Fair Value (Tables)

3 Months Ended

Mar. 31, 2018

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 March 31, 2018, December 31, 2017 and March 31, 2017.



	At March 31, 2018
	Level 1		Level 2		Level 3		Total
Securities available for sale
Mortgage-backed securities	$	—	$	295,328,000	$	—	$	295,328,000
State and political subdivisions	—		5,511,000		—		5,511,000
Other equity securities	—		2,930,000		—		2,930,000
Total securities available for sale	—		303,769,000		—		303,769,000
Interest rate swap agreements	—		2,441,000		—		2,441,000
Total assets	$	—	$	306,210,000	$	—	$	306,210,000



	At December 31, 2017
	Level 1		Level 2		Level 3		Total
Securities available for sale
Mortgage-backed securities	$	—	$	289,989,000	$	—	$	289,989,000
State and political subdivisions	—		6,769,000		—		6,769,000
Other equity securities	—		3,414,000		—		3,414,000
Total securities available for sale	—		300,172,000		—		300,172,000
Interest rate swap agreements	—		1,955,000		—		1,955,000
Total assets	$	—	$	302,127,000	$	—	$	302,127,000



	At March 31, 2017
	Level 1		Level 2		Level 3		Total
Securities available for sale
Mortgage-backed securities	$	—	$	293,627,000	$	—	$	293,627,000
State and political subdivisions	—		15,705,000		—		15,705,000
Other equity securities	—		3,292,000		—		3,292,000
Total securities available for sale	—		312,624,000		—		312,624,000
Interest rate swap agreements	—		1,886,000		—		1,886,000
Total assets	$	—	$	314,510,000	$	—	$	314,510,000

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 and $78,000 at, December 31, 2017, and March 31, 2017, respectively. There was no allowance at March 31, 2018. 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 $1,924,000, $1,531,000 and $356,000 at March 31, 2018, December 31, 2017, and March 31, 2017, respectively.



	At March 31, 2018
	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—	$	1,121,000	$	—	$	1,121,000
Impaired loans	—		5,938,000		—		5,938,000
Total assets	$	—	$	7,059,000	$	—	$	7,059,000



	At December 31, 2017
	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—	$	1,012,000	$	—	$	1,012,000
Impaired loans	—		6,521,000		—		6,521,000
Total assets	$	—	$	7,533,000	$	—	$	7,533,000



	At March 31, 2017
	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—	$	525,000	$	—	$	525,000
Impaired loans	—		718,000		—		718,000
Total assets	$	—	$	1,243,000	$	—	$	1,243,000

Estimated Fair Value of Financial Instruments

The carrying amount and estimated fair values for financial instruments as of March 31, 2018 were as follows:



	Carrying value		Estimated fair value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	16,559,000	$	16,559,000	$	16,559,000	$	—	$	—
Interest bearing deposits in other banks	280,000		280,000		280,000		—		—
Securities available for sale	303,769,000		303,769,000		—		303,769,000		—
Securities to be held to maturity	258,690,000		255,851,000		—		255,851,000		—
Restricted equity securities	11,947,000		11,947,000		—		11,947,000		—
Loans held for sale	284,000		284,000		—		284,000		—
Loans (net of allowance for loan losses)
Commercial
Real estate	335,275,000		326,030,000		—		3,000		326,027,000
Construction	43,385,000		42,189,000		—		—		42,189,000
Other	173,960,000		171,045,000		—		5,495,000		165,550,000
Municipal	35,440,000		34,972,000		—		—		34,972,000
Residential
Term	438,765,000		430,023,000		—		334,000		429,689,000
Construction	15,814,000		15,587,000		—		—		15,587,000
Home equity line of credit	109,525,000		108,047,000		—		106,000		107,941,000
Consumer	24,881,000		24,178,000		—		—		24,178,000
Total loans	1,177,045,000		1,152,071,000		—		5,938,000		1,146,133,000
Mortgage servicing rights	1,280,000		2,518,000		—		2,518,000		—
Interest rate swap agreements	2,441,000		2,441,000		—		2,441,000		—
Accrued interest receivable	7,222,000		7,222,000		—		7,222,000		—
Financial liabilities
Demand deposits	$	137,674,000	$	128,525,000	$	—	$	128,525,000	$	—
NOW deposits	314,587,000		286,661,000		—		286,661,000		—
Money market deposits	108,726,000		102,196,000		—		102,196,000		—
Savings deposits	232,458,000		198,171,000		—		198,171,000		—
Local certificates of deposit	260,450,000		255,579,000		—		255,579,000		—
National certificates of deposit	374,297,000		374,095,000		—		374,095,000		—
Total deposits	1,428,192,000		1,345,227,000		—		1,345,227,000		—
Repurchase agreements	67,182,000		64,361,000		—		64,361,000		—
Federal Home Loan Bank advances	177,047,000		175,308,000		—		175,308,000		—
Total borrowed funds	244,229,000		239,669,000		—		239,669,000		—
Accrued interest payable	760,000		760,000		—		760,000		—

