Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Summary of assets measured at fair value on a recurring basis

The following tables present the assets and liabilities reported on the Consolidated Balance Sheet at their fair value on a recurring basis as of September 30, 2015 and December 31, 2014 by level within the fair value hierarchy (in thousands). Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

September 30, 2015	Level I	Level II	Level III	Total
Assets
Securities available for sale:
U.S. Agency securities	$ -	$ 164,102	$ -	$ 164,102
Obligations of state and
political subdivisions	-	98,165	-	98,165
Corporate obligations	-	12,707	-	12,707
Mortgage-backed securities in
government sponsored entities	-	23,899	-	23,899
Equity securities in financial
institutions	1,757	-	-	1,757

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 September 30, 2015 and December 31, 2014 are included in the table below (in thousands):

September 30, 2015	Level I	Level II	Level III	Total
Impaired Loans	$ -	$ -	$ 7,954	$ 7,954
Other real estate owned	-	-	1,429	1,429

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 (dollars in thousands).

September 30, 2015	Fair Value	Valuation Technique(s)	Unobservable input	Range	Weighted average
Impaired Loans	$ 206	Discounted Cash Flows	Discount in interest rates	0-5.5%	3.19%

	7,748	Appraised Collateral Values	Discount for time since appraisal	0-30%	16.66%
			Selling costs	5%-10%	13.25%
			Holding period	0 - 18 months	12 months

Other real estate owned	1,429	Appraised Collateral Values	Discount for time since appraisal	0-20%	20%
			Selling costs	4%-10%	9%
			Holding period	0 - 18 months	12 months

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

Fair value of financial instruments

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

	Carrying
September 30, 2015	Amount	Fair Value	Level I	Level II	Level III
Financial assets:
Cash and due from banks	$ 10,314	$ 10,314	$ 10,314	$ -	$ -
Interest bearing time deposits with other banks	6,460	6,465	-	-	6,465
Available-for-sale securities	300,630	300,630	1,757	298,873
Loans held for sale	1,248	1,248	1,248
Net loans	575,964	605,361	-	-	605,361
Bank owned life insurance	20,773	20,773	20,773	-	-
Regulatory stock	1,983	1,983	1,983	-	-
Accrued interest receivable	3,566	3,566	3,566	-	-

Financial liabilities:
Deposits	$ 797,848	$ 799,026	$ 550,646	$ -	$ 248,380
Borrowed funds	44,657	41,978	12,882	-	29,096
Accrued interest payable	693	693	693	-	-

	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	-	-