XML 45 R19.htm IDEA: XBRL DOCUMENT
v3.19.3

Fair Value Measurements | 9 Months Ended
--- | ---
Sep. 30, 2019
Fair Value Measurements |
Fair Value Measurements | (12) Fair Value Measurements Fair value represents the amount expected to be received to sell an asset or paid to transfer a liability in its principal or most advantageous market in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Company uses various valuation methodologies and assumptions to estimate fair value. The measurement of fair value under US GAAP uses a hierarchy intended to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows. During the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively, there were no transfers into or out of Levels 1‑3. The fair value hierarchy is as follows: Level 1 – Inputs are unadjusted quoted prices for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available. A contractually binding sales price also provides reliable evidence of fair value. Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 – Inputs are unobservable inputs for the asset or liability and significant to the fair value. These may be internally developed using the Company’s best information and assumptions that a market participant would consider. In accordance with fair value accounting guidance, the Company measures, records, and reports various types of assets and liabilities at fair value on either a recurring or non-recurring basis in the Consolidated Financial Statements. Nonfinancial assets measured at fair value on a nonrecurring basis would include foreclosed real estate, long-lived assets, and core deposit intangible assets, which are reviewed when circumstances or other events indicate that impairment may have occurred. Valuation Methods for Assets and Liabilities Measured at Fair Value on a Recurring Basis Following is a description of the Company’s valuation methodologies used for assets and liabilities recorded at fair value on a recurring basis: Available-for-Sale Securities The fair value measurements of the Company’s investment securities are determined by a third party pricing service which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The fair value measurements are subject to independent verification to another pricing source by management each quarter for reasonableness. Equity securities with readily determinable fair values are recorded at fair value, with changes in fair value reflected in earnings. The Company uses level 1 inputs to value equity securities that are traded in active markets. Equity securities that do not have readily determinable fair values are carried at cost and are periodically assessed for impairment. Equity securities that are not actively traded are classified in level 2. Mortgage Servicing Rights The fair value of mortgage servicing rights is based on the discounted value of estimated future cash flows utilizing contractual cash flows, servicing rate, constant prepayment rate, servicing cost, and discount rate factors. Accordingly, the fair value is estimated based on a valuation model that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, market discount rates, cost to service, float earnings rates, and other ancillary income, including late fees. The valuation models estimate the present value of estimated future net servicing income. The Company classifies its servicing rights as Level 3.
|  |  |  |  | Fair Value Measurements
|  |  |  |  | Quoted Prices |  |  |  |  |  |
|  |  |  |  | in Active |  |  |  |  |  |
|  |  |  |  | Markets for |  | Other |  | Significant
|  |  |  |  | Identical |  | Observable |  | Unobservable
|  |  |  |  | Assets |  | Inputs |  | Inputs
(in thousands) |  | Fair Value |  | (Level 1) |  | (Level 2) |  | (Level 3)
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury |  | $ | 995 |  | $ | 995 |  |  | — |  | $ | —
U.S. government and federal agency obligations |  |  | 8,465 |  |  | — |  |  | 8,465 |  |  | —
Government sponsored enterprises |  |  | 22,798 |  |  | — |  |  | 22,798 |  |  | —
Obligations of states and political subdivisions |  |  | 29,424 |  |  | — |  |  | 29,424 |  |  | —
Mortgage-backed securities |  |  | 115,234 |  |  | — |  |  | 115,234 |  |  | —
Other debt securities |  |  | 3,051 |  |  | — |  |  | 3,051 |  |  | —
Bank-issued trust preferred securities |  |  | 1,303 |  |  | — |  |  | 1,303 |  |  | —
Equity securities |  |  | 13 |  |  | 13 |  |  | — |  |  | —
Mortgage servicing rights |  |  | 2,575 |  |  | — |  |  | — |  |  | 2,575
Total |  | $ | 183,858 |  | $ | 1,008 |  | $ | 180,275 |  | $ | 2,575
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury |  | $ | 1,952 |  | $ | 1,952 |  |  | — |  | $ | —
U.S. government and federal agency obligations |  |  | 9,966 |  |  | — |  |  | 9,966 |  |  | —
Government sponsored enterprises |  |  | 43,335 |  |  | — |  |  | 43,335 |  |  | —
Obligations of states and political subdivisions |  |  | 40,386 |  |  | — |  |  | 40,386 |  |  | —
Mortgage-backed securities |  |  | 118,192 |  |  | — |  |  | 118,192 |  |  | —
Other debt securities |  |  | 3,000 |  |  | — |  |  | 3,000 |  |  | —
Bank-issued trust preferred securities |  |  | 1,374 |  |  | — |  |  | 1,374 |  |  | —
Equity securities |  |  | 12 |  |  | 12 |  |  | — |  |  | —
Mortgage servicing rights |  |  | 2,931 |  |  | — |  |  | — |  |  | 2,931
Total |  | $ | 221,148 |  | $ | 1,964 |  | $ | 216,253 |  | $ | 2,931
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:
|  | Fair Value Measurements Using |  | Fair Value Measurements Using |
|  | Significant Unobservable Inputs |  | Significant Unobservable Inputs |
|  | (Level 3) |  | (Level 3) |
|  | Mortgage Servicing Rights |  | Mortgage Servicing Rights |
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
(in thousands) |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
Balance at beginning of period |  | $ | 2,657 |  | $ | 2,813 |  | $ | 2,931 |  | $ | 2,713 |