The carrying amounts and estimated fair values for financial instruments as of December 31, 2017 were as follows:



	Carrying value		Estimated fair value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	19,207,000	$	19,207,000	$	19,207,000	$	—	$	—
Interest bearing deposits in other banks	860,000		860,000		860,000		—		—
Securities available for sale	300,172,000		300,172,000		—		300,172,000		—
Securities to be held to maturity	256,567,000		259,655,000		—		259,655,000		—
Restricted equity securities	10,358,000		10,358,000		—		10,358,000		—
Loans held for sale	386,000		386,000		—		386,000		—
Loans (net of allowance for loan losses)
Commercial
Real estate	319,691,000		311,321,000		—		72,000		311,249,000
Construction	37,594,000		36,610,000		—		—		36,610,000
Other	177,956,000		175,455,000		—		6,018,000		169,437,000
Municipal	33,370,000		33,280,000		—		—		33,280,000
Residential
Term	431,459,000		431,028,000		—		391,000		430,637,000
Construction	17,830,000		17,613,000		—		—		17,613,000
Home equity line of credit	110,566,000		109,012,000		—		40,000		108,972,000
Consumer	24,944,000		24,408,000		—		—		24,408,000
Total loans	1,153,410,000		1,138,727,000		—		6,521,000		1,132,206,000
Mortgage servicing rights	1,268,000		2,321,000		—		2,321,000		—
Interest rate swap agreements	1,955,000		1,955,000		—		1,955,000		—
Accrued interest receivable	5,867,000		5,867,000		—		5,867,000		—
Financial liabilities
Demand deposits	$	145,332,000	$	139,350,000	$	—	$	139,350,000	$	—
NOW deposits	318,043,000		295,775,000		—		295,775,000		—
Money market deposits	163,898,000		153,497,000		—		153,497,000		—
Savings deposits	232,605,000		203,799,000		—		203,799,000		—
Local certificates of deposit	223,074,000		220,734,000		—		220,734,000		—
National certificates of deposit	335,927,000		335,775,000		—		335,775,000		—
Total deposits	1,418,879,000		1,348,930,000		—		1,348,930,000		—
Repurchase agreements	70,564,000		67,976,000		—		67,976,000		—
Federal Home Loan Bank advances	158,194,000		156,396,000		—		156,396,000		—
Total borrowed funds	228,758,000		224,372,000		—		224,372,000		—
Accrued interest payable	642,000		642,000		—		642,000		—

The carrying amount and estimated fair values for financial instruments as of March 31, 2017 were as follows:



	Carrying value		Estimated fair value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	17,600,000	$	17,600,000	$	17,600,000	$	—	$	—
Interest bearing deposits in other banks	3,272,000		3,272,000		3,272,000		—		—
Securities available for sale	312,624,000		312,624,000		—		312,624,000		—
Securities to be held to maturity	240,829,000		239,378,000		—		239,378,000		—
Restricted equity securities	13,363,000		13,363,000		—		13,363,000		—
Loans held for sale	979,000		979,000		—		979,000		—
Loans (net of allowance for loan losses)
Commercial
Real estate	299,920,000		295,039,000		—		424,000		294,615,000
Construction	28,254,000		27,794,000		—		—		27,794,000
Other	156,233,000		154,823,000		—		33,000		154,790,000
Municipal	28,306,000		28,737,000		—		—		28,737,000
Residential
Term	420,057,000		420,393,000		—		261,000		420,132,000
Construction	13,689,000		13,593,000		—		—		13,593,000
Home equity line of credit	109,058,000		107,823,000		—		—		107,823,000
Consumer	23,851,000		23,519,000		—		—		23,519,000
Total loans	1,079,368,000		1,071,721,000		—		718,000		1,071,003,000
Mortgage servicing rights	1,054,000		1,853,000		—		1,853,000		—
Interest rate swap agreements	1,886,000		1,886,000		—		1,886,000		—
Accrued interest receivable	6,854,000		6,854,000		—		6,854,000		—
Financial liabilities
Demand deposits	$	130,319,000	$	123,696,000	$	—	$	123,696,000	$	—
NOW deposits	323,919,000		296,958,000		—		296,958,000		—
Money market deposits	142,220,000		130,374,000		—		130,374,000		—
Savings deposits	222,976,000		193,142,000		—		193,142,000		—
Local certificates of deposit	213,296,000		212,337,000		—		212,337,000		—
National certificates of deposit	313,753,000		313,833,000		—		313,833,000		—
Total deposits	1,346,483,000		1,270,340,000		—		1,270,340,000		—
Repurchase agreements	76,342,000		72,399,000		—		72,399,000		—
Federal Home Loan Bank advances	150,125,000		149,358,000		—		149,358,000		—
Total borrowed funds	226,467,000		221,757,000		—		221,757,000		—
Accrued interest payable	519,000		519,000		—		519,000		—