Fair Value Measurements (Tables)

9 Months Ended

Sep. 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 September 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.

September 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	$	-	$	190,766	$	-	$	190,766
U.S. Treasury securities		5,020		-		-		5,020
Obligations of state and
political subdivisions		-		102,222		-		102,222
Corporate obligations		-		14,376		-		14,376
Mortgage-backed securities in
government sponsored entities		-		34,052		-		34,052
Equity securities in financial institutions		2,718		-		-		2,718

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 September 30, 2016 and December 31, 2015 are included in the table below (in thousands):

September 30, 2016	Level I		Level II		Level III		Total
Impaired Loans	$	-	$	-	$	830	$	830
Other real estate owned		-		-		799		799

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 III Fair Value Measurements
September 30, 2016	Fair Value		Valuation Technique(s)	Unobservable input	Range			Weighted average
Impaired Loans	$	830	Appraised Collateral Values	Discount to appraised value		0-75	%		40.43	%
				Selling costs		5%-10	%		8.11	%
				Holding period	6 - 12 months			10 months

Other real estate owned		799	Appraised Collateral Values	Discount to appraised value		0-37	%		25.90	%

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
September 30, 2016	Amount		Fair Value		Level I		Level II		Level III
Financial assets:
Cash and due from banks	$	16,371	$	16,371	$	16,371	$	-	$	-
Interest bearing time deposits with other banks		6,955		6,961		-		-		6,961
Available-for-sale securities		349,154		349,154		7,738		341,416
Loans held for sale		576		576		576
Net loans		743,099		764,383		-		-		764,383
Bank owned life insurance		26,050		26,050		26,050		-		-
Regulatory stock		4,139		4,139		4,139		-		-
Accrued interest receivable		3,988		3,988		3,988		-		-

Financial liabilities:
Deposits	$	1,008,747	$	1,009,877	$	742,676	$	-	$	267,201
Borrowed funds		51,859		50,674		12,740		-		37,934
Accrued interest payable		636		636		636		-		-

	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		-