FAIR VALUE MEASUREMENT (Tables)

9 Months Ended

Sep. 30, 2014

Assets and liabilities measured at fair value on a recurring basis

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of September 30, 2014:

	(in thousands)
September 30, 2014	Total		Level 1		Level 2		Level 3
Securities of U.S. government agencies and corporations	$	34,776	$	—	$	34,776	$	—
Obligations of states and political subdivisions		21,435		—		21,435		—
Collateralized mortgage obligations		10,115		—		10,115		—
Mortgage-backed securities		77,463		—		77,463		—

Total investments at fair value	$	143,789	$	—	$	143,789	$	—

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31, 2013:

	(in thousands)
December 31, 2013	Total		Level 1		Level 2		Level 3
Securities of U.S. government agencies and corporations	$	52,685	$	—	$	52,685	$	—
Obligations of states and political subdivisions		27,387		—		27,387		—
Collateralized mortgage obligations		5,405		—		5,405
Mortgage-backed securities		87,792		—		87,792		—

Total investments at fair value	$	173,269	$	—	$	173,269	$	—

Assets measured at fair value on a non-recurring basis

Assets measured at fair value on a non-recurring basis are included in the table below by level within the fair value hierarchy as of September 30, 2014:

	(in thousands)
September 30, 2014	Total		Level 1		Level 2		Level 3
Impaired loans	$	150	$	—	$	—	$	150

Total assets at fair value	$	150	$	—	$	—	$	150

Assets measured at fair value on a non-recurring basis are included in the table below by level within the fair value hierarchy as of December 31, 2013:

	(in thousands)
December 31, 2013	Total		Level 1		Level 2		Level 3
Impaired loans	$	1,095	$	—	$	—	$	1,095
Loan servicing rights		1,968		—		—		1,968

Total assets at fair value	$	3,063	$	—	$	—	$	3,063

Methods and assumptions used in measuring fair value of assets and liabilities

Key methods and assumptions used in measuring the fair value of impaired loans and loan servicing rights as of September 30, 2014 and December 31, 2013 were as follows:

	Method	Assumption Inputs

Impaired loans	Collateral, market, income, enterprise, liquidation and discounted Cash Flows	External appraised values, management assumptions regarding market trends or other relevant factors; selling costs ranging 6% to 7%.
Loan servicing rights	Discounted cash flows	Present value of expected future cash flows is estimated using a discount rate factor of 10.05% as of September 30, 2014 and December 31, 2013. A constant prepayment rate of 11.36% and 9.09% as of September 30, 2014 and December 31, 2013, respectively, was utilized.