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Fair value of financial instruments | 12 Months Ended
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Dec. 31, 2019
Fair value of financial instruments |
Fair value of financial instruments | 13. Fair value of financial instruments: Assets and liabilities measured at fair value on a recurring basis at December 31, 2019 and 2018 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, 2019 |  | Amount |  | (Level 1) |  | (Level 2) |  | (Level 3) |
U.S. Treasury securities |  | $ | 24,128 |  | $ | 24,128 |  |  |  |  | $ |  |
U.S. government-sponsored enterprises |  |  | 87,110 |  |  |  |  | $ | 87,110 |  |  |  |
State and municipals: |  |  |  |  |  |  |  |  |  |  |  |  |
Taxable |  |  | 34,898 |  |  |  |  |  | 34,898 |  |  |  |
Tax-exempt |  |  | 60,163 |  |  |  |  |  | 60,163 |  |  |  |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies |  |  | 8,470 |  |  |  |  |  | 8,470 |  |  |  |
U.S. government-sponsored enterprises |  |  | 115,709 |  |  |  |  |  | 115,709 |  |  |  |
Common equity securities |  |  | 423 |  |  | 423 |  |  |  |  |  |  |
Interest rate floor-other assets |  |  | 944 |  |  |  |  |  | 944 |  |  |  |
Interest rate swap-other assets |  |  | 4,728 |  |  |  |  |  | 4,728 |  |  |  |
Interest rate swap-other liabilities |  |  | (4,680) |  |  |  |  |  | (4,680) |  |  |  |
Total |  | $ | 331,893 |  | $ | 24,551 |  | $ | 307,342 |  | $ |  |
|  | 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 |  | $ |  |
Assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2019 and 2018 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, 2019 |  | Amount |  | (Level 1) |  | (Level 2) |  | (Level 3) |
Impaired loans |  | $ | 1,808 |  |  |  |  |  |  |  | $ | 1,808 |
Other real estate owned |  | $ | 283 |  |  |  |  |  |  |  | $ | 283 |
|  | Fair Value Measurement Using |
|  |  |  |  | Quoted Prices in |  | Significant Other |  | Significant |
|  |  |  | Active Markets for |  | 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 |
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, 2019 |  | Estimate |  | Valuation Techniques |  | Unobservable Input |  | (Weighted Average) |
Impaired loans |  | $ | 1,808 |  | Appraisal of collateral |  | Appraisal adjustments |  | 8.6% to 97.0% (54.4)% |
|  |  |  |  |  |  | Liquidation expenses |  | 3.0% to 6.0% (5.2)% |
Other real estate owned |  | $ | 283 |  | Appraisal of collateral |  | Appraisal adjustments |  | 20.0% to 63.6% (43.7)% |
|  |  |  |  |  |  | Liquidation expenses |  | 3.0% to 6.0% (5.0)% |
|  | 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)% |
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, 2019 and 2018 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, 2019 |  | Value |  | Value |  | (level 1) |  | (level 2) |  | (Level 3) |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 31,153 |  | $ | 31,153 |  | $ | 31,153 |  |  |  |  |  |  |
Investment securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available-for-sale |  |  | 330,478 |  |  | 330,478 |  |  | 24,128 |  | $ | 306,350 |  |  |  |
Common equity securities |  |  | 423 |  |  | 423 |  |  | 423 |  |  |  |  |  |  |
Held-to-maturity |  |  | 7,656 |  |  | 7,889 |  |  |  |  |  | 7,889 |  |  |  |
Loans held for sale |  |  | 986 |  |  | 986 |  |  |  |  |  | 986 |  |  |  |
Net loans |  |  | 1,915,563 |  |  | 1,881,658 |  |  |  |  |  |  |  | $ | 1,881,658 |
Accrued interest receivable |  |  | 6,981 |  |  | 6,981 |  |  |  |  |  | 6,981 |  |  |  |
Mortgage servicing rights |  |  | 738 |  |  | 1,444 |  |  |  |  |  | 1,444 |  |  |  |
Restricted equity securities (FHLB and other) |  |  | 10,201 |  |  | 10,201 |  |  |  |  |  | 10,201 |  |  |  |
Interest rate floor |  |  | 944 |  |  | 944 |  |  |  |  |  | 944 |  |  |  |
Interest rate swaps |  |  | 4,728 |  |  | 4,728 |  |  |  |  |  | 4,728 |  |  |  |
Total |  | $ | 2,309,851 |  | $ | 2,276,885 |  |  |  |  |  |  |  |  |  |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 1,971,489 |  | $ | 1,972,084 |  |  |  |  | $ | 1,972,084 |  |  |  |
Long-term debt |  |  | 32,733 |  |  | 33,075 |  |  |  |  |  | 33,075 |  |  |  |
Accrued interest payable |  |  | 1,277 |  |  | 1,277 |  |  |  |  |  | 1,277 |  |  |  |
Interest rate swaps |  |  | 4,680 |  |  | 4,680 |  |  |  |  |  | 4,680 |  |  |  |
Total |  | $ | 2,010,179 |  | $ | 2,011,116 |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | 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 |  |  | 25,952 |  | $ | 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 (FHLB and other) |  |  | 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 |  |  |  |  |  |  |  |  |  |

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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