Fair Value (Tables)

6 Months Ended

Jun. 30, 2017

Assets and Liabilities Measured on Recurring Basis Measured at Fair Value

The following tables present the balances of assets and that were measured at fair value on a recurring basis as of June 30, 2017, December 31, 2016 and June 30, 2016.



	At June 30, 2017
	Level 1		Level 2		Level 3		Total
Securities available for sale
Mortgage-backed securities	$	—	$	288,991,000	$	—	$	288,991,000
State and political subdivisions	—		15,828,000		—		15,828,000
Other equity securities	—		3,327,000		—		3,327,000
Total securities available for sale	—		308,146,000		—		308,146,000
Interest rate swap agreements	—		1,623,000		—		1,623,000
Total assets	$	—	$	309,769,000	$	—	$	309,769,000



	At December 31, 2016
	Level 1		Level 2		Level 3		Total
Securities available for sale
Mortgage-backed securities	$	—	$	280,604,000	$	—	$	280,604,000
State and political subdivisions	—		16,482,000		—		16,482,000
Other equity securities	—		3,330,000		—		3,330,000
Total securities available for sale	$	—	$	300,416,000	$	—	$	300,416,000
Interest rate swap agreements	$	—	$	1,790,000	$	—	$	1,790,000
Total assets	$	—	$	302,206,000	$	—	$	302,206,000



	At June 30, 2016
	Level 1		Level 2		Level 3		Total
Securities available for sale
U.S. Treasury and agency	$	—	$	522,000	$	—	$	522,000
Mortgage-backed securities	—		219,353,000		—		219,353,000
State and political subdivisions	—		18,415,000		—		18,415,000
Other equity securities	—		3,037,000		—		3,037,000
Total assets	$	—	$	241,327,000	$	—	$	241,327,000



	At June 30, 2016
	Level 1		Level 2		Level 3		Total
Interest rate swap agreements	$	—	$	208,000	$	—	$	208,000
Total liabilities	$	—	$	208,000	$	—	$	208,000

Assets and Liabilities Measured on Nonrecurring Basis Measured at Fair Value

The following tables include assets measured at fair value on a nonrecurring basis that have had a fair value adjustment since their initial recognition. Other real estate owned is presented net of an allowance of $39,000, $205,000 and $115,000 at June 30, 2017, December 31, 2016, and June 30, 2016, respectively. Only collateral-dependent impaired loans with a related specific allowance for loan losses or a partial charge off are included in impaired loans for purposes of fair value disclosures. Impaired loans below are presented net of specific allowances of $202,000, $478,000 and $567,000 at June 30, 2017, December 31, 2016, and June 30, 2016, respectively.



	At June 30, 2017
	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—	$	324,000	$	—	$	324,000
Impaired loans	—		269,000		—		269,000
Total assets	$	—	$	593,000	$	—	$	593,000



	At December 31, 2016
	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—	$	375,000	$	—	$	375,000
Impaired loans	—		827,000		—		827,000
Total assets	$	—	$	1,202,000	$	—	$	1,202,000



	At June 30, 2016
	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—	$	1,129,000	$	—	$	1,129,000
Impaired loans	—		1,889,000		—		1,889,000
Total assets	$	—	$	3,018,000	$	—	$	3,018,000

Estimated Fair Value of Financial Instruments

The carrying amount and estimated fair values for financial instruments as of June 30, 2017 were as follows:



	Carrying value		Estimated fair value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	20,189,000	$	20,189,000	$	20,189,000	$	—	$	—
Interest bearing deposits in other banks	3,820,000		3,820,000		3,820,000		—		—
Securities available for sale	308,146,000		308,146,000		—		308,146,000		—
Securities to be held to maturity	244,123,000		246,238,000		—		246,238,000		—
Restricted equity securities	12,311,000		12,311,000		—		12,311,000		—
Loans held for sale	865,000		865,000		—		865,000		—
Loans (net of allowance for loan losses)
Commercial
Real estate	301,722,000		295,339,000		—		—		295,339,000
Construction	32,989,000		32,291,000		—		—		32,291,000
Other	171,099,000		169,509,000		—		33,000		169,476,000
Municipal	28,672,000		28,902,000		—		—		28,902,000
Residential
Term	425,985,000		428,556,000		—		236,000		428,320,000
Construction	15,025,000		14,983,000		—		—		14,983,000
Home equity line of credit	109,516,000		107,855,000		—		—		107,855,000
Consumer	25,046,000		24,654,000		—		—		24,654,000
Total loans	1,110,054,000		1,102,089,000		—		269,000		1,101,820,000
Mortgage servicing rights	1,109,000		1,888,000		—		1,888,000		—
Interest rate swap agreements	1,623,000		1,623,000		—		1,623,000		—
Accrued interest receivable	7,192,000		7,192,000		—		7,192,000		—
Financial liabilities
Demand deposits	$	180,298,000	$	174,958,000	$	—	$	174,958,000	$	—
NOW deposits	250,316,000		234,049,000		—		234,049,000		—
Money market deposits	134,760,000		126,402,000		—		126,402,000		—
Savings deposits	226,391,000		200,712,000		—		200,712,000		—
Local certificates of deposit	217,495,000		217,021,000		—		217,021,000		—
National certificates of deposit	309,999,000		309,853,000		—		309,853,000		—
Total deposits	1,319,259,000		1,262,995,000		—		1,262,995,000		—
Repurchase agreements	67,154,000		64,852,000		—		64,852,000		—
Federal Home Loan Bank advances	215,123,000		214,893,000		—		214,893,000		—
Total borrowed funds	282,277,000		279,745,000		—		279,745,000		—
Accrued interest payable	603,000		603,000		—		603,000		—

