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FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of fair Value, by Balance Sheet Grouping


	June 30, 2020
	Quoted
	Prices		Other
	in Active		Observable		Unobservable		Total
	Markets		Inputs		Inputs		Fair
(In Thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Recurring fair value measurements
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of U.S. Government agencies	$	0	$	11,673	$	0	$	11,673
Obligations of states and political subdivisions:
Tax-exempt		0		91,643		0		91,643
Taxable		0		39,784		0		39,784
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		51,520		0		51,520
Residential collateralized mortgage obligations		0		89,435		0		89,435
Commercial mortgage-backed securities		0		48,133		0		48,133
Total available for sale debt Securities		0		332,188		0		332,188
Marketable equity security		1,003		0		0		1,003
Servicing rights		0		0		1,284		1,284
Total recurring fair value measurements	$	1,003	$	332,188	$	1,284	$	334,475

Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	12,189	$	12,189
Valuation allowance		0		0		(1,956)		(1,956)
Impaired loans, net		0		0		10,233		10,233
Foreclosed assets held for sale		0		0		1,593		1,593
Total nonrecurring fair value measurements	$	0	$	0	$	11,826	$	11,826


	December 31, 2019
	Quoted
	Prices		Other
	in Active		Observable		Unobservable		Total
	Markets		Inputs		Inputs		Fair
(In Thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Recurring fair value measurements
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of U.S. Government agencies	$	0	$	17,000	$	0	$	17,000
Obligations of states and political subdivisions:
Tax-exempt		0		70,760		0		70,760
Taxable		0		36,303		0		36,303
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		59,210		0		59,210
Residential collateralized mortgage obligations		0		114,723		0		114,723
Commercial mortgage-backed securities		0		48,727		0		48,727
Total available-for-sale debt securities		0		346,723		0		346,723
Marketable equity security		979		0		0		979
Servicing rights		0		0		1,277		1,277
Total recurring fair value measurements	$	979	$	346,723	$	1,277	$	348,979

Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	3,375	$	3,375
Valuation allowance		0		0		(1,051)		(1,051)
Impaired loans, net		0		0		2,324		2,324
Foreclosed assets held for sale		0		0		2,886		2,886
Total nonrecurring fair value measurements	$	0	$	0	$	5,210	$	5,210

Schedule of fair Value Measurement Inputs and Valuation Techniques


	Fair Value at
	6/30/20		Valuation	Unobservable				Method or Value As of
Asset	(In Thousands)		Technique	Input(s)				6/30/20
Servicing rights	$	1,284	Discounted cash flow	Discount rate		12.50	%	Rate used through modeling period
				Loan prepayment speeds		285.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	of payments are late
						5.00	%	late fees assessed
					$	1.94		Miscellaneous fees per account per month
				Servicing costs	$	6.00		Monthly servicing cost per account
					$	24.00		Additional monthly servicing cost per loan on loans more than 30 days delinquent
						1.50	%	of loans more than 30 days delinquent
						3.00	%	annual increase in servicing costs


	Fair Value at
	12/31/19		Valuation	Unobservable				Method or Value As of
Asset	(In Thousands)		Technique	Input(s)				12/31/19
Servicing rights	$	1,277	Discounted cash flow	Discount rate		12.50	%	Rate used through modeling period
				Loan prepayment speeds		183.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	of payments are late
						5.00	%	late fees assessed
					$	1.94		Miscellaneous fees per account per month
				Servicing costs	$	6.00		Monthly servicing cost per account
					$	24.00		Additional monthly servicing cost per loan on loans more than 30 days delinquent
						1.50	%	of loans more than 30 days delinquent
						3.00	%	annual increase in servicing costs

Schedule of fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation


(In Thousands)	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Servicing rights balance, beginning of period	$	1,226	$	1,347	$	1,277	$	1,404
Originations of servicing rights		328		46		403		66
Unrealized losses included in earnings		(270)		(71)		(396)		(148)
Servicing rights balance, end of period	$	1,284	$	1,322	$	1,284	$	1,322

Schedule of fair Value Measurements, Recurring and Nonrecurring


(In Thousands)	Fair Value	June 30, 2020				December 31, 2019
	Hierarchy	Carrying		Fair		Carrying		Fair
	Level	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	73,812	$	73,812	$	31,122	$	31,122
Certificates of deposit	Level 2		3,830		4,078		4,080		4,227
Restricted equity securities (included in Other Assets)	Level 2		8,861		8,861		10,321		10,321
Loans, net	Level 3		1,230,387		1,236,040		1,172,386		1,181,000
Accrued interest receivable	Level 2		6,326		6,326		5,001		5,001

Financial liabilities:
Deposits with no stated maturity	Level 2		1,039,401		1,039,401		877,965		877,965
Time deposits	Level 2		341,777		344,959		374,695		376,738
Short-term borrowings	Level 2		14,404		14,271		86,220		86,166
Long-term borrowings	Level 2		72,904		74,545		52,127		52,040
Accrued interest payable	Level 2		312		312		311		311

Recurring fair value measurements

Notes Tables

Schedule of fair Value Measurement Inputs and Valuation Techniques


(In Thousands, Except									Weighted
Percentages)			Valuation						Average
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset	6/30/20		6/30/20		6/30/20		Technique	Inputs	6/30/20

Impaired loans:
Residential mortgage loans -
first and junior liens	$	1,520	$	164	$	1,355	Sales comparison	Discount to appraised value	31	%
Commercial:
Commercial loans secured by real estate		6,754		494		6,261	Sales comparison	Discount to appraised value	38	%
Commercial and industrial		3,580		1,264		2,316	Liquidation of assets	Discount to appraised value	35	%
Loans secured by farmland		335		34		302	Sales comparison	Discount to appraised value	42	%
Total impaired loans	$	12,189	$	1,956	$	10,234
Foreclosed assets held for sale -
real estate:
Residential (1-4 family)	$	118	$	0	$	118	Sales comparison	Discount to appraised value	55	%
Land		70		0		70	Sales comparison	Discount to appraised value	53	%
Commercial real estate		1,405		0		1,405	Sales comparison	Discount to appraised value	38	%
Total foreclosed assets held for sale	$	1,593	$	0	$	1,593


(In Thousands, Except									Weighted
Percentages)	Valuation								Average
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset	12/31/19		12/31/19		12/31/19		Technique	Inputs	12/31/19

Impaired loans:
Residential mortgage loans -
first and junior liens	$	732	$	176	$	556	Sales comparison	Discount to appraised value	30	%
Commercial:
Commercial and industrial		106		89		17	Sales comparison	Discount to appraised value	69	%
Commercial and industrial		798		60		738	Liquidation of accounts receivable	Discount to borrower's financial statement value	15	%
Commercial construction and land		1,261		678		583	Sales comparison	Discount to appraised value	47	%
Loans secured by farmland		478		48		430	Sales comparison	Discount to appraised value	46	%
Total impaired loans	$	3,375	$	1,051	$	2,324
Foreclosed assets held for sale -
real estate:
Residential (1-4 family)	$	292	$	0	$	292	Sales comparison	Discount to appraised value	46	%
Land		70		0		70	Sales comparison	Discount to appraised value	53	%
Commercial real estate		2,524		0		2,524	Sales comparison	Discount to appraised value	39	%
Total foreclosed assets held for sale	$	2,886	$	0	$	2,886

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details