Fair Value Disclosures [Text Block] | Note 7. The Company uses a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company ’s market assumptions. The three two Level 1 Level 2 Level 3 one The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the consolidated financial statements: Securities available for sale: Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1 not may 2 The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 December 31, 2016: (Dollars in Thousands) Carrying value at September 30, 2017 Description Balance as of September 30, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: U.S. Government agency securities $ 13,356 $ – $ 13,356 $ – Mortgage-backed securities and CMO ’s 21,193 – 21,193 – Corporate securities 6,558 – 6,558 – Municipal securities 12,487 – 12,487 – (Dollars in Thousands) Carrying value at December 31, 2016 Description Balance as of December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: U.S. Government agency securities $ 12,444 $ – $ 12,444 $ – Mortgage-backed securities and CMO ’s 19,768 – 19,768 – Corporate securities 5,066 – 5,066 – Municipal securities 15,697 – 15,697 – Certain assets are measured at fair value on a nonrecurring basis in accordance with generally accepted accounting principles (GAAP). Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The following describes the valuation techniques used by the Company to measure certain assets recorded at fair value on a nonrecurring basis in the consolidated financial statements: Impaired Loans: The Company does not not one not 2. not no 3. Loans held for sale: The carrying value of these loans approximates the fair value. These loans close in the name of the Bank’s consolidated joint venture subsidiary HomeTown Residential Mortgage, LLC, but are generally sold within a two Other Real Estate Owned (OREO) : The carrying amount of real estate owned by the Company resulting from foreclosures is estimated at the lesser of cost or the fair value of the real estate based on an observable market price or a current appraised value less selling costs. If carried at market price based on appraised value using observable market data, it is recorded as nonrecurring Level 2. not not no 3. The following tables summarize the Company ’s assets that were measured at fair value on a nonrecurring basis as of September 30, 2017 December 31, 2016. (Dollars in Thousands) Carrying value at September 30, 2017 Description Balance as of September 30, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Loans held for sale 1,013 – 1,013 – Other real estate owned 3,562 – – 3,562 (Dollars in Thousands) Carrying value at December 31, 2016 Description Balance as of December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Impaired loans, net of valuation allowance $ 98 $ – $ – $ 98 Loans held for sale 678 – 678 – Other real estate owned 3,794 – – 3,794 At September 30, 2017 December 31, 2016, not The following table displays quantitative information about Level 3 September 30, 2017: (Dollars in Thousands) Quantitative information about Level 3 Fair Value Measurements for September 30, 2017 Assets Fair Value Valuation Technique(s) Unobservable input Range (Weighted Average) Other real estate owned $ 1,378 Discounted appraised value Selling cost 6% - 6% (6%) Discount for lack of marketability and age of appraisal 4% - 13% (12%) $ 2,184 Internal evaluations Internal evaluations 4% - 95% (22%) The following table displays quantitative information about Level 3 December 31, 2016: (Dollars in Thousands) Quantitative information about Level 3 Fair Value Measurements for December 31, 2016 Assets Fair Value Valuation Technique(s) Unobservable input Range (Weighted Average) Impaired loans $ 98 Discounted appraised value Residual cash flows discount rate 6% - 6% (6%) Other real estate owned $ 1,560 Discounted appraised value Selling cost 6% - 6% (6%) Discount for lack of marketability and age of appraisal 4% - 12% (10%) $ 2,234 Internal evaluations Internal evaluations 4% - 54% (24%) The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash and due from banks: The carrying amounts reported in the consolidated balance sheet for cash on hand and amounts due from correspondent banks approximate their fair values. Federal funds sold: Federal funds sold consist of overnight loans to other financial institutions and mature within one three September 30, 2017 December 31, 2016, Securities available for sale: Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1 not may 2 Restricted equity securities: For these restricted equity securities, the carrying amount is a reasonable estimate of fair value based on the redemption provisions of the related securities. Loans held for sale: The carrying value of these loans approximates the fair value. These loans close in the name of the Bank ’s joint venture subsidiary HomeTown Residential Mortgage, LLC, but are generally sold within a two Loans receivable: For variable-rate loans that reprice frequently and with no Bank owned life insurance: The cash values of these policies are estimates using information provided by insurance carriers. The policies are carried at their cash surrender value, which approximates fair value. Deposit liabilities: The fair values disclosed for demand and savings deposits are, by definition, equal to the amount payable on demand at the reporting date. The fair values for certificates of deposit and individual retirement accounts are estimated using a discounted cash flow calculation that applies interest rates currently being offered to a schedule of contractual maturities on such time deposits. FHLB borrowings: The fair values for FHLB borrowings are estimated using a discounted cash flow calculation that applies interest rates currently being offered on FHLB borrowings to the contractual maturities on such FHLB borrowings. Subordinated notes: The fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may 2 Other borrowings: The warehouse line of credit is a short term revolving credit facility used to fund mortgage loans originations until the underlying loan is sold. The warehouse line of credit, federal funds purchased, borrowings under repurchase agreements mature within 30 Accrued interest: The carrying amount of accrued interest receivable and payable approximates fair value. Off-balance sheet financial instruments: The fair values of commitments to extend credit and standby letters of credit are estimated using the fees currently charged to enter into similar agreements. At September 30, 2017 December 31, 2016, The carrying amounts and approximate fair values of the Company's financial instruments are as follows at September 30, 2017: (Dollars in Thousands) Fair value at September 30, 2017 Description Carrying value as of September 30, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Approximate Fair Values Financial assets Cash and due from banks $ 34,755 $ 34,755 $ – $ – $ 34,755 Federal funds sold 132 132 – – 132 Securities available for sale 53,594 – 53,594 – 53,594 Restricted equity securities 2,371 – 2,371 – 2,371 Loans held for sale 1,013 – 1,013 – 1,013 Loans, net 431,104 – – 433,652 433,652 Bank owned life insurance 8,115 – 8,115 – 8,115 Accrued income 2,619 – 2,619 – 2,619 Financial liabilities Total deposits 478,944 – 479,777 – 479,777 FHLB borrowings 11,361 – 11,386 – 11,386 Subordinated notes 7,247 – 7,954 – 7,954 Other borrowings 992 – 992 – 992 Accrued interest payable 508 – 508 – 508 The carrying amounts and approximate fair values of the Company's financial instruments are as follows at December 31, 2016: (Dollars in Thousands) Fair value at December 31, 2016 Description Carrying value as of December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Approximate Fair Values Financial assets Cash and due from banks $ 18,229 $ 17,479 $ 760 $ – $ 18,239 Federal funds sold 42 42 – – 42 Securities available for sale 52,975 – 52,975 – 52,975 Restricted equity securities 2,213 – 2,213 – 2,213 Loans held for sale 678 – 678 – 678 Loans, net 415,355 – – 415,039 415,039 Bank owned life insurance 7,469 – 7,469 – 7,469 Accrued income 2,289 – 2,289 – 2,289 Financial liabilities Total deposits 450,848 – 451,385 – 451,385 FHLB borrowings 8,000 – 8,031 – 8,031 Subordinated notes 7,224 – 8,012 – 8,012 Other borrowings 1,117 – 1,117 – 1,117 Accrued interest payable 386 – 386 – 386 |