8. Fair Value (Tables)

3 Months Ended

Mar. 31, 2017

Table Text Block Supplement [Abstract]

Schedule of Fair Value of Assets on a Recurring Basis

Assets on the consolidated balance sheets measured at fair value on a recurring basis are summarized below.

(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at March 31, 2017	Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs  (Level 2)	Significant Unobservable  Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$  2,280	$       -	$ 2,280	$         -
Government Sponsored Enterprises residential mortgage-backed securities	3,048	-	3,048	-
Money market funds	130	130	-	-
Total	$ 5,458	$ 130	$ 5,328	$         -
Loans held for sale	$ 7,646	$     -	$7,646	$         -
Loans held at fair value	$ 4,303	$     -	$       -	$  4,303
Servicing asset	$    317	$     -	$       -	$    317

(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets/Liabilities Measured at Fair Value at December 31, 2016	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$ 2,268	$      -	$ 2,268	$       -
Government Sponsored Enterprises residential mortgage-backed securities	3,180	-	3,180	-
Money market funds	130	130	-	-
Total	$ 5,578	$ 130	$ 5,448	$      -
Loans held for sale	$ 7,794	$     -	$ 7,794	$      -
Loans held at fair value	$ 4,207	$     -	$        -	$ 4,207
Servicing asset	$     313	$     -	$        -	$  313

Schedule of Inputs in Estimation of Fair Value of Level 3 Financial Instruments

These inputs include estimated cashflows, prepayment speeds, average projected default rate and discount rates as follows:

(in 000’s)

Assets measured at fair value	March 31, 2017 Fair value	December 31, 2016 Fair Value	Principal valuation techniques	Significant observable inputs	March 31, 2017 Range of inputs	December 31, 2016 Range of inputs
Loans held at fair value:	$4,303	$ 4,207	Discounted cash flow	Constant prepayment rate	7.61% to   9.48%	7.53% to 9.62%
				Weighted average discount rate	8.38% to 10.84%	8.11% to 10.58%
				Weighted average life	2.98 yrs to    9.93 yrs	3.05 yrs to 9.95 yrs
				Projected default rate	0.70% to   6.82%	0.77% to   6.64%

(in 000’s)

Assets measured at fair value	March 31, 2017 Fair value	December 31, 2016 Fair Value	Principal valuation techniques	Significant observable inputs	March 31, 2017 Range of inputs	December 31, 2016 Range of inputs
Servicing asset	$317	$ 313	Discounted cash flow	Constant prepayment rate	5.27% to   9.52%	4.89% to 9.96%
				Weighted average discount rate	10.81% to 15.17%	10.50% to 15.31%
				Weighted average life	3.01 yrs to    9.71 yrs	3.05 yrs to 9.70 yrs

The following table summarizes additional information about assets measured at fair value on a recurring basis for which level 3 inputs were utilized to determine fair value:

(in 000’s)	Loans held at fair value	Servicing Asset
Balance at December 31, 2016	$ 4,207	$ 313
Origination of loans/additions	122	10
Principal repayments/amortization	(52)	(8)
Change in fair value of financial instruments	26	2
Balance at March 31, 2017	$ 4,303	$317

Schedule of Fair Value of Assets Measured on a Nonrecurring Basis

Carrying Value at March 31, 2017:

(in 000’s)	Total	Quoted Prices in Active markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total fair value gain (loss) during 3 months ended
Impaired loans	$   424	$       -	$      -	$     471	$     -
Other real estate owned (“OREO”)	$ 447	$ -	$ -	$ 447	$ -

Carrying Value at December 31, 2016:

(in 000’s)	Total	Quoted Prices in Active markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total fair value gain (loss) during 12 months ended
Impaired Loans	$ 418	$ -	$ -	$ 418	$ -
Other real estate owned (“OREO”)	$ 447	$ -	$ -	$ 447	$ -

Schedule of Fair Value of Financial Instruments at Year-End

The fair value of assets and liabilities not previously disclosed are depicted below:

		March 31, 2017		December 31, 2016
(in 000’s)	Level in	Carrying	Fair	Carrying	Fair
	Value Hierarchy	Amount	Value	Amount	Value
(Dollars in thousands)
Assets:
Cash and cash equivalents	Level 1	$ 9,795	$ 9,975	$ 7,803	$ 7,803
Loans, net of allowance for loan losses	(1)	25,373	25,567	26,296	26,617
Servicing asset	Level 3	317	317	313	313
Accrued interest receivable	Level 1	147	147	141	141
Liabilities:
Demand deposits	Level 1	29,318	29,318	28,497	28,497
Savings deposits	Level 1	12,130	12,130	11,735	11,735
Time deposits	(2)	9,422	9,412	10,411	10,395
Accrued interest payable	Level 1	11	11	11	11

(1) Level 2 for non-impaired loans; Level 3 for impaired loans.

(2) Level 1 for variable rate instruments, level 3 for fixed rate instruments.