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Fair value of financial instruments

12 Months Ended

Dec. 31, 2018

Fair value of financial instruments

Fair value of financial instruments

12. Fair value of financial instruments:

Assets and liabilities measured at fair value on a recurring basis at December 31, 2018 and 2017 are summarized as follows:

		Fair Value Measurement Using
					Quoted Prices in			Significant			Significant
					Active Markets for			Other Observable			Unobservable
					Identical Assets			Inputs			Inputs
December 31, 2018		Amount			(Level 1)			(Level 2)			(Level 3)
U.S. Treasury securities		$	25,592		$	25,592					$
U.S. Government-sponsored enterprises			92,818					$	92,818
State and Municipals:
Taxable			13,853						13,853
Tax-exempt			85,954						85,954
Mortgage-backed securities:
U.S. Government agencies			12,629						12,629
U.S. Government-sponsored enterprises			38,836						38,836
Common equity securities			291			291
Interest rate floor - other assets			553						553
Interest rate swap-other assets			108						108
Interest rate swap-other liabilities			(138)						(138)
Total		$	270,496		$	25,883		$	244,613		$

		Fair Value Measurement Using
					Quoted Prices in			Significant			Significant
					Active Markets for			Other Observable			Unobservable
					Identical Assets			Inputs			Inputs
December 31, 2017		Amount			(Level 1)			(Level 2)			(Level 3)
U.S. Treasury securities		$	19,814		$	19,814					$
U.S. Government-sponsored enterprises			93,648					$	93,648
State and Municipals:
Taxable			15,047						15,047
Tax-exempt			103,833						103,833
Mortgage-backed securities:
U.S. Government agencies			14,434						14,434
U.S. Government-sponsored enterprises			25,726						25,726
Common equity securities			46			46
Interest rate swap-other assets			655						655
Interest rate swap-other liabilities			(733)						(733)
Total		$	272,470		$	19,860		$	252,610		$

Assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2018 and 2017 are summarized as follows:

Fair Value Measurement Using

Quoted Prices in

Significant

Significant

Active Markets for

Other Observable

Unobservable

Identical Assets

Inputs

Inputs

December 31, 2018

Amount

(Level 1)

(Level 2)

(Level 3)

Impaired loans

$

2,809

$

2,809

Other real estate owned

$

234

$

234

Fair Value Measurement Using

Quoted Prices in

Significant Other

Significant

Active Markets for

Observable

Unobservable

Identical Assets

Inputs

Inputs

December 31, 2017

Amount

(Level 1)

(Level 2)

(Level 3)

Impaired loans

$

3,424

$

3,424

Other real estate owned

$

216

$

216

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value							Range
December 31, 2018		Estimate			Valuation Techniques		Unobservable Input		(Weighted Average)
Impaired loans		$	2,809		Appraisal of collateral		Appraisal adjustments		7.1% to 97.0%   (61.8)%
							Liquidation expenses		3.0% to 6.0% (4.4)%
Other real estate owned		$	234		Appraisal of collateral		Appraisal adjustments		26.0% to 73.3%   (38.9)%
							Liquidation expenses		3.0% to 6.0% (5.0)%

		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value							Range
December 31, 2017		Estimate			Valuation Techniques		Unobservable Input		(Weighted Average)
Impaired loans		$	3,424		Appraisal of collateral		Appraisal adjustments		4.0% to 97.0%   (67.2)%
							Liquidation expenses		3.0% to 6.0% (4.9)%
Other real estate owned		$	216		Appraisal of collateral		Appraisal adjustments		25.0% to 41.3%   (30.7)%
							Liquidation expenses		3.0% to 6.0% (5.0)%

Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 Inputs which are not identifiable.

Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

The carrying and fair values of the Company’s financial instruments at December 31, 2018 and 2017 and their placement within the fair value hierarchy are as follows:

								Fair Value Hierarchy
								Quoted
								Prices in
								Active			Significant
								Markets for			Other			Significant
								Identical			Observable			Unobservable
		Carrying			Fair			Assets			Inputs			Inputs
December 31, 2018		Value			Value			(level 1)			(level 2)			(Level 3)
Financial assets:
Cash and cash equivalents		$	32,616		$	32,616		$	32,616
Investment securities:
Available-for-sale			269,682			269,682			25,592		$	244,090
Common equity securities			291			291			291
Held-to-maturity			8,361			8,380						8,380
Loans held for sale			749			749						749
Net loans			1,801,887			1,762,449								$	1,762,449
Accrued interest receivable			7,115			7,115						7,115
Mortgage servicing rights			718			1,710						1,710
Restricted equity securities			7,462			7,462						7,462
Interest rate floor			553			553						553
Interest rate swaps			108			108						108
Total		$	2,129,542		$	2,091,115
Financial liabilities:
Deposits		$	1,875,022		$	1,874,520					$	1,874,520
Short-term borrowings			86,500			86,500						86,500
Long-term debt			37,906			38,071						38,071
Accrued interest payable			1,195			1,195						1,195
Interest rate swaps			138			138						138
Total		$	2,000,761		$	2,000,424

								Fair Value Hierarchy
								Quoted
								Prices in
								Active			Significant
								Markets for			Other			Significant
								Identical			Observable			Unobservable
		Carrying			Fair			Assets			Inputs			Inputs
December 31, 2017		Value			Value			(level 1)			(level 2)			(Level 3)
Financial assets:
Cash and cash equivalents		$	37,488		$	37,488		$	37,488
Investment securities:
Available-for-sale			272,548			272,548			19,860		$	252,688
Held-to-maturity			9,274			9,547						9,547
Loans held for sale			106			106						106
Net loans			1,674,105			1,645,292								$	1,645,292
Accrued interest receivable			6,936			6,936						6,936
Mortgage servicing rights			728			1,638						1,638
Restricted equity securities			8,562			8,562						8,562
Interest rate swaps			655			655						655
Total		$	2,010,402		$	1,982,772
Financial liabilities:
Deposits		$	1,719,018		$	1,666,284					$	1,666,284
Short-term borrowings			123,675			123,675						123,675
Long-term debt			49,734			50,147						50,147
Accrued interest payable			497			497						497
Interest rate swaps			733			733						733
Total		$	1,893,657		$	1,841,336

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- References

No definition available.

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- 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.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-URI http://asc.fasb.org/topic&trid=2155941

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