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

9 Months Ended

Sep. 30, 2021

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Schedule of assets measured at fair value and the valuation methods used


		September 30, 2021
		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, assets:
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of the U.S. Treasury		$	0		$	25,068		$	0		$	25,068
Obligations of U.S. Government agencies			0			24,312			0			24,312
Obligations of states and political subdivisions:
Tax-exempt			0			139,244			0			139,244
Taxable			0			70,493			0			70,493
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			0			60,629			0			60,629
Residential collateralized mortgage obligations			0			44,593			0			44,593
Commercial mortgage-backed securities			0			73,518			0			73,518
Total available-for-sale debt securities			0			437,857			0			437,857
Marketable equity security			981			0			0			981
Servicing rights			0			0			2,247			2,247
Interest rate swap agreements, assets			0			3,902			0			3,902
Total recurring fair value measurements, assets		$	981		$	441,759		$	2,247		$	444,987

Recurring fair value measurements, liabilities,
Interest rate swap agreements, liabilities		$	0		$	3,902		$	0		$	3,902

Nonrecurring fair value measurements, assets:
Impaired loans with a valuation allowance		$	0		$	0		$	7,225		$	7,225
Valuation allowance			0			0			(883)			(883)
Impaired loans, net			0			0			6,342			6,342
Foreclosed assets held for sale			0			0			1,374			1,374
Total nonrecurring fair value measurements, assets		$	0		$	0		$	7,716		$	7,716


		December 31, 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, assets:
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of the U.S. Treasury		$	0		$	12,182		$	0		$	12,182
Obligations of U.S. Government agencies			0			26,344			0			26,344
Obligations of states and political subdivisions:
Tax-exempt			0			122,401			0			122,401
Taxable			0			47,452			0			47,452
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			0			38,176			0			38,176
Residential collateralized mortgage obligations			0			57,467			0			57,467
Commercial mortgage-backed securities			0			45,310			0			45,310
Total available-for-sale debt securities			0			349,332			0			349,332
Marketable equity security			1,000			0			0			1,000
Servicing rights			0			0			1,689			1,689
Interest rate swap agreements, assets			0			6,566			0			6,566
Total recurring fair value measurements, assets		$	1,000		$	355,898		$	1,689		$	358,587

Recurring fair value measurements, liabilities,
Interest rate swap agreements, liabilities		$	0		$	6,566		$	0		$	6,566

Nonrecurring fair value measurements, assets:
Impaired loans with a valuation allowance		$	0		$	0		$	8,082		$	8,082
Valuation allowance			0			0			(925)			(925)
Impaired loans, net			0			0			7,157			7,157
Foreclosed assets held for sale			0			0			1,338			1,338
Total nonrecurring fair value measurements, assets		$	0		$	0		$	8,495		$	8,495

Schedule of reconciliation of level 3 activity


(In Thousands)		Three Months Ended						Nine Months Ended
		September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Servicing rights balance, beginning of period		$	2,116		$	1,284		$	1,689		$	1,277
Originations of servicing rights			176			374			567			777
Unrealized loss included in earnings			(45)			(221)			(9)			(617)
Servicing rights balance, end of period		$	2,247		$	1,437		$	2,247		$	1,437

Schedule of estimated fair values, and carrying amounts of financial instruments not recorded at fair value


(In Thousands)		Fair Value		September 30, 2021						December 31, 2020
		Hierarchy		Carrying			Fair			Carrying			Fair
		Level		Amount			Value			Amount			Value
Financial assets:
Cash and cash equivalents		Level 1		$	190,155		$	190,155		$	96,017		$	96,017
Certificates of deposit		Level 2			8,840			8,949			5,840			6,054
Restricted equity securities (included in Other Assets)		Level 2			9,650			9,650			9,970			9,970
Loans, net		Level 3			1,563,008			1,586,592			1,632,824			1,646,207
Accrued interest receivable		Level 2			7,307			7,307			8,293			8,293

Financial liabilities:
Deposits with no stated maturity		Level 2			1,637,463			1,637,463			1,430,062			1,430,062
Time deposits		Level 2			302,678			304,330			390,407			393,566
Short-term borrowings		Level 2			1,875			1,685			20,022			19,974
Long-term borrowings		Level 2			38,680			39,229			54,608			55,723
Senior debt		Level 2			14,685			15,000			0			0
Subordinated debt		Level 2			32,988			33,150			16,553			16,680
Accrued interest payable		Level 2			633			633			390			390

Recurring fair value measurements

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Schedule of inputs and valuation techniques


		Fair Value at
		9/30/2021			Valuation		Unobservable					Method or Value As of
Asset		(In Thousands)			Technique		Input(s)					9/30/2021
Servicing rights		$	2,247		Discounted cash flow		Discount rate			13.00	%	Rate used through modeling period
							Loan prepayment speeds			221.00	%	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
		12/31/2020			Valuation		Unobservable					Method or Value As of
Asset		(In Thousands)			Technique		Input(s)					12/31/2020
Servicing rights		$	1,689		Discounted cash flow		Discount rate			13.00	%	Rate used through modeling period
							Loan prepayment speeds			277.00	%	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

Nonrecurring fair value measurements

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Schedule of inputs and valuation techniques


(Dollars In Thousands)															Weighted
					Valuation										Average
		Balance at			Allowance at			Fair Value at			Valuation		Unobservable		Discount at
Asset		9/30/2021			9/30/2021			9/30/2021			Technique		Inputs		9/30/2021

Impaired loans:
Commercial:
Commercial loans secured by real estate		$	6,480		$	672		$	5,808		Sales comparison		Discount to appraised value		27	%
Commercial and industrial			72			72			0		Liquidation of assets		Discount to appraised value		100	%
Residential mortgage loans - first and junior liens			673			139			534		Sales comparison		Discount to appraised value		33	%
Total impaired loans		$	7,225		$	883		$	6,342
Foreclosed assets held for sale - real estate:
Commercial real estate		$	1,195		$	0		$	1,195		Sales comparison		Discount to appraised value		47	%
Residential (1-4 family)			179			0			179		Sales comparison		Discount to appraised value		52	%
Total foreclosed assets held for sale		$	1,374		$	0		$	1,374


(Dollars In Thousands)															Weighted
					Valuation										Average
		Balance at			Allowance at			Fair Value at			Valuation		Unobservable		Discount at
Asset		12/31/2020			12/31/2020			12/31/2020			Technique		Inputs		12/31/2020

Impaired loans:
Commercial:
Commercial loans secured by real estate		$	6,501		$	691		$	5,810		Sales comparison		Discount to appraised value		28	%
Commercial and industrial			72			72			0		Liquidation of assets		Discount to appraised value		100	%
Residential mortgage loans - first and junior liens			1,509			162			1,347		Sales comparison		Discount to appraised value		31	%
Total impaired loans		$	8,082		$	925		$	7,157
Foreclosed assets held for sale - real estate:
Commercial real estate		$	1,258		$	0		$	1,258		Sales comparison		Discount to appraised value		44	%
Residential (1-4 family)			80			0			80		Sales comparison		Discount to appraised value		36	%
Total foreclosed assets held for sale		$	1,338		$	0		$	1,338

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.

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