FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2022

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

NOTE 9. FAIR VALUE MEASUREMENTS

In accordance with fair value guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 — Valuation is based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 — Valuation is based on inputs other than quoted prices included with Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the asset or liability.

Level 3 — Valuation is based on unobservable income inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

Fair values of assets and liabilities measured on a recurring basis at June 30, 2022 and December 31, 2021 follows:

	Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
June 30, 2022
Available-for-sale securities	$	82,276	$	-	$	82,276	$	-
December 31, 2021
Available-for-sale securities	$	88,339	$	-	$	88,339	$	-

Fair values of assets and liabilities measured on a nonrecurring basis at June 30, 2022 and December 31, 2021 follows:

	Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
June 30, 2022
Impaired loans	$	797	$	-	$	-	$	797
Foreclosed assets		320		-		-		320
Total	$	1,117	$	-	$	-	$	1,117
December 31, 2021
Impaired loans	$	1,020	$	-	$	-	$	1,020
Foreclosed assets		340		-		-		340
Total	$	1,360	$	-	$	-	$	1,360

At June 30, 2022 and December 31, 2021, impaired loans with a recorded investment of $1.1 million and $1.4 million, respectively, have been written down to their fair value by a charge to the allowance for loan losses. Foreclosed assets are written down to fair value by a charge to earnings through foreclosed asset expense. During the six months ended June 30, 2022, no impairment losses on foreclosed assets were recognized.

The fair value of impaired loans and foreclosed assets is estimated using  third-party appraisals of the collateral or asset held less estimated costs to sell and discounts to reflect current conditions.