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

3 Months Ended

Mar. 31, 2022

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

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


		March 31, 2022
		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		$	36,494		$	0		$	0		$	36,494
Obligations of U.S. Government agencies			0			23,408			0			23,408
Bank holding company debt securities			0			24,043			0			24,043
Obligations of states and political subdivisions:
Tax-exempt			0			143,633			0			143,633
Taxable			0			69,629			0			69,629
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			0			106,568			0			106,568
Residential collateralized mortgage obligations			0			43,868			0			43,868
Commercial mortgage-backed securities			0			85,270			0			85,270
Total available-for-sale debt securities			36,494			496,419			0			532,913
Marketable equity security			926			0			0			926
Servicing rights			0			0			2,429			2,429
Interest rate swap agreements, assets			0			137			0			137
Total recurring fair value measurements, assets		$	37,420		$	496,556		$	2,429		$	536,405

Recurring fair value measurements, liabilities,
Interest rate swap agreements, liabilities		$	0		$	137		$	0		$	137

Nonrecurring fair value measurements, assets:
Impaired loans, net		$	0		$	0		$	5,798		$	5,798
Foreclosed assets held for sale			0			0			531			531
Total nonrecurring fair value measurements, assets		$	0		$	0		$	6,329		$	6,329


		December 31, 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		$	24,912		$	0		$	0		$	24,912
Obligations of U.S. Government agencies			0			24,091			0			24,091
Bank holding company debt securities			0			17,987			0			17,987
Obligations of states and political subdivisions:
Tax-exempt			0			148,028			0			148,028
Taxable			0			72,765			0			72,765
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			0			98,181			0			98,181
Residential collateralized mortgage obligations			0			44,247			0			44,247
Commercial mortgage-backed securities			0			87,468			0			87,468
Total available-for-sale debt securities			24,912			492,767			0			517,679
Marketable equity security			971			0			0			971
Servicing rights			0			0			2,329			2,329
Interest rate swap agreements, assets			0			3,104			0			3,104
Total recurring fair value measurements, assets		$	25,883		$	495,871		$	2,329		$	524,083

Recurring fair value measurements, liabilities,
Interest rate swap agreements, liabilities		$	0		$	3,104		$	0		$	3,104

Nonrecurring fair value measurements, assets:
Impaired loans, net		$	0		$	0		$	5,800		$	5,800
Foreclosed assets held for sale			0			0			684			684
Total nonrecurring fair value measurements, assets		$	0		$	0		$	6,484		$	6,484

Schedule of reconciliation of level 3 activity


(In Thousands)		Three Months Ended
		March 31, 2022			March 31, 2021
Servicing rights balance, beginning of period		$	2,329		$	1,689
Originations of servicing rights			98			192
Unrealized gain included in earnings			2			75
Servicing rights balance, end of period		$	2,429		$	1,956

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


(In Thousands)		Fair Value		March 31, 2022						December 31, 2021
		Hierarchy		Carrying			Fair			Carrying			Fair
		Level		Amount			Value			Amount			Value
Financial assets:
Cash and cash equivalents		Level 1		$	105,246		$	105,246		$	95,848		$	95,848
Certificates of deposit		Level 2			9,100			8,911			9,100			9,142
Restricted equity securities (included in Other Assets)		Level 2			9,508			9,508			9,562			9,562
Loans, net		Level 3			1,523,919			1,533,430			1,551,312			1,573,955
Accrued interest receivable		Level 2			7,507			7,507			7,235			7,235

Financial liabilities:
Deposits with no stated maturity		Level 2			1,691,457			1,691,457			1,639,167			1,639,167
Time deposits		Level 2			269,495			269,902			285,893			286,962
Short-term borrowings		Level 2			2,357			1,956			1,803			1,603
Long-term borrowings		Level 2			20,581			20,518			28,042			28,347
Senior debt		Level 2			14,717			14,429			14,701			15,016
Subordinated debt		Level 2			33,031			30,293			33,009			33,171
Accrued interest payable		Level 2			633			633			205			205

Recurring fair value measurements

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Schedule of inputs and valuation techniques


		Fair Value at
		3/31/2022			Valuation		Unobservable					Method or Value As of
Asset		(In Thousands)			Technique		Input(s)					3/31/2022
Servicing rights		$	2,429		Discounted cash flow		Discount rate			13.00	%	Rate used through modeling period
							Loan prepayment speeds			193.00	%	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
		12/31/2021			Valuation		Unobservable					Method or Value As of
Asset		(In Thousands)			Technique		Input(s)					12/31/2021
Servicing rights		$	2,329		Discounted cash flow		Discount rate			13.00	%	Rate used through modeling period
							Loan prepayment speeds			209.00	%	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		3/31/2022			3/31/2022			3/31/2022			Technique		Inputs		3/31/2022

Impaired loans:
Commercial:
Commercial loans secured by real estate		$	6,456		$	658		$	5,798		Sales comparison		Discount to appraised value		27	%
Commercial and industrial			72			72			0		Liquidation of assets		Discount to appraised value		100	%
Total impaired loans		$	6,528		$	730		$	5,798
Foreclosed assets held for sale - real estate:
Commercial real estate		$	275		$	0		$	275		Sales comparison		Discount to appraised value		50	%
Residential (1-4 family)			256			0			256		Sales comparison		Discount to appraised value		53	%
Total foreclosed assets held for sale		$	531		$	0		$	531


(Dollars In Thousands)															Weighted
					Valuation										Average
		Balance at			Allowance at			Fair Value at			Valuation		Unobservable		Discount at
Asset		12/31/2021			12/31/2021			12/31/2021			Technique		Inputs		12/31/2021

Impaired loans:
Commercial:
Commercial loans secured by real estate		$	6,468		$	668		$	5,800		Sales comparison		Discount to appraised value		27	%
Commercial and industrial			72			72			0		Liquidation of assets		Discount to appraised value		100	%
Total impaired loans		$	6,540		$	740		$	5,800
Foreclosed assets held for sale - real estate:
Commercial real estate		$	428		$	0		$	428		Sales comparison		Discount to appraised value		50	%
Residential (1-4 family)			256			0			256		Sales comparison		Discount to appraised value		53	%
Total foreclosed assets held for sale		$	684		$	0		$	684

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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