Fair Value Measurements

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 5 – FAIR VALUE MEASUREMENTS

The Company provides disclosures about assets and liabilities carried at fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. The three broad levels of the fair value hierarchy are described below:

Level I:	Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level II:	Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by corroborated or other means. If the asset or liability has a specified (contractual) term, the Level II input must be observable for substantially the full term of the asset or liability.
Level III:	Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following table presents the assets reported on the Consolidated Balance Sheet at their fair value as of March 31, 2016 and December 31, 2015 by level within the fair value hierarchy. No liabilities are carried at fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Equity securities and U.S. Treasury Notes are valued at the closing price reported on the active market on which the individual securities are traded. Obligations of U.S. government agencies, mortgage-backed securities, asset-backed securities, obligations of states and political subdivisions and corporate bonds are valued at observable market data for similar assets.

(Dollars in thousands)	Level I		Level II		Level III		Total
March 31, 2016
Assets:
Securities available-for-sale
U.S. Treasury security	$	1,002	$	—	$	—	$	1,002
U.S. Government agencies		—		13,003		—		13,003
Mortgage-backed securities of government agencies		—		61,320		—		61,320
Other mortgage-backed securities		—		95		—		95
Asset-backed securities of government agencies		—		1,339		—		1,339
State and political subdivisions		—		28,717		—		28,717
Corporate bonds		—		16,701		—		16,701
Total debt securities		1,002		121,175		—		122,177
Equity securities		65		—		—		65
Total available-for-sale securities	$	1,067	$	121,175	$	—	$	122,242
December 31, 2015
Assets:
Securities available-for-sale
U.S. Treasury security	$	1,000	$	—	$	—	$	1,000
U.S. Government agencies		—		18,118		—		18,118
Mortgage-backed securities of government agencies		—		63,179		—		63,179
Other mortgage-backed securities		—		104		—		104
Asset-backed securities of government agencies		—		1,392		—		1,392
State and political subdivisions		—		25,301		—		25,301
Corporate bonds		—		18,811		—		18,811
Total debt securities		1,000		126,905		—		127,905
Equity securities		64		—		—		64
Total available-for-sale securities	$	1,064	$	126,905	$	—	$	127,969

The following table presents the assets measured on a nonrecurring basis on the Consolidated Balance Sheets at their fair value as of March 31, 2016 and December 31, 2015, by level within the fair value hierarchy. Impaired loans are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loans include: quoted market prices for identical assets classified as Level I inputs; and observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

(Dollars in thousands)	Level I		Level II		Level III		Total
March 31, 2016
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	7,661	$	7,661
December 31, 2015
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	8,335	$	8,335

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level III inputs to determine fair value:

	Quantitative Information about Level III Fair Value Measurements
	Fair Value	Valuation	Unobservable
(Dollars in thousands)	Estimate	Techniques	Input	Range (Weighted Average)
March 31, 2016
Impaired loans	$6,425	Discounted cash flow	Remaining term Discount rate	1 mo to 29.25 yrs (54 months) 3.1% to 9.8% (4.3%)
	1,236	Appraisal of collateral (1)	Appraisal adjustments (2) Liquidation expense (2)	0% to -50% (-34%) -10%
December 31, 2015
Impaired loans	$7,256	Discounted cash flow	Remaining term Discount rate	2 mos to 29.5 yrs / (55 mos) 3.1% to 8.3% / (4.3%)
	1,079	Appraisal of collateral (1)	Appraisal adjustments (2) Liquidation expense (2)	0% to -50% (-26%) -10%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.