Fair Value Measurements and Disclosure (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair value of financial instruments

The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized at the periods indicated:

June 30, 2020
(in 000's)	Carrying Amount	Estimated Fair Value	Quoted Prices In Active Markets for Identical Assets Level 1	Significant Other Observable Inputs Level 2	Significant Unobservable Inputs Level 3
Financial Assets:
Investment securities	96,739	96,739	3,862	92,877	—
Loans	639,788	635,674	—	—	635,674
Accrued interest receivable	9,146	9,146	—	9,146	—
Financial Liabilities:
Deposits:
Noninterest-bearing	362,010	362,010	362,010	—	—
NOW and money market	378,274	378,274	378,274	—	—
Savings	89,153	89,153	89,153	—	—
Time deposits	63,675	64,090	—	—	64,090
Total deposits	893,112	893,527	829,437	—	64,090
Junior subordinated debt	9,771	9,771	—	—	9,771
Accrued interest payable	36	36	—	36	—

December 31, 2019
(in 000's)	Carrying Amount	Estimated Fair Value	Quoted Prices In Active Markets for Identical Assets Level 1	Significant Other Observable Inputs Level 2	Significant Unobservable Inputs Level 3
Financial Assets:
Investment securities	80,088	80,088	3,776	76,312	—
Loans	588,646	581,695	—	—	581,695
Accrued interest receivable	8,208	8,208	—	8,208	—
Financial Liabilities:
Deposits:
Noninterest-bearing	311,950	311,950	311,950	—	—
NOW and money market	360,934	360,934	360,934	—	—
Savings	80,078	80,078	80,078	—	—
Time deposits	65,400	65,236	—	—	65,236
Total deposits	818,362	818,198	752,962	—	65,236
Junior subordinated debt	10,808	10,808	—	—	10,808
Accrued interest payable	59	59	—	59	—

Schedule of quantitative information about Level 3 fair value measurements

The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at June 30, 2020 and December 31, 2019:

June 30, 2020				December 31, 2019
Financial Instrument	Valuation Technique	Unobservable Input	Weighted Average	Financial Instrument	Valuation Technique	Unobservable Input	Weighted Average
Junior Subordinated Debt	Discounted cash flow	Market credit risk adjusted spreads	4.05%	Junior Subordinated Debt	Discounted cash flow	Market credit risk adjusted spreads	4.46%

The following table presents quantitative information about Level 3 fair value measurements for the Company's assets measured at fair value on a non-recurring basis at December 31, 2019 (in 000's).

December 31, 2019
Financial Instrument	Fair Value	Valuation Technique	Unobservable Input	Adjustment Percentage
Impaired Loans:
Real estate mortgage	$144	Fair Value of Collateral Method for Collateral Dependent Loans	Adjustment for difference between appraised value and net realizable value	6.00%

Assets and liabilities measured at fair value on recurring and non-recurring basis

The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring and non-recurring basis as of June 30, 2020 (in 000’s):

Description of Assets	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
AFS Securities (2):
U.S. Government agencies	$	36,300	$	—	$	36,300	$	—
U.S. Government collateralized mortgage obligations	47,802		—		47,802		—
Asset-backed securities	3,758		—		3,758		—
Corporate Bond	5,017		—		5,017		5,017
Total AFS securities	$	92,877	$	—	$	92,877	$	5,017
Marketable equity securities (2)	3,862		3,862		—		—
Impaired loans (1):
RE construction & development	3,332		—		—		3,332
Total impaired loans	3,332		—		—		3,332
Other real estate owned (1)	5,018		—		—		5,018
Total	$	100,071	$	3,862	$	92,877	$	8,349

Description of Liabilities	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Junior subordinated debt (2)	$	9,771	—	—	$	9,771
Total	$	9,771	—	—	$	9,771

(1)Nonrecurring

(2)Recurring

The following table presents quantitative information about Level 3 fair value measurements for the Company's assets measured at fair value on a non-recurring basis at June 30, 2020 (in 000's).

June 30, 2020
Financial Instrument	Fair Value	Valuation Technique	Unobservable Input	Adjustment Percentage
Impaired Loans:
RE construction & development	$3,332	Fair Value of Collateral Method for Collateral Dependent Loans	Adjustment for difference between appraised value and net realizable value	7.02%
Other Real Estate Owned:	$5,018	Fair Value of Collateral Method for Collateral Dependent Loans	Adjustment for difference between appraised value and net realizable value	13.69%

The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring and non-recurring basis as of December 31, 2019 (in 000’s):

Description of Assets	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
AFS Securities (2):
U.S. Government agencies	$	28,699	$	—	$	28,699	$	—
U.S. Government collateralized mortgage obligations	47,613		—		47,613		—
Total AFS securities	76,312		—		76,312		$	—
Marketable equity securities (2)	3,776		3,776		—		—
Impaired Loans (1):
Real estate mortgage	144		—		—		144
Total impaired loans	144		—		—		144
Total	$	80,232	$	3,776	$	76,312	$	144

Description of Liabilities	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Junior subordinated debt (2)	$	10,808	$	—	$	—	$	10,808
Total	$	10,808	$	—	$	—	$	10,808

(1)Nonrecurring

(2)Recurring

Significant unobservable inputs (level 3) on a recurring basis

The following tables provide a reconciliation of assets and liabilities at fair value using significant unobservable inputs (Level 3) on a recurring basis during the quarters ended June 30, 2020 and 2019 (in 000’s):

	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Reconciliation of Liabilities:	Junior Subordinated Debt		Junior Subordinated Debt		Junior Subordinated Debt		Junior Subordinated Debt
Beginning balance	$	8,546	$	10,454	$	10,808	$	10,155
Gross loss (gain) included in earnings	30		(497)		(1,469)		(911)
Gross loss (gain) related to changes in instrument specific credit risk	1,208		542		453		1,247
Change in accrued interest	(13)		(3)		(21)		5
Ending balance	$	9,771	$	10,496	$	9,771	$	10,496
The amount of total gain for the period included in earnings attributable to the change in unrealized gains or losses relating to liabilities still held at the reporting date	$	30	$	(497)	$	(1,469)	$	(911)