Fair Value Measurements and Disclosures (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Measurements and Disclosures

Schedule of financial assets measured at fair value on a recurring basis

	March 31, 2019
(dollars in thousands)	Total		Level 1	Level 2	Level 3
Securities available for sale:
U.S. government agency mortgage-backed securities	$	22,918	—	22,918	—
U.S. government agency collateralized mortgage obligations		15,405	—	15,405	—
State and municipal securities		11,125	—	11,125	—
Investments in mutual funds and other equity securities		992	—	992	—
Mortgage loans held-for-sale		29,612	—	29,612	—
Mortgage loans held-for-investment		12,751	—	12,751	—
Interest rate lock commitments		330	—	—	330
Customer derivatives - Interest rate swaps		229	—	229	—
Total	$	93,362	—	93,032	330

	December 31, 2018
(dollars in thousands)	Total		Level 1	Level 2	Level 3
Securities available for sale:
U.S. government agency mortgage-backed securities	$	23,866	—	23,866	—
U.S. government agency collateralized mortgage obligations		14,664	—	14,664	—
State and municipal securities		10,919	—	10,919	—
Investments in mutual funds and other equity securities		979	—	979	—
Mortgage loans held-for-sale		37,695	—	37,695	—
Mortgage loans held-for-investment		11,422	—	11,422	—
Interest rate lock commitments		310	—	—	310
Customer derivatives - Interest rate swaps		141	—	141	—
Total	$	99,996	—	99,686	310

Schedule of financial assets measured at fair value on non-recurring basis

	March 31, 2019
(dollars in thousands)	Total		Level 1	Level 2	Level 3
Impaired loans (1)	$	5,468	—	—	5,468
Other real estate owned (2)		120	—	—	120
Total	$	5,588	—	—	5,588

	December 31, 2018
(dollars in thousands)	Total		Level 1	Level 2	Level 3
Impaired loans (1)	$	5,799	—	—	5,799
Other real estate owned (2)		—	—	—	—
Total	$	5,799	—	—	5,799

(1) Real estate properties acquired through, or in lieu of, foreclosure are to be sold and are carried at fair value less estimated cost to sell. Fair value is based upon independent market prices or appraised value of the property. These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement. Appraised values may be discounted based on management’s expertise, historical knowledge, changes in market conditions from the time of valuation and/or estimated costs to sell.

(2) Impaired loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third‑party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Schedule of estimated fair values of financial instruments

		March 31, 2019			December 31, 2018
	Fair Value	Carrying			Carrying
(dollars in thousands)	Hierarchy Level	amount		Fair value	amount	Fair value
Financial assets:
Cash and cash equivalents	Level 1	$	38,940	38,940	23,952	23,952
Securities available-for-sale	Level 2		50,440	50,440	50,428	50,428
Securities held-to-maturity	Level 2		12,712	12,814	12,741	12,655
Mortgage loans held-for-sale	Level 2		29,612	29,612	37,695	37,695
Loans receivable, net	Level 3		841,245	849,409	818,631	820,512
Mortgage loans held-for-investment	Level 2		12,751	12,751	11,422	11,422
Interest rate lock commitments	Level 3		330	330	310	310
Restricted investment in bank stock	Level 3		6,179	6,179	7,002	7,002
Accrued interest receivable	Level 3		3,001	3,001	2,889	2,889
Customer derivatives - Interest rate swaps	Level 2		229	229	141	141
Financial liabilities:
Deposits	Level 2		810,713	817,200	752,130	744,300
Short-term borrowings	Level 2		82,233	82,233	114,300	114,300
Long-term debt	Level 2		6,031	6,034	6,238	6,240
Subordinated debentures	Level 2		9,239	9,396	9,239	9,396
Accrued interest payable	Level 2		434	434	305	305
Interest rate lock commitments	Level 3		41	41	40	40
Forward commitments	Level 2		170	170	176	176
Customer derivatives - Interest rate swaps	Level 2		260	260	161	161
		Notional			Notional
Off-balance sheet financial instruments:		amount		Fair value	amount	Fair value
Commitments to extend credit	Level 2	$	289,692	330	290,614	310
Letters of credit	Level 2		6,354	—	5,158	—

Schedule of level 3 inputs reconciliation

	Three Months Ended March 31,
	2019		2018
Balance at beginning of the period	$	310	344
(Decrease) increase in value		19	242
Balance at end of the period	$	329	586

Schedule of measurement inputs

				Significant
Valuation Techniques for Level 3 interest rate lock	Fair Value			Unobservable	Range of		Weighted
commitments as of March 31, 2019	Level 3		Valuation Technique	Input	Inputs		Average
Interest rate lock commitments	$	329	Market comparable pricing	Pull through	1 - 99	%	89.27	%