Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Summary of Assets Measured at Fair Value on a Recurring Basis

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

June 30, 2015	Level I	Level II	Level III	Total
Assets
Securities available for sale:
U.S. Agency securities	$ -	$ 167,580	$ -	$ 167,580
Obligations of state and
political subdivisions	-	96,282	-	96,282
Corporate obligations	-	12,805	-	12,805
Mortgage-backed securities in
government sponsored entities	-	26,350	-	26,350
Equity securities in financial
institutions	1,775	-	-	1,775

December 31, 2014	Level I	Level II	Level III	Total
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

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

Assets measured at fair value on a nonrecurring basis as of June 30, 2015 and December 31, 2014 are included in the table below (in thousands):

June 30, 2015	Level I	Level II	Level III	Total
Impaired Loans	$ -	$ -	$ 7,885	$ 7,885
Other real estate owned	-	-	1,815	1,815

December 31, 2014
Impaired Loans	$ -	$ -	$ 8,724	$ 8,724
Other real estate owned	-	-	1,792	1,792

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.

Quantitative Information about Level 3 Fair Value Measurements
June 30, 2015	Fair Value	Valuation Technique(s)	Unobservable input	Range	Weighted average

Impaired Loans	$ 206	Discounted Cash Flows	Change in interest rates	0-5.5%	3.21%

	7,679	Appraised Collateral Values	Discount for time since appraisal	0-30%	17.09%
			Selling costs	5%-10%	9.28%
			Holding period	0 - 18 months	12 months

Other real estate owned	1,815	Appraised Collateral Values	Discount for time since appraisal	0-20%	20%
			Selling costs	4%-10%	9%
			Holding period	0 - 18 months	12

December 31, 2014	Fair Value	Valuation Technique(s)	Unobservable input	Range
Impaired Loans	$ 230	Discounted Cash Flows	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

Fair Value of Financial Instruments

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

	Carrying
June 30, 2015	Amount	Fair Value	Level I	Level II	Level III
Financial assets:
Cash and due from banks	$ 10,912	$ 10,912	$ 10,912	$ -	$ -
Interest bearing time deposits with other banks	5,960	5,969			5,969
Available-for-sale securities	304,792	304,792	1,775	303,017
Loans held for sale	1,152	1,152	1,152
Net loans	564,692	580,732	-	-	580,732
Bank owned life insurance	20,615	20,615	20,615	-	-
Regulatory stock	1,864	1,864	1,864	-	-
Accrued interest receivable	3,584	3,584	3,584	-	-

Financial liabilities:
Deposits	$ 791,887	$ 792,477	$ 544,830	$ -	$ 247,647
Borrowed funds	39,194	36,080	6,287	-	29,793
Accrued interest payable	674	674	674	-	-

	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	-	-