Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2015

Fair value of assets and liabilities


	For the three months ended		For the three months ended		For the nine months ended		For the nine months ended
(in thousands)	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014

Balance, beginning of period	$	1,653	$	3,210	$	1,020	$	2,271

Realized and unrealized gains (loss) included in earnings		105		(391)		738		548

Balance, end of period	$	1,758	$	2,819	$	1,758	$	2,819

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
September 30, 2015:
Impaired loans	$	11,989	Appraisal of collateral (1)	Appraisal adjustments(2)	20% - 30%
				Liquidation expense (2)	5% - 10%

Other real estate owned	$	274	Appraisal of collateral (1)	Appraisal adjustments (2)	20% - 30%
				Liquidation expense (2)	5% - 10%

Mortgage servicing rights	$	1,155	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


	September 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
U.S. Government Agency securities	$	—	$	32,090	$	—	$	32,090
U.S. Sponsored Mortgage backed securities		—		34,712		—		34,712
Municipal securities		—		459		—		459
Equity and Other securities		88		809		—		897
Loans held for sale		—		73,047		—		73,047
Interest rate lock commitment		—		—		1,758		1,758
Interest rate swap		—		580		—		580
Interest rate cap		—		443		—		443
Liability:
Interest rate swap		—		580		—		580
Forward sales commitments		—		417		—		417


	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


	September 30, 2015
(in thousands)	Level I		Level II		Level III		Total
Assets:
Impaired loans	$	—	$	—	$	11,989	$	11,989
Other real estate owned		—		—		274		274
Mortgage servicing rights		—		—		1,155		1,155


	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)
September 30, 2015:
Financial assets:
Cash and cash equivalents	$	25,135	$	25,135	$	25,135	$	—	$	—
Certificates of deposits with other banks		13,150		13,341		—		13,341		—
Securities available-for-sale		68,158		68,158		88		68,070		—
Securities held-to-maturity		52,969		53,923		—		53,923		—
Loans held for sale		73,047		73,047		—		73,047		—
Loans, net		994,833		1,000,857		—		—		1,000,857
Mortgage servicing rights		1,155		1,155		—		—		1,155
Interest rate lock commitment		1,758		1,758		—		—		1,758
Interest rate swap		580		580		—		580		—
Interest rate cap		443		443		—		443		—
Accrued interest receivable		3,250		3,250		—		800		2,450

Financial liabilities:
Deposits	$	1,018,255	$	1,019,968	$	—	$	1,019,968	$	—
Repurchase agreements		26,562		26,562		—		26,562		—
FHLB and other borrowings		102,468		102,476		—		102,476		—
Interest rate swap		580		580		—		580		—
Forward sales commitments		417		417		—		417		—
Accrued interest payable		458		458		—		458		—
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		—