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FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)
6 Months Ended
Jun. 30, 2023
FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS  
Schedule of assets measured at fair value and the valuation methods used

June 30, 2023

    

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

$

30,743

$

0

$

0

$

30,743

Obligations of U.S. Government agencies

0

20,552

0

20,552

Bank holding company debt securities

0

23,325

0

23,325

Obligations of states and political subdivisions:

 

  

 

 

  

 

Tax-exempt

 

0

 

113,170

 

0

 

113,170

Taxable

 

0

 

55,702

 

0

 

55,702

Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:

 

  

 

  

 

  

 

  

Residential pass-through securities

 

0

 

92,795

 

0

 

92,795

Residential collateralized mortgage obligations

 

0

 

35,897

 

0

 

35,897

Commercial mortgage-backed securities

 

0

 

65,517

 

0

 

65,517

Private label commercial mortgage-backed securities

 

0

 

7,994

 

0

 

7,994

Total available-for-sale debt securities

 

30,743

 

414,952

 

0

 

445,695

Marketable equity security

 

859

 

0

 

0

 

859

Servicing rights

 

0

 

0

 

2,607

 

2,607

RPA Out

0

12

0

12

Interest rate swap agreements, assets

0

3,645

0

3,645

Total recurring fair value measurements, assets

$

31,602

$

418,609

$

2,607

$

452,818

Recurring fair value measurements, liabilities,

Interest rate swap agreements, liabilities

$

0

$

3,645

$

0

$

3,645

Nonrecurring fair value measurements, assets:

 

  

 

  

 

  

 

  

Loans individually evaluated for credit loss, net

$

0

$

0

$

5,065

$

5,065

Foreclosed assets held for sale

 

0

 

0

 

459

 

459

Total nonrecurring fair value measurements, assets

$

0

$

0

$

5,524

$

5,524

December 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

$

31,836

$

0

$

0

$

31,836

Obligations of U.S. Government agencies

0

23,430

0

23,430

Bank holding company debt securities

0

25,386

0

25,386

Obligations of states and political subdivisions:

 

  

 

 

  

 

Tax-exempt

 

0

 

132,623

 

0

 

132,623

Taxable

 

0

 

56,812

 

0

 

56,812

Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:

 

  

 

  

 

  

 

  

Residential pass-through securities

 

0

 

99,941

 

0

 

99,941

Residential collateralized mortgage obligations

 

0

 

40,296

 

0

 

40,296

Commercial mortgage-backed securities

 

0

 

79,686

 

0

 

79,686

Private label commercial mortgage-backed securities

 

0

 

8,023

 

0

 

8,023

Total available-for-sale debt securities

 

31,836

 

466,197

 

0

 

498,033

Marketable equity security

 

859

 

0

 

0

 

859

Servicing rights

 

0

 

0

 

2,653

 

2,653

Interest rate swap agreements, assets

0

3,638

0

3,638

Total recurring fair value measurements, assets

$

32,695

$

469,835

$

2,653

$

505,183

Recurring fair value measurements, liabilities,

Interest rate swap agreements, liabilities

$

0

$

3,638

$

0

$

3,638

Nonrecurring fair value measurements, assets:

 

  

 

  

 

  

 

  

Impaired loans, net

$

0

$

0

$

3,007

$

3,007

Foreclosed assets held for sale

 

0

 

0

 

275

 

275

Total nonrecurring fair value measurements, assets

$

0

$

0

$

3,282

$

3,282

Schedule of reconciliation of level 3 activity

(In Thousands)

Three Months Ended

Six Months Ended

    

June 30, 2023

    

June 30, 2022

    

June 30, 2023

    

June 30, 2022

Servicing rights balance, beginning of period

$

2,585

$

2,429

$

2,653

$

2,329

Originations of servicing rights

 

34

 

61

 

49

 

159

Unrealized (loss) gain included in earnings

 

(12)

 

150

 

(95)

 

152

Servicing rights balance, end of period

$

2,607

$

2,640

$

2,607

$

2,640

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

(In Thousands)

Fair Value

June 30, 2023

December 31, 2022

Hierarchy

Carrying

Fair

Carrying

Fair

    

Level

    

Amount

    

Value

    

Amount

    

Value

Financial assets:

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents

 

