FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2017

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 March 31, 2017:

	(in thousands)
March 31, 2017	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. Treasury securities	$	28,608	$	28,608	$	—	$	—
Securities of U.S. government agencies and corporations		22,226		—		22,226		—
Obligations of states and political subdivisions		30,587		—		30,587		—
Collateralized mortgage obligations		52,682		—		52,682		—
Mortgage-backed securities		159,340		—		159,340		—
Total investments at fair value	$	293,443	$	28,608	$	264,835	$	—

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, 2016:

	(in thousands)
December 31, 2016	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. Treasury securities	$	28,652	$	28,652	$	—	$	—
Securities of U.S. government agencies and corporations		24,197		—		24,197		—
Obligations of states and political subdivisions		30,888		—		30,888		—
Collateralized mortgage obligations		49,938		—		49,938		—
Mortgage-backed securities		143,404		—		143,404		—
Total investments at fair value	$	277,079	$	28,652	$	248,427	$	—

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 March 31, 2017:

	(in thousands)
March 31, 2017	Carrying Value			Level 1			Level 2			Level 3
Impaired loans		$	3,674		$	—		$	—		$	3,674
Total assets at fair value		$	3,674		$	—		$	—		$	3,674

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, 2016:

	(in thousands)
December 31, 2016	Carrying Value			Level 1			Level 2			Level 3
Impaired loans		$	4,128		$	—		$	—		$	4,128
Loan servicing rights			1,794			—			—			1,794
Total assets at fair value		$	5,922		$	—		$	—		$	5,922

Key Methods and Assumptions Used in Measuring Fair Value of Impaired Loans and Other Real Estate Owned

Key methods and assumptions used in measuring the fair value of impaired loans and loan servicing rights as of March 31, 2017 and December 31, 2016 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 10.02% as of December 31, 2016. A constant prepayment rate of 12.67% as of December 31, 2016 was utilized.

Estimated Fair Value of Financial Instruments

The estimated fair values of the Company's financial instruments for the periods ended March 31, 2017 and December 31, 2016 were approximately as follows:

			March 31, 2017				December 31, 2016
	Level		Carrying amount		Fair value		Carrying amount		Fair value

Financial assets:
Cash and cash equivalents		1	$	163,247	$	163,247	$	159,643	$	159,643
Certificates of deposit		2		15,717		15,726		16,213		16,230
Stock in Federal Home Loan Bank and other equity securities		3		4,409		4,409		4,409		4,409
Loans receivable:
Net loans		3		653,453		652,973		669,770		669,437
Loans held-for-sale		2		1,243		1,280		3,326		3,363
Interest receivable		2		3,686		3,686		3,996		3,996
Mortgage servicing rights		3		1,798		1,918		1,794		1,794
Financial liabilities:
Deposits		3		1,060,734		990,737		1,063,696		1,001,460
Interest payable		2		80		80		78		78