Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2020

Schedule of Fair Value of Assets Measured on Recurring Basis

The following table presents the assets reported on the Consolidated Balance Sheets at their fair value on a recurring basis as of March 31, 2020 and December 31, 2019 by level within the fair value hierarchy. No liabilities are carried at fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Equity securities with readily determinable values and U.S. Treasury Notes are valued at the closing price reported on the active market on which the individual securities are traded. Obligations of U.S. government agencies, mortgage-backed securities, asset-backed securities, obligations of states and political subdivisions and corporate bonds are valued at observable market data for similar assets. Equity securities without readily determinable values are carried at amortized cost adjusted for impairment and observable price changes.

(Dollars in thousands)	Level I		Level II		Level III		Total
March 31, 2020
Assets:
Securities available-for-sale
U.S. Treasury security	$	1,020	$	—	$	—	$	1,020
U.S. Government agencies		—		2,003		—		2,003
Mortgage-backed securities of government agencies		—		75,207		—		75,207
Asset-backed securities of government agencies		—		805		—		805
State and political subdivisions		—		20,957		—		20,957
Corporate bonds		—		8,271		—		8,271
Total available-for-sale securities	$	1,020	$	107,243	$	—	$	108,263
Equity securities	$	33	$	—	$	—	$	33

December 31, 2019
Assets:
Securities available-for-sale
U.S. Treasury security	$	999	$	—	$	—	$	999
U.S. Government agencies		—		5,496		—		5,496
Mortgage-backed securities of government agencies		—		75,857		—		75,857
Asset-backed securities of government agencies		—		917		—		917
State and political subdivisions		—		21,511		—		21,511
Corporate bonds		—		7,366		—		7,366
Total available-for-sale securities	$	999	$	111,147	$	—	$	112,146
Equity securities	$	46	$	—	$	—	$	46

Schedule of Fair Value of Assets Measured on Nonrecurring Basis

NOTE 5 – FAIR VALUE MEASUREMENTS – (CONTINUED)

The following table presents the assets measured on a nonrecurring basis on the Consolidated Balance Sheets at their fair value as of March 31, 2020 and December 31, 2019, by level within the fair value hierarchy. An impaired loan is written down to fair value through the establishment of specific reserves or a charge down is taken to reduce the loan to fair value of the collateral (less estimated selling costs) and the loan is included in the following table as a Level III measurement. Techniques used to value the collateral that secure the impaired loans include quoted market prices for identical assets classified as Level I inputs, and observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

(Dollars in thousands)	Level I		Level II		Level III		Total
March 31, 2020
Assets measured on a nonrecurring basis:
Other real estate owned	$	—	$	—	$	99	$	99

December 31, 2019
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	553	$	553
Other real estate owned		—		—		99		99

Schedule of Quantitative Information of Assets Measured at Fair Value on Nonrecurring Basis

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level III inputs to determine fair value. As of March 31, 2020 there were no impaired loans carried at fair value under the methods described above.

Quantitative Information about Level III Fair Value Measurements

(Dollars in thousands)

Fair Value

Estimate

Valuation

Techniques

Unobservable

Input

Range

(Weighted Average)

March 31, 2020

Appraisal adjustments ²

-33

Other real estate

owned

Appraisal of collateral ¹

Liquidation expense ²

-10

December 31, 2019

Remaining term

3.9 yrs to 26.9 yrs / (16 yrs)

Impaired loans

553

Discounted cash flow

Discount rate

3.5% to 6.0% / (5.3%)

Appraisal adjustments ²

-33

Other real estate

owned

Appraisal of collateral ¹

Liquidation expense ²

-10

¹	Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various inputs which are not identifiable.

²	Appraisals may be adjusted by management for qualitative factors. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.