5. Fair Value of Financial Instruments

U.S. GAAP requires disclosure of fair value information about financial instruments, whether or not recognized on the balance sheet, for which it is practical to estimate that value. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. The use of assumptions and various valuation techniques, as well as the absence of secondary markets for certain financial instruments, will likely reduce the comparability of fair value disclosures between financial institutions. In some cases, book value is a reasonable estimate of fair value due to the relatively short period of time between origination of the instrument and its expected realization. The valuation of loans held for investment was impacted by the adoption of ASU 2016-01. In accordance with ASU 2016-01, the fair value of loans held for investment, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit, and nonperformance risk of the loans. Loans are considered a Level 3 classification.

The following tables summarize the book value and estimated fair value of financial instruments for the periods indicated:

			Fair Value of Financial Instruments Using
March 31, 2018 (in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
Assets:
Cash and Cash Equivalents	$	134,984	$	134,984	$	-	$	-	$	134,984

Investment Securities Available-for-Sale		495,814		143,609		349,705		2,500		495,814

Investment Securities Held-to-Maturity		53,527		-		37,028		16,717		53,745

FHLB Stock		10,342		N/A		N/A		N/A		N/A
Loans & Leases, Net of Deferred Fees & Allowance		2,184,406		-		-		2,152,504		2,152,504
Accrued Interest Receivable		9,237		-		9,237		-		9,237

Liabilities:
Deposits		2,701,405		2,218,642		478,846		-		2,697,488
Subordinated Debentures		10,310		-		7,751		-		7,751
Accrued Interest Payable		909		-		909		-		909

			Fair Value of Financial Instruments Using
December 31, 2017 (in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
Assets:
Cash and Cash Equivalents	$	187,149	$	187,149	$	-	$	-	$	187,149

Investment Securities Available-for-Sale		481,596		29,580		449,516		2,500		481,596

Investment Securities Held-to-Maturity		54,460		-		38,492		16,744		55,236

FHLB Stock		10,342		N/A		N/A		N/A		N/A
Loans & Leases, Net of Deferred Fees & Allowance		2,164,953		-		-		2,137,987		2,137,987
Accrued Interest Receivable		10,999		-		10,999		-		10,999

Liabilities:
Deposits		2,723,228		2,247,831		472,671		-		2,720,502
Subordinated Debentures		10,310		-		7,428		-		7,428
Accrued Interest Payable		1,137		-		1,137		-		1,137

			Fair Value of Financial Instruments Using
March 31, 2017 (in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
Assets:
Cash and Cash Equivalents	$	164,512	$	164,512	$	-	$	-	$	164,512

Investment Securities Available-for-Sale		452,842		104,619		347,723		500		452,842

Investment Securities Held-to-Maturity		57,281		-		39,991		17,682		57,673

FHLB Stock		8,872		N/A		N/A		N/A		N/A
Loans & Leases, Net of Deferred Fees & Allowance		2,097,632		-		-		2,076,248		2,076,248
Accrued Interest Receivable		7,962		-		7,962		-		7,962

Liabilities:
Deposits		2,607,613		2,017,969		587,811		-		2,605,780
Subordinated Debentures		10,310		-		6,581		-		6,581
Accrued Interest Payable		882		-		882		-		882