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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements Fair Value Hierarchy Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 — Quoted market prices (unadjusted) for identical instruments traded in active markets that the entity has the ability to access as of the measurement date. Level 2 —Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 — Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The estimated carrying and fair values of the Company’s financial instruments not carried at fair value are as follows (in thousands):
|  | September 30, 2023
|  | Carrying Amount |  | Fair Value
(In thousands) |  |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets: |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 27,558 |  |  | $ | 27,558 |  |  | $ | — |  |  | $ | — |  |  | $ | 27,558 |
Interest-earning deposits in other banks |  | 47,017 |  |  | 47,017 |  |  | — |  |  | — |  |  | 47,017 |
Held-to-maturity investment securities |  | 303,451 |  |  | — |  |  | 260,023 |  |  | — |  |  | 260,023 |
Loans, net |  | 1,259,877 |  |  | — |  |  | — |  |  | 1,172,613 |  |  | 1,172,613 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |
Time deposits |  | 163,246 |  |  | — |  |  | 161,758 |  |  | — |  |  | 161,758 |
Senior debt and subordinated debentures |  | 69,708 |  |  | — |  |  | — |  |  | 58,848 |  |  | 58,848 |
|  | December 31, 2022
|  | Carrying Amount |  | Fair Value
(In thousands) |  |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets: |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 25,485 |  |  | $ | 25,485 |  |  | $ | — |  |  | $ | — |  |  | $ | 25,485 |
Interest-earning deposits in other banks |  | 5,685 |  |  | 5,685 |  |  | — |  |  | — |  |  | 5,685 |
Held-to-maturity investment securities |  | 305,107 |  |  | — |  |  | 271,249 |  |  | — |  |  | 271,249 |
Loans, net |  | 1,245,456 |  |  | — |  |  | — |  |  | 1,113,849 |  |  | 1,113,849 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |
Time deposits |  | 67,923 |  |  | — |  |  | 67,047 |  |  | — |  |  | 67,047 |
Short-term borrowings |  | 46,000 |  |  | — |  |  | 46,000 |  |  | — |  |  | 46,000 |
Subordinated debentures |  | 69,599 |  |  | — |  |  | — |  |  | 62,504 |  |  | 62,504 |
The methods and assumptions used to estimate fair values are described as follows: (a) Cash and Cash Equivalents — The carrying amounts of cash and due from banks, interest-earning deposits in other banks, and Federal funds sold approximate fair values and are classified as Level 1. (b) Investment securities — The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). (c) Loans — Fair values of loans are estimated as follows: fixed and variable loans are estimated using discounted cash flow analyses, taking into consideration various factors including loan type, credit loss and prepayment expectations. The loan cash flows are discounted to present value using a combination of existing market rates and liquidity spreads as well as underlying index rates and margins on variable rate loans resulting in a Level 3 classification. (d) Time Deposits — Fair value for fixed and variable rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities resulting in a Level 2 classification. (e) Short-Term Borrowings — The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification. (f) Subordinated Debentures and Senior Debt — The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification. Assets Recorded at Fair Value The Company is required or permitted to record the following assets at fair value on a recurring basis. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022:
|  | Fair Value Measurements Using
September 30, 2023 |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Available-for-sale debt securities: |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 8,616 |  |  | $ | — |  |  | $ | 8,616 |  |  | $ | — |
U.S. Government agencies |  | 92 |  |  | — |  |  | 92 |  |  | — |
Obligations of states and political subdivisions |  | 166,125 |  |  | — |  |  | 166,125 |  |  | — |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 85,946 |  |  | — |  |  | 85,946 |  |  | — |
Private label mortgage and asset backed securities |  | 332,651 |  |  | — |  |  | 332,651 |  |  | — |
Equity securities |  | 6,354 |  |  | 6,354 |  |  | — |  |  | — |
Total assets measured at fair value on a recurring basis |  | $ | 599,784 |  |  | $ | 6,354 |  |  | $ | 593,430 |  |  | $ | — |
|  | Fair Value Measurements Using
December 31, 2022 |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Available-for-sale debt securities: |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 8,707 |  |  | $ | — |  |  | $ | 8,707 |  |  | $ | — |
U.S. Government agencies |  | 98 |  |  | — |  |  | 98 |  |  | — |
Obligations of states and political subdivisions |  | 174,985 |  |  | — |  |  | 174,985 |  |  | — |
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations |  | 109,493 |  |  | — |  |  | 109,493 |  |  | — |
Private label mortgage and asset backed securities |  | 355,542 |  |  | — |  |  | 355,542 |  |  | — |
Equity securities |  | 6,558 |  |  | 6,558 |  |  | — |  |  | — |
Total assets measured at fair value on a recurring basis |  | $ | 655,383 |  |  | $ | 6,558 |  |  | $ | 648,825 |  |  | $ | — |
There were no changes in valuation techniques used during the nine months ended September 30, 2023 or the year ended December 31, 2022. There were no assets measured on a non-recurring basis at September 30, 2023 and December 31, 2022.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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