| Fair Value Measurements |
FAIR VALUE MEASUREMENTS
The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis. | | | | | | | | | | | | | | | | | | Balance at | | Fair Value Measurements Using: | Dollars in thousands | September 30, 2017 | | Level 1 | | Level 2 | | Level 3 | Available for sale securities | | | | | | | | U.S. Government sponsored agencies | $ | 24,135 |
| | $ | — |
| | $ | 24,135 |
| | $ | — |
| Mortgage backed securities: | |
| | |
| | |
| | |
| Government sponsored agencies | 121,759 |
| | — |
| | 121,759 |
| | — |
| Nongovernment sponsored entities | 2,755 |
| | — |
| | 2,755 |
| | — |
| State and political subdivisions | 13,435 |
| | — |
| | 13,435 |
| | — |
| Corporate debt securities | 16,190 |
| | — |
| | 16,190 |
| | — |
| Other equity securities | 137 |
| | — |
| | 137 |
| | — |
| Tax-exempt state and political subdivisions | 150,315 |
| | — |
| | 150,315 |
| | — |
| Total available for sale securities | $ | 328,726 |
| | $ | — |
| | $ | 328,726 |
| | $ | — |
| | | | | | | | | Derivative financial assets | | | | | | | | Interest rate swaps | $ | 125 |
| | $ | — |
| | $ | 125 |
| | $ | — |
| | | | | | | | | Derivative financial liabilities | |
| | |
| | |
| | |
| Interest rate swaps | $ | 3,056 |
| | $ | — |
| | $ | 3,056 |
| | $ | — |
|
| | | | | | | | | | | | | | | | | | Balance at | | Fair Value Measurements Using: | Dollars in thousands | December 31, 2016 | | Level 1 | | Level 2 | | Level 3 | Available for sale securities | | | | | | | | U.S. Government sponsored agencies | $ | 15,174 |
| | $ | — |
| | $ | 15,174 |
| | $ | — |
| Mortgage backed securities: | |
| | |
| | |
| | |
| Government sponsored agencies | 138,846 |
| | — |
| | 138,846 |
| | — |
| Nongovernment sponsored entities | 4,653 |
| | — |
| | 4,653 |
| | — |
| Corporate debt securities | 18,170 |
| | — |
| | 18,170 |
| | — |
| Other equity securities | 137 |
| | — |
| | 137 |
| | — |
| Tax-exempt state and political subdivisions | 89,562 |
| | — |
| | 89,562 |
| | — |
| Total available for sale securities | $ | 266,542 |
| | $ | — |
| | $ | 266,542 |
| | $ | — |
| | | | | | | | | Derivative financial assets | | | | | | | | Interest rate swaps | $ | 200 |
| | $ | — |
| | $ | 200 |
| | $ | — |
| | | | | | | | | Derivative financial liabilities | |
| | |
| | |
| | |
| Interest rate swaps | $ | 4,611 |
| | $ | — |
| | $ | 4,611 |
| | $ | — |
|
We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis are included in the table below. | | | | | | | | | | | | | | | | | | Balance at | | Fair Value Measurements Using: | Dollars in thousands | September 30, 2017 | | Level 1 | | Level 2 | | Level 3 | Residential mortgage loans held for sale | $ | 220 |
| | $ | — |
| | $ | 220 |
| | $ | — |
| | | | | | | | | Collateral-dependent impaired loans | |
| | |
| | |
| | |
| Commercial real estate | $ | 518 |
| | $ | — |
| | $ | 518 |
| | $ | — |
| Construction and development | 945 |
| | — |
| | 945 |
| | — |
| Residential real estate | 203 |
| | — |
| | 203 |
| | — |
| Total collateral-dependent impaired loans | $ | 1,666 |
| | $ | — |
| | $ | 1,666 |
| | $ | — |
| | | | | | | | | Property held for sale | |
| | |
| | |
| | |
| Commercial real estate | $ | 1,476 |
| | $ | — |
| | $ | 1,292 |
| | $ | 184 |
| Construction and development | 16,627 |
| | — |
| | 16,627 |
| | — |
| Residential real estate | 352 |
| | — |
| | 352 |
| | — |
| Total property held for sale | $ | 18,455 |
| | $ | — |
| | $ | 18,271 |
| | $ | 184 |
|
| | | | | | | | | | | | | | | | | | Balance at | | Fair Value Measurements Using: | Dollars in thousands | December 31, 2016 | | Level 1 | | Level 2 | | Level 3 | Residential mortgage loans held for sale | $ | 176 |
| | $ | — |
| | $ | 176 |
| | $ | — |
| | | | | | | | | Collateral-dependent impaired loans | |
| | |
| | |
| | |
| Construction and development | $ | 945 |
| | $ | — |
| | $ | 945 |
| | $ | — |
| Residential real estate | 130 |
| | — |
| | 130 |
| | — |
| Total collateral-dependent impaired loans | $ | 1,075 |
| | $ | — |
| | $ | 1,075 |
| | $ | — |
| | | | | | | | | Property held for sale | |
| | |
| | |
| | |
| Commercial real estate | $ | 976 |
| | $ | — |
| | $ | 976 |
| | $ | — |
| Construction and development | 19,327 |
| | — |
| | 19,327 |
| | — |
| Residential real estate | 279 |
| | — |
| | 279 |
| | — |
| Total property held for sale | $ | 20,582 |
| | $ | — |
| | $ | 20,582 |
| | $ | — |
|
The following summarizes the methods and significant assumptions we used in estimating our fair value disclosures for financial instruments, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.
Cash and cash equivalents: The carrying values of cash and cash equivalents approximate their estimated fair value.
Securities: Estimated fair values of securities are based on quoted market prices, where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities.
Other investments: Other investments consists of FHLB stock, which does not have readily determinable fair values and is carried at cost and an investment in a limited partnership which owns interests in a diversified portfolio of qualified affordable housing projects which is reflected at its carrying value. Loans held for sale: The carrying values of loans held for sale approximate their estimated fair values.
Loans: The estimated fair values for loans are computed based on scheduled future cash flows of principal and interest, discounted at interest rates currently offered for loans with similar terms to borrowers of similar credit quality. No prepayments of principal are assumed.
Accrued interest receivable and payable: The carrying values of accrued interest receivable and payable approximate their estimated fair values.
Deposits: The estimated fair values of demand deposits (i.e. non-interest bearing checking, NOW, money market and savings accounts) and other variable rate deposits approximate their carrying values. Fair values of fixed maturity deposits are estimated using a discounted cash flow methodology at rates currently offered for deposits with similar remaining maturities. Any intangible value of long-term relationships with depositors is not considered in estimating the fair values disclosed.
Short-term borrowings: The carrying values of short-term borrowings approximate their estimated fair values.
Long-term borrowings: The fair values of long-term borrowings are estimated by discounting scheduled future payments of principal and interest at current rates available on borrowings with similar terms.
Subordinated debentures owed to unconsolidated subsidiary trusts: The carrying values of subordinated debentures owed to unconsolidated subsidiary trusts approximate their estimated fair values.
Derivative financial instruments: The fair value of the interest rate swaps is valued using independent pricing models.
Off-balance sheet instruments: The fair values of commitments to extend credit and standby letters of credit are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit standing of the counter parties. The amounts of fees currently charged on commitments and standby letters of credit are deemed insignificant and therefore, the estimated fair values and carrying values are not shown below.
