Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2014

Financial assets and liabilities measured at fair value on recurring basis

The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013 by levels within the valuation hierarchy:

	Fair Value Measurements Using
(In thousands)	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at September 30, 2014:
Available for sale securities:
Obligations of U.S. Government corporations and agencies	$	44,550	$	-	$	44,550	$	-
Obligations of states and political subdivisions		7,191		-		7,191		-
Corporate bonds		3,100		-		3,100		-
Mutual funds		361		361		-		-
Total available for sale securities		55,202		361		54,841		-

Interest rate swaps		37		-		37		-
Total assets at fair value	$	55,239	$	361	$	54,878	$	-

Liabilities at September 30, 2014:
Interest rate swaps	$	321	$	-	$	321	$	-
Total liabilities at fair value	$	321	$	-	$	321	$	-

Assets at December 31, 2013:
Available for sale securities:
Obligations of U.S. Government corporations and agencies	$	43,937	$	-	$	43,937	$	-
Obligations of states and political subdivisions		7,035		-		7,035		-
Corporate bonds		2,250		-		2,250		-
Mutual funds		349		349		-		-
Total available-for sale securities		53,571		349		53,222		-

Interest rate swaps		96		-		96		-
Total assets at fair value	$	53,667	$	349	$	53,318	$	-

Liabilities at December 31, 2013:
Interest rate swaps	$	223	$	-	$	223	$	-
Total liabilities at fair value	$	223	$	-	$	223	$	-

Changes in Level 3 assets measured at estimated fair value on a recurring

Change in Level 3 Fair Value

There were no Level 3 assets measured at estimated fair value on a recurring basis as of September 30, 2014. The changes in Level 3 assets measured at estimated fair value on a recurring basis during the year ended December 31, 2013 were as follows:

	Total Gains (Losses) Realized/Unrealized
(In thousands)	Balance January 1, 2013		Included in Earnings		Included in Other Comprehensive Income		Transfers in and/or out of Level 3 and 2			Balance December 31, 2013
Available for sale securities	$	325	$	144	$	1,781	$	(2,250	)	$	-

Financial assets measured at fair value on a nonrecurring basis

The following table summarizes the Company's financial assets that were measured at fair value on a nonrecurring basis at September 30, 2014 and December 31, 2013

	Carrying Value at September 30, 2014
	Balance as of September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets:
Impaired loans, net	$	6,480	$	-	$	6,369	$	111
Other real estate owned, net		1,406		-		1,406		-

	Carrying Value at December 31, 2013
	Balance as of December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets:
Impaired loans, net	$	3,911	$	-	$	3,748	$	163
Other real estate owned, net		4,085		-		4,085		-

Quantitative Information about level 3 fair value measurements

The following table displays quantitative information about Level 3 Fair Value Measurements at September 30, 2014.

	Quantitative Information about Level 3 Fair Value Measurements
(In thousands)	Fair Value		Valuation Technique(s)	Unobservable Input	Weighted Average Discount
Impaired loans	$	111	Appraised values	Age of appraisal, current market conditons, experience within local market, and U.S. Government guarantees		84	%
Total	$	111

Estimated fair values of the financial instruments

The estimated fair values of the Company's financial instruments are as follows:

	Fair Value Measurements at September 30, 2014
(In thousands)	Carrying Value as of September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Fair Value as of September 30, 2014
Assets
Cash and short-term investments	$	52,157	$	52,186	$	-	$	-	$	52,186
Securities available for sale		55,202		361		54,841		-		55,202
Restricted investments		1,294		-		1,294		-		1,294
Net loans		431,278		-		430,525		111		430,636
Accrued interest receivable		1,440		-		1,440		-		1,440
Interest rate swaps		37		-		37		-		37
BOLI		12,365		-		12,365		-		12,365
Total financial assets	$	553,773	$	52,547	$	500,502	$	111	$	553,160

Liabilities
Deposits	$	507,819	$	-	$	508,561	$	-	$	508,561
Borrowings		13,092		-		13,011		-		13,011
Company obligated mandatorily redeemable capital securities		4,124		-		4,117		-		4,117
Accrued interest payable		208		-		208		-		208
Interest rate swaps		321		-		321		-		321
Total financial liabilities	$	525,564	$	-	$	526,218	$	-	$	526,218

	Fair Value Measurements at December 31, 2013
(In thousands)	Carrying Value as of December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Fair Value as of December 31, 2013
Assets
Cash and short-term investments	$	71,126	$	71,197	$	-	$	-	$	71,197
Securities available for sale		53,571		349		53,222		-		53,571
Restricted investments		1,462		-		1,462		-		1,462
Net Loans		444,710		-		444,587		163		444,750
Accrued interest receivable		1,568		-		1,568		-		1,568
Interest rate swaps		96		-		96		-		96
BOLI		12,433		-		12,433		-		12,433
Total financial assets	$	584,966	$	71,546	$	513,368	$	163	$	585,077

Liabilities
Deposits	$	540,204	$	-	$	541,496	$	-	$	541,496
Borrowings		13,139		-		12,833		-		12,833
Company obligated mandatorily redeemable capital securities		4,124		-		4,117		-		4,117
Accrued interest payable		219		-		219		-		219
Interest rate swaps		223		-		223		-		223
Total financial liabilities	$	557,909	$	-	$	558,888	$	-	$	558,888

- 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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