19.	Fair Value of Financial Instruments

U.S. GAAP requires disclosure of fair value information about financial instruments, whether or not recognized on the balance sheet, for which it is practical to estimate that value. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. The use of assumptions and various valuation techniques, as well as the absence of secondary markets for certain financial instruments, will likely reduce the comparability of fair value disclosures between financial institutions. In some cases, book value is a reasonable estimate of fair value due to the relatively short period of time between origination of the instrument and its expected realization.

The following tables summarize the book value and estimated fair value of financial instruments for the periods indicated:

			Fair Value of Financial Instruments Using
December 31, 2017 (in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimatd Fair Value
Assets:
Cash and Cash Equivalents	$	187,149	$	187,149	$	-	$	-	$	187,149

Investment Securities Available-for-Sale		481,596		29,580		449,516		2,500		481,596

Investment Securities Held-to-Maturity		54,460		-		38,492		16,744		55,236

FHLB Stock		10,342		N/A		N/A		N/A		N/A
Loans & Leases, Net of Deferred Fees & Allowance		2,164,953		-		-		2,137,987		2,137,987
Accrued Interest Receivable		10,999		-		10,999		-		10,999

Liabilities:
Deposits		2,723,228		2,247,831		472,671		-		2,720,502
Subordinated Debentures		10,310		-		7,428		-		7,428
Accrued Interest Payable		1,137		-		1,137		-		1,137

			Fair Value of Financial Instruments Using
December 31, 2016 (in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
Assets:
Cash and Cash Equivalents	$	98,960	$	98,960	$	-	$	-	$	98,960

Investment Securities Available-for-Sale		448,263		134,628		313,135		500		448,263

Investment Securities Held-to-Maturity		58,109		-		40,415		17,993		58,408

FHLB Stock		8,872		N/A		N/A		N/A		N/A
Loans & Leases, Net of Deferred Fees & Allowance		2,129,682		-		-		2,107,060		2,107,060
Accrued Interest Receivable		10,047		-		10,047		-		10,047

Liabilities:
Deposits		2,581,711		2,011,418		569,183		-		2,580,601
Subordinated Debentures		10,310		-		6,578		-		6,578
Accrued Interest Payable		852		-		852		-		852

Fair value estimates presented herein are based on pertinent information available to management as of December 31, 2017 and December 31, 2016. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purpose of these financial statements since that date, and; therefore, current estimates of fair value may differ significantly from the amounts presented above. The methods and assumptions used to estimate the fair value of each class of financial instrument listed in the table above are explained below.

Cash and Cash Equivalents - The carrying amounts reported in the balance sheet for cash and due from banks, interest-bearing deposits with banks, federal funds sold, and securities purchased under agreements to resell are a reasonable estimate of fair value. All cash and cash equivalents are classified as Level 1.

Investment Securities - Fair values for investment securities consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things. Based on the available market information the classification level could be 1, 2, or 3.

Federal Home Loan Bank Stock - It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

Loans & Leases, Net of Deferred Loan & Lease Fees & Allowance - Fair values of loans & leases are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans & leases are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans & leases are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans & leases do not necessarily represent an exit price.

Deposit Liabilities - The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair values for fixed-maturity certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Subordinated Debentures - The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued Interest Receivable and Payable - The carrying amount of accrued interest receivable and payable approximates their fair value resulting in a Level 2 classification.