Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value, Assets Measured on Recurring Basis

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



	June 30, 2018
(Dollars in thousands)	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Securities available for sale:
U.S. Treasury securities and obligations of U.S. Government sponsored entities (“GSE”) and agencies	$	995	$	2,925	$	—	$	3,920
Residential collateralized mortgage obligations - GSE	—		40,809		—		40,809
Residential mortgage backed securities - GSE	—		15,714		—		15,714
Obligations of state and political subdivisions	—		23,867		—		23,867
Trust preferred debt securities - single issuer	—		1,402		—		1,402
Corporate debt securities	18,542		9,352		—		27,894
Other debt securities	—		16,469		—		16,469
Interest rate lock derivative	—		136		—		136
Total	$	19,537	$	110,674	$	—	$	130,211



	December 31, 2017
(Dollars in thousands)	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Securities available for sale:
U.S. Treasury securities and obligations of U.S. Government sponsored entities (“GSE”) and agencies	$	—	$	1,967	$	—	$	1,967
Residential collateralized mortgage obligations - GSE	—		27,325		—		27,325
Residential mortgage backed securities - GSE	—		14,288		—		14,288
Obligations of state and political subdivisions	—		19,720		—		19,720
Trust preferred debt securities - single issuer	—		2,349		—		2,349
Corporate debt securities	16,080		11,603		—		27,683
Other debt securities	—		12,126		—		12,126
Interest rate lock derivative	—		135		—		135
Total	$	16,080	$	89,513	$	—	$	105,593

Fair Value Measurements, Nonrecurring

Assets and liabilities subject to fair value adjustments (impairment) on a nonrecurring basis for the six months ended June 30, 2018 and the twelve months ended December 31, 2017 were as follows:



(Dollars in thousands)	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
June 30, 2018
Impaired loans	$	—	$	—	$	12,226	$	12,226
Other real estate owned	—		—		93		93
December 31, 2017
Impaired loans	$	—	$	—	$	8,313	$	8,313

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques

The following table presents additional qualitative information about assets measured at fair value on a nonrecurring basis, where there was evidence of impairment, and for which the Company has utilized Level 3 inputs to determine fair value:



(Dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
June 30, 2018
Impaired loans	$	12,226	Appraisal of collateral ⁽¹⁾	Appraisal adjustments ⁽²⁾	1.7% - 100% (28.2%)
Other real estate owned	$	93	Appraisal of collateral (1)	Appraisal adjustments ⁽²⁾	N/A (47.0%)
December 31, 2017
Impaired loans	$	8,313	Appraisal of collateral ⁽¹⁾	Appraisal adjustments ⁽²⁾	0.5%-100% (28.2%)


⁽¹⁾	Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs that are not identifiable.


⁽²⁾	Includes qualitative adjustments by management and estimated liquidation expenses.

Fair Value, by Balance Sheet Grouping

The estimated fair values and carrying amounts of financial assets and liabilities as of June 30, 2018 and December 31, 2017 were as follows:



	June 30, 2018
	Carrying			Level 1		Level 2			Level 3		Fair
(Dollars in thousands)	Value			Inputs		Inputs			Inputs		Value
Cash and cash equivalents	$	30,651		$	30,651	$	—		$	—	$	30,651
Securities available for sale	130,075			19,537		110,538			—		130,075
Securities held to maturity	95,322			—		95,670			—		95,670
Loans held for sale	9,291			—		9,854			—		9,854
Loans, net	899,912			—		—			893,340		893,340
SBA servicing asset	791			—		1,016			—		1,016
Interest rate lock derivative	136			—		136			—		136
Accrued interest receivable	3,785			—		3,785			—		3,785
FHLB stock	6,155			—		6,155			—		6,155
Deposits	(956,787		)	—		(954,380		)	—		(954,380		)
Borrowings	(118,225		)	—		(118,225		)	—		(118,225		)
Redeemable subordinated debentures	(18,557		)	—		(12,739		)	—		(12,739		)
Accrued interest payable	(849		)	—		(849		)	—		(849		)



	December 31, 2017
	Carrying			Level 1		Level 2			Level 3		Fair
(Dollars in thousands)	Value			Inputs		Inputs			Inputs		Value
Cash and cash equivalents	$	18,754		$	18,754	$	—		$	—	$	18,754
Securities available for sale	105,458			16,080		89,378			—		105,458
Securities held to maturity	110,267			—		111,865			—		111,865
Loans held for sale	4,254			—		4,539			—		4,539
Loans, net	781,893			—		—			784,064		784,064
SBA servicing asset	726			—		1,016			—		1,016
Interest rate lock derivative	135			—		135			—		135
Accrued interest receivable	3,478			—		3,478			—		3,478
FHLB stock	1,490			—		1,490			—		1,490
Deposits	(922,006		)	—		(920,732		)	—		(920,732		)
Borrowings	(20,500		)	—		(20,500		)	—		(20,500		)
Redeemable subordinated debentures	(18,557		)	—		(12,326		)	—		(12,326		)
Accrued interest payable	(804		)	—		(804		)	—		(804		)