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Fair Values of Financial Instruments | 12 Months Ended
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Dec. 31, 2018
Other Benefit Plans |
Fair Values of Financial Instruments | Note 16. Fair Values of Financial Instruments ASC Topic 825, Disclosure about Fair Value of Financial Instruments, requires the disclosure of the estimated fair values of financial instruments. Quoted market prices, where available, are shown as estimates of fair values. Because no quoted market prices are available for a significant part of the Company’s financial instruments, the fair values of such instruments have been derived based on the amount and timing of future cash flows and estimated discount rates. Present value techniques used in estimating the fair value of the Company’s financial instruments are significantly affected by the assumptions used. Fair values derived from using present value techniques are not substantiated by comparisons to independent markets, and in many cases, could not be realized in immediate settlement of the instruments. ASC Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following table presents the estimated fair value and the related carrying values of the Company’s financial instruments as December 31, 2018 and 2017. Items that are not financial instruments are not included.
|  | December 31, 2018 |  | December 31, 2017 |
(dollars in thousands) |  | Carrying |  | Fair |  | Carrying |  | Fair |
|  | Amount |  | Value |  | Amount |  | Value |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 2,605 |  | $ | 2,605 |  | $ | 2,610 |  | $ | 2,610 |
Interest-bearing deposits in other financial institutions |  |  | 12,468 |  |  | 12,468 |  |  | 9,846 |  |  | 9,846 |
Federal funds sold |  |  | 881 |  |  | 881 |  |  | 149 |  |  | 149 |
Investment securities available for sale |  |  | 81,572 |  |  | 81,572 |  |  | 89,349 |  |  | 89,349 |
Investments in restricted stock |  |  | 2,481 |  |  | 2,481 |  |  | 1,232 |  |  | 1,232 |
Ground rents |  |  | 143 |  |  | 143 |  |  | 153 |  |  | 153 |
Loans, less allowance for credit losses |  |  | 296,579 |  |  | 293,175 |  |  | 269,023 |  |  | 275,819 |
Accrued interest receivable |  |  | 1,198 |  |  | 1,198 |  |  | 1,133 |  |  | 1,133 |
Cash value of life insurance |  |  | 7,860 |  |  | 7,860 |  |  | 8,713 |  |  | 8,713 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 322,453 |  |  | 307,271 |  |  | 334,238 |  |  | 324,512 |
Long-term borrowings |  |  | — |  |  | — |  |  | — |  |  | — |
Short-term borrowings |  |  | 55,000 |  |  | 55,851 |  |  | 20,000 |  |  | 20,739 |
Accrued interest payable |  |  | 152 |  |  | 152 |  |  | 101 |  |  | 101 |
Unrecognized financial instruments: |  |  |  |  |  |  |  |  |  |  |  |  |
Commitments to extend credit |  |  | 19,905 |  |  | 19,905 |  |  | 19,109 |  |  | 19,109 |
Standby letters of credit |  |  | 1,059 |  |  | 1,059 |  |  | 71 |  |  | 71 |
The following table presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments.
(dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |
|  | Carrying |  | Fair |  |  |  |  |  |  |  |
December 31, 2018 |  | Amount |  | Value |  | Level 1 |  | Level 2 |  | Level 3
Financial instruments - Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 15,954 |  | $ | 15,954 |  | $ | 15,954 |  | — |  | $ | —
Loans receivable, net |  |  | 296,579 |  |  | 293,175 |  |  | — |  | — |  |  | 293,175
Cash value of life insurance |  |  | 7,860 |  |  | 7,860 |  |  | — |  | 7,860 |  |  | —
Financial instruments - Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 322,453 |  |  | 307,271 |  |  | 219,952 |  | 87,319 |  |  | —
Long-term debt |  |  | — |  |  | — |  |  | — |  | — |  |  | —
Short-term debt |  |  | 55,000 |  |  | 55,851 |  |  | — |  | 55,851 |  |  | —
For purposes of the disclosures of estimated fair value, the following assumptions were used. Loans. The estimated fair value for loans is determined by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Investment securities. Fair values for investment securities are based on quoted market prices, where applicable. When quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. Deposits. The estimated fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings, NOW accounts and money market accounts, is equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The fair value of certificates of deposit is based on the rates currently offered for deposits of similar maturities. The fair value estimates do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market. Borrowings. The estimated fair value approximates carrying value for short-term borrowings. The fair value of long-term fixed rate borrowings is estimated by discounting future cash flows using current interest rates currently offered for similar financial instruments over the same maturities. Other assets and liabilities. The estimated fair values for cash and due from banks, interest-bearing deposits in other financial institutions, Federal funds sold, accrued interest receivable and payable, and short-term borrowings are considered to approximate cost because of their short-term nature. Other assets and liabilities of the Bank that are not defined as financial instruments are not included in the above disclosures, such as property and equipment. In addition, non-financial instruments typically not recognized in the financial statements nevertheless may have value but are not included in the above disclosures. These include, among other items, the estimated earnings power of core deposit accounts, the trained work force, customer goodwill, and similar items.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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