The carrying amounts and estimated fair values for financial instruments as of December 31, 2016 were as follows:



	Carrying value		Estimated fair value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	17,366,000	$	17,366,000	$	17,366,000	$	—	$	—
Interest bearing deposits in other banks	293,000		293,000		293,000		—		—
Securities available for sale	300,416,000		300,416,000		—		300,416,000		—
Securities to be held to maturity	226,828,000		225,537,000		—		225,537,000		—
Restricted equity securities	11,930,000		11,930,000		—		11,930,000		—
Loans held for sale	782,000		782,000		—		782,000		—
Loans (net of allowance for loan losses)
Commercial
Real estate	297,952,000		293,103,000		—		558,000		292,545,000
Construction	24,954,000		24,548,000		—		—		24,548,000
Other	148,737,000		147,394,000		—		33,000		147,361,000
Municipal	27,035,000		27,446,000		—		—		27,446,000
Residential
Term	409,999,000		410,327,000		—		236,000		410,091,000
Construction	18,253,000		18,125,000		—		—		18,125,000
Home equity line of credit	109,986,000		108,740,000		—		—		108,740,000
Consumer	24,472,000		24,131,000		—		—		24,131,000
Total loans	1,061,388,000		1,053,814,000		—		827,000		1,052,987,000
Mortgage servicing rights	1,113,000		1,696,000		—		1,696,000		—
Interest rate swap agreements	1,790,000		1,790,000		—		1,790,000		—
Accrued interest receivable	5,532,000		5,532,000		—		5,532,000		—
Financial liabilities
Demand deposits	$	140,482,000	$	133,342,000	$	—	$	133,342,000	$	—
NOW deposits	282,971,000		259,418,000		—		259,418,000		—
Money market deposits	125,544,000		115,087,000		—		115,087,000		—
Savings deposits	217,340,000		188,260,000		—		188,260,000		—
Local certificates of deposit	210,316,000		209,370,000		—		209,370,000		—
National certificates of deposit	266,304,000		266,372,000		—		266,372,000		—
Total deposits	1,242,957,000		1,171,849,000		—		1,171,849,000		—
Repurchase agreements	84,174,000		79,827,000		—		79,827,000		—
Federal Home Loan Bank advances	194,727,000		193,733,000		—		193,733,000		—
Total borrowed funds	278,901,000		273,560,000		—		273,560,000		—
Accrued interest payable	479,000		479,000		—		479,000		—

The carrying amount and estimated fair values for financial instruments as of June 30, 2016 were as follows:



	Carrying value		Estimated fair value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	20,838,000	$	20,838,000	$	20,838,000	$	—	$	—
Interest bearing deposits in other banks	7,568,000		7,568,000		7,568,000		—		—
Securities available for sale	241,327,000		241,327,000		—		241,327,000		—
Securities to be held to maturity	216,272,000		225,200,000		—		225,200,000		—
Restricted equity securities	14,441,000		14,441,000		—		14,441,000		—
Loans held for sale	1,553,000		1,553,000		—		1,553,000		—
Loans (net of allowance for loan losses)
Commercial
Real estate	298,822,000		294,749,000		—		544,000		294,205,000
Construction	18,078,000		17,832,000		—		—		17,832,000
Other	134,632,000		134,567,000		—		348,000		134,219,000
Municipal	25,512,000		26,833,000		—		—		26,833,000
Residential
Term	401,911,000		410,502,000		—		933,000		409,569,000
Construction	13,364,000		13,289,000		—		—		13,289,000
Home equity line of credit	111,537,000		110,635,000		—		—		110,635,000
Consumer	24,159,000		24,126,000		—		64,000		24,062,000
Total loans	1,028,015,000		1,032,533,000		—		1,889,000		1,030,644,000
Mortgage servicing rights	948,000		1,489,000		—		1,489,000		—
Accrued interest receivable	6,372,000		6,372,000		—		6,372,000		—
Financial liabilities
Demand deposits	$	130,168,000	$	134,043,000	$	—	$	134,043,000	$	—
NOW deposits	254,136,000		253,251,000		—		253,251,000		—
Money market deposits	73,030,000		68,204,000		—		68,204,000		—
Savings deposits	208,826,000		196,812,000		—		196,812,000		—
Local certificates of deposit	211,006,000		213,726,000		—		213,726,000		—
National certificates of deposit	268,543,000		268,873,000		—		268,873,000		—
Total deposits	1,145,709,000		1,134,909,000		—		1,134,909,000		—
Repurchase agreements	82,965,000		81,775,000		—		81,775,000		—
Federal Home Loan Bank advances	200,130,000		202,184,000		—		202,184,000		—
Total borrowed funds	283,095,000		283,959,000		—		283,959,000		—
Interest rate swap agreements	208,000		208,000				208,000
Accrued interest payable	499,000		499,000		—		499,000		—