The carrying values and estimated fair values of our financial instruments are summarized below: | | | | | | | | | | | | | | | | | | | | | | September 30, 2017 | | Fair Value Measurements Using: | Dollars in thousands | | Carrying Value | | Estimated Fair Value | | Level 1 | Level 2 | Level 3 | Financial assets | | | | | | | | | Cash and cash equivalents | | $ | 51,214 |
| | $ | 51,214 |
| | $ | — |
| $ | 51,214 |
| $ | — |
| Securities available for sale | | 328,726 |
| | 328,726 |
| | — |
| 328,726 |
| — |
| Other investments | | 12,170 |
| | 12,170 |
| | — |
| 12,170 |
| — |
| Loans held for sale, net | | 220 |
| | 220 |
| | — |
| 220 |
| — |
| Loans, net | | 1,559,328 |
| | 1,557,227 |
| | — |
| 1,666 |
| 1,555,561 |
| Accrued interest receivable | | 7,979 |
| | 7,979 |
| | — |
| 7,979 |
| — |
| Derivative financial assets | | 125 |
| | 125 |
| | — |
| 125 |
| — |
| | | $ | 1,959,762 |
| | $ | 1,957,661 |
| | $ | — |
| $ | 402,100 |
| $ | 1,555,561 |
| Financial liabilities | | |
| | |
| | |
| |
| | Deposits | | $ | 1,616,768 |
| | $ | 1,637,258 |
| | $ | — |
| $ | 1,637,258 |
| $ | — |
| Short-term borrowings | | 202,988 |
| | 202,988 |
| | — |
| 202,988 |
| — |
| Long-term borrowings | | 45,755 |
| | 46,962 |
| | — |
| 46,962 |
| — |
| Subordinated debentures owed to unconsolidated subsidiary trusts | | 19,589 |
| | 19,589 |
| | — |
| 19,589 |
| — |
| Accrued interest payable | | 912 |
| | 912 |
| | — |
| 912 |
| — |
| Derivative financial liabilities | | 3,056 |
| | 3,056 |
| | — |
| 3,056 |
| — |
| | | $ | 1,889,068 |
| | $ | 1,910,765 |
| | $ | — |
| $ | 1,910,765 |
| $ | — |
|
| | | | | | | | | | | | | | | | | | | | | | December 31, 2016 | | Fair Value Measurements Using: | Dollars in thousands | | Carrying Value | | Estimated Fair Value | | Level 1 | Level 2 | Level 3 | Financial assets | | | | | | | | | Cash and cash equivalents | | $ | 46,616 |
| | $ | 46,616 |
| | $ | — |
| $ | 46,616 |
| $ | — |
| Securities available for sale | | 266,542 |
| | 266,542 |
| | — |
| 266,542 |
| — |
| Other investments | | 12,942 |
| | 12,942 |
| | — |
| 12,942 |
| — |
| Loans held for sale, net | | 176 |
| | 176 |
| | — |
| 176 |
| — |
| Loans, net | | 1,307,862 |
| | 1,321,235 |
| | — |
| 1,075 |
| 1,320,160 |
| Accrued interest receivable | | 6,167 |
| | 6,167 |
| | — |
| 6,167 |
| — |
| Derivative financial assets | | 200 |
| | 200 |
| | — |
| 200 |
| — |
| | | $ | 1,640,505 |
| | $ | 1,653,878 |
| | $ | — |
| $ | 333,718 |
| $ | 1,320,160 |
| Financial liabilities | | |
| | |
| | |
| |
| | Deposits | | $ | 1,295,519 |
| | $ | 1,309,820 |
| | $ | — |
| $ | 1,309,820 |
| $ | — |
| Short-term borrowings | | 224,461 |
| | 224,461 |
| | — |
| 224,461 |
| — |
| Long-term borrowings | | 46,670 |
| | 49,013 |
| | — |
| 49,013 |
| — |
| Subordinated debentures owed to unconsolidated subsidiary trusts | | 19,589 |
| | 19,589 |
| | — |
| 19,589 |
| — |
| Accrued interest payable | | 736 |
| | 736 |
| | — |
| 736 |
| — |
| Derivative financial liabilities | | 4,611 |
| | 4,611 |
| | — |
| 4,611 |
| — |
| | | $ | 1,591,586 |
| | $ | 1,608,230 |
| | $ | — |
| $ | 1,608,230 |
| $ | — |
|
|