Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2015

Fair value of assets and liabilities


	For the three months ended		For the three months ended		For the six months ended		For the six months ended
(in thousands)	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014

Balance, beginning of period	$	1,790	$	2,607	$	1,020	$	2,271

Realized and unrealized gains (loss) included in earnings		(137)		603		633		939

Balance, end of period	$	1,653	$	3,210	$	1,653	$	3,210

Schedule of quantitative information about assets measured at fair value on a non-recurring basis


	Quantitative Information about Level 3 Fair Value Measurements
			Valuation	Unobservable
(Dollars in thousands)	Fair Value		Technique	Input	Range
June 30, 2015:
Impaired loans	$	12,731	Appraisal of collateral (1)	Appraisal adjustments(2)	20% - 30%
				Liquidation expense (2)	5% - 10%

Other real estate owned	$	375	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%

Mortgage servicing rights	$	1,262	Discounted cash flows	Constant prepayment rate	12%
				Cost of service	0.25%
				Discount rate	12%


	Quantitative Information about Level 3 Fair Value Measurements
			Valuation	Unobservable
(Dollars in thousands)	Fair Value		Technique	Input	Range
December 31, 2014:
Impaired loans	$	14,091	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%

Other real estate owned	$	575	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%

Mortgage servicing rights	$	1,423	Discounted cash flows	Constant prepayment rate	12%
				Cost of service	0.25%
				Discount rate	12%

(1)

Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not observable.

(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.

Recurring

Fair value of assets and liabilities

Schedule of assets measured at fair value


	June 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency Securities	$	—	$	30,582	$	—	$	30,582
U.S. Sponsored Mortgage backed securities		—		34,530		—		34,530
Equity and Other Securities		73		670		—		743
Loans held for sale		—		116,307		—		116,307
Interest rate lock commitment		—		—		1,653		1,653
Forward sales commitments				783				783
Interest rate cap		—		936		—		936


	December 31, 2014
(in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency Securities	$	—	$	37,534	$	—	$	37,534
U.S. Sponsored Mortgage backed securities		—		29,932		—		29,932
Equity and Other Securities		77		670		—		747
Loans held for sale		—		69,527		—		69,527
Interest rate lock commitment		—		—		1,020		1,020
Interest rate cap		—		1,423		—		1,423
Liability:
Forward sales commitments		—		431		—		431

Non-recurring

Fair value of assets and liabilities

Schedule of assets measured at fair value


	June 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
Impaired loans	$	—	$	—	$	12,731	$	12,731
Other real estate owned		—		—		375		375
Mortgage servicing rights		—		—		1,262		1,262


	December 31, 2014
(in thousands)	Level I		Level II		Level III		Total
Assets:
Impaired loans	$	—	$	—	$	14,091	$	14,091
Other real estate owned		—		—		575		575
Mortgage servicing rights		—		—		1,423		1,423

Schedule of carrying values and estimated fair values of the Company's financial instruments

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

Fair Value Measurements at:


					Quoted Prices in		Significant		Significant
					Active Markets For		Other		Unobservable
	Carrying		Estimated		Identical Assets		Observable		Inputs
	Value		Fair Value		(Level 1)		Inputs (Level 2)		(Level 3)
June 30, 2015:
Financial assets:
Cash and cash equivalents	$	14,014	$	14,014	$	14,014	$	—	$	—
Certificates of deposits with other banks		11,659		11,891		—		11,891		—
Securities available-for-sale		65,855		65,855		73		65,782		—
Securities held-to-maturity		53,141		53,441		—		53,441		—
Loans held for sale		116,307		116,307		—		116,307		—
Loans, net		904,038		912,331		—		—		912,331
Mortgage servicing rights		1,262		1,262		—		—		1,262
Interest rate lock commitment		1,653		1,653		—		—		1,653
Forward sales commitments		783		783		—		783		—
Interest rate cap		936		936		—		936		—
Accrued interest receivable		2,923		2,923		—		668		2,255

Financial liabilities:
Deposits	$	890,969	$	894,979	$	—	$	894,979	$	—
Repurchase agreements		26,263		26,263		—		26,263		—
FHLB and other borrowings		178,245		178,264		—		178,264		—
Accrued interest payable		437		437		—		437		—
Subordinated debt		33,524		31,172		—		31,172		—

December 31, 2014
Financial assets:
Cash and cash equivalents	$	30,077	$	30,077	$	30,077	$	—	$	—
Certificates of deposits with other banks		11,907		12,035		—		12,035		—
Securities available-for-sale		68,213		68,213		77		68,136		—
Securities held-to-maturity		54,538		55,871		—		55,871		—
Loans held for sale		69,527		69,527		—		69,527		—
Loans, net		792,074		803,036		—		—		803,036
Mortgage servicing rights		1,423		1,423		—		—		1,423
Interest rate lock commitment		1,020		1,020		—		—		1,020
Interest rate cap		1,423		1,423		—		1,423		—
Accrued interest receivable		2,387		2,387		—		728		1,659

Financial liabilities:
Deposits	$	823,227	$	824,078	$	—	$	824,078	$	—
Repurchase agreements		32,673		32,673		—		32,673		—
FHLB and other borrowings		101,287		101,338		—		101,338		—
Forward sales commitments		431		431		—		431		—
Accrued interest payable		376		376		—		376		—
Subordinated debt		33,524		31,172		—		31,172		—