Fair Value (Tables)

9 Months Ended

Sep. 30, 2017

Assets Measured on Recurring Basis Measured at Fair Value

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



	At September 30, 2017
	Level 1		Level 2		Level 3		Total
Securities available for sale
Mortgage-backed securities	$	—	$	288,789,000	$	—	$	288,789,000
State and political subdivisions	—		6,842,000		—		6,842,000
Other equity securities	—		3,368,000		—		3,368,000
Total securities available for sale	—		298,999,000		—		298,999,000
Interest rate swap agreements	—		1,592,000		—		1,592,000
Total assets	$	—	$	300,591,000	$	—	$	300,591,000



	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 September 30, 2016
	Level 1		Level 2		Level 3		Total
Securities available for sale
Mortgage-backed securities	$	—	$	261,514,000	$	—	$	261,514,000
State and political subdivisions	—		17,484,000		—		17,484,000
Other equity securities	—		3,295,000		—		3,295,000
Total securities available for sale	—		282,293,000		—		282,293,000
Interest rate swap agreements	—		90,000		—		90,000
Total assets	$	—	$	282,383,000	$	—	$	282,383,000

Assets 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 $53,000, $205,000 and $162,000 at September 30, 2017, December 31, 2016, and September 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 $1,553,000, $478,000 and $496,000 at September 30, 2017, December 31, 2016, and September 30, 2016, respectively.



	At September 30, 2017
	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—	$	320,000	$	—	$	320,000
Impaired loans	—		7,334,000		—		7,334,000
Total assets	$	—	$	7,654,000	$	—	$	7,654,000



	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 September 30, 2016
	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—	$	855,000	$	—	$	855,000
Impaired loans	—		1,311,000		—		1,311,000
Total assets	$	—	$	2,166,000	$	—	$	2,166,000

Estimated Fair Value of Financial Instruments

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



	Carrying value		Estimated fair value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	22,375,000	$	22,375,000	$	22,375,000	$	—	$	—
Interest bearing deposits in other banks	584,000		584,000		584,000		—		—
Securities available for sale	298,999,000		298,999,000		—		298,999,000		—
Securities to be held to maturity	242,679,000		245,021,000		—		245,021,000		—
Restricted equity securities	10,798,000		10,798,000		—		10,798,000		—
Loans held for sale	434,000		434,000		—		434,000		—
Loans (net of allowance for loan losses)
Commercial
Real estate	296,888,000		290,475,000		—		351,000		290,124,000
Construction	32,348,000		31,649,000		—		—		31,649,000
Other	169,493,000		167,710,000		—		6,259,000		161,451,000
Municipal	33,289,000		33,466,000		—		—		33,466,000
Residential
Term	428,318,000		431,112,000		—		724,000		430,388,000
Construction	15,461,000		15,307,000		—		—		15,307,000
Home equity line of credit	109,433,000		107,891,000		—		—		107,891,000
Consumer	24,844,000		24,416,000		—		—		24,416,000
Total loans	1,110,074,000		1,102,026,000		—		7,334,000		1,094,692,000
Mortgage servicing rights	1,109,000		1,888,000		—		1,888,000		—
Interest rate swap agreements	1,592,000		1,592,000		—		1,592,000		—
Accrued interest receivable	5,820,000		5,820,000		—		5,820,000		—
Financial liabilities
Demand deposits	$	193,089,000	$	187,310,000	$	—	$	187,310,000	$	—
NOW deposits	291,403,000		274,629,000		—		274,629,000		—
Money market deposits	134,257,000		126,541,000		—		126,541,000		—
Savings deposits	234,456,000		207,813,000		—		207,813,000		—
Local certificates of deposit	220,702,000		220,047,000		—		220,047,000		—
National certificates of deposit	276,142,000		276,078,000		—		276,078,000		—
Total deposits	1,350,049,000		1,292,418,000		—		1,292,418,000		—
Repurchase agreements	75,412,000		72,948,000		—		72,948,000		—
Federal Home Loan Bank advances	158,916,000		158,424,000		—		158,424,000		—
Total borrowed funds	234,328,000		231,372,000		—		231,372,000		—
Accrued interest payable	605,000		605,000		—		605,000		—

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 September 30, 2016 were as follows:



	Carrying value		Estimated fair value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	23,456,000	$	23,456,000	$	23,456,000	$	—	$	—
Interest bearing deposits in other banks	15,098,000		15,098,000		15,098,000		—		—
Securities available for sale	282,293,000		282,293,000		—		282,293,000		—
Securities to be held to maturity	188,770,000		195,797,000		—		195,797,000		—
Restricted equity securities	14,048,000		14,048,000		—		14,048,000		—
Loans held for sale	1,228,000		1,228,000		—		1,228,000		—
Loans (net of allowance for loan losses)
Commercial
Real estate	293,167,000		289,015,000		—		544,000		288,471,000
Construction	18,452,000		18,191,000		—		—		18,191,000
Other	129,258,000		129,143,000		—		—		129,143,000
Municipal	26,132,000		27,270,000		—		—		27,270,000
Residential
Term	401,597,000		409,916,000		—		703,000		409,213,000
Construction	14,226,000		14,170,000		—		—		14,170,000
Home equity line of credit	110,989,000		110,220,000		—		—		110,220,000
Consumer	24,873,000		24,724,000		—		64,000		24,660,000
Total loans	1,018,694,000		1,022,649,000		—		1,311,000		1,021,338,000
Mortgage servicing rights	1,071,000		1,683,000		—		1,683,000		—
Interest rate swap agreements	90,000		90,000		—		90,000		—
Accrued interest receivable	5,079,000		5,079,000		—		5,079,000		—
Financial liabilities
Demand deposits	$	158,476,000	$	163,498,000	$	—	$	163,498,000	$	—
NOW deposits	295,708,000		296,393,000		—		296,393,000		—
Money market deposits	76,685,000		71,714,000		—		71,714,000		—
Savings deposits	218,425,000		206,331,000		—		206,331,000		—
Local certificates of deposit	211,402,000		213,622,000		—		213,622,000		—
National certificates of deposit	213,053,000		213,332,000		—		213,332,000		—
Total deposits	1,173,749,000		1,164,890,000		—		1,164,890,000		—
Repurchase agreements	87,970,000		87,246,000		—		87,246,000		—
Federal Home Loan Bank advances	180,128,000		181,918,000		—		181,918,000		—
Total borrowed funds	268,098,000		269,164,000		—		269,164,000		—
Accrued interest payable	508,000		508,000		—		508,000		—