Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Assets Measured at Fair Value on Recurring Basis

The following table presents assets measured at fair value on a recurring basis as of June 30, 2014 and December 31, 2013. There were no liabilities measured at fair value on a recurring basis for either period presented.


	Fair Value Measurements as of June 30, 2014 Using
	Totals At June 30, 2014		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	111,896	$	—	$	111,896	$	—
Commercial		36,233		—		36,233		—
Obligations of states and political subdivisions		16,641		—		16,641		—
U.S. treasury securities		3,929		—		3,929		—
Obligations of U.S. government sponsored agencies		411		—		411		—
Other assets - derivatives		69		—		69		—


	Fair Value Measurements as of December 31, 2013 Using
	Totals At December 31, 2013		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Investment securities, available-for-sale
Mortgage-backed securities:
Residential	$	83,434	$	—	$	83,434	$	—
Commercial		30,465		—		30,465		—
Obligations of states and political subdivisions		17,027		—		17,027		—
U.S. treasury securities		3,827		—		3,827		—
Obligations of U.S. government sponsored agencies		1,001		—		1,001		—

Balances of Impaired Loans and Foreclosed Assets Measured at Fair Value on Nonrecurring Basis

The following table presents the balances of impaired loans and foreclosed assets measured at fair value on a non-recurring basis as of June 30, 2014 and December 31, 2013.


	Fair Value Measurements as of June 30, 2014 Using
	Totals At June 30, 2014		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	1,983	$	—	$	—	$	1,983
Foreclosed property and other real estate		1,866		—		—		1,866


	Fair Value Measurements as of December 31, 2013 Using
	Totals At December 31, 2013		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans	$	11,358	$	—	$	—	$	11,358
Foreclosed property and other real estate		5,832		—		—		5,832

Summary of Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

Following the table is a description of the valuation technique and the sensitivity of the technique to changes in the significant unobservable input.


	Level 3 Significant Unobservable Input Assumptions
	Fair Value June 30, 2014		Valuation Technique	Unobservable Input	Quantitative Range of Unobservable Inputs (Weighted- Average)
	(Dollars in Thousands)
Non-recurring fair value measurements:
Impaired loans	$	1,983	Multiple data points, including discount to appraised value of collateral based on recent market activity	Appraisal comparability adjustment (discount)	9% - 10% (9.5%)
Foreclosed property and other real estate	$	1,866	Discount to appraised value of property based on recent market activity for sales of similar properties	Appraisal comparability adjustment (discount)	9% - 10% (9.5%)

Schedule of Estimated Fair Value and Related Carrying or Notional Amounts of Company's Financial Instruments

The estimated fair value and related carrying or notional amounts, as well as the level within the fair value hierarchy, of the Company’s financial instruments as of June 30, 2014 and December 31, 2013, were as follows:


	June 30, 2014
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	41,443	$	41,443	$	41,443	$	—	$	—
Investment securities available-for-sale		169,110		169,110		—		169,110		—
Investment securities held-to-maturity		40,835		40,220		—		40,220		—
Federal Home Loan Bank stock		738		738		—		—		738
Loans, net of allowance for loan losses		272,086		273,992		—		—		273,992
Other assets - derivatives		69		69		—		69		—
Liabilities:
Deposits		483,254		483,733		—		483,733		—
Short-term borrowings		623		623		—		623		—
Long-term debt		5,000		5,013		—		5,013		—


	December 31, 2013
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	47,720	$	47,720	$	47,720	$	—	$	—
Investment securities available-for-sale		135,754		135,754		—		135,754		—
Investment securities held-to-maturity		35,050		33,365		—		33,365		—
Federal Home Loan Bank stock		906		906		—		—		906
Loans, net of allowance for loan losses		300,927		303,291		—		—		303,291
Liabilities:
Deposits		484,279		484,957		—		484,957		—
Short-term borrowings		1,231		1,231		—		1,231		—
Long-term debt		5,000		5,011		—		5,011		—

- Definition

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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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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