Fair Value (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2018, December 31, 2017 and June 30, 2017.



	At June 30, 2018
	Level 1		Level 2		Level 3		Total
Securities available for sale
Mortgage-backed securities	$	—	$	297,378,000	$	—	$	297,378,000
State and political subdivisions	—		4,692,000		—		4,692,000
Other equity securities	—		2,978,000		—		2,978,000
Total securities available for sale	—		305,048,000		—		305,048,000
Interest rate swap agreements	—		2,616,000		—		2,616,000
Total assets	$	—	$	307,664,000	$	—	$	307,664,000



	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 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

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 $39,000 at December 31, 2017, and June 30, 2017, respectively. There was no allowance at June 30, 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 $1,893,000, $1,531,000 and $202,000 at June 30, 2018, December 31, 2017, and June 30, 2017, respectively.



	At June 30, 2018
	Level 1		Level 2		Level 3		Total
Other real estate owned	$	—	$	609,000	$	—	$	609,000
Impaired loans	—		6,387,000		—		6,387,000
Total assets	$	—	$	6,996,000	$	—	$	6,996,000



	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 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

Estimated Fair Value of Financial Instruments

The carrying amount and estimated fair values for financial instruments as of June 30, 2018 were as follows:



	Carrying value		Estimated fair value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	21,056,000	$	21,056,000	$	21,056,000	$	—	$	—
Interest bearing deposits in other banks	1,616,000		1,616,000		1,616,000		—		—
Securities available for sale	305,048,000		305,048,000		—		305,048,000		—
Securities to be held to maturity	260,077,000		256,316,000		—		256,316,000		—
Restricted equity securities	12,363,000		12,363,000		—		12,363,000		—
Loans held for sale	481,000		481,000		—		481,000		—
Loans (net of allowance for loan losses)
Commercial
Real estate	345,853,000		338,784,000		—		423,000		338,361,000
Construction	39,852,000		39,037,000		—		—		39,037,000
Other	180,750,000		178,904,000		—		5,527,000		173,377,000
Municipal	48,693,000		47,790,000		—		—		47,790,000
Residential
Term	452,289,000		441,029,000		—		339,000		440,690,000
Construction	14,550,000		14,443,000		—		—		14,443,000
Home equity line of credit	106,892,000		105,264,000		—		98,000		105,166,000
Consumer	24,089,000		23,322,000		—		—		23,322,000
Total loans	1,212,968,000		1,188,573,000		—		6,387,000		1,182,186,000
Mortgage servicing rights	1,285,000		2,581,000		—		2,581,000		—
Interest rate swap agreements	2,616,000		2,616,000		—		2,616,000		—
Accrued interest receivable	7,723,000		7,723,000		—		7,723,000		—
Financial liabilities
Demand deposits	$	146,964,000	$	136,167,000	$	—	$	136,167,000	$	—
NOW deposits	282,449,000		254,619,000		—		254,619,000		—
Money market deposits	100,378,000		93,978,000		—		93,978,000		—
Savings deposits	229,464,000		194,141,000		—		194,141,000		—
Local certificates of deposit	267,932,000		263,342,000		—		263,342,000		—
National certificates of deposit	389,459,000		389,062,000		—		389,062,000		—
Total deposits	1,416,646,000		1,331,309,000		—		1,331,309,000		—
Repurchase agreements	91,764,000		88,560,000		—		88,560,000		—
Federal Home Loan Bank advances	205,691,000		204,476,000		—		204,476,000		—
Total borrowed funds	297,455,000		293,036,000		—		293,036,000		—
Accrued interest payable	943,000		943,000		—		943,000		—

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 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	$	137,061,000	$	133,002,000	$	—	$	133,002,000	$	—
NOW deposits	293,553,000		274,476,000		—		274,476,000		—
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		1,261,466,000		—		1,261,466,000		—
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		—