7. Disclosures About Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2018

Disclosures About Fair Value Of Financial Instruments

7. Disclosures About Fair Value of Financial Instruments

The following presents the carrying amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments as of September 30, 2018 and December 31, 2017. For short-term financial assets such as cash and cash equivalents and short-term liabilities, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest bearing demand, interest bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity. Fair values for September 30, 2018 are estimated under the exit price notion in accordance with the prospective adoption of ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” Fair values for December 31, 2017 are estimated under the guidance in effect for that period, which did not require use of the exit price notion.

The estimated fair values, and related carrying amounts (dollars in thousands), of the Company’s financial instruments are as follows:

			Fair Value Measurements at September 30, 2018 Using
(dollars in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at September 30, 2018
Assets:
Cash and cash equivalents	$	17,423	$	17,423	$	-	$	-	$	17,423
Securities		8,367		-		8,367		-		8,367
Loans held for sale		38,595		-		38,595		-		38,595
Loans held for investment, net		639,511		-		-		636,558		636,558
Interest receivable		2,076		-		2,076		-		2,076
Bank owned life insurance		19,320		-		19,320		-		19,320
Total	$	725,292	$	17,423	$	68,358	$	636,558	$	722,339
Liabilities:
Deposits	$	588,985	$	-	$	431,124	$	160,211	$	591,335
Short-term debt		30,000		-		30,000		-		30,000
Long-term debt		46,326		-		-		46,251		46,251
Interest payable		318		-		318		-		318
Total	$	665,629	$	-	$	461,442	$	206,462	$	667,904

			Fair Value Measurements at December 31, 2017 Using
(dollars in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2017
Assets:
Cash and cash equivalents	$	11,907	$	11,907	$	-	$	-	$	11,907
Securities		28,740		19,998		8,742		-		28,740
Loans held for sale		39,775		-		39,775		-		39,775
Loans held for investment, net		610,930		-		-		646,703		646,703
Interest receivable		2,007		-		2,007		-		2,007
Bank owned life insurance		13,950		-		13,950		-		13,950
Total	$	707,309	$	31,905	$	64,474	$	646,703	$	743,082
Liabilities:
Deposits	$	569,177	$	-	$	403,907	$	167,210	$	571,117
Short-term debt		25,296		-		25,296		-		25,296
Long-term debt		49,733		-		-		49,869		49,869
Interest payable		260		-		260		-		260
Total	$	644,466	$	-	$	429,463	$	217,079	$	646,542