Fair Value (Tables)

3 Months Ended

Mar. 31, 2017

Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	Fair value measurements at March 31, 2017
				Quoted prices
				in active		Significant
				markets for		other			Significant
				identical		observable			unobservable
	Carrying			assets		inputs			inputs
	Value			(Level 1)		(Level 2)			(Level 3)
Assets:
Securities available for sale:
U.S. government-sponsored agencies	$	11,314		$	—	$	11,314		$	—
Obligations of states and political subdivisions		27,340			—		27,340			—
Mortgage-backed securities-residential		129,138			—		129,138			—
Asset-backed securities		20,724			—		20,724			—
Total securities available for sale	$	188,516		$	—	$	188,516		$	—
Derivatives:
Interest rate swaps - customer related	$	328		$	—	$	328		$	—
Liabilities:
Derivatives:
Interest rate swaps - customer related	$	(328	)	$	—	$	(328	)	$	—
Interest rate swaps - cash flow hedges		(1,535	)		—		(1,535	)		—
Total derivatives	$	(1,863	)	$	—	$	(1,863	)	$	—

	Fair value measurements at December 31, 2016
				Quoted prices
				in active		Significant
				markets for		other			Significant
				identical		observable			unobservable
	Carrying			assets		inputs			inputs
	Value			(Level 1)		(Level 2)			(Level 3)
Assets:
Securities available for sale:
U.S. government-sponsored agencies	$	9,374		$	—	$	9,374		$	—
Obligations of states and political subdivisions		27,913			—		27,913			—
Mortgage-backed securities-residential		124,595			—		124,595			—
Asset-backed securities		20,473			—		20,473			—
Total securities available for sale	$	182,355		$	—	$	182,355		$	—
Derivatives:
Interest rate swaps - customer related	$	460		$	—	$	460		$	—
Liabilities:
Derivatives:
Interest rate swaps - customer related	$	(460	)	$	—	$	(460	)	$	—
Interest rate swaps - cash flow hedges		(1,535	)		—		(1,535	)		—
Total derivatives	$	(1,995	)	$	—	$	(1,995	)	$	—

Summary of Assets Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis are summarized below (in thousands):

Fair value measurements at March 31, 2017

Quoted prices

in active

Significant

markets for

other

Significant

identical

observable

unobservable

Carrying

assets

inputs

Value

(level 1)

(level 2)

(level 3)

Assets:

Impaired loans:

Commercial and industrial

9,725

—

9,725

Fair value measurements at December 31, 2016

Quoted prices

in active

Significant

markets for

other

Significant

identical

observable

unobservable

Carrying

assets

inputs

Value

(level 1)

(level 2)

(level 3)

Assets:

Impaired loans:

Commercial and industrial

1,809

—

1,809

Summary of Quantitative Information About Level 3 Fair Value Measurements for Assets Measured at Fair Value on a Non-recurring Basis

The following table presents quantitative information about Level 3 fair value measurements for assets measured at fair value on a non-recurring basis at March 31, 2017 and December 31, 2016 (dollars in thousands):

					Range
	Fair		Valuation		(Weighted-
March 31, 2017	Value		Technique(s)	Unobservable Input(s)	Average)
Impaired loans:
Commercial and industrial	$	9,725	Sales comparison approach	Appraisal discounts	10 - 25%

Range

Fair

Valuation

(Weighted-

December 31, 2016

Value

Technique(s)

Unobservable Input(s)

Average)

Impaired loans:

Commercial and industrial

1,809

Sales comparison approach

Appraisal discounts

Summary of Carrying Value and Fair Values of the Bank's Financial Instruments

The carrying value and estimated fair values of the Bank’s financial instruments at March 31, 2017 and December 31, 2016 were as follows (in thousands):

	March 31, 2017				December 31, 2016
	Carrying				Carrying				Fair value
	amount		Fair value		amount		Fair value		level of input
Financial assets:
Cash and due from banks, interest-bearing deposits in financial institutions	$	58,629	$	58,629	$	63,456	$	63,456	Level 1
Federal funds sold		1,410		1,410		16,654		16,654	Level 1
Securities available for sale		188,516		188,516		182,355		182,355	Level 2
Securities held to maturity		46,855		49,769		46,864		49,731	Level 2
Loans held for sale		35,371		35,410		42,111		42,302	Level 2
Restricted equity securities		6,544	N/A			6,032	N/A		N/A
Loans, net		1,003,434		1,002,131		935,251		934,628	Level 3
Accrued interest receivable		4,012		4,012		3,942		3,942	Level 2
Bank owned life insurance		22,044		22,044		21,900		21,900	Level 2
Other assets		328		328		460		460	Level 2
Financial liabilities:
Deposits		1,157,995		1,116,924		1,128,722		1,088,758	Level 3
Federal Home Loan Bank advances		75,000		74,993		55,000		54,989	Level 2
Accrued interest payable		236		236		212		212	Level 2
Other liabilities		3,789		3,789		5,349		5,349	Level 3