Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2023

The Company is required to disclose fair values for its financial instruments. Fair values are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Also, it is the Company’s general practice and intention to hold most of its financial instruments to maturity and not to engage in trading or sales activities. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These fair values are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions can significantly affect the fair values.

Fair values have been determined by the Company using historical data and an estimation methodology suitable for each category of financial instruments. The Company’s fair values are set forth below for the Company’s other financial instruments.

As certain assets and liabilities, such as deferred tax assets, premises and equipment, and many other operational elements of the Company, are not considered financial instruments but have value, this fair value of financial instruments would not represent the full market value of the Company.

The fair values of the Company’s financial instruments not recorded at fair value on a recurring or nonrecurring basis are as follows at September 30, 2023 and December 31, 2022:


	Carrying		Fair		Fair Value Measurements at September 30, 2023
(In Thousands)	Value		Value		Level I		Level II		Level III
Financial assets:






Loans held for sale (1)	$	4,083	$	4,083	$	4,083	$	—	$	—
Loans, net	1,805,571		1,761,944		—		—		1,761,944



Financial liabilities:

Time deposits & brokered deposits	356,244		350,456		—		—		350,456
Short-term borrowings	193,746		193,746		193,746		—		—
Long-term borrowings	217,645		238,977		—		—		238,977

(1) The financial instrument is carried at cost at, September 30, 2023 which approximate the fair value of the instruments


	Carrying		Fair		Fair Value Measurements at December 31, 2022
(In Thousands)	Value		Value		Level I		Level II		Level III
Financial assets:





Loans held for sale (1)	$	3,298	$	3,298	$	3,298	$	—	$	—
Loans, net	1,624,094		1,594,073		—		—		1,594,073



Financial liabilities:

Time deposits & brokered deposits	146,282		137,559		—		—		137,559
Short-term borrowings	153,349		153,349		153,349		—		—
Long-term borrowings	102,783		99,118		—		—		99,118

(1) The financial instrument is carried at cost at, December 31, 2022 which approximate the fair value of the instruments

The methods and assumptions used by the Company in estimating fair values of financial instruments is in accordance with ASC Topic 825, Financial Instruments, as amended by ASU 2016-01 which requires public entities to use exit pricing in the calculation of the above tables.