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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2021

Estimated Fair Values and Related Carrying or Notional Amounts

The estimated fair values, and related carrying or notional amounts, for on and off-balance sheet financial instruments as of June 30, 2021 and December 31, 2020 are reflected below.

	(In Thousands)
	June 30, 2021
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	151,119	$	151,119	$	151,119	$	-	$	-
Interest-bearing time deposits		18,597		18,635		-		18,635		-
Securities - available-for-sale		407,500		407,500		63,360		340,192		3,948
Other securities		6,419		6,419		-		-		6,419
Loans held for sale		8,041		8,041		-		-		8,041
Loans, net		1,443,336		1,402,959		-		-		1,402,959
Interest receivable		6,495		6,495		-		-		6,495

Financial Liabilities:
Interest bearing deposits	$	1,153,765	$	1,153,807	$	-	$	-	$	1,153,807
Non-interest bearing deposits		443,863		443,863		-		443,863		-
Time deposits		256,445		258,344		-		-		258,344
Total Deposits		1,854,073		1,856,014		-		443,863		1,412,151

Federal funds purchased and securities sold under agreement to repurchase		29,882		29,882		-		-		29,882
Federal Home Loan Bank advances		17,868		17,869		-		-		17,869
Interest payable		379		379		-		-		379

	(In Thousands)
	December 31, 2020
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	175,706	$	175,706	$	175,706	$	-	$	-
Interest-bearing time deposits		4,653		4,677		-		4,677		-
Securities - available-for-sale		307,812		307,812		-		306,250		1,562
Other securities		5,939		5,939		-		-		5,939
Loans held for sale		7,740		7,740		-		-		7,740
Loans, net		1,289,318		1,261,440		-		-		1,261,440
Interest receivable		6,188		6,188		-		-		6,188

Financial Liabilities:
Interest bearing deposits	$	997,462	$	1,004,608	$	-	$	-	$	1,004,608
Non-interest bearing deposits		351,147		351,147		-		351,147		-
Time deposits		247,553		250,135		-		-		250,135
Total Deposits		1,596,162		1,605,890		-		351,147		1,254,743

Federal funds purchased and securities sold under agreement to repurchase		30,239		30,239		-		-		30,239
Federal Home Loan Bank advances		17,861		17,872		-		-		17,872
Interest payable		338		338		-		-		338

Financial Assets Measured at Fair Value on Recurring Basis

The following summarizes financial assets measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020, segregated by level or the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets and Liabilities Measured at Fair Value on a Recurring Basis (In Thousands)
June 30, 2021	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets - (Securities Available-for-Sale)
U.S. Treasury	$	63,360	$	-	$	-
U.S. Government agencies		-		150,604		-
Mortgage-backed securities		-		128,573		-
State and local governments		-		61,015		3,948
Total Securities Available-for-Sale	$	63,360	$	340,192	$	3,948

December 31, 2020	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets - (Securities Available-for-Sale)
U.S. Treasury	$	-	$	-	$	-
U.S. Government agencies		-		124,241		-
Mortgage-backed securities		-		113,056		-
State and local governments		-		68,953		1,562
Total Securities Available-for-Sale	$	-	$	306,250	$	1,562

Changes in the Level 3 Fair-Value Category of Unobservable Inputs

The following tables represent the changes in the Level 3 fair-value category of which unobservable inputs are relied upon as of the three and six month periods ended June 30, 2021 and June 30, 2020.

	(In Thousands)
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	State and Local Governments Tax-Exempt			State and Local Governments Taxable			State and Local Governments Total
Balance at April 1, 2021	$	-		$	1,539		$	1,539

Change in Market Value		(8	)		(1	)		(9	)

Purchases		2,418			-			2,418

Payments & Maturities		-			-			-

Balance at June 30, 2021	$	2,410		$	1,538		$	3,948

	(In Thousands)
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	State and Local Governments Tax-Exempt		State and Local Governments Taxable		State and Local Governments Total
Balance at April 1, 2020	$	-	$	1,537	$	1,537

Change in Market Value		-		13		13

Payments & Maturities		-		-		-

Balance at June 30, 2020	$	-	$	1,550	$	1,550

	(In Thousands)
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	State and Local Governments Tax-Exempt			State and Local Governments Taxable			State and Local Governments Total
Balance at January 1, 2021	$	-		$	1,562		$	1,562

Change in Market Value		(8	)		(24	)		(32	)
							.
Purchases		2,418			-			2,418

Payments & Maturities		-			-			-

Balance at June 30, 2021	$	2,410		$	1,538		$	3,948

	(In Thousands)
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	State and Local Governments Tax-Exempt		State and Local Governments Taxable		State and Local Governments Total
Balance at January 1, 2020	$	-	$	1,490	$	1,490

Change in Market Value		-		60		60

Payments & Maturities		-		-		-

Balance at June 30, 2020	$	-	$	1,550	$	1,550

Quantitative Information about Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements:

	(In Thousands)				Range
	Fair Value at				(Weighted
	June 30, 2021		Valuation Technique	Unobservable Inputs	Average)
State and local government	$	3,948	Discounted Cash Flow	Credit strength of underlying project or entity / Discount rate	0.34-1.34% (0.86%)

Collateral dependent impaired loans		7,516	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	34.54-81.41% (47.96%)

Other real estate owned - residential		137	Appraisals	Discount to reflect current market	0-7.32% (7.32%)

	(In Thousands)				Range
	Fair Value at				(Weighted
	December 31, 2020		Valuation Technique	Unobservable Inputs	Average)
State and local government	$	1,562	Discounted Cash Flow	Credit strength of underlying project or entity / Discount rate	1.19-1.19% (1.19%)

Collateral dependent impaired loans		7,703	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0.71-100% (17.71%)

Other real estate owned - residential		-	Appraisals	Discount to reflect current market	— % ( — )

Impaired Loans

The following table presents impaired loans as recorded at fair value on June 30, 2021 and December 31, 2020:

	Assets Measured at Fair Value on a Nonrecurring Basis at June 30, 2021
	(In Thousands)
	Balance at June 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent impaired loans	$	7,516	$	-	$	-	$	7,516
Other real estate owned - residential		137		-		-		137

	Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2020
	(In Thousands)
	Balance at December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent impaired loans	$	7,703	$	-	$	-	$	7,703
Other real estate owned - residential		-		-		-		-

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details