FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments require disclosure of fair value information, whether or not recognized in the consolidated balance sheets, when it is practical to estimate the fair value. A financial instrument is defined as cash, evidence of an ownership interest in an entity or a contractual obligation which requires the exchange of cash. Certain items are specifically excluded from the financial instrument fair value disclosure requirements, including the Company’s common stock, OREO, premises and equipment and other assets and liabilities.

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Therefore, any aggregate unrealized gains or losses should not be interpreted as a forecast of future earnings or cash flows. Furthermore, the fair values disclosed should not be interpreted as the aggregate current value of the Company.

The Company’s estimated fair values of financial instruments are presented in the following tables.



September 30, 2019	Carrying Amount		Fair Value		Fair Value Measurements
Description of Asset (dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Assets
Investment securities - AFS	$	131,288	$	131,288	$	—	$	131,288	$	—
Investment securities - HTM	88,654		90,035		1,494		88,541		—
Equity securities carried at fair value through income	4,665		4,665		—		4,665
Non-marketable equity securities in other financial institutions	209		209		—		209		—
FHLB Stock	4,510		4,510		—		4,510		—
Net loans receivable	1,405,856		1,383,237		—		—		1,383,237
Accrued Interest Receivable	5,213		5,213		—		5,213		—
Investment in BOLI	36,958		36,958		—		36,958		—

Liabilities
Savings, NOW and money market accounts	$	1,125,224	1,125,224		$	—	$	1,125,224	$	—
Time deposits	434,736		437,289		—		437,289		—
Short-term borrowings	15,000		15,033		—		15,033		—
Long-term debt	55,387		55,708		—		55,708		—
TRUPs	12,000		10,362		—		10,362		—
Subordinated notes	23,000		23,068		—		23,068		—

See the Company’s methodologies disclosed in Note 21 of the Company’s 2018 Form 10‑K for the fair value methodologies used as of December 31, 2018:



December 31, 2018	Carrying Amount		Fair Value		Fair Value Measurements
Description of Asset (dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Assets
Investment securities - AFS	$	119,976	$	119,976	$	—	$	119,976	$	—
Investment securities - HTM	96,271		93,745		999		92,746		—
Equity securities carried at fair value through income	4,428		4,428				4,428		—
Non-marketable equity securities in other financial institutions	209		209		—		209		—
FHLB Stock	3,821		3,821		—		3,821		—
Net loans receivable	1,337,129		1,298,465		—		—		1,298,465
Accrued Interest Receivable	4,957		4,957		—		4,957		—
Investment in BOLI	36,295		36,295		—		36,295		—

Liabilities
Savings, NOW and money market accounts	$	982,600	982,600		$	—	$	982,600	$	—
Time deposits	447,029		446,683		—		446,683		—
Short-term borrowings	35,000		35,016		—		35,016		—
Long-term debt	20,436		20,568		—		20,568		—
TRUPs	12,000		10,924		—		10,924		—
Subordinated notes	23,000		23,085		—		23,085		—

At September 30, 2019 and December 31, 2018, the Company had outstanding loan commitments and standby letters of credit of $71.0 million and $47.3 million, respectively, and $18.7 million and $21.2 million, respectively. Additionally, at September 30, 2019 and December 31, 2018, customers had $228.3 million and $211.5 million, respectively, available and unused on lines of credit, which include lines of credit for commercial customers, home equity loans as well as builder and construction lines. Based on the short-term lives of these instruments, the Company does not believe that the fair value of these instruments differs significantly from their carrying values.

The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2019 and December 31, 2018. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.