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Disclosures About Fair Value of Assets and Liabilities | 6 Months Ended
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Jun. 30, 2019
Disclosures About Fair Value of Assets and Liabilities [Abstract] |
Disclosures About Fair Value of Assets and Liabilities |
Note 9: | Disclosures About Fair Value of Assets and Liabilities
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:
| Level 1 | Quoted prices in active markets for identical assets or liabilities
| Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
| Level 3 | Unobservable inputs supported by little or no market activity and significant to the fair value of the assets or liabilities
Recurring Measurements There were no assets measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018. Nonrecurring Measurements The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2019 and December 31, 2018 (dollars in thousands):
|  | Fair Value |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
June 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans (collateral- dependent) |  | $ | 1,919 |  |  | $ | - |  |  | $ | - |  |  | $ | 1,919 |
Foreclosed assets held for sale |  | $ | 188 |  |  | $ | - |  |  | $ | - |  |  | $ | 188 |
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans (collateral-dependent) |  | $ | 506 |  |  | $ | - |  |  | $ | - |  |  | $ | 506 |
Foreclosed assets held for sale |  | $ | 110 |  |  | $ | - |  |  | $ | - |  |  | $ | 110 |
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Collateral-Dependent Impaired Loans, Net of Allowance for Loan Losses The estimated fair value of collateral-dependent impaired loans is based on fair value, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy. The Company considers evaluation analysis as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Values of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by executive management and loan administration. Values are reviewed for accuracy and consistency by executive management and loan administration. The ultimate collateral values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. Foreclosed Assets Held for Sale Foreclosed assets held for sale are carried at the lower of fair value at acquisition date or current estimated fair value, less estimated cost to sell when the asset is acquired. Estimated fair value of foreclosed assets is based on appraisals or evaluations. Foreclosed assets held for sale are classified within Level 3 of the fair value hierarchy. Appraisals of foreclosed assets held for sale are obtained when the asset is acquired and subsequently as deemed necessary by the Company. Appraisals are reviewed for accuracy and consistency by executive management and loan administration. Unobservable (Level 3) Inputs The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.
|  | Fair Value |  | Valuation Technique | Unobservable Inputs |  | Weighted- Average |
June 30, 2019 |  |  |  |  |  |  |  |
Collateral-dependent impaired loans |  | $ | 1,919 |  | Appraisals from comparable properties | Estimated cost to sell |  |  | 3-5 | %
Foreclosed assets held for sale |  | $ | 188 |  | Appraisals from comparable properties | Estimated cost to sell |  |  | 7-10 | %
December 31, 2018 |  |  |  |  |  |  |  |  |  |
Collateral-dependent impaired loans |  | $ | 506 |  | Appraisals from comparable properties | Estimated cost to sell |  |  | 7-10 | %
Foreclosed assets held for sale |  | $ | 110 |  | Appraisals from comparable properties | Estimated cost to sell |  |  | 7-10 | %
The following tables presents estimated fair values of the Company’s financial instruments not recorded at fair value at June 30, 2019 and December 31, 2018 (dollars in thousands):
|  | Carrying |  |  | Fair Value Measurements |
|  | Amount |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
June 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 123,763 |  |  | $ | 123,763 |  |  | $ | - |  |  | $ | - |  |  | $ | 123,763 |
Interest-bearing time deposits in other banks |  | $ | 32,632 |  |  | $ | - |  |  | $ | 32,631 |  |  | $ | - |  |  | $ | 32,631 |
Loans, net of allowance |  | $ | 623,614 |  |  | $ | - |  |  | $ | 621,399 |  |  | $ | 1,919 |  |  | $ | 623,318 |
Mortgage loans held for sale |  | $ | 8 |  |  | $ | - |  |  | $ | 8 |  |  | $ | - |  |  | $ | 8 |
Nonmarketable equity securities |  | $ | 1,069 |  |  | $ | - |  |  | $ | 1,069 |  |  | $ | - |  |  | $ | 1,069 |
Interest receivable |  | $ | 4,270 |  |  | $ | - |  |  | $ | 4,270 |  |  | $ | - |  |  | $ | 4,270 |
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 696,055 |  |  | $ | - |  |  | $ | 696,015 |  |  | $ | - |  |  | $ | 696,015 |
Interest payable |  | $ | 607 |  |  | $ | - |  |  | $ | 607 |  |  | $ | - |  |  | $ | 607 |
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 128,090 |  |  | $ | 128,090 |  |  | $ | - |  |  | $ | - |  |  | $ | 128,090 |
Interest-bearing time deposits in other banks |  | $ | 31,759 |  |  | $ | - |  |  | $ | 31,758 |  |  | $ | - |  |  | $ | 31,758 |
Loans, net of allowance |  | $ | 592,078 |  |  | $ | - |  |  | $ | 591,893 |  |  | $ | 506 |  |  | $ | 592,399 |
Mortgage loans held for sale |  | $ | 512 |  |  | $ | - |  |  | $ | 512 |  |  | $ | - |  |  | $ | 512 |
Nonmarketable equity securities |  | $ | 1,055 |  |  | $ | - |  |  | $ | 1,055 |  |  | $ | - |  |  | $ | 1,055 |
Interest receivable |  | $ | 4,538 |  |  | $ | - |  |  | $ | 4,538 |  |  | $ | - |  |  | $ | 4,538 |
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 675,903 |  |  | $ | - |  |  | $ | 675,017 |  |  | $ | - |  |  | $ | 675,017 |
Interest payable |  | $ | 461 |  |  | $ | - |  |  | $ | 461 |  |  | $ | - |  |  | $ | 461 |
The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value: Cash and Due from Banks, Interest-Bearing Time Deposits in Other Banks, Nonmarketable Equity Securities, Interest Receivable and Interest Payable The carrying amount approximates fair value. Loans and Mortgage Loans Held for Sale The fair value of loans is estimated by discounting the future cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations. Deposits Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities. Commitments to Extend Credit, Lines of Credit and Standby Letters of Credit The fair values of unfunded commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The fair values of standby letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. The estimated fair values of the Company’s commitments to extend credit, lines of credit and standby letters of credit were not material at June 30, 2019 or December 31, 2018.

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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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