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Disclosures about Fair Value of Assets

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Disclosures about Fair Value of Assets

Note 17:

Disclosures about Fair Value of Assets

Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets

Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets

Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets

Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014:

						December 31, 2015
						Fair Value Measurements Using
		Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)

U.S. Government agencies		$	15,938,697			$	—			$	15,938,697			$	—
Mortgage-backed securities (Government-sponsored enterprises - residential)			23,178,395				—				23,178,395				—
Municipal bonds			48,356,240				—				48,356,240				—

						December 31, 2014
						Fair Value Measurements Using
		Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)

U.S. Government agencies		$	9,958,273			$	—			$	9,958,273			$	—
Mortgage-backed securities (Government-sponsored enterprises - residential)			41,419,921				—				41,419,921				—
Municipal bonds			45,306,703				—				45,306,703				—

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended December 31, 2015.

Available-for-Sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. The Company has no Level 1 securities. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models. Such securities are classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The Company did not have securities considered Level 3 as of December 31, 2015 or December 31, 2014.

Nonrecurring Measurements

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014:

						December 31, 2015
						Fair Value Measurements Using
		Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)

Impaired loans (collateral dependent)		$	899,981			$	—			$	—			$	899,981

						December 31, 2014
						Fair Value Measurements Using
		Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)

Impaired loans (collateral dependent)		$	1,147,400			$	—			$	—			$	1,147,400

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Impaired Loans (Collateral Dependent)

The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary. Appraisals are reviewed for accuracy and consistency. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. Fair value adjustments on impaired loans were $(156,069) and $265,687 at December 31, 2015 and 2014.

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements.

		Fair Value at December 31, 2015				Valuation Technique		Unobservable Inputs		Range (Weighted Average)

Collateral-dependent impaired loans		$	899,981			Market comparable properties		Marketability discount		20% – 30% (25%)

		Fair Value at December 31, 2014				Valuation Technique		Unobservable Inputs		Range (Weighted Average)

Collateral-dependent impaired loans		$	1,147,400			Market comparable properties		Marketability discount		20% – 30% (25%)

Fair Value of Other Financial Instruments

The following table presents estimated fair values of the Company’s other financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014:

						December 31, 2015
						Fair Value Measurements Using
		Carrying Amount				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)

Financial assets
Cash and cash equivalents		$	4,103,432			$	4,103,432			$	—			$	—
Interest-earning time deposits			2,724,000				2,724,000				—				—
Other investments			62,223				—				62,223				—
Loans held for sale			539,000				—				539,000				—
Loans, net of allowance for loan losses			193,039,879				—				—				193,006,301
Federal Home Loan Bank stock			1,113,800				—				1,113,800				—
Interest receivable			1,715,676				—				1,715,676				—

Financial liabilities
Deposits			239,281,930				—				160,227,406				80,300,060
Short-term borrowings			15,131,710				—				6,631,710				8,500,000
Advances from borrowers for taxes and insurance			990,917				—				990,917				—
Interest payable			118,335				—				118,335				—

Unrecognized financial instruments (net of contract amount)
Commitments to originate loans			—				—				—				—
Letters of credit			—				—				—				—
Lines of credit			—				—				—				—

						December 31, 2014
						Fair Value Measurements Using
		Carrying Amount				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)

Financial assets
Cash and cash equivalents		$	9,611,638			$	9,611,638			$	—			$	—
Other investments			73,766				—				73,766				—
Loans held for sale			235,600				—				235,600				—
Loans, net of allowance for loan losses			184,718,612				—				—				184,573,401
Federal Home Loan Bank stock			1,113,800				—				1,113,800				—
Interest receivable			1,713,243				—				1,713,243				—

Financial liabilities
Deposits			245,941,562				—				151,341,999				96,956,400
Short-term borrowings			13,821,730				—				8,821,730				4,996,109
Advances from borrowers for taxes and insurance			962,762				—				962,762				—
Interest payable			166,052				—				166,052				—

Unrecognized financial instruments (net of contract amount)
Commitments to originate loans			—				—				—				—
Letters of credit			—				—				—				—
Lines of credit			—				—				—				—

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying condensed consolidated balance sheets at amounts other than fair value.

Cash and Cash Equivalents, Interest Receivable, Federal Home Loan Bank Stock, and Other Investments

The carrying amount approximates fair value.

Loans Held for Sale

For homogeneous categories of loans, such as mortgage loans held for sale, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics.

Loans

The fair value of loans is estimated by discounting the future cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.

Deposits

Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

Short-term Borrowings, Interest Payable, and Advances from Borrowers for Taxes and Insurance

The carrying amount approximates fair value.

Commitments to Originate Loans, Letters of Credit, and Lines of Credit

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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