Fair Value (Tables)

6 Months Ended

Jun. 30, 2017

For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy are as follows:



(Dollar amounts in thousands)			(Level 1)		(Level 2)		(Level 3)
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
June 30, 2017:
U.S. Treasury and federal agency	$	4,518	$	4,518	$	—	$	—
U.S. government sponsored entities and agencies	12,043		—		12,043		—
U.S. agency mortgage-backed securities: residential	22,242		—		22,242		—
U.S. agency collateralized mortgage obligations: residential	24,002		—		24,002		—
State and political subdivision	25,781		—		25,781		—
Corporate debt securities	9,520		—		9,520		—
Equity securities	1,722		1,587		—		135
	$	99,828	$	6,105	$	93,588	$	135

December 31, 2016:
U.S. Treasury and federal agency	4,500		4,500		—		—
U.S. government sponsored entities and agencies	8,998		—		8,998		—
U.S. agency mortgage-backed securities: residential	25,626		—		25,626		—
U.S. agency collateralized mortgage obligations: residential	24,706		—		24,706		—
State and political subdivisions	27,608		—		27,608		—
Corporate debt securities	7,932		—		7,932		—
Equity securities	2,190		2,054		—		136
	$	101,560	$	6,554	$	94,870	$	136

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents changes in Level 3 assets measured on a recurring basis for the three and six month periods ended June 30, 2017 and 2016:



(Dollar amounts in thousands)	Three months ended June 30,					Six months ended June 30,
	2017			2016		2017			2016
Balance at the beginning of the period	$	136		$	74	$	136		$	74
Total gains or losses (realized/unrealized):
Included in earnings	—			—		—			—
Included in other comprehensive income	(1		)	1		(1		)	1
Acquired	—			60		—			60
Transfers in and/or out of Level 3	—			—		—			—
Balance at the end of the period	$	135		$	135	$	135		$	135

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

For assets measured at fair value on a non-recurring basis at December 31, 2016, the fair value measurements by level within the fair value hierarchy are as follows:



(Dollar amounts in thousands)			(Level 1)		(Level 2)		(Level 3)
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2016:
Impaired residential mortgage loan	$	58	$	—	$	—	$	58
Impaired commercial real estate loan	463						463
Impaired commercial business loan	582		—		—		582

	$	1,103	$	—	$	—	$	1,103

Fair Value Inputs, Assets, Quantitative Information

The following table presents quantitative information about Level 3 fair value measurements for assets measured at fair value on a non-recurring basis:



(Dollar amounts in thousands)			Valuation Technique(s)	Unobservable Input(s)	Weighted Average
December 31, 2016:

Impaired residential mortgage loan	$	58	Sales comparison approach	Adjustment for differences between comparable sales	10	%

Impaired commercial real estate loan	463		Sales comparison approach	Adjustment for differences between comparable sales	37	%

Impaired commercial business loan	582		Liquidation value of business assets	Adjustment for differences between comparable business assets	64	%

Schedule of Carrying Amount and Fair Values of Financial Instruments

The following table sets forth the carrying amount and estimated fair values of the Corporation’s financial instruments included in the consolidated balance sheet as of June 30, 2017 and December 31, 2016:



(Dollar amounts in thousands)
	Carrying		Fair Value Measurements using:
Description	Amount		Total		Level 1		Level 2		Level 3
June 30, 2017:
Financial Assets:
Cash and cash equivalents	$	34,715	$	34,715	$	34,715	$	—	$	—
Securities available for sale	99,828		99,828		6,105		93,588		135
Loans held for sale	—		—		—		—		—
Loans, net	545,766		547,265		—		—		547,265
Federal bank stock	4,862		—		N/A		N/A		N/A
Accrued interest receivable	1,827		1,827		53		335		1,439
	$	686,998	$	683,635	$	40,873	$	93,923	$	548,839
Financial Liabilities:
Deposits	629,174		631,082		461,889		169,193		—
Borrowed funds	41,500		41,377		—		41,377		—
Accrued interest payable	359		359		8		351		—
	$	671,033	$	672,818	$	461,897	$	210,921	$	—



	Carrying		Fair Value Measurements using:
	Amount		Total		Level 1		Level 2		Level 3
December 31, 2016:
Financial Assets:
Cash and cash equivalents	$	17,568	$	17,568	$	17,568	$	—	$	—
Securities available for sale	101,560		101,560		6,554		94,870		136
Loans held for sale	68		68		—		68		—
Loans, net	515,435		519,573		—		—		519,573
Federal bank stock	4,861		—		N/A		N/A		N/A
Accrued interest receivable	1,815		1,815		37		365		1,413
	$	641,307	$	640,584	$	24,159	$	95,303	$	521,122
Financial Liabilities:
Deposits	584,940		582,458		423,693		158,765		—
Borrowed funds	44,000		44,027		—		44,027		—
Accrued interest payable	239		239		7		232		—
	$	629,179	$	626,724	$	423,700	$	203,024	$	—

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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