Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

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 June 30, 2016 and December 31, 2015 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.

June 30, 2016	Level I		Level II		Level III		Total
Fair value measurements on a recurring basis:
Assets
Securities available for sale:
U.S. Agency securities	$	-	$	205,819	$	-	$	205,819
U.S. Treasury securities		5,053		-		-		5,053
Obligations of state and
political subdivisions		-		104,472		-		104,472
Corporate obligations		-		11,480		-		11,480
Mortgage-backed securities in
government sponsored entities		-		31,606		-		31,606
Equity securities in financial institutions		2,514		-		-		2,514

December 31, 2015
Fair value measurements on a recurring basis:
Securities available for sale:
U.S. Agency securities	$	-	$	199,591	$	-	$	199,591
U.S. Treasuries securities		10,082		-		-		10,082
Obligations of state and
political subdivisions		-		102,863		-		102,863
Corporate obligations		-		14,565		-		14,565
Mortgage-backed securities in
government sponsored entities		-		30,204		-		30,204
Equity securities in financial institutions		2,432		-		-		2,432

Summary of assets measured at fair value on non-recurring basis

Assets measured at fair value on a nonrecurring basis as of June 30, 2016 and December 31, 2015 are included in the table below (in thousands):

June 30, 2016	Level I		Level II		Level III		Total
Impaired Loans	$	-	$	-	$	989	$	989
Other real estate owned		-		-		1,007		1,007

December 31, 2015
Impaired Loans	$	-	$	-	$	894	$	894
Other real estate owned		-		-		1,197		1,197

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).

Quantitative Information about Level 3 Fair Value Measurements
June 30, 2016	Fair Value		Valuation Technique(s)	Unobservable input	Range			Weighted average
Impaired Loans	$	989	Appraised Collateral Values	Discount to appraised value		0-75	%		36.64	%
				Selling costs		5%-10	%		8.18	%
				Holding period	0 - 12 months			10 months

Other real estate owned		1,007	Appraised Collateral Values	Discount to appraised value		0-37	%		24.70	%

December 31, 2015	Fair Value		Valuation Technique(s)	Unobservable input	Range
Impaired Loans		894	Appraised Collateral Values	Discount to appraised value		0-70	%		46.50	%
				Selling costs		4%-10	%		7.75	%
				Holding period	0 - 12 months			10 months

Other real estate owned		1,197	Appraised Collateral Values	Discount to appraised value		0-75	%		25	%

Fair value of financial instruments

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

	Carrying
June 30, 2016	Amount		Fair Value		Level I		Level II		Level III
Financial assets:
Cash and due from banks	$	26,822	$	26,822	$	26,822	$	-	$	-
Interest bearing time deposits with other banks		6,954		6,961		-		-		6,961
Available-for-sale securities		360,944		360,944		7,567		353,377
Loans held for sale		1,304		1,304		1,304
Net loans		701,756		726,584		-		-		726,584
Bank owned life insurance		25,877		25,877		25,877		-		-
Regulatory stock		3,407		3,407		3,407		-		-
Accrued interest receivable		4,176		4,176		4,176		-		-

Financial liabilities:
Deposits	$	1,003,482	$	1,005,158	$	734,593	$	-	$	270,565
Borrowed funds		38,786		37,240		-		-		37,240
Accrued interest payable		644		644		644		-		-

	Carrying
December 31, 2015	Amount		Fair Value		Level I		Level II		Level III
Financial assets:
Cash and due from banks	$	24,384	$	24,384	$	24,384	$	-	$	-
Interest bearing time deposits with other banks		7,696		7,705		-		-		7,705
Available-for-sale securities		359,737		359,737		12,514		347,223		-
Loans held for sale		603		603		603
Net loans		687,925		712,524		-		-		712,524
Bank owned life insurance		25,535		25,535		25,535		-		-
Regulatory stock		3,459		3,459		3,459		-		-
Accrued interest receivable		4,211		4,211		4,211		-		-

Financial liabilities:
Deposits	$	988,031	$	987,542	$	706,121	$	-	$	281,421
Borrowed funds		41,631		38,863		1,598		-		37,265
Accrued interest payable		734		734		734		-