Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2015

Fair Value of Assets and Liabilities

Note 3. Fair Value of Assets and Liabilities

Recurring Basis

The following table provides a summary of the financial instruments the Company measures at fair value on a recurring basis as of December 31, 2015 and 2014:

			Fair Value Measurements Using
	As of December 31, 2015 Assets At Fair Value		Fair Value Measurements Using
	As of December 31, 2015 Assets At Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(dollars in thousands)
Assets
Obligations of U.S. government agencies	$	47,318	$	-	$	47,318	$	-
Mortgage backed securities
U.S government sponsored entities and agencies		245,235		-		245,235		-
Non-agency		34,317		-		34,317		-
State and municipal securities		108,406		-		108,406		-
Asset backed securities		15,627		-		15,627		-
Other investments		32		32		-		-

Total assets measured on a recurring basis	$	450,935	$	32	$	450,903	$	-

			Fair Value Measurements Using
	As of December 31, 2014 Assets At Fair Value		Fair Value Measurements Using
	As of December 31, 2014 Assets At Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(dollars in thousands)
Assets
Obligations of U.S. government agencies	$	19,664	$	-	$	19,664	$	-
Mortgage backed securities
U.S government sponsored entities and agencies		215,398		-		215,398		-
Non-agency		11,901		-		11,901		-
State and municipal securities		82,592		-		82,592		-
Asset backed securities		26,025		-		26,025		-

Total assets measured on a recurring basis	$	355,580	$	-	$	355,580	$	-

There were no transfers between levels of fair value measures during 2015 and 2014 for assets measured at fair value on a recurring basis. There were no liabilities measured on a recurring basis during 2015. As of December 31, 2015 and 2014, there were no assets or liabilities classified as Level 3.

Non-recurring Basis

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets and liabilities that are measured at the lower of cost or fair value, and that were recognized at fair value which was below cost. Certain impaired loans are recorded in the Company's consolidated financial statements using the discounted cash flow method versus the collateral method. The discounted cash flow method as prescribed by ASC 310 Receivables, is not a fair value measurement since the discount rate utilized is the loan's effective interest rate, which is not considered a market rate for those loans. The discounted cash flow approach is used to measure impairment for certain impaired loans, because of the significant payment history and the global cash flow analysis performed on each borrower.

The following table provides a summary of assets the Company measures at fair value on a non-recurring basis as of December 31, 2015 and 2014. There were no assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2015, and there were no liabilities measured at fair value on a non-recurring basis as of December 31, 2014.

Fair Value Measurements Using

As of
December 31,
2015
Assets At
Fair Value

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Year To
Date Losses
(Recoveries)

(dollars in thousands)

Assets

Impaired loans

Commercial real estate

Construction and land

Total assets measured on a non-recurring basis

			Fair Value Measurements Using
	As of December 31, 2014 Assets At Fair Value		Fair Value Measurements Using
	As of December 31, 2014 Assets At Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Year To Date Losses (Recoveries)
		(dollars in thousands)
Assets
Impaired loans
Commercial real estate	$	1,325	$	-	$	-	$	1,325	$	1,026
Construction and land		3,261		-		-		3,261		(946	)

Total assets measured on a non-recurring basis	$	4,586	$	-	$	-	$	4,586	$	80

There were no transfers between levels of fair value measures during 2015 and 2014 for assets measured at fair value on a non-recurring basis.

Fair Value of Financial Instruments

The following table provides a summary of the estimated fair value of financial instruments at December 31, 2015 and 2014:

			Fair Value Measurements Using
	As of December 31, 2015 Carrying Amount		Fair Value Measurements Using
	As of December 31, 2015 Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
		(dollars in thousands)
Assets
Cash and cash equivalents	$	69,923	$	69,923	$	-	$	-	$	69,923
Investment securities available for sale		450,935		32		450,903		-		450,935
Federal Home Loan Bank stock		7,853		-		-		-		N/A
Loans receivable, net		1,228,696		-		-		1,250,903		1,250,903
Loans held for sale		9,755		-		9,755		-		9,755
Accrued interest receivable		6,256		-		2,589		3,667		6,256
Liabilities
Non-interest bearing deposits		514,559		514,559		-		-		514,559
Interest bearing deposits		1,050,402		-		1,051,731		-		1,051,731
Federal Home Loan Bank advances		103,521		-		104,718		-		104,718
Junior subordinated debentures		10,438		-		-		8,195		8,195
Accrued interest payable		390		-		390		-		390

			Fair Value Measurements Using
	As of December 31, 2014 Carrying Amount		Fair Value Measurements Using
	As of December 31, 2014 Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
		(dollars in thousands)
Assets
Cash and cash equivalents	$	35,580	$	35,580	$	-	$	-	$	35,580
Investment securities available for sale		355,580		-		355,580		-		355,580
Federal Home Loan Bank stock		7,853		-		-		-		N/A
Loans receivable, net		1,175,236		-		-		1,196,997		1,196,997
Loans held for sale		2,586		-		2,586		-		2,586
Accrued interest receivable		5,659		-		2,038		3,621		5,659
Liabilities
Non interest-bearing deposits		461,479		461,479		-		-		461,479
Interest-bearing deposits		933,325		-		936,151		-		936,151
Federal Home Loan Bank advances		95,558		-		96,679		-		96,679
Junior subordinated debentures		13,233		-		-		9,297		9,297
Accrued interest payable		401		-		401		-		401

Information on off-balance sheet instruments as of December 31, 2015 and 2014 follows:

	December 31, 2015				December 31, 2014
	Notional Amount		Cost to Cede or Assume		Notional Amount		Cost to Cede or Assume
		(dollars in thousands)
Off-balance sheet instruments, commitments to extend credit and standby letters of credit	$	255,093	$	2,551	$	253,275	$	2,533

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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