Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2015

Estimated fair values as of the periods indicated are as follows:



	December 31, 2015				December 31, 2014
(In Thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Level 1 inputs:
Cash, due from banks and deposits in other banks		$58,673		$58,673		$72,056		$72,056
Investment securities	43,033		43,033		45,570		45,570

Level 2 inputs:
Investment securities	248,983		249,039		238,361		241,872
Investment in Federal Home Loan Bank Stock	1,816		1,816		3,404		3,404
Accrued interest receivable	3,620		3,620		3,373		3,373
Interest rate contracts	125		125		78		78

Level 3 inputs:
Loans and loans held for sale	1,031,340		1,033,551		968,370		974,366
Purchased receivables, net	13,326		13,326		15,254		15,254
Interest rate lock commitments	1,514		1,514		841		841
Mortgage servicing rights	1,654		1,654		1,010		1,010

Financial liabilities:
Level 2 inputs:
Deposits		$1,240,792		$1,240,223		$1,179,747		$1,180,136
Securities sold under repurchase agreements	31,420		31,420		19,843		19,843
Borrowings	2,120		2,101		26,304		26,485
Accrued interest payable	56		56		18		18
Interest rate contracts	216		216		158		158
Level 3 inputs:
Junior subordinated debentures	18,558		17,433		18,558		17,239

Unrecognized financial instruments:
Commitments to extend credit⁽¹⁾		$222,387		$2,224		$219,349		$2,193
Standby letters of credit⁽¹⁾	6,399		64		6,004		60

⁽¹⁾Carrying amounts reflect the notional amount of credit exposure under these financial instruments.

Schedule of Assets And Liabilities Measured At Fair Value On A Recurring Basis

The following table sets forth the balances as of the periods indicated of assets measured at fair value on a recurring basis:



(In Thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2015
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities		$237,436		$35,008		$202,428		$—
Municipal securities	10,326		—		10,326		—
U.S. Agency mortgage-backed securities	809		—		809		—
Corporate bonds	39,018		4,501		34,517		—
Preferred stock	3,524		3,524		—		—
Total available for sale securities		$291,113		$43,033		$248,080		$—
Interest rate contracts		$125		$—		$125		$—
Interest rate lock commitments	1,514		—		—		1,514
Mortgage servicing rights	1,654		—		—		1,654
Total other assets		$3,293		$—		$125		$3,168
Liabilities:
Interest rate contracts		$216		$—		$216		$—
December 31, 2014
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities		$226,190		$15,545		$210,645		$—
Municipal securities	12,124		—		12,124		—
U.S. Agency mortgage-backed securities	1,029		—		1,029		—
Corporate bonds	39,235		26,873		12,362		—
Preferred stock	3,152		3,152		—		—
Total available for sale securities		$281,730		$45,570		$236,160		$—
Interest rate contracts	78		—		78		—
Interest rate lock commitments	841		—		—		841
Mortgage servicing rights	1,010		—		—		1,010
Total other assets		$1,929		$—		$78		$1,851
Liabilities:
Interest rate contracts		$158		$—		$158		$—

Fair Value, Assets Measured on Recurring Basis

The following table provides a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the years ended December 31, 2015 and 2014:



(In Thousands)	Beginning balance		Change included in earnings			Purchases and issuances		Sales and settlements			Ending balance		Net change in unrealized gains (losses) relating to items held at end of period
December 31, 2015
Interest rate lock commitments		$841		($2,270	)		$20,886		($17,943	)		$1,514		$1,514
Mortgage servicing rights	1,010		(158		)	802		—			1,654		—
Total		$1,851		($2,428	)		$21,688		($17,943	)		$3,168		$1,514
December 31, 2014
Interest rate lock commitments		$—		($119	)		$2,399		($1,439	)		$841		$841
Mortgage servicing rights	—		(160		)	1,170		—			1,010		—
Total		$—		($279	)		$3,569		($1,439	)		$1,851		$841

Fair Value, Assets Measured on Nonrecurring Basis



(In Thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total (gains) losses
December 31, 2015
Loans measured for impairment		$1,061		$—		$—		$1,061		$269
Other real estate owned	830		—		—		830		361
Total		$1,891		$—		$—		$1,891		$630
December 31, 2014
Loans measured for impairment		$806		$—		$—		$806		$75
Other real estate owned	423		—		—		423		56
Total		$1,229		$—		$—		$1,229		$131

Schedule of Valuation Assumptions

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 nonrecurring basis at December 31, 2015:



Financial Instrument	Valuation Technique	Unobservable Input	Weighted Average Rate Range
Loans measured for impairment	In-house valuation of real estate; discounted cash flow	Discount rate	25% - 50%
Other real estate owned	Fair value of collateral	Estimated capital costs to complete improvements	7% - 25%
Interest rate lock commitment	External pricing model	Pull through rate	93.16	%
Mortgage servicing rights	Discounted cash flow	Constant prepayment rate	9.90% - 19.12%
		Discount rate	9.08% - 9.23%