Level 1

$

46,162

$

46,162

$

47,698

$

47,698

Certificates of deposit

 

Level 2

 

5,600

 

5,244

 

7,350

 

6,956

Restricted equity securities (included in other assets)

 

Level 2

 

15,020

 

15,020

 

14,418

 

14,418

Loans, net

 

Level 3

 

1,795,454

 

1,733,521

 

1,723,425

 

1,674,002

Accrued interest receivable

 

Level 2

 

8,439

 

8,439

 

8,653

 

8,653

Financial liabilities:

 

  

 

  

 

  

 

  

 

  

Deposits with no stated maturity

 

Level 2

 

1,600,553

 

1,600,553

 

1,702,404

 

1,702,404

Time deposits

 

Level 2

 

409,565

 

407,332

 

295,189

 

293,814

Short-term borrowings

 

Level 2

 

31,431

 

31,431

 

80,062

 

80,062

Long-term borrowings

 

Level 2

 

115,263

 

113,606

 

62,347

 

60,944

Senior debt

Level 2

14,798

12,644

14,765

9,712

Subordinated debt

Level 2

24,661

21,529

24,607

16,186

Accrued interest payable

 

Level 2

 

1,054

 

1,054

 

461

 

461

Recurring fair value measurements  
FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS  
Schedule of inputs and valuation techniques

    

Fair Value at

    

  

    

  

    

  

    

  

6/30/2023

Valuation

Unobservable

Method or Value As of

Asset

(In Thousands)

Technique

Input(s)

6/30/2023

Servicing rights

$

2,607

 

Discounted cash flow

 

Discount rate

 

13.00

%  

Rate used through modeling period

 

 

Loan prepayment speeds

130.00

%  

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

    

  

    

  

    

  

    

  

12/31/2022

Valuation

Unobservable

Method or Value As of

Asset

(In Thousands)

Technique

Input(s)

12/31/2022

Servicing rights

$

2,653

 

Discounted cash flow

 

Discount rate

 

13.00

%  

Rate used through modeling period

 

 

Loan prepayment speeds

133.00

%  

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

6/30/2023

6/30/2023

6/30/2023

Technique

Inputs

6/30/2023

Loans individually evaluated for credit loss:

 

  

 

  

 

  

 

  

 

  

 

  

Commercial real estate - nonowner occupied

$

4,781

$

465

$

4,316

 

Sales comparison

 

Discount to appraised value

 

27

%

Commercial real estate - owner occupied

801

156

645

Sales comparison & SBA guaranty

Discount to appraised value

56

%

All other commercial loans

203

99

104

Liquidation & SBA guaranty

Discount to appraised value

19

%

Total loans individually evaluated for credit loss

$

5,785

$

720

$

5,065

 

  

 

  

 

  

Foreclosed assets held for sale - real estate:

 

 

  

 

  

 

  

 

  

 

  

Residential (1-4 family)

$

184

$

0

$

184

 

Sales comparison

 

Discount to appraised value

 

36

%

Commercial real estate

275

0

275

Sales comparison

Discount to appraised value

50

%

Total foreclosed assets held for sale

$

459

$

0

$

459

 

  

 

  

 

(Dollars In Thousands)

    

    

  

    

  

    

  

    

  

    

Weighted  

 

Valuation

  

  

  

Average  

 

Balance at

Allowance at

Fair Value at

Valuation

Unobservable

Discount at

 

Asset

12/31/2022

12/31/2022

12/31/2022

Technique

Inputs

12/31/2022

 

Impaired loans:

 

  

 

  

 

  

 

  

 

  

 

  

Commercial:

 

  

 

 

 

  

 

  

 

Commercial loans secured by real estate

$

3,400

$

427

$

2,973

 

Sales comparison

 

Discount to appraised value

 

25

%

Commercial and industrial

60

26

34

Liquidation of assets

Discount to appraised value

33

%

Total impaired loans

$

3,460

$

453

$

3,007

 

  

 

  

 

  

Foreclosed assets held for sale - real estate:

 

 

  

 

  

 

  

 

  

 

  

Commercial real estate

$

275

$

0

$

275

 

Sales comparison

 

Discount to appraised value

 

50

%

Total foreclosed assets held for sale

$

275

$

0

$

275