Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 5 – FAIR VALUE MEASUREMENTS

The Company provides disclosures about assets and liabilities carried at fair value.  The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. The three broad levels of the fair value hierarchy are described below:

Level I:	Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level II:	Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by corroborated or other means.  If the asset or liability has a specified (contractual) term, the Level II input must be observable for substantially the full term of the asset or liability.
Level III:	Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

NOTE 5 – FAIR VALUE MEASUREMENTS (CONTINUED)

The following table presents the assets reported on the Consolidated Balance Sheets at their fair value on a recurring basis as of September 30, 2021 and December 31, 2020 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 and are not included in the table below.

(Dollars in thousands)	Level I		Level II		Level III		Total
September 30, 2021
Assets:
Securities available-for-sale
U.S. Treasury security	$	3,846	$	—	$	—	$	3,846
U.S. Government agencies		—		13,817		—		13,817
Mortgage-backed securities of government agencies		—		132,938		—		132,938
Asset-backed securities of government agencies		—		761		—		761
State and political subdivisions		—		25,759		—		25,759
Corporate bonds		—		8,333		—		8,333
Total available-for-sale securities	$	3,846	$	181,608	$	—	$	185,454
Equity securities	$	61	$	—	$	—	$	61
December 31, 2020
Assets:
Securities available-for-sale
U.S. Treasury security	$	1,011	$	—	$	—	$	1,011
U.S. Government agencies		—		14,006		—		14,006
Mortgage-backed securities of government agencies		—		140,012		—		140,012
Asset-backed securities of government agencies		—		837		—		837
State and political subdivisions		—		23,966		—		23,966
Corporate bonds		—		10,606		—		10,606
Total available-for-sale securities	$	1,011	$	189,427	$	—	$	190,438
Equity securities	$	41	$	—	$	—	$	41

NOTE 5 – FAIR VALUE MEASUREMENTS (CONTINUED)

There were no assets measured on a nonrecurring basis at September 30, 2021.  The following table presents the assets measured on a nonrecurring basis on the Consolidated Balance Sheets at their fair value as of December 31, 2020, 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
December 31, 2020
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	10	$	10

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.   

	Quantitative Information about Level III Fair Value Measurements
(Dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
December 31, 2020
Impaired loans	$	10	Appraisal of collateral 1	Appraisal adjustments 2	-20%
				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.