Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Fair value of assets and liabilities

The following table represents recurring level III assets:

Interest Rate Lock Commitments (Dollars in thousands)	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016
Balance, beginning of period	$	2,094		$	3,625		$	1,546	$	1,583

Realized and unrealized gains included in earnings	(245		)	(474		)	303		1,568

Balance, end of period	$	1,849		$	3,151		$	1,849	$	3,151

Quantitative Information About the Level III Significant Unobservable Inputs for Assets and Liabilities Measured at Fair Value on Nonrecurring Basis

The following tables presents quantitative information about the Level III significant unobservable inputs for assets and liabilities measured at fair value at September 30, 2017 and December 31, 2016.



	Quantitative Information about Level III Fair Value Measurements
(Dollars in thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
September 30, 2017
Nonrecurring measurements:
Impaired loans	$	11,966	Appraisal of collateral ¹	Appraisal adjustments ²	20% - 62%
				Liquidation expense ²	5% - 10%

Other real estate owned	$	1,387	Appraisal of collateral ¹	Appraisal adjustments ²	20% - 30%
				Liquidation expense ²	5% - 10%

Recurring measurements:
Interest rate lock commitments	$	1,849	Pricing model	Pull through rates	73% - 81%



	Quantitative Information about Level III Fair Value Measurements
(Dollars in thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
December 31, 2016
Nonrecurring measurements:
Impaired loans	$	11,609	Appraisal of collateral ¹	Appraisal adjustments ²	20% - 62%
				Liquidation expense ²	5% - 10%

Other real estate owned	$	414	Appraisal of collateral ¹	Appraisal adjustments ²	20% - 30%
				Liquidation expense ²	5% - 10%

Recurring measurements:
Interest rate lock commitments	$	1,546	Pricing model	Pull through rates	73% - 85%

¹ Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level III inputs which are not identifiable.

² Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Carrying Values and Estimated Fair Values of Financial Instruments

The carrying values and estimated fair values of the Company’s financial instruments are summarized as follows:

Fair Value Measurements at:

(Dollars in thousands)	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)
September 30, 2017
Financial assets:
Cash and cash equivalents	$	20,272	$	20,272	$	20,272	$	—	$	—
Certificates of deposits with other banks	14,778		14,449		—		14,449		—
Securities available-for-sale	187,348		187,348		2,333		185,015		—
Loans held for sale	69,057		69,057		—		69,057		—
Loans, net	1,085,071		1,082,593		—		—		1,082,593
Mortgage servicing rights	184		184		—		—		184
Interest rate lock commitment	1,849		1,849		—		—		1,849
Mortgage-backed security hedges	12		12		—		12		—
Interest rate swap	111		111		—		111		—
Interest rate cap	34		34		—		34		—
Accrued interest receivable	4,904		4,904		—		1,224		3,680

Financial liabilities:
Deposits	$	1,165,199	$	1,131,413	$	—	$	1,131,413	$	—
Repurchase agreements	25,045		25,045		—		25,045		—
FHLB and other borrowings	84,403		84,425		—		84,425		—
Interest rate swap	111		111		—		111		—
Accrued interest payable	538		538		—		538		—
Subordinated debt	33,524		32,275		—		32,275		—

December 31, 2016
Financial assets:
Cash and cash equivalents	$	17,340	$	17,340	$	17,340	$	—	$	—
Certificates of deposits with other banks	14,527		14,985		—		14,985		—
Securities available-for-sale	162,368		162,368		897		161,471		—
Loans held for sale	90,174		90,174		—		90,174		—
Loans, net	1,043,764		1,035,437		—		—		1,035,437
Mortgage servicing rights	190		190		—		—		190
Interest rate lock commitment	1,546		1,546		—		—		1,546
Mortgage-backed security hedges	372		372		—		372		—
Interest rate swap	250		250		—		250		—
Interest rate cap	268		268		—		268		—
Accrued interest receivable	3,951		3,951		—		1,002		2,949

Financial liabilities:
Deposits	$	1,107,017	$	1,116,174	$	—	$	1,116,174	$	—
Repurchase agreements	25,160		25,160		—		25,160		—
FHLB and other borrowings	90,921		90,919		—		90,919		—
Interest rate swap	250		250		—		250		—
Accrued interest payable	741		741		—		741		—
Subordinated debt	33,524		32,275		—		32,275		—

Recurring

Fair value of assets and liabilities

Financial Assets and Liabilities Measured at Fair Value

The following tables present the assets reported on the consolidated statements of financial condition at their fair value on a recurring basis as of September 30, 2017 and December 31, 2016 by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.



	September 30, 2017
(Dollars in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency securities	$	—	$	55,617	$	—	$	55,617
U.S. Sponsored Mortgage backed securities	—		54,719		—		54,719
Municipal securities	—		61,396		—		61,396
Equity and other securities	2,333		13,283		—		15,616
Loans held for sale	—		69,057		—		69,057
Interest rate lock commitment	—		—		1,849		1,849
Mortgage-backed security hedges	—		12		—		12
Interest rate swap	—		111		—		111
Interest rate cap	—		34		—		34
Liabilities:
Interest rate swap	—		111		—		111



	December 31, 2016
(Dollars in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency securities	$	—	$	28,816	$	—	$	28,816
U.S. Sponsored Mortgage backed securities	—		54,732		—		54,732
Municipal securities	—		70,796		—		70,796
Equity and other securities	897		7,127		—		8,024
Loans held for sale	—		90,174		—		90,174
Interest rate lock commitment	—		—		1,546		1,546
Mortgage-backed security hedges	—		372		—		372
Interest rate swap	—		250		—		250
Interest rate cap	—		268		—		268
Liabilities:
Interest rate swap	—		250		—		250

Non-recurring

Fair value of assets and liabilities

Financial Assets and Liabilities Measured at Fair Value

Assets measured at fair value on a nonrecurring basis as of September 30, 2017 and December 31, 2016 are included in the table below:



	September 30, 2017
(Dollars in thousands)	Level I		Level II		Level III		Total
Impaired loans	$	—	$	—	$	11,966	$	11,966
Other real estate owned	—		—		1,387		1,387



	December 31, 2016
(Dollars in thousands)	Level I		Level II		Level III		Total
Impaired loans	$	—	$	—	$	11,609	$	11,609
Other real estate owned	—		—		414		414