Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Financial assets and liabilities measured at fair value on a recurring basis

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014.



(Dollars in thousands)	September 30, 2015
Description	Total		Level I		Level II		Level III
Assets:
U.S. government agencies	$	67,717	$	—	$	67,717	$	—
U.S. Treasury securities	50		—		50		—
Obligations of states and political subdivisions	76,569		—		76,569		—
Mortgage-backed securities:
Agency	141,684		—		141,684		—
Non-agency	14,882		—		14,882		—
Other asset backed securities	54,988		—		54,988		—
Corporate securities	16,889		—		16,889		—
Interest rate swaps	136		—		136		—
Interest rate cap	35		—		35		—
Liabilities:
Interest rate swaps	619		—		619		—



(Dollars in thousands)	December 31, 2014
Description	Total		Level I		Level II		Level III
Assets:
U.S. government agencies	$	41,397	$	—	$	41,397	$	—
Obligations of states and political subdivisions	57,740		—		57,740		—
Mortgage-backed securities:
Agency	173,213		—		173,213		—
Non-agency	28,123		—		28,123		—
Other asset backed securities	31,713		—		31,713		—
Corporate securities	16,077		—		16,077
Interest rate swaps	50		—		50		—
Liabilities:
Interest rate swaps	337		—		337		—

Estimated fair values and related carrying amounts of financial instruments

The estimated fair values, and related carrying amounts, of the Company's financial instruments are as follows:



(Dollars in thousands)	September 30, 2015
					Fair value measurements using:
	Carrying Amount		Total Fair Value		Level I		Level II		Level III
Financial assets:
Cash and cash equivalents	$	39,779	$	39,779	$	39,779	$	—	$	—
Securities held to maturity	1,500		1,375		—		1,375		—
Securities available for sale	372,779		372,779		—		372,779		—
Loans, net	769,467		781,466		—		4,351		777,115
Bank owned life insurance	23,107		23,107		—		23,107		—
Accrued interest receivable	5,007		5,007		—		5,007		—
Interest rate swaps	136		136		—		136		—
Interest rate cap	35		35		—		35		—
Financial liabilities:
Deposits	$	1,032,353	$	1,032,511	$	—	$	1,032,511	$	—
Securities sold under agreements to repurchase	24,468		24,468		—		24,468		—
FHLB borrowings	60,000		60,022		—		60,022		—
Subordinated debt	5,155		5,157		—		5,157		—
Accrued interest payable	396		396		—		396		—
Interest rate swaps	619		619		—		619		—



(Dollars in thousands)	December 31, 2014
					Fair value measurements using:
	Carrying Amount		Total Fair Value		Level I		Level II		Level III
Financial assets:
Cash and cash equivalents	$	55,022	$	55,022	$	55,022	$	—	$	—
Securities held to maturity	1,500		1,397		—		1,397		—
Securities available for sale	348,263		348,263		—		348,263		—
Loans, net	743,060		751,572		—		1,289		750,283
Bank-owned life insurance	22,617		22,617		—		22,617		—
Accrued interest receivable	4,285		4,285		—		4,285		—
Interest rate swaps	50		50		—		50		—
Financial liabilities:
Deposits	$	989,080	$	989,563	$	—	$	989,563	$	—
Securities sold under agreements to repurchase	38,551		38,551		—		38,551		—
FHLB borrowings	55,000		55,042		—		55,042		—
Subordinated debt	5,155		5,159		—		5,159		—
Accrued interest payable	403		403		—		403		—
Interest rate swaps	337		337		—		337		—

The following table summarizes the Company’s non-financial assets that were measured at fair value on a nonrecurring basis during the period.



(Dollars in thousands)	September 30, 2015
	Total		Level I		Level II		Level III
Assets:
Impaired loans	$	8,419	$	—	$	4,351	$	4,068
Other real estate owned	$	3,871	$	—	$	3,871	$	—
Repossessed assets⁽¹⁾	$	1,044	$	—	$	—	$	1,044

(Dollars in thousands)	December 31, 2014
	Total		Level I		Level II		Level III
Assets:
Impaired loans	$	5,799	$	—	$	1,289	$	4,510
Other real estate owned	$	4,051	$	—	$	4,051	$	—
Repossessed assets ⁽¹⁾	$	1,132	$	—	$	—	$	1,132

⁽¹⁾Included in other assets on the consolidated balance sheets.

Quantitative information about Level III fair value measurements

The following table presents quantitative information as of September 30, 2015 and December 31, 2014 about Level III fair value measurements for assets measured at fair value on a nonrecurring basis:



September 30, 2015	Fair Value (in thousands)		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	4,068	Discounted appraised value	Discount for age of appraisals	0% - 100% (5%)
Repossessed assets	$	1,044	Market analysis	Historical sales activity	50%



December 31, 2014	Fair Value (in thousands)		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	4,510	Discounted appraised value	Discount for age of appraisals	0% - 100% (7%)
Repossessed assets	$	1,132	Market analysis	Historical sales activity	50%

- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

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