Debt securities available for sale286,127 286,127 — 286,127 — 
Debt securities held to maturity99,914 103,157 — 103,157 — 
Other investments14,185 14,185 — 14,185 — 
Loans held for sale, net1,998 1,998 — 1,998 — 
Loans, net2,379,907 2,384,275 — 12,095 2,372,180 
Accrued interest receivable11,989 11,989 — 11,989 — 
Cash surrender value of life insurance policies and
  annuities		59,438 59,438 — 59,438 — 
Derivative financial assets6,653 6,653 — 6,653 — 
 $2,959,998 $2,967,609 $19,522 $575,907 $2,372,180 
Financial liabilities  
Deposits$2,595,651 $2,597,326 $— $2,597,326 $— 
Short-term borrowings140,146 140,146 — 140,146 — 
Long-term borrowings699 866 — 866 — 
Subordinated debentures29,364 29,364 — 29,364 — 
Subordinated debentures owed to unconsolidated subsidiary trusts
19,589 19,589 — 19,589 — 
Accrued interest payable745 745 — 745 — 
Derivative financial liabilities2,747 2,747 — 2,747 — 
 $2,788,941 $2,790,783 $— $2,790,783 $—