FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2014

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

Summary of Assets Measured at Fair Value on a Recurring Basis

The following tables present the assets reported on the consolidated balance sheet at their fair value on a recurring basis as of December 31, 2014 and 2013 (in thousands) by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

2014	Level I	Level II	Level III	Total
Fair value measurements on a recurring basis:
Securities available for sale:
U.S. Agency securities	$                  -	$           150,885	$               -	$         150,885
U.S. Treasuries securities	-	4,849	-	4,849
Obligations of state and
political subdivisions	-	105,036	-	105,036
Corporate obligations	-	13,958	-	13,958
Mortgage-backed securities in
government sponsored entities	-	29,728	-	29,728
Equity securities in financial institutions	1,690	-	-	1,690
2013	Level I	Level II	Level III	Total
Fair value measurements on a recurring basis:
Securities available for sale:
U.S. agency securities	$                  -	$           152,189	$               -	$         152,189
U.S. treasuries	-	11,309	-	11,309
Obligations of state and
political subdivisions	-	95,005	-	95,005
Corporate obligations	-	16,802	-	16,802
Mortgage-backed securities in
government sponsored entities	-	40,671	-	40,671
Equity securities in financial institutions	1,325	-	-	1,325

Summary of Assets Measured at Fair Value on Non-recurring Basis

Assets measured at fair value on a nonrecurring basis as of December 31, 2014 and 2013 (in thousands) are included in the table below:

	December 31, 2014
	Level 1	Level II	Level III	Total
Impaired Loans	$                  -	$                      -	$       8,724	$               8,724
Other real estate owned	-	-	1,792	1,792
	December 31, 2013
	Level 1	Level II	Level III	Total
Impaired Loans	$                  -	$                      -	$     10,067	$             10,067
Other real estate owned	-	-	1,360	1,360

Significant Unobservable Inputs Used in Fair Value Measurement Process

The following table provides a listing of the significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques.

2014	Fair Value	Valuation Technique(s)	Unobservable input	Range	Weighted average
Impaired Loans	$  230	Discounted Cash Flows	Probability of Default	0%	0.00%
			Change in interest rates	0-5.5%	1.99%
	8,494	Appraised Collateral Values	Discount for time since appraisal	0-30%	22.00%
			Selling costs	4%-10%	8.55%
			Holding period	0 - 18 months	15 months
Other real estate owned	1,792	Appraised Collateral Values	Discount for time since appraisal	0-20%	20%
			Selling costs	4%-10%	9%
			Holding period	0 - 18 months	12 months
2013		Valuation Technique(s)	Unobservable input	Range
Impaired Loans	$  263	Discounted Cash Flows	Probability of Default	0%	0%
			Change in interest rates	0-7%	1.96%
	9,804	Appraised Collateral Values	Discount for time since appraisal	0-30%	19.02%
			Selling costs	4%-10%	8.41%
			Holding period	0 - 18 months	14 months
Other real estate owned	1,360	Appraised Collateral Values	Discount for time since appraisal	0-20%	20%
			Selling costs	4%-10%	9%
			Holding period	0 - 18 months	12 months

Fair Value of Financial Instruments

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

	Carrying
December 31, 2014	Amount	Fair Value	Level I	Level II	Level III
Financial assets:
Cash and due from banks	$    11,423	$    11,423	$    11,423	$              -	$              -
Interest bearing time deposits with other banks	5,960	5,969			5,969
Available-for-sale securities	306,146	306,146	1,690	304,456	-
Loans held for sale	497	497	497
Net loans	547,290	564,944	-	-	564,944
Bank owned life insurance	20,309	20,309	20,309	-	-
Regulatory stock	2,035	2,035	2,035	-	-
Accrued interest receivable	3,644	3,644	3,644	-	-
Financial liabilities:
Deposits	$  773,933	$  774,387	$  525,166	$              -	$  249,221
Borrowed funds	41,799	38,219	16,593	-	21,626
Accrued interest payable	756	756	756	-	-

	Carrying
December 31, 2013	Amount	Fair Value	Level I	Level II	Level III
Financial assets:
Cash and due from banks	$    10,083	$    10,083	$    10,083	$              -	$              -
Interest bearing time deposits with other banks	2,480	2,474			2,474
Available-for-sale securities	317,301	317,301	1,325	315,976	-
Loans held for sale	278	278	278
Net loans	533,514	547,405	-	-	547,405
Bank owned life insurance	14,679	14,679	14,679	-	-
Regulatory stock	3,926	3,926	3,926	-	-
Accrued interest receivable	3,728	3,728	3,728	-	-
Financial liabilities:
Deposits	$  748,316	$  750,172	$  481,957	$              -	$  268,215
Borrowed funds	66,932	63,500	42,954	-	20,546
Accrued interest payable	895	895	895	-	-