FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2014

FAIR VALUE [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013, for which the Company has elected the fair value option, by level within the hierarchy:

(Dollars in thousands)
September 30, 2014	Total		Level I		Level II		Level III
Assets:
Securities available-for-sale:
U.S. government-sponsored entities and agencies	$	7,423	$	-	$	7,423	$	-
State and political subdivisions		7,555		-		7,555		-
Mortgage-backed securities - residential		33,069		-		33,069		-
Collateralized mortgage obligations		31,260		-		31,260		-
Corporate bonds		3,118		-		3,118		-
Liabilities:
Derivative liability		689		-		689		-

December 31, 2013	Total		Level I		Level II		Level III
Assets:
Securities available-for-sale:
U.S. government-sponsored entities and agencies	$	8,396	$	-	$	8,396	$	-
State and political subdivisions		8,037		-		8,037		-
Mortgage-backed securities - residential		33,225		-		33,225		-
Collateralized mortgage obligations		31,978		-		31,978		-
Corporate bonds		3,135		-		3,135		-
Liabilities:
Derivative liability		765		-		765		-

Assets Measured at Fair Value on Non - Recurring Basis

The following table presents information about our assets measured at fair value on a non-recurring basis as of September 30, 2014 and December 31, 2013, by level within the fair value hierarchy.  The amounts in the tables represent only assets for which the carrying amount has been adjusted for impairment during the period; therefore, these amounts will differ from the total amounts outstanding.

(Dollars in thousands)
September 30, 2014	Total		Level I		Level II		Level III
Impaired Loans (Collateral Dependent):
Real estate mortgage loans:
Residential	$	512	$	-	$	-	$	512
Commercial		3,053		-		-		3,053
Construction and land		309		-		-		309
Other real estate owned:
Real estate mortgage loans:
Residential		-		-		-		-
Commercial		169		-		-		169
Construction and land		2,705		-		-		2,705
Assets held for sale		925		-		-		925

December 31, 2013	Total		Level I		Level II		Level III
Impaired Loans (Collateral Dependent):
Real estate mortgage loans:
Residential	$	568	$	-	$	-	$	568
Commercial		2,981		-		-		2,981
Construction and land		262		-		-		262
Other real estate owned:
Real estate mortgage loans:
Residential		155		-		-		155
Commercial		169		-		-		169
Construction and land		2,754		-		-		2,754

Quantitative Information About Unobservable Inputs for Assets Measured on Non-Recurring Basis

The following table presents quantitative information about unobservable inputs for assets measured on a non-recurring basis using Level III measurements as of September 30, 2014 and December 31, 2013.  This quantitative information is the same for each class of loans.

(Dollars in thousands) September 30, 2014	Fair  Value		Valuation Technique	Unobservable  Inputs	Range of  Inputs			Weighted Average
Impaired loans (collateral dependent)	$	3,874	Market comparable properties	Marketability discount		0% - 0.0	%		0.0	%
Other real estate owned		2,874	Market comparable properties	Comparability adjustments		0% - 0.2	%		0.2

December 31, 2013	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs			Weighted Average
Impaired loans (collateral dependent)	$	3,811	Market comparable properties	Marketability discount		0% – 23.5	%		1.6	%
Other real estate owned		3,078	Market comparable properties	Comparability adjustments		0% – 20.0	%		1.8

Summary of Outstanding Balance, Valuation Allowance, Net Carrying Amount and Period Expense Related to Level Three Non-Recurring Instruments

The table below summarizes the outstanding balance, valuation allowance, net carrying amount and period expense related to Level III non-recurring instruments for the nine months ended September 30, 2014 and 2013:

(Dollars in thousands) September 30, 2014	Outstanding  Balance		Valuation Allowance		Net Carrying Amount		Period  Expense
Impaired loans (collateral dependent)	$	6,094	$	2,220	$	3,874	$	434
Other real estate owned		3,880		1,006		2,874		48
Assets held for sale		940		-		925		15

September 30, 2013	Outstanding Balance		Valuation  Allowance		Net Carrying  Amount		Period  Expense
Impaired loans (collateral dependent)	$	2,406	$	1,382	$	1,024	$	2,471
Other real estate owned		9,077		639		8,438		546

Carrying Amount and Estimated Fair Values of Financial Instruments

The carrying amount and estimated fair values of financial instruments as of September 30, 2014 and December 31, 2013 were as follows:

	September 30, 2014					December 31, 2013
(Dollars in thousands)	Carrying Amount		Fair Value			Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	54,244	$	54,244		$	40,325	$	40,325
Securities available-for-sale		82,425		82,425			84,771		84,771
Loans, net		345,492		351,473			354,592		361,874
Federal Home Loan Bank stock		1,243		N/	A		1,580		N/	A
Accrued interest receivable		1,523		1,523			1,723		1,723
Financial Liabilities:
Deposits	$	438,365	$	438,778		$	434,966	$	422,430
Federal Home Loan Bank
Advances and other borrowings		17,635		17,775			20,153		20,351
Subordinated debentures		16,202		7,960			16,154		7,275
Accrued interest payable		121		121			167		167
Interest rate swap		689		689			765		765

Breakdown of Cash and Cash Equivalents Between Level I and Level II

The carrying amounts of cash and cash equivalents approximate the fair value and are classified as either Level I or Level II in the fair value hierarchy.  The carrying amounts classified as Level II are National CD’s purchased by the Company.  As of September 30, 2014 and December 31, 2013, respectively, the breakdown of cash and cash equivalents between Level I and Level II were as follows:

	September 30, 2014						December 31, 2013
(Dollars in thousands)	Level I			Level II			Level I			Level II
Cash and cash equivalents		$	48,811		$	5,433		$	34,139		$	6,186