Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Measurements by Level of Valuation Inputs

The following table summarizes financial assets and financial liabilities measured at fair value as of June 30, 2015 and December 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands). There were no transfers of assets between fair value Level 1 and Level 2 during the six months ended June 30, 2015 or 2014.


				(Level 1)		(Level 2)		(Level 3)
				Quoted Prices in		Significant		Significant
				Active Markets		Other		Other
		June 30,		for Identical		Observable		Unobservable
		2015		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	36,828	$	-	$	36,828	$	-
Obligations of state and political subdivisions		32,894		-		32,894		-
Mortgage-backed securities		67,054		-		67,054		-
Equity securities available-for-sale		1,572		1,572		-		-

Measured at fair value on a non-recurring basis:
Impaired loans		2,676		-		-		2,676
Mortgage servicing rights		204		-		-		204

				(Level 1)		(Level 2)		(Level 3)
				Quoted Prices in		Significant		Significant
				Active Markets		Other		Other
		December 31,		for Identical		Observable		Unobservable
		2014		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	50,101	$	-	$	50,101	$	-
Obligations of state and political subdivisions		35,873		-		35,873		-
Mortgage-backed securities		55,429		-		55,429		-
Equity securities available-for-sale		1,500		1,500		-		-

Measured at fair value on a non-recurring basis:
Impaired loans		3,370		-		-		3,370
Mortgage servicing rights		193		-		-		193

Quantitative Information for Assets Measured at Fair Value

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs have been used to determine fair value:


June 30, 2015	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average

Impaired loans	$	2,676	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	(7)% - (20)%	(15.8)%
Mortgage servicing rights		204	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	363%


December 31, 2014	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average

Impaired loans	$	3,370	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	(7)% - (15)%	(11.2)%
Mortgage servicing rights		193	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	360%

(1)

Fair value is generally determined through independent appraisals of the underlying collateral that generally include various level 3 inputs which are not identifiable.

(2)

Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Estimated Fair Values of Financial Instruments

The estimated fair values of the Company’s financial instruments are as follows (in thousands):


Financial Instruments
(in thousands)

		June 30, 2015				December 31, 2014
		Carrying		Fair		Carrying		Fair
Financial assets:		Value		Value		Value		Value
Cash and due from banks	$	7,746	$	7,746	$	6,757	$	6,757
Interest bearing deposits with banks		247		247		10		10
Securities		138,348		138,348		142,903		142,903
Restricted investment in FHLB stock		3,055		3,055		2,726		2,726
Loans, net of allowance for loan losses		301,808		298,967		292,521		294,083
Mortgage servicing rights		204		204		193		193
Accrued interest receivable		1,463		1,463		1,491		1,491

Financial liabilities:
Non-interest bearing deposits		79,043		79,043		77,697		77,697
Interest bearing deposits		299,723		301,827		303,187		305,635
Securities sold under agreements to repurchase		3,926		3,926		4,594		4,594
Short-term borrowings		25,450		25,450		15,950		15,950
Long-term debt		22,500		22,587		22,500		22,464
Other interest bearing liabilities		1,430		1,435		1,412		1,416
Accrued interest payable		230		230		301		301

Off-balance sheet financial instruments:
Commitments to extend credit		-		-		-		-
Letters of credit		-		-		-		-

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

This table excludes financial instruments for which the carrying amount approximates fair value (in thousands).


			(Level 1)	(Level 2)	(Level 3)
			Quoted Prices in
			Active Markets	Significant	Significant
			for Identical	Other	Other
June 30, 2015	Carrying Amount	Fair Value	Assets or Liabilities	Observable Inputs	Unobservable Inputs
Financial instruments - Assets
Loans, net of allowance for loan losses	$ 301,808	$ 298,967	$ -	$ -	$ 298,967
Financial instruments - Liabilities
Interest bearing deposits	299,723	301,827	-	301,827	-
Long-term debt	22,500	22,587		22,587
Other interest bearing liabilities	1,430	1,435	-	1,435	-


			(Level 1)	(Level 2)	(Level 3)
			Quoted Prices in
			Active Markets	Significant	Significant
			for Identical	Other	Other
December 31, 2014	Carrying Amount	Fair Value	Assets or Liabilities	Observable Inputs	Unobservable Inputs
Financial instruments - Assets
Loans, net of allowance for loan losses	292,521	294,083	-	-	294,083
Financial instruments - Liabilities
Interest bearing deposits	303,187	305,635	-	305,635	-
Long-term debt	22,500	22,464		22,464
Other interest bearing liabilities	1,412	1,416	-	1,416	-