FAIR VALUE MEASUREMENT (Tables)

9 Months Ended

Sep. 30, 2016

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, 2016:

	(in thousands)
September 30, 2016	Total		Level 1		Level 2		Level 3
U.S. Treasury securities	$	26,344	$	26,344	$	—	$	—
Securities of U.S. government agencies and corporations		20,770		—		20,770		—
Obligations of states and political subdivisions		31,045		—		31,045		—
Collateralized mortgage obligations		28,603		—		28,603		—
Mortgage-backed securities		151,043		—		151,043		—

Total investments at fair value	$	257,805	$	26,344	$	231,461	$	—

There were no transfers of assets measured at fair value on a recurring basis between level 1 and level 2 of the fair value hierarchy.

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31, 2015:

	(in thousands)
December 31, 2015	Total		Level 1		Level 2		Level 3
U.S. Treasury securities	$	20,186	$	20,186	$	—	$	—
Securities of U.S. government agencies and corporations		33,997		—		33,997		—
Obligations of states and political subdivisions		25,709		—		25,709		—
Collateralized mortgage obligations		10,932		—		10,932		—
Mortgage-backed securities		92,527		—		92,527		—

Total investments at fair value	$	183,351	$	20,186	$	163,165	$	—

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, 2016:

	(in thousands)
September 30, 2016	Total		Level 1		Level 2		Level 3
Impaired loans	$	4,171	$	—	$	—	$	4,171
Loan servicing rights		1,589		—		—		1,589

Total assets at fair value	$	5,760	$	—	$	—	$	5,760

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, 2015:

	(in thousands)
December 31, 2015	Total			Level 1			Level 2			Level 3
Impaired loans		$	841		$	—		$	—		$	841

Total assets at fair value		$	841		$	—		$	—		$	841

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, 2016 and December 31, 2015 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 was estimated using a discount rate factor of 10.03% as of September 30, 2016 and December 31, 2015. A constant prepayment rate of 15.94% and 10.94% as of September 30, 2016 and December 31, 2015, respectively, was utilized.