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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value of Financial Instruments [Abstract]

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques





For Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis as of March 31, 2018 and December 31, 2017, the significant unobservable inputs used in the fair value measurements were as follows:





(in thousands)		Fair Value at March 31, 2018	Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:

Investment Securities – available for sale	$	15,977	Discounted Cash Flow	Discount Rate	LIBOR+ 4.75%

Non-recurring:

Impaired Loans	$	2,178	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1)               (weighted avg 10.8%)

Other Real Estate Owned	$	1,055	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1)               (weighted avg 12.4%)

(in thousands)		Fair Value at December 31, 2017	Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:

Investment Securities – available for sale	$	14,920	Discounted Cash Flow	Discount Rate	Range of LIBOR+ 4.5% to 5.5%

Non-recurring:

Impaired Loans	$	2,507	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1)               (weighted avg 10.9%)

Other Real Estate Owned	$	1,841	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1)               (weighted avg 13.3%)



NOTE:

Range would include discounts taken since appraisal and estimated values

Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis

For assets measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2018 and December 31, 2017 are as follows:




				Fair Value Measurements at March 31, 2018 Using
		Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)		03/31/18		(Level 1)		(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
   U.S. government agencies	$	28,861			$	28,861
   Commercial mortgage-backed agencies	$	40,028			$	40,028
   Collateralized mortgage obligations	$	38,889			$	38,889
   Obligations of states and political subdivisions	$	21,849			$	21,849
   Collateralized debt obligations	$	15,977					$	15,977
Financial Derivatives	$	1,388			$	1,388
Non-recurring:
Impaired loans	$	2,178					$	2,178
Other real estate owned	$	1,055					$	1,055






				Fair Value Measurements at December 31, 2017 Using

		Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)		12/31/2017		(Level 1)		(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
   U.S. government agencies	$	29,256			$	29,256
   Commercial mortgage-backed agencies	$	40,891			$	40,891
   Collateralized mortgage obligations	$	40,384			$	40,384
   Obligations of states and political subdivisions	$	21,019			$	21,019
   Collateralized debt obligations	$	14,920					$	14,920
Financial Derivative	$	781			$	781
Non-recurring:
Impaired loans	$	2,507					$	2,507
Other real estate owned	$	1,841					$	1,841



Reconciliation of Fair Valued Assets Measured on a Recurring Basis

The following tables show a reconciliation of the beginning and ending balances for fair valued assets measured on a recurring basis using Level 3 significant unobservable inputs for the three-month periods ended March 31, 2018 and 2017:




		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

(In thousands)		Investment Securities Available for Sale
Beginning balance January 1, 2018	$	14,920
   Total gains realized/unrealized:
       Included in other comprehensive income		1,057
Ending balance March 31, 2018	$	15,977











		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

(in thousands)		Investment Securities Available for Sale
Beginning balance January 1, 2017	$	20,254
   Total gains realized/unrealized:
       Included in other comprehensive income		103
Ending balance March 31, 2017	$	20,357




Fair Value by Balance Sheet Grouping



The following tables present fair value information about financial instruments, whether or not recognized in the Consolidated Statement of Financial Condition, for which it is practicable to estimate that value. The actual carrying amounts and estimated fair values of the Corporation’s financial instruments that are included in the Consolidated Statement of Financial Condition are as follows:






	March 31, 2018					Fair Value Measurements
	Carrying		Fair		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	19,408	$	19,408	$	19,408
Interest bearing deposits in banks		1,818		1,818		1,818
Investment securities - AFS		145,604		145,604			$	129,627	$	15,977
Investment securities - HTM		91,878		91,335				81,993		9,342
Restricted bank stock		5,352		5,352				5,352
Loans, net 1		927,023		914,502						914,502
Financial derivatives		1,388		1,388				1,388
Accrued interest receivable		3,909		3,909				3,909

Financial Liabilities:
Deposits – non-maturity		796,122		796,122				796,122
Deposits – time deposits		221,741		222,792				222,792
Short-term borrowed funds		55,210		55,210				55,210
Long-term borrowed funds		115,929		117,799				117,799
Accrued interest payable		410		410				410
Off balance sheet financial instruments		0		0		0































	December 31, 2017					Fair Value Measurements
	Carrying		Fair		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	82,273	$	82,273	$	82,273
Interest bearing deposits in banks		1,479		1,479		1,479
Investment securities - AFS		146,470		146,470			$	131,550	$	14,920
Investment securities - HTM		93,632		95,346				86,836		8,510
Restricted bank stock		5,204		5,204				5,204
Loans, net 1		882,546		883,936						883,936
Financial derivative		781		781				781
Accrued interest receivable		3,814		3,814				3,814

Financial Liabilities:
Deposits- non-maturity		805,263		805,263				805,263
Deposits- time deposits		234,127		235,489				235,489
Short-term borrowed funds		48,845		48,845				48,845
Long-term borrowed funds		120,929		123,906				123,906
Accrued interest payable		453		453				453
Off balance sheet financial instruments		0		0		0



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- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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