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Fair Value Measurement | 12 Months Ended
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Dec. 31, 2015
Fair Value Disclosures [Abstract] |
Fair Value Measurement | NOTE 17 – FAIR VALUE MEASUREMENT U.S. generally accepted accounting principles establish a hierarchal disclosure framework associated with the level of observable pricing utilized in measuring assets and liabilities at fair value. The three broad levels defined by the hierarchy are as follows: Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; Level 3: Significant unobservable inputs that reflect the Company’s own view about the assumptions that market participants would use in pricing an asset. Securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Equity securities: The Company’s equity securities are not actively traded in an open market. The fair values of these equity securities available for sale are determined by using market data inputs for similar securities that are observable. (Level 2 inputs). Fair value swap asset/liability: The fair value of the swap asset and liability is based on an external derivative model using data inputs as of the valuation date and classified Level 2. Impaired loans: The Company has measured impairment on impaired loans generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable value. If the fair value of the collateral dependent loan is less than the carrying amount of the loan, a specific reserve for the loan is made in the allowance for loan losses or a charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling costs) and the loan is included in the table above as a Level 3 measurement. Other real estate owned: OREO is carried at the lower of cost or fair value, which is measured at the date foreclosure. If the fair value of the collateral exceeds the carrying amount of the loan, no charge-off or adjustment is necessary, the loan is not considered to be carried at fair value, and is therefore not included in the table below. If the fair value of the collateral is less than the carrying amount of the loan, management will charge the loan down to its estimated realizable value. Management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. In these cases, the properties are categorized in the below table as Level 3 measurements since these adjustments are considered to be unobservable inputs. Income and expenses from operations are included in other operating expenses. Further declines in the fair value of the collateral subsequent to foreclosure are included in net gain on sale of other real estate owned. Assets measured at fair value are summarized below.
Fair Value Measurements at December 31, 2015 Using: |
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
Assets measured at fair value on a recurring basis: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ | — |  |  | $ | 40,937 |  |  | $ | — |
Obligations of states and political subdivisions |  |  | — |  |  |  | 92,152 |  |  |  | — |
Mortgage-backed securities in government sponsored entities |  |  | — |  |  |  | 62,573 |  |  |  | — |
Equity securities in financial institutions |  |  | — |  |  |  | 587 |  |  |  | — |
Fair value swap asset |  |  | — |  |  |  | 1,962 |  |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Fair value swap liability |  |  | — |  |  |  | 1,962 |  |  |  | — |
Assets measured at fair value on a nonrecurring basis: |  |  |  |  |  |  |  |  |  |  |  |
Impaired Loans |  | $ | — |  |  | $ | — |  |  | $ | 759 |
Other Real Estate Owned |  |  | — |  |  |  | — |  |  |  | 109 |
Fair Value Measurements at December 31, 2014 Using: |
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
Assets measured at fair value on a recurring basis: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. Government agencies |  | $ | — |  |  | $ | 42,902 |  |  | $ | — |
Obligations of states and political subdivisions |  |  | — |  |  |  | 88,021 |  |  |  | — |
Mortgage-backed securities in government sponsored entities |  |  | — |  |  |  | 66,442 |  |  |  | — |
Equity securities in financial institutions |  |  | — |  |  |  | 540 |  |  |  | — |
Fair value swap asset |  |  | — |  |  |  | 1,721 |  |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Fair value swap liability |  |  | — |  |  |  | 1,721 |  |  |  | — |
Assets measured at fair value on a nonrecurring basis: |  |  |  |  |  |  |  |  |  |  |  |
Impaired Loans |  | $ | — |  |  | $ | — |  |  | $ | 2,690 |
Other Real Estate Owned |  |  | — |  |  |  | — |  |  |  | 550 |
The following tables presents quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2015 and 2014.
