FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2023

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Schedule of assets measured at fair value and the valuation methods used

	March 31, 2023
	Quoted
	Prices		Other
	in Active		Observable		Unobservable		Total
	Markets		Inputs		Inputs		Fair
(In Thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Recurring fair value measurements, assets:
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of the U.S. Treasury	$	31,163	$	0	$	0	$	31,163
Obligations of U.S. Government agencies		0		23,348		0		23,348
Bank holding company debt securities		0		24,723		0		24,723
Obligations of states and political subdivisions:
Tax-exempt		0		117,812		0		117,812
Taxable		0		57,572		0		57,572
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		97,807		0		97,807
Residential collateralized mortgage obligations		0		38,117		0		38,117
Commercial mortgage-backed securities		0		74,195		0		74,195
Private label commercial mortgage-backed securities		0		8,077		0		8,077
Total available-for-sale debt securities		31,163		441,651		0		472,814
Marketable equity security		873		0		0		873
Servicing rights		0		0		2,585		2,585
Interest rate swap agreements, assets		0		3,145		0		3,145
Total recurring fair value measurements, assets	$	32,036	$	444,796	$	2,585	$	479,417
Recurring fair value measurements, liabilities,
Interest rate swap agreements, liabilities	$	0	$	3,145	$	0	$	3,145
Nonrecurring fair value measurements, assets:
Loans individually evaluated for credit loss, net	$	0	$	0	$	4,907	$	4,907
Foreclosed assets held for sale		0		0		459		459
Total nonrecurring fair value measurements, assets	$	0	$	0	$	5,366	$	5,366

	December 31, 2022
	Quoted
	Prices		Other
	in Active		Observable		Unobservable		Total
	Markets		Inputs		Inputs		Fair
(In Thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Recurring fair value measurements, assets:
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of the U.S. Treasury	$	31,836	$	0	$	0	$	31,836
Obligations of U.S. Government agencies		0		23,430		0		23,430
Bank holding company debt securities		0		25,386		0		25,386
Obligations of states and political subdivisions:
Tax-exempt		0		132,623		0		132,623
Taxable		0		56,812		0		56,812
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		99,941		0		99,941
Residential collateralized mortgage obligations		0		40,296		0		40,296
Commercial mortgage-backed securities		0		79,686		0		79,686
Private label commercial mortgage-backed securities		0		8,023		0		8,023
Total available-for-sale debt securities		31,836		466,197		0		498,033
Marketable equity security		859		0		0		859
Servicing rights		0		0		2,653		2,653
Interest rate swap agreements, assets		0		3,638		0		3,638
Total recurring fair value measurements, assets	$	32,695	$	469,835	$	2,653	$	505,183
Recurring fair value measurements, liabilities,
Interest rate swap agreements, liabilities	$	0	$	3,638	$	0	$	3,638
Nonrecurring fair value measurements, assets:
Impaired loans, net	$	0	$	0	$	3,007	$	3,007
Foreclosed assets held for sale		0		0		275		275
Total nonrecurring fair value measurements, assets	$	0	$	0	$	3,282	$	3,282

Schedule of reconciliation of level 3 activity

(In Thousands)	Three Months Ended
	March 31, 2023		March 31, 2022
Servicing rights balance, beginning of period	$	2,653	$	2,329
Originations of servicing rights		15		98
Unrealized (loss) gain included in earnings		(83)		2
Servicing rights balance, end of period	$	2,585	$	2,429

Schedule of estimated fair values, and carrying amounts of financial instruments not recorded at fair value

(In Thousands)	Fair Value	March 31, 2023				December 31, 2022
	Hierarchy	Carrying		Fair		Carrying		Fair
	Level	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	46,112	$	46,112	$	47,698	$	47,698
Certificates of deposit	Level 2		6,100		5,729		7,350		6,956
Restricted equity securities (included in other assets)	Level 2		16,246		16,246		14,418		14,418
Loans, net	Level 3		1,726,793		1,691,155		1,723,425		1,674,002
Accrued interest receivable	Level 2		8,805		8,805		8,653		8,653
Financial liabilities:
Deposits with no stated maturity	Level 2		1,584,383		1,584,383		1,702,404		1,702,404
Time deposits	Level 2		331,657		329,780		295,189		293,814
Short-term borrowings	Level 2		93,396		93,396		80,062		80,062
Long-term borrowings	Level 2		98,701		97,992		62,347		60,944
Senior debt	Level 2		14,781		13,346		14,765		9,712
Subordinated debt	Level 2		24,634		21,491		24,607		16,186
Accrued interest payable	Level 2		980		980		461		461

Recurring fair value measurements

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Schedule of inputs and valuation techniques

	Fair Value at
	3/31/2023		Valuation	Unobservable				Method or Value As of
Asset	(In Thousands)		Technique	Input(s)				3/31/2023
Servicing rights	$	2,585	Discounted cash flow	Discount rate		13.00	%	Rate used through modeling period
				Loan prepayment speeds		138.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	of payments are late
						5.00	%	late fees assessed
					$	1.94		Miscellaneous fees per account per month
				Servicing costs	$	6.00		Monthly servicing cost per account
					$	24.00		Additional monthly servicing cost per loan on loans more than 30 days delinquent
						1.50	%	of loans more than 30 days delinquent
						3.00	%	annual increase in servicing costs

	Fair Value at
	12/31/2022		Valuation	Unobservable				Method or Value As of
Asset	(In Thousands)		Technique	Input(s)				12/31/2022
Servicing rights	$	2,653	Discounted cash flow	Discount rate		13.00	%	Rate used through modeling period
				Loan prepayment speeds		133.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	of payments are late
						5.00	%	late fees assessed
					$	1.94		Miscellaneous fees per account per month
				Servicing costs	$	6.00		Monthly servicing cost per account
					$	24.00		Additional monthly servicing cost per loan on loans more than 30 days delinquent
						1.50	%	of loans more than 30 days delinquent
						3.00	%	annual increase in servicing costs

Nonrecurring fair value measurements

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Schedule of inputs and valuation techniques

(Dollars In Thousands)									Weighted
			Valuation						Average
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset	3/31/2023		3/31/2023		3/31/2023		Technique	Inputs	3/31/2023
Loans individually evaluated for credit loss:
Commercial real estate - nonowner occupied	$	4,781	$	609	$	4,172	Sales comparison	Discount to appraised value	27	%
Commercial real estate - owner occupied		812		183		629	Sales comparison & SBA guaranty	Discount to appraised value	56	%
All other commercial loans		209		103		106	Liquidation & SBA guaranty	Discount to appraised value	20	%
Total loans individually evaluated for credit loss	$	5,802	$	895	$	4,907
Foreclosed assets held for sale - real estate:
Residential (1-4 family)	$	184	$	0	$	184	Sales comparison	Discount to appraised value	36	%
Commercial real estate		275		0		275	Sales comparison	Discount to appraised value	50	%
Total foreclosed assets held for sale	$	459	$	0	$	459

(Dollars In Thousands)									Weighted
			Valuation						Average
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset	12/31/2022		12/31/2022		12/31/2022		Technique	Inputs	12/31/2022
Impaired loans:
Commercial:
Commercial loans secured by real estate	$	3,400	$	427	$	2,973	Sales comparison	Discount to appraised value	25	%
Commercial and industrial		60		26		34	Liquidation of assets	Discount to appraised value	33	%
Total impaired loans	$	3,460	$	453	$	3,007
Foreclosed assets held for sale - real estate:
Commercial real estate	$	275	$	0	$	275	Sales comparison	Discount to appraised value	50	%
Total foreclosed assets held for sale	$	275	$	0	$	275