Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Estimated fair values as of the periods indicated are as follows:



	December 31, 2019				December 31, 2018
(In Thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Level 1 inputs:
Cash, due from banks and deposits in other banks		$95,424		$95,424		$77,538		$77,538
Investment securities available for sale	75,456		75,456		74,549		74,549
Marketable equity securities	7,945		7,945		7,265		7,265

Level 2 inputs:
Investment securities available for sale	200,682		200,682		197,061		197,061
Investment in Federal Home Loan Bank Stock	2,138		2,138		2,101		2,101
Accrued interest receivable	4,512		4,512		4,817		4,817
Interest rate swaps	2,950		2,950		853		853

Level 3 inputs:
Loans and loans held for sale	1,111,205		1,095,031		1,019,056		995,115
Purchased receivables, net	24,373		24,373		14,406		14,406
Interest rate lock commitments	810		810		978		978
Mortgage servicing rights	11,920		11,920		10,821		10,821
Commercial servicing rights	1,214		1,214		1,030		1,030

Financial liabilities:
Level 2 inputs:
Deposits		$1,372,351		$1,373,647		$1,228,088		$1,227,086
Securities sold under repurchase agreements	—		—		34,278		34,278
Borrowings	8,891		9,216		7,241		6,965
Accrued interest payable	23		23		22		22
Interest rate swaps	3,484		3,484		246		246
Retail interest rate contracts	71		71		262		262
Level 3 inputs:
Junior subordinated debentures	10,310		11,000		10,310		10,809

Schedule of Assets And Liabilities Measured At Fair Value On A Recurring Basis

The following table sets forth the balances as of the periods indicated of assets measured at fair value on a recurring basis:



(In Thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2019
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities		$211,852		$57,480		$154,372		$—
Municipal securities	3,297		—		3,297		—
Corporate bonds	35,066		17,976		17,090		—
Collateralized loan obligations	25,923		—		25,923		—
Total available for sale securities		$276,138		$75,456		$200,682		$—
Marketable equity securities		$7,945		$7,945		$—		$—
Total marketable equity securities		$7,945		$7,945		$—		$—
Interest rate swaps		$2,950		$—		$2,950		$—
Interest rate lock commitments	810		—		—		810
Mortgage servicing rights	11,920		—		—		11,920
Commercial servicing rights	1,214		—		—		1,214
Total other assets		$16,894		$—		$2,950		$13,944
Liabilities:
Interest rate swaps		$3,484		$—		$3,484		$—
Retail interest rate contracts	71		—		71		—
Total other liabilities		$3,555		$—		$3,555		$—
December 31, 2018
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities		$208,860		$54,863		$153,997		$—
Municipal securities	9,084		—		9,084		—
Corporate bonds	39,780		19,686		20,094		—
Collateralized loan obligations	13,886		—		13,886		—
Total available for sale securities		$271,610		$74,549		$197,061		$—
Marketable equity securities		$7,265		$7,265		$—		$—
Total marketable equity securities		$7,265		$7,265		$—		$—
Interest rate swaps		$853		$—		$853		$—
Interest rate lock commitments	978		—		—		978
Mortgage servicing rights	10,821		—		—		10,821
Commercial servicing rights	1,030		—		—		1,030
Total other assets		$13,682		$—		$853		$12,829
Liabilities:
Interest rate swaps		$246		$—		$246		$—
Retail interest rate contracts	262		—		262		—
Total other liabilities		$508		$—		$508		$—

Fair Value, Assets Measured on Recurring Basis

The following table provides a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the years ended December 31, 2019 and 2018:



(In Thousands)	Beginning balance		Change included in earnings			Purchases and issuances		Sales and settlements			Ending balance
December 31, 2019
Interest rate lock commitments		$978		($1,942	)		$15,904		($14,130	)		$810
Mortgage servicing rights	10,821		(2,608		)	3,707		—			11,920
Commercial servicing rights	1,030		6			178		—			1,214
Total		$12,829		($4,544	)		$19,789		($14,130	)		$13,944
December 31, 2018
Interest rate lock commitments		$873		($2,018	)		$18,585		($16,462	)		$978
Mortgage servicing rights	7,305		(125		)	3,641		—			10,821
Commercial servicing rights	—		972			58		—			1,030
Total		$8,178		($1,171	)		$22,284		($16,462	)		$12,829

Fair Value, Assets Measured on Nonrecurring Basis

During 2019 and 2018, no impairment or valuation adjustment was recognized for assets recognized at fair value on a nonrecurring basis, except for certain assets as shown in the following table. For loans measured for impairment, the Company classifies fair value measurements using observable inputs, such as external appraisals, as Level 2 valuations in the fair value hierarchy, and unobservable inputs, such as in-house evaluations, as Level 3 valuations in the fair value hierarchy.



(In Thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2019
Loans measured for impairment		$561		$—		$—		$561
Total		$561		$—		$—		$561
December 31, 2018
Loans measured for impairment		$848		$—		$—		$848
Other assets - equity method investment	709		—		—		709
Total		$1,557		$—		$—		$1,557

The following table presents the (income) losses resulting from nonrecurring fair value adjustments for the periods ended December 31, 2019, 2018 and 2017, respectively:



(In Thousands)	2019		2018			2017
Loans measured for impairment		$3		($952	)		$352
Other real estate owned	—		—			904
Other operating expense - impairment on equity method investment	—		804			686
Total (income) loss from nonrecurring measurements		$3		($148	)		$1,942

Schedule of Valuation Assumptions

The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value at December 31, 2019 and 2018:



Financial Instrument	Valuation Technique	Unobservable Input	Weighted Average or Rate Range
December 31, 2019
Loans measured for impairment	In-house valuation of collateral	Discount rate	25	%
Interest rate lock commitment	External pricing model	Pull through rate	92.65	%
Mortgage servicing rights	Discounted cash flow	Constant prepayment rate	9.11% - 10.67%
		Discount rate	8.51% - 8.66%
Commercial servicing rights	Discounted cash flow	Constant prepayment rate	7.64% - 15.67%
		Discount rate	11.70	%
December 31, 2018
Loans measured for impairment	In-house valuation of collateral	Discount rate	65	%
	Discounted cash flow	Discount rate	8.25% - 8.50%
Interest rate lock commitment	External pricing model	Pull through rate	91.66	%
Mortgage servicing rights	Discounted cash flow	Constant prepayment rate	7.62% - 9.87%
		Discount rate	9.93% - 10.47%
Commercial servicing rights	Discounted cash flow	Constant prepayment rate	7.64% - 15.67%
		Discount rate	11.49	%