Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value of Financial Instruments [Abstract]

Schedule of fair value measurements for assets and liabilities on a recurring basis

The following table presents fair value measurements for assets that are measured at fair value on a recurring basis as of and for the nine months ended September 30, 2019:


					Significant
					Other		Significant		Total Changes
			Quoted		Observable		Unobservable		In Fair Values
	Carrying		Prices		Inputs		Inputs		Included In
	Value		(Level 1)		(Level 2)		(Level 3)		Period Income
Assets:	(dollars in thousands)
AFS Securities - U.S. Treasury notes	$	999	$	999	$	—	$	—	$	—
AFS Securities - U.S. government agency notes		8,030		—		8,030		—		—
Loans held for sale ("LHFS")		17,587		—		17,587		—		(373)
Mortgage servicing rights ("MSRs")		316		—		—		316		(121)
Interest-rate lock commitments ("IRLCs")		180		—		—		180		80
Best efforts forward contracts		26		—		26		—		26
Mandatory forward contracts		46		—		46		—		63

The following table presents fair value measurements for assets and liabilities that are measured at fair value on a recurring basis as of and for the year ended December 31, 2018:


					Significant
					Other		Significant		Total Changes
			Quoted		Observable		Unobservable		In Fair Values
	Carrying		Prices		Inputs		Inputs		Included In
	Value		(Level 1)		(Level 2)		(Level 3)		Period Income
Assets:	(dollars in thousands)
AFS Securities - U.S. Treasury notes	$	1,981	$	1,981	$	—	$	—	$	—
AFS Securities - U.S. government agency notes		9,997		—		9,997		—		—
LHFS		9,686		—		9,686		—		192
MSRs		437		—		—		437		(40)
IRLCs		100		—		—		100		78

Liabilities:
Mandatory forward contracts		16		—		16		—		(30)
Best efforts forward contracts		—		—		—		—		(3)

Schedule of additional quantitative information about assets measured at fair value on a recurring basis

The following table provides additional quantitative information about assets measured at fair value on a recurring basis and for which we have utilized Level 3 inputs to determine fair value:


	Fair Value		Valuation	Unobservable	Range
	Estimate		Technique	Input	(Weighted-Average)
September 30, 2019:	(dollars in thousands)
MSRs	$	316	Market Approach	Weighted average prepayment speed	13.60	%
IRLCs		180	Market Approach	Range of pull through rate	80% - 95	%
				Average pull through rate	90	%

December 31, 2018:
MSRs	$	437	Market Approach	Weighted average prepayment speed	9.80	%
IRLCs		100	Market Approach	Range of pull through rate	70% - 95	%
				Average pull through rate	84	%

Schedule of activity of servicing assets at fair value

The following table shows the activity in the MSRs:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(dollars in thousands)
Beginning balance	$	343	$	501	$	437	$	477
Valuation adjustment		(27)		(19)		(121)		5
Ending balance	$	316	$	482	$	316	$	482

The following table shows the activity in the IRLCs:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(dollars in thousands)
Beginning balance	$	345	$	168	$	100	$	22
Valuation adjustment		(165)		19		80		165
Ending balance	$	180	$	187	$	180	$	187

Schedule of assets measured at fair value on a nonrecurring basis

For assets measured at fair value on a nonrecurring basis, the following tables provide the level of valuation assumptions used to determine each adjustment and the carrying value of assets:


	September 30, 2019
					Significant
					Other		Significant
			Quoted		Observable		Unobservable
	Carrying		Prices		Inputs		Inputs		Range of	Weighted
	Value		(Level 1)		(Level 2)		(Level 3)		Discount (1)	Average
	(dollars in thousands)
Impaired loans	$	4,849	$	—	$	—	$	4,849	0% - 160%	8	%
Real estate acquired through foreclosure		551		—		—		551	0% - 16%	15	%

(1)

Discount based on current market conditions and estimated selling costs

December 31, 2018

Significant

Other

Significant

Quoted

Observable

Unobservable

Carrying

Prices

Inputs

Range of

Weighted

Value

(Level 1)

(Level 2)

(Level 3)

Discount (1)

Average

(dollars in thousands)

Impaired loans

5,678

—

5,678

0% - 16%

6.7

(1)

Discount based on current market conditions and estimated selling costs

Estimated fair values of financial instruments

The carrying value and fair value of all financial instruments are summarized in the following tables:


	September 30, 2019
	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
Assets:	(dollars in thousands)
Cash and cash equivalents	$	65,253	$	65,253	$	—	$	—	$	65,253
Certificates of deposit held for investment		7,540		7,540		—		—		7,540
AFS securities		9,029		999		8,030		—		9,029
HTM securities		30,302		2,010		28,449		—		30,459
LHFS		17,587		—		17,587		—		17,587
Loans receivable, net		653,448		—		—		679,547		679,547
Restricted stock investments		2,431		—		2,431		—		2,431
Accrued interest receivable		2,514		—		2,514		—		2,514
ROU asset		2,534		—		2,534		—		2,534
MSRs		316		—		—		316		316
IRLCs		180		—		—		180		180
Mandatory forward contracts		46		—		46		—		46
Best effort forward contracts		26		—		26		—		26
Liabilities:
Deposits		657,154		—		660,174		—		660,174
Accrued interest payable		332		—		332		—		332
Borrowings		38,498		—		35,022		—		35,022
Subordinated debentures		20,619		—		—		20,619		20,619
Lease liability		2,572		—		2,572		—		2,572


	December 31, 2018
	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
Assets:	(dollars in thousands)
Cash and cash equivalents	$	188,340	$	188,340	$	—	$	—	$	188,340
Certificates of deposit held for investment		8,780		8,780		—		—		8,780
AFS securities		11,978		1,981		9,997		—		11,978
HTM securities		38,912		2,008		36,204		—		38,212
LHFS		9,686		—		9,686		—		9,686
Loans receivable, net		674,305		—		—		670,512		670,512
Restricted stock investments		3,766		—		3,766		—		3,766
Accrued interest receivable		2,848		—		2,848		—		2,848
MSRs		437		—		—		437		437
IRLCs		100		—		—		100		100
Liabilities:
Deposits		779,506		—		778,313		—		778,313
Accrued interest payable		419		—		419		—		419
Borrowings		73,500		—		69,210		—		69,210
Subordinated debentures		20,619		—		—		20,619		20,619
Mandatory forward contracts		16		—		16		—		16