|  | Quantitative Information about Level 3 Fair Value Measurements
|  | Fair Value |  |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average
December 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans |  | $ | 759 |  |  | Appraisal of collateral |  | Appraisal adjustments |  | 10% - 30% |  | 10%
|  |  |  |  |  |  |  | Liquidation expense |  | 0% - 10% |  | 10%
|  |  |  |  |  |  |  | Holding period |  | 0 - 30 months |  | 17 months
Other real estate owned |  | $ | 109 |  |  | Appraisal of collateral |  | Appraisal adjustments |  | 10% - 30% |  | 10%
|  |  |  |  |  |  |  | Liquidation expense |  | 0% - 10% |  | 10%
|  | Quantitative Information about Level 3 Fair Value Measurements
|  | Fair Value |  |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average
December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans |  | $ | 2,690 |  |  | Appraisal of collateral |  | Appraisal adjustments |  | 10% - 30% |  | 10%
|  |  |  |  |  |  |  | Liquidation expense |  | 0% - 10% |  | 10%
|  |  |  |  |  |  |  | Holding period |  | 0 - 30 months |  | 16 months
Other real estate owned |  | $ | 550 |  |  | Appraisal of collateral |  | Appraisal adjustments |  | 10% - 30% |  | 10%
|  |  |  |  |  |  |  | Liquidation expense |  | 0% - 10% |  | 10%
The carrying amount and fair value of financial instruments were as follows:
|  | Carrying |  |  | Total |  |  |  |  |  |  |  |  |  |
|  | Amount |  |  | Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
December 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  | $ | 35,561 |  |  | $ | 35,561 |  |  | $ | 35,561 |  |  | $ | — |  |  | $ | — |
Securities available for sale |  |  | 196,249 |  |  |  | 196,249 |  |  |  | — |  |  |  | 196,249 |  |  |  | — |
Loans, held for sale |  |  | 2,698 |  |  |  | 2,698 |  |  |  | 2,698 |  |  |  | — |  |  |  | — |
Loans, net of allowance for loan losses |  |  | 987,166 |  |  |  | 986,848 |  |  |  | — |  |  |  | — |  |  |  | 986,848 |
Other securities |  |  | 13,452 |  |  |  | 13,452 |  |  |  | 13,452 |  |  |  | — |  |  |  | — |
Bank owned life insurance |  |  | 20,104 |  |  |  | 20,104 |  |  |  | 20,104 |  |  |  | — |  |  |  | — |
Accrued interest receivable |  |  | 3,902 |  |  |  | 3,902 |  |  |  | 3,902 |  |  |  | — |  |  |  | — |
Swap asset |  |  | 1,962 |  |  |  | 1,962 |  |  |  | — |  |  |  | 1,962 |  |  |  | — |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonmaturing deposits |  |  | 840,984 |  |  |  | 840,984 |  |  |  | 840,984 |  |  |  | — |  |  |  | — |
Time deposits |  |  | 211,049 |  |  |  | 212,006 |  |  |  | — |  |  |  | — |  |  |  | 212,006 |
Short-term FHLB advances |  |  | 53,700 |  |  |  | 52,906 |  |  |  | 52,906 |  |  |  | — |  |  |  | — |
Long-term FHLB advances |  |  | 17,500 |  |  |  | 17,687 |  |  |  | — |  |  |  | — |  |  |  | 17,687 |
Securities sold under agreement to repurchase |  |  | 25,040 |  |  |  | 25,040 |  |  |  | 25,040 |  |  |  | — |  |  |  | — |
Subordinated debentures |  |  | 29,427 |  |  |  | 25,572 |  |  |  | — |  |  |  | — |  |  |  | 25,572 |
Accrued interest payable |  |  | 120 |  |  |  | 120 |  |  |  | 120 |  |  |  | — |  |  |  | — |
Swap liability |  |  | 1,962 |  |  |  | 1,962 |  |  |  | — |  |  |  | 1,962 |  |  |  | — |
|  | Carrying |  |  | Total |  |  |  |  |  |  |  |  |  |
|  | Amount |  |  | Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  | $ | 29,858 |  |  | $ | 29,858 |  |  | $ | 29,858 |  |  | $ | — |  |  | $ | — |
Securities available for sale |  |  | 197,905 |  |  |  | 197,905 |  |  |  | — |  |  |  | 197,905 |  |  |  | — |
Loans, held for sale |  |  | 2,410 |  |  |  | 2,410 |  |  |  | 2,410 |  |  |  | — |  |  |  | — |
Loans, net of allowance for loan losses |  |  | 900,589 |  |  |  | 908,118 |  |  |  | — |  |  |  | — |  |  |  | 908,118 |
Other securities |  |  | 12,586 |  |  |  | 12,586 |  |  |  | 12,586 |  |  |  | — |  |  |  | — |
Bank owned life insurance |  |  | 19,637 |  |  |  | 19,637 |  |  |  | 19,637 |  |  |  | — |  |  |  | — |
Accrued interest receivable |  |  | 3,852 |  |  |  | 3,852 |  |  |  | 3,852 |  |  |  | — |  |  |  | — |
Swap asset |  |  | 1,721 |  |  |  | 1,721 |  |  |  | — |  |  |  | 1,721 |  |  |  | — |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonmaturing deposits |  |  | 748,948 |  |  |  | 748,948 |  |  |  | 748,948 |  |  |  | — |  |  |  | — |
Time deposits |  |  | 219,970 |  |  |  | 221,263 |  |  |  | — |  |  |  | — |  |  |  | 221,263 |
Short-term FHLB advances |  |  | 42,700 |  |  |  | 42,700 |  |  |  | 42,700 |  |  |  | — |  |  |  | — |
Long-term FHLB advances |  |  | 22,500 |  |  |  | 22,699 |  |  |  | — |  |  |  | — |  |  |  | 22,699 |
Securities sold under agreement to repurchase |  |  | 21,613 |  |  |  | 21,613 |  |  |  | 21,613 |  |  |  | — |  |  |  | — |
Subordinated debentures |  |  | 29,427 |  |  |  | 24,688 |  |  |  | — |  |  |  | — |  |  |  | 24,688 |
Accrued interest payable |  |  | 126 |  |  |  | 126 |  |  |  | 126 |  |  |  | — |  |  |  | — |
Swap liability |  |  | 1,721 |  |  |  | 1,721 |  |  |  | — |  |  |  | 1,721 |  |  |  | — |
The estimated fair value approximates carrying amount for all items except those described below. Estimated fair value for securities is based on quoted market values for the individual securities or for equivalent securities. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the cash flow analysis or underlying collateral values. Fair value of debt is based on current rates for similar financing. The fair value of off-balance-sheet items is based on the current fees or cost that would be charged to enter into or terminate such arrangements and are considered nominal. For certain homogeneous categories of loans, such as some residential mortgages, credit card receivables, and other consumer loans, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13433-108611 + Details
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