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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

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, 2019 and December 31, 2018, the significant unobservable inputs used in the fair value measurements were as follows:





(in thousands)		Fair Value at March 31, 2019	Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:

Investment Securities – available for sale	$	15,152	Discounted Cash Flow	Discount Rate	Range of LIBOR+ 4.50%

Non-recurring:

Impaired Loans	$	8,087	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1)               (weighted avg 12.8%)

Other Real Estate Owned	$	786	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1)               (weighted avg 14.6%)

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

Investment Securities – available for sale	$	15,277	Discounted Cash Flow	Discount Rate	Range of LIBOR+ 4.50%

Non-recurring:

Impaired Loans	$	1,316	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1)               (weighted avg 12.8%)

Other Real Estate Owned	$	2,707	Market Comparable Properties	Marketability Discount	10.0% - 15.0% (1)               (weighted avg 13.5%)



NOTE:

(1) 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, 2019 and December 31, 2018 are as follows:




				Fair Value Measurements at March 31, 2019 Using
		Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)		03/31/2019		(Level 1)		(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
   U.S. government agencies	$	29,464			$	29,464
   Commercial mortgage-backed agencies	$	36,976			$	36,976
   Collateralized mortgage obligations	$	35,005			$	35,005
   Obligations of states and political subdivisions	$	19,917			$	19,917
   Collateralized debt obligations	$	15,152					$	15,152
Financial Derivatives	$	612			$	612
Non-recurring:
Impaired loans	$	8,087					$	8,087
Other real estate owned	$	786					$	786






				Fair Value Measurements at December 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)		12/31/2018		(Level 1)		(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
   U.S. government agencies	$	29,026			$	29,026
   Commercial mortgage-backed agencies	$	37,752			$	37,752
   Collateralized mortgage obligations	$	35,704			$	35,704
   Obligations of states and political subdivisions	$	19,882			$	19,882
   Collateralized debt obligations	$	15,277					$	15,277
Financial Derivative	$	1,043			$	1,043
Non-recurring:
Impaired loans	$	1,316					$	1,316
Other real estate owned	$	2,707					$	2,707



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, 2019 and 2018:




		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

(in thousands)		Investment Securities Available for Sale
Beginning balance January 1, 2019	$	15,277
   Total losses realized/unrealized:
       Included in other comprehensive income		(125)
Ending balance March 31, 2019	$	15,152











		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 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, 2019					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	$	53,112	$	53,112	$	53,112
Interest bearing deposits in banks		892		892		892
Investment securities - AFS		136,514		136,514			$	121,362	$	15,152
Investment securities - HTM		95,538		97,364				80,764		16,600
Restricted bank stock		4,373		4,373				4,373
Loans, net		993,070		971,274						971,274
Financial derivatives		612		612				612
Accrued interest receivable		4,268		4,268				4,268

Financial Liabilities:
Deposits – non-maturity		874,296		874,296				874,296
Deposits – time deposits		256,316		257,122				257,122
Short-term borrowed funds		39,695		39,695				39,695
Long-term borrowed funds		100,929		102,508				102,508
Accrued interest payable		490		490				490
Off balance sheet financial instruments		0		0		0































	December 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	$	22,187	$	22,187	$	22,187
Interest bearing deposits in banks		1,354		1,354		1,354
Investment securities - AFS		137,641		137,641			$	122,364	$	15,277
Investment securities - HTM		94,010		93,760				80,780		12,980
Restricted bank stock		5,394		5,394				5,394
Loans, net		996,667		967,198						967,198
Financial derivative		1,043		1,043				1,043
Accrued interest receivable		4,175		4,175				4,175

Financial Liabilities:
Deposits- non-maturity		815,858		815,858				815,858
Deposits- time deposits		251,669		252,146				252,146
Short-term borrowed funds		77,707		77,707				77,707
Long-term borrowed funds		100,929		102,590				102,590
Accrued interest payable		455		455				455
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 inputs and valuation techniques used to measure fair value, and a discussion of changes in valuation techniques and related inputs, if any, applied during the period to each separate class of assets, liabilities, and financial instruments classified in shareholders' equity that are measured on a recurring and/or nonrecurring basis.

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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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