5. Fair Value of Financial Instruments

U.S. GAAP requires disclosure of fair value information about financial instruments, whether or not recognized on the balance sheet, for which it is practical to estimate that value. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. The use of assumptions and various valuation techniques, as well as the absence of secondary markets for certain financial instruments, will likely reduce the comparability of fair value disclosures between financial institutions. In some cases, book value is a reasonable estimate of fair value due to the relatively short period of time between origination of the instrument and its expected realization.

The following tables summarize the book value and estimated fair value of financial instruments for the periods indicated.

				Fair Value of Financial Instruments Using
September 30, 2016 (in thousands)	Carrying Amount			Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Estimated Fair Value
Assets:
Cash and Cash Equivalents	$	99,303		$	99,303	$	-	$	-		$	99,303

Investment Securities Available-for-Sale:
Government Agency & Government-Sponsored Entities		83,293			-		83,293		-			83,293
U.S. Treasury Notes		85,681			85,681		-		-			85,681
Mortgage Backed Securities		188,873			-		188,873		-			188,873
Other		1,010			200		310		500			1,010
Total Investment Securities Available-for-Sale		358,857			85,881		272,476		500			358,857

Investment Securities Held-to-Maturity:
Obligations of States and Political Subdivisions		58,905			-		42,675		17,779			60,454
Total Investment Securities Held-to-Maturity		58,905			-		42,675		17,779			60,454

FHLB Stock		8,872			N/A		N/A		N/A			N/A
Loans & Leases, Net of Deferred Fees & Allowance:
Commercial Real Estate		616,992			-		-		620,655			620,655
Agricultural Real Estate		430,601			-		-		422,056			422,056
Real Estate Construction		172,587			-		-		172,358			172,358
Residential 1st Mortgages		237,547			-		-		241,703			241,703
Home Equity Lines and Loans		30,318			-		-		31,397			31,397
Agricultural		268,482			-		-		267,101			267,101
Commercial		206,486			-		-		205,769			205,769
Consumer & Other		6,796			-		-		6,832			6,832
Leases		67,341							69,408			69,408
Unallocated Allowance		(1,926	)		-		-		(1,926	)		(1,926	)
Total Loans & Leases, Net of Deferred Fees & Allowance		2,035,224			-		-		2,035,353			2,035,353
Accrued Interest Receivable		10,116			-		10,116		-			10,116

Liabilities:
Deposits:
Demand		672,351			672,351		-		-			672,351
Interest Bearing Transaction		433,220			433,220		-		-			433,220
Savings and Money Market		702,441			702,441		-		-			702,441
Time		547,625			-		547,145		-			547,145
Total Deposits		2,355,637			1,808,012		547,145		-			2,355,157
Subordinated Debentures		10,310			-		6,606		-			6,606
Accrued Interest Payable		681			-		681		-			681

				Fair Value of Financial Instruments Using
December 31, 2015 (in thousands)	Carrying Amount			Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Estimated Fair Value
Assets:
Cash and Cash Equivalents	$	59,446		$	59,446	$	-	$	-		$	59,446

Investment Securities Available-for-Sale:
Government Agency & Government-Sponsored Entities		33,251			-		33,251		-			33,251
U.S. Treasury Notes		72,884			72,884		-		-			72,884
Mortgage Backed Securities		262,493			-		262,493		-			262,493
Other		509			199		310		-			509
Total Investment Securities Available-for-Sale		369,137			73,083		296,054		-			369,137

Investment Securities Held-to-Maturity:
Obligations of States and Political Subdivisions		61,396			-		44,675		17,713			62,388
Total Investment Securities Held-to-Maturity		61,396			-		44,675		17,713			62,388

FHLB Stock		7,795			N/A		N/A		N/A			N/A
Loans & Leases, Net of Deferred Fees & Allowance:
Commercial Real Estate		593,587			-		-		591,271			591,271
Agricultural Real Estate		417,153			-		-		405,295			405,295
Real Estate Construction		149,489			-		-		149,371			149,371
Residential 1st Mortgages		205,616			-		-		207,431			207,431
Home Equity Lines and Loans		30,910			-		-		32,360			32,360
Agricultural		287,658			-		-		285,733			285,733
Commercial		202,968			-		-		201,105			201,105
Consumer & Other		6,417			-		-		6,416			6,416
Leases		62,584			-		-		62,139			62,139
Unallocated Allowance		(1,546	)		-		-		(1,546	)		(1,546	)
Total Loans & Leases, Net of Deferred Fees & Allowance		1,954,836			-		-		1,939,575			1,939,575
Accrued Interest Receivable		9,240			-		9,240		-			9,240

Liabilities:
Deposits:
Demand		711,029			711,029		-		-			711,029
Interest Bearing Transaction		377,594			377,594		-		-			377,594
Savings and Money Market		707,885			707,885		-		-			707,885
Time		481,024			-		480,334		-			480,334
Total Deposits		2,277,532			1,796,508		480,334		-			2,276,842
Subordinated Debentures		10,310			-		6,424		-			6,424
Accrued Interest Payable		513			-		513		-			513

				Fair Value of Financial Instruments Using
September 30, 2015 (in thousands)	Carrying Amount			Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Estimated Fair Value
Assets:
Cash and Cash Equivalents	$	50,300		$	50,300	$	-	$	-		$	50,300

Investment Securities Available-for-Sale:
Government Agency & Government-Sponsored Entities		41,513			-		41,513		-			41,513
U.S. Treasury Notes		30,300			30,300		-		-			30,300
Mortgage Backed Securities		256,195			-		256,195		-			256,195
Corporate Securities		16,235			-		16,235		-			16,235
Other		485			175		310		-			485
Total Investment Securities Available-for-Sale		344,728			30,475		314,253		-			344,728

Investment Securities Held-to-Maturity:
Obligations of States and Political Subdivisions		64,134			-		51,966		12,800			64,766
Other		2,123			-		2,123		-			2,123
Total Investment Securities Held-to-Maturity		66,257			-		54,089		12,800			66,889

FHLB Stock		7,795			N/A		N/A		N/A			N/A
Loans & Leases, Net of Deferred Fees & Allowance:
Commercial Real Estate		549,498			-		-		552,323			552,323
Agricultural Real Estate		425,130			-		-		415,304			415,304
Real Estate Construction		159,374			-		-		159,295			159,295
Residential 1st Mortgages		196,141			-		-		199,565			199,565
Home Equity Lines and Loans		29,678			-		-		31,314			31,314
Agricultural		244,645			-		-		243,495			243,495
Commercial		202,246			-		-		200,932			200,932
Consumer & Other		6,519			-		-		6,543			6,543
Leases		58,349							58,854			58,854
Unallocated Allowance		(400	)		-		-		(400	)		(400	)
Total Loans & Leases, Net of Deferred Fees & Allowance		1,871,180			-		-		1,867,225			1,867,225
Accrued Interest Receivable		10,548			-		10,548		-			10,548

Liabilities:
Deposits:
Demand		603,430			603,430		-		-			603,430
Interest Bearing Transaction		373,193			373,193		-		-			373,193
Savings and Money Market		672,052			672,052		-		-			672,052
Time		483,967			-		484,018		-			484,018
Total Deposits		2,132,642			1,648,675		484,018		-			2,132,693
FHLB Advances & Securities Sold Under Agreement to Repurchase		5,500			-		5,500		-			5,500
Subordinated Debentures		10,310			-		6,292		-			6,292
Accrued Interest Payable		590			-		590		-			590