Note 17 – Financial Instruments

Financial instruments as of the dates indicated were as follows:

					Quoted Prices
					In Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
(Dollars in thousands)	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2019
Assets
Cash and cash equivalents	$	59,558	$	59,558	$	59,558	$	—	$	—
Equity securities at fair value		2,851		2,851		1,379		—		1,472
Securities available for sale		339,579		339,579		—		327,212		12,367
Federal Home Loan Bank and Federal Reserve Bank stock		6,458		6,458		—		6,458		—
Loans held for sale		3,095		3,134		—		3,134		—
Loans to other financial institutions		51,048		51,048		—		51,048		—
Loans, net		797,991		793,270		—		—		793,270
Accrued interest receivable		3,965		3,965		—		3,965		—

Liabilities
Noninterest-bearing deposits		287,460		287,460		—		287,460		—
Interest-bearing deposits		867,142		867,154		—		867,154		—
Federal Home Loan Bank advances		33,198		33,243		—		33,243		—
Accrued interest payable		411		411		—		411		—

December 31, 2018
Assets
Cash and due from banks	$	19,690	$	19,690	$	19,690	$	—	$	—
Equity securities at fair value		2,847		2,847		1,961		—		886
Securities available for sale		166,602		166,602		—		158,104		8,498
Federal Home Loan Bank and Federal Reserve Bank stock		3,567		3,567		—		3,567		—
Loans held for sale		831		856		—		856		—
Loans to other financial institutions		20,644		20,644		—		20,644		—
Loans, net		404,400		399,091		—		—		399,091
Accrued interest receivable		2,267		2,267		—		2,267		—

Liabilities
Noninterest-bearing deposits		153,542		153,542		—		153,542		—
Interest-bearing deposits		423,473		422,381		—		422,381		—
Federal funds purchased		4,800		4,800		—		4,800		—
Federal Home Loan Bank advances		5,233		5,241		—		5,241		—
Accrued interest payable		210		210		—		210		—

The estimated fair values approximate the carrying amounts for all financial instruments except those described later in this paragraph. The methodology for determining the estimated fair value for securities available for sale is described in Note 18. The estimated fair value for loans follows the guidance in ASU 2016-01 which prescribes an “exit price” approach, which incorporates discounts for credit, liquidity, and marketability. The allowance for loan losses is considered to be a reasonable estimate of discount for credit quality concerns. The estimated fair value of loans also included the mark to market adjustments related to the Company’s merger with County.

The estimated fair value of deposits is based on comparing the average rate paid on deposits compared to the three month LIBOR rate which is assumed to be the replacement value of these deposits. The estimated fair values for time deposits and FHLB advances are based on the rates paid at December 31 for new deposits or FHLB advances, applied until maturity. The estimated fair values for other financial instruments and off-balance sheet loan commitments are considered nominal.