Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

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 June 30, 2016 and December 31, 2015.



(Dollars in thousands)	June 30, 2016
Description	Total		Level I		Level II		Level III
Assets:
U.S. government agencies	$	66,531	$	—	$	66,531	$	—
Obligations of states and political subdivisions	69,995		—		69,995		—
Mortgage-backed securities:
Agency	126,790		—		126,790		—
Non-agency	13,397		—		13,397		—
Other asset backed securities	54,506		—		54,506		—
Corporate securities	15,964		—		15,964		—
Interest rate swaps	322		—		322		—
Interest rate cap	3		—		3		—
Liabilities:
Interest rate swaps	899		—		899		—



(Dollars in thousands)	December 31, 2015
Description	Total		Level I		Level II		Level III
Assets:
U.S. government agencies	$	78,940	$	—	$	78,940	$	—
Obligations of states and political subdivisions	75,593		—		75,593		—
Mortgage-backed securities:
Agency	131,661		—		131,661		—
Non-agency	12,777		—		12,777		—
Other asset backed securities	58,781		—		58,781		—
Corporate securities	16,819		—		16,819
Interest rate swaps	73		—		73		—
Interest rate cap	39		—		39		—
Liabilities:
Interest rate swaps	370		—		370		—

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)	June 30, 2016
					Fair value measurements using:
	Carrying Amount		Total Fair Value		Level I		Level II		Level III
Financial assets:
Cash and cash equivalents	$	32,620	$	32,620	$	32,620	$	—	$	—
Securities held to maturity	10,727		11,080		—		11,080		—
Securities available for sale	347,183		347,183		—		347,183		—
Loans held for sale, net	189		189		—		189		—
Loans, net	843,120		854,350		—		—		854,350
Bank owned life insurance	23,596		23,596		—		23,596		—
Accrued interest receivable	5,131		5,131		—		5,131		—
Interest rate swaps	322		322		—		322		—
Interest rate cap	3		3		—		3		—
Financial liabilities:
Deposits	$	1,056,369	$	1,056,495	$	—	$	1,056,495	$	—
Securities sold under agreements to repurchase	31,043		31,043		—		31,043		—
FHLB borrowings	79,500		79,792		—		79,792		—
Subordinated notes	5,155		5,174		—		5,174		—
Accrued interest payable	393		393		—		393		—
Interest rate swaps	899		899		—		899		—



(Dollars in thousands)	December 31, 2015
					Fair value measurements using:
	Carrying Amount		Total Fair Value		Level I		Level II		Level III
Financial assets:
Cash and cash equivalents	$	39,228	$	39,228	$	39,228	$	—	$	—
Securities held to maturity	4,207		4,163		—		4,163		—
Securities available for sale	374,571		374,571		—		374,571		—
Loans, net	794,635		802,535		—		—		802,535
Bank-owned life insurance	23,273		23,273		—		23,273		—
Accrued interest receivable	5,204		5,204		—		5,204		—
Interest rate swaps	73		73		—		73		—
Interest rate cap	39		39		—		39		—
Financial liabilities:
Deposits	$	1,040,800	$	1,040,016	$	—	$	1,040,016	$	—
Securities sold under agreements to repurchase	26,869		26,869		—		26,869		—
FHLB borrowings	85,000		85,033		—		85,033		—
Subordinated debt	5,155		5,157		—		5,157		—
Accrued interest payable	410		410		—		410		—
Interest rate swaps	370		370		—		370		—

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)	June 30, 2016
	Total		Level I		Level II		Level III
Assets:
Impaired loans	$	7,028	$	—	$	—	$	7,028
Other real estate owned	$	3,553	$	—	$	—	$	3,553
Repossessed assets⁽¹⁾	$	1,043	$	—	$	—	$	1,043

(Dollars in thousands)	December 31, 2015
	Total		Level I		Level II		Level III
Assets:
Impaired loans	$	9,018	$	—	$	—	$	9,018
Other real estate owned	$	3,345	$	—	$	—	$	3,345
Repossessed assets ⁽¹⁾	$	1,043	$	—	$	—	$	1,043


⁽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 June 30, 2016 and December 31, 2015 about Level III fair value measurements for assets measured at fair value on a nonrecurring basis:



June 30, 2016	Fair Value (in thousands)		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	3,238	Appraisals	Discount to reflect current market conditions and estimated selling costs	0% - 100% (19%)
Impaired loans	$	3,790	Present value of cash flows	Discount rate	6% - 8% (6%)
Other real estate owned	$	3,553	Appraisals	Discount to reflect current market conditions and estimated selling costs	10%
Repossessed assets	$	1,043	Market analysis	Historical sales activity	50%



December 31, 2015	Fair Value (in thousands)		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	5,434	Appraisals	Discount to reflect current market conditions and estimated selling costs	0% - 100% (17%)
Impaired loans	$	3,584	Present value of cash flows	Discount rate	6% - 8% (7%)
Other real estate owned	$	3,345	Appraisals	Discount to reflect current market conditions and estimated selling costs	10%
Repossessed assets	$	1,043	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.

+ References + Details