Total (losses) or gains (realized/unrealized): |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings |  |  | (170) |  |  | (8) |  |  | (543) |  |  | (40) |
Included in other comprehensive income |  |  | — |  |  | — |  |  | — |  |  | — |
Purchases |  |  | — |  |  | — |  |  | — |  |  | — |
Sales |  |  | — |  |  | — |  |  | — |  |  | — |
Issues |  |  | 88 |  |  | 66 |  |  | 187 |  |  | 198 |
Settlements |  |  | — |  |  | — |  |  | — |  |  | — |
Balance at end of period |  | $ | 2,575 |  | $ | 2,871 |  | $ | 2,575 |  | $ | 2,871 |
Valuation methods for Assets and Liabilities measured at fair value on a nonrecurring basis Following is a description of the Company’s valuation methodologies used for assets and liabilities recorded at fair value on a nonrecurring basis: Collateral dependent impaired loans While the overall loan portfolio is not carried at fair value, the Company periodically records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral dependent loans when establishing the allowance for loan losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. In determining the value of real estate collateral, the Company relies on external and internal appraisals of property values depending on the size and complexity of the real estate collateral. The Company maintains staff that is trained to perform in-house evaluations and also review third party appraisal reports for reasonableness. In the case of non-real estate collateral, reliance is placed on a variety of sources, including external estimates of value and judgments based on the experience and expertise of internal specialists. Values of all loan collateral are regularly reviewed by senior loan committee. Because many of these inputs are not observable, the measurements are classified as Level 3. As of September, 2019, the Company identified $2.9 million in collateral dependent impaired loans that had specific allowances for losses aggregating $398,000. Related to these loans, there were $77,000 and $204,000 in charge-offs recorded during the three and nine months ended September 30, 2019, respectively. As of September 30, 2018, the Company identified $4.2 million in collateral dependent impaired loans that had specific allowances for losses aggregating $891,000. Related to these loans, there were $53,000 and $303,000 in charge-offs recorded during the three and nine months ended September 30, 2018, respectively. Other Real Estate and Foreclosed Assets Other real estate owned (OREO) and foreclosed assets consisted of loan collateral that has been repossessed through foreclosure. This collateral is comprised of commercial and residential real estate and other non-real estate property, including autos, manufactured homes, and construction equipment. Subsequent to foreclosure, these assets initially are carried at fair value of the collateral less estimated selling costs. Fair value, when recorded, is generally based upon appraisals by approved, independent state certified appraisers. Like impaired loans, appraisals on OREO may be discounted based on the Company’s historical knowledge, changes in market conditions from the time of appraisal or other information available. During the holding period, valuations are updated periodically, and the assets may be written down to reflect a new cost basis. Because many of these inputs are not observable, the measurements are classified as Level 3.
|  |  |  |  | Fair Value Measurements Using
|  |  |  |  | Quoted Prices |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  | in Active |  |  |  |  |  |  |  | Three Months |  | Nine Months
|  |  |  |  | Markets for |  | Other |  | Significant |  | Ended |  | Ended
|  |  |  |  | Identical |  | Observable |  | Unobservable |  | September 30, |  | September 30,
|  | Total |  | Assets |  | Inputs |  | Inputs |  | Total Gains |  | Total Gains
(in thousands) |  | Fair Value |  | (Level 1) |  | (Level 2) |  | (Level 3) |  | (Losses)* |  | (Losses)*
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collateral dependent impaired loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, & agricultural |  | $ | 529 |  | $ | — |  | $ | — |  | $ | 529 |  | $ | (22) |  | $ | (132)
Real estate construction - commercial |  |  | 145 |  |  | — |  |  | — |  |  | 145 |  |  | — |  |  | —
Real estate mortgage - residential |  |  | 933 |  |  | — |  |  | — |  |  | 933 |  |  | (45) |  |  | (45)
Real estate mortgage - commercial |  |  | 860 |  |  | — |  |  | — |  |  | 860 |  |  | (6) |  |  | (15)
Installment and other consumer |  |  | 13 |  |  | — |  |  | — |  |  | 13 |  |  | (4) |  |  | (12)
Total |  | $ | 2,480 |  | $ | — |  | $ | — |  | $ | 2,480 |  | $ | (77) |  | $ | (204)
Other real estate and repossessed assets |  | $ | 12,878 |  | $ | — |  | $ | — |  | $ | 12,878 |  | $ | 10 |  | $ | (166)
September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collateral dependent impaired loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, & agricultural |  | $ | 1,549 |  | $ | — |  | $ | — |  | $ | 1,549 |  | $ | (21) |  | $ | (187)
Real estate construction - commercial |  |  | 158 |  |  | — |  |  | — |  |  | 158 |  |  | — |  |  | (27)
Real estate mortgage - residential |  |  | 1,156 |  |  | — |  |  | — |  |  | 1,156 |  |  | (32) |  |  | (44)
Real estate mortgage - commercial |  |  | 399 |  |  | — |  |  | — |  |  | 399 |  |  | — |  |  | (20)
Installment and other consumer |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (25)
Total |  | $ | 3,262 |  | $ | — |  | $ | — |  | $ | 3,262 |  | $ | (53) |  | $ | (303)
Other real estate and repossessed assets |  | $ | 13,373 |  | $ | — |  | $ | — |  | $ | 13,373 |  | $ | (3) |  | $ | (29)
*Total gains (losses) reported for other real estate and foreclosed assets includes charge-offs, valuation write downs, and net losses taken during the periods reported.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration