Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value Measurements by Level of Valuation Inputs

The following table summarizes financial assets and financial liabilities measured at fair value as of March 31, 2016 and December 31, 2015, 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 three months ended March 31, 2016 or 2015.


				(Level 1)		(Level 2)		(Level 3)
				Quoted Prices in		Significant		Significant
				Active Markets		Other		Other
		March 31,		for Identical		Observable		Unobservable
		2016		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	30,080	$	-	$	30,080	$	-
Obligations of state and political subdivisions		32,316		-		32,316		-
Mortgage-backed securities		81,268		-		81,268		-
Equity securities available-for-sale		2,224		2,224		-		-

Measured at fair value on a non-recurring basis:
Impaired loans		2,492		-		-		2,492
Other real estate owned		171		-		-		171
Mortgage servicing rights		202		-		-		202

				(Level 1)		(Level 2)		(Level 3)
				Quoted Prices in		Significant		Significant
				Active Markets		Other		Other
		December 31,		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	$	32,732	$	-	$	32,732	$	-
Obligations of state and political subdivisions		29,535		-		29,535		-
Mortgage-backed securities		87,741		-		87,741		-
Equity securities available-for-sale		2,319		2,319		-		-

Measured at fair value on a non-recurring basis:
Impaired loans		2,232		-		-		2,232
Other real estate owned		150		-		-		150
Mortgage servicing rights		205		-		-		205

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:


March 31, 2016	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average

Impaired loans	$	2,492	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	7% - 37%	15.1%
Other real estate owned		171	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	10% - 32%	30%
Mortgage servicing rights		202	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	363%


December 31, 2015	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average

Impaired loans	$	2,232	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	7% - 37%	16.1%
Other real estate owned		150	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	32%	32%
Mortgage servicing rights		205	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	364%

(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)

		March 31, 2016					December 31, 2015
		Carrying			Fair		Carrying		Fair
Financial assets:		Value			Value		Value		Value
Cash and due from banks	$	9,503		$	9,503	$	10,385	$	10,385
Interest bearing deposits with banks		75			75		73		73
Interest bearing time deposits with banks		350			350		350		350
Securities		145,888			145,888		152,327		152,327
Restricted investment in FHLB stock		3,111			3,111		3,509		3,509
Loans held for sale		-			-		1,808		1,808
Loans, net of allowance for loan losses		375,952			373,419		374,565		373,078
Mortgage servicing rights		202			202		205		205
Accrued interest receivable		1,564			1,564		1,806		1,806

Financial liabilities:
Non-interest bearing deposits		108,059			108,059		106,667		106,667
Interest bearing deposits		358,173			360,864		350,459		352,859
Securities sold under agreements to repurchase		3,406			3,406		4,996		4,996
Short-term borrowings		4,100	4,100		4,100		30,061		30,061
Long-term debt		32,500			32,424		22,500		22,482
Other interest bearing liabilities		1,469			1,474		1,471		1,476
Accrued interest payable		235			235		238		238

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
March 31, 2016	Carrying Amount	Fair Value	Assets or Liabilities	Observable Inputs	Unobservable Inputs
Financial instruments - Assets
Interest bearing time deposits with banks	$ 350	$ 350	$ -	$ 350	$ -
Loans, net of allowance for loan losses	375,952	373,419	-	-	373,419
Financial instruments - Liabilities
Interest bearing deposits	358,173	360,864	-	360,864	-
Long-term debt	32,500	32,631	-	32,631	-
Other interest bearing liabilities	1,469	1,474	-	1,474	-


			(Level 1)	(Level 2)	(Level 3)
			Quoted Prices in
			Active Markets	Significant	Significant
			for Identical	Other	Other
December 31, 2015	Carrying Amount	Fair Value	Assets or Liabilities	Observable Inputs	Unobservable Inputs
Financial instruments - Assets
Interest bearing time deposits with banks	$ 350	$ 350	$ -	$ 350	$ -
Loans held for sale	1,808	1,808	-	1,808	-
Loans, net of allowance for loan losses	374,565	373,078	-	-	373,078
Financial instruments - Liabilities
Interest bearing deposits	350,459	352,859	-	352,859	-
Long-term debt	22,500	22,482	-	22,482	-
Other interest bearing liabilities	1,471	1,476	-	1,476	-