FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2023

FAIR VALUE MEASUREMENTS

Schedule of securities measured at fair value on a recurring basis

(Dollars in thousands)
September 30, 2023	Level 1		Level 2		Level 3		Total
Debt Securities Available-for-Sale:
U.S. Treasury securities	$	6,757	$	—	$	—	$	6,757
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgaged-backed		—		118,357		—		118,357
Other		—		8,594		—		8,594
Other mortgage backed debt securities		—		31,796		—		31,796
Obligations of state and political subdivisions		—		83,145		—		83,145
Asset-backed securities		—		47,532		—		47,532
Corporate debt securities		—		36,996		—		36,996
Total debt securities available-for-sale		6,757		326,420		—		333,177
Marketable equity securities		1,389		—		—		1,389
Total recurring fair value measurements	$	8,146	$	326,420	$	—	$	334,566

(Dollars in thousands)
December 31, 2022	Level 1		Level 2		Level 3		Total
Debt Securities Available-for-Sale:
U.S. Treasury securities	$	6,801	$	—	$	—	$	6,801
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgaged-backed		—		131,675		—		131,675
Other		—		11,180		—		11,180
Other mortgage backed debt securities		—		33,688		—		33,688
Obligations of state and political subdivisions		—		110,689		—		110,689
Asset-backed securities		—		36,418		—		36,418
Corporate debt securities		—		42,993		—		42,993
Total debt securities available-for-sale		6,801		366,643		—		373,444
Marketable equity securities		1,699		—		—		1,699
Total recurring fair value measurements	$	8,500	$	366,643	$	—	$	375,143

Schedule of impaired loans measured at fair value on a nonrecurring basis

(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at September 30, 2023
Individually evaluated loans:
Real Estate	$	—	$	—	$	2,340	$	2,340
Total individually evaluated loans	$	—	$	—	$	2,340	$	2,340

Prior to the adoption of ASU No. 2016-13, at December 31, 2022, impaired loans measured at fair value on a nonrecurring basis were as follows:

(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at December 31, 2022
Impaired loans:
Commercial Real Estate	$	—	$	—	$	5,167	$	5,167
Residential Real Estate		—		—		30		30
Total impaired loans	$	—	$	—	$	5,197	$	5,197

Schedule of fair value measurement inputs and valuation techniques

(Dollars in thousands)	Quantitative Information about Level 3 Fair Value Measurements
Post-ASU No. 2016-13 Adoption:	Fair Value					Weighted
September 30, 2023	Estimate		Valuation Technique	Unobservable Input	Range	Average
Individually evaluated loans - collateral dependent	$	2,340	Appraisal of collateral1,3 Certificate of Inspection1,3	Appraisal adjustments2 Qualitative Adjustments4	(5%) – (5%)	(5%)
Pre-ASU No. 2016-13 Adoption:
December 31, 2022
Impaired loans - collateral dependent	$	2,370	Appraisal of collateral1,3 Certificate of Inspection1,3	Appraisal adjustments2 Qualitative Adjustments4	(0%) – (5%)	(5%)
Impaired loans - other	$	2,827	Discounted cash flow	Discount rate	(4%) – (7%)	(6%)

1. Fair value is generally determined through independent appraisals or Certificates of Inspection of the underlying collateral, as defined by Bank regulators.

2. Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses. The typical range of appraisal adjustments are presented as a percent of the appraisal value.

3. Includes qualitative adjustments by management and estimated liquidation expenses.

4. Collateral values may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses.

Schedule of fair value of financial instruments, including financial assets and financial liabilities

(Dollars in thousands)	Carrying		Fair Value Measurements at September 30, 2023
	Amount		Level 1		Level 2		Level 3		Total
FINANCIAL ASSETS:
Cash and due from banks	$	10,537	$	10,537	$	—	$	—	$	10,537
Interest-bearing deposits in other banks		2,100		—		2,100		—		2,100
Restricted investment in bank stocks		7,017		—		7,017		—		7,017
Net loans		874,221		—		—		834,222		834,222
Mortgage servicing rights		276		—		—		276		276
Accrued interest receivable		4,615		—		4,615		—		4,615
Derivative Assets		228		—		228		—		228
FINANCIAL LIABILITIES:
Demand, savings and other deposits		742,563		—		742,563		—		742,563
Time deposits		249,740		—		245,793		—		245,793
Short-term borrowings		154,776		—		154,914		—		154,914
Long-term borrowings		22,000		—		21,421		—		21,421
Subordinated debentures		25,000		—		22,859		—		22,859
Accrued interest payable		1,660		—		1,660		—		1,660

(Dollars in thousands)	Carrying		Fair Value Measurements at December 31, 2022
	Amount		Level 1		Level 2		Level 3		Total
FINANCIAL ASSETS:
Cash and due from banks	$	9,441	$	9,441	$	—	$	—	$	9,441
Interest-bearing deposits in other banks		1,297		—		1,297		—		1,297
Restricted investment in bank stocks		7,136		—		7,136		—		7,136
Net loans		850,195		—		—		810,104		810,104
Mortgage servicing rights		319		—		—		319		319
Accrued interest receivable		4,391		—		4,391		—		4,391
Derivative Assets		—		—		—		—		—
FINANCIAL LIABILITIES:
Demand, savings and other deposits		827,399		—		827,399		—		827,399
Time deposits		166,100		—		160,472		—		160,472
Short-term borrowings		153,418		—		153,209		—		153,209
Long-term borrowings		25,000		—		24,090		—		24,090
Subordinated debentures		25,000		—		22,365		—		22,365
Accrued interest payable		563		—		563		—		563