FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2016

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, 2016 and 2015 (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.

2016	Level I		Level II		Level III		Total
Fair value measurements on a recurring basis:
Securities available for sale:
U.S. Agency securities	$	-	$	170,414	$	-	$	170,414
U.S. Treasuries securities		3,000		-		-		3,000
Obligations of state and
political subdivisions		-		96,926		-		96,926
Corporate obligations		-		3,050		-		3,050
Mortgage-backed securities in
government sponsored entities		-		37,728		-		37,728
Equity securities in financial institutions		2,899		-		-		2,899

2015	Level I		Level II		Level III		Total
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 December 31, 2016 and 2015 (in thousands) are included in the table below:

2016	Level I		Level II		Level III		Total
Impaired Loans	$	-	$	-	$	2,033	$	2,033
Other real estate owned		-		-		839		839
2015	Level I		Level II		Level III		Total
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.

Quantitative Information about Level 3 Fair Value Measurements
2016	Fair Value	Valuation Technique(s)	Unobservable input	Range	Weighted average
Impaired Loans	2,033	Appraised Collateral Values	Discount for time since appraisal	0-65%	28.98%
			Selling costs	5%-9%	7.56%
			Holding period	6 - 12 months	11 months
Other real estate owned	839	Appraised Collateral Values	Discount for time since appraisal	10-67%	25.45%
2015	Fair Value	Valuation Technique(s)	Unobservable input	Range	Weighted average
Impaired Loans	894	Appraised Collateral Values	Discount for time since appraisal	0-70%	46.50%
			Selling costs	4%-10%	7.75%
			Holding period	12 months	10 months
Other real estate owned	1,197	Appraised Collateral Values	Discount for time since appraisal	0-75%	25%

Fair value of financial instruments

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

	Carrying
December 31, 2016	Amount		Fair Value		Level I		Level II		Level III
Financial assets:
Cash and due from banks	$	17,754	$	17,754	$	17,754	$	-	$	-
Interest bearing time deposits with other banks		6,955		6,960		-		-		6,960
Available-for-sale securities		314,017		314,017		5,899		308,118		-
Loans held for sale		1,827		1,827		1,827		-		-
Net loans		790,725		797,184		-		-		797,184
Bank owned life insurance		26,223		26,223		26,223		-		-
Regulatory stock		5,306		5,306		5,306		-		-
Accrued interest receivable		4,089		4,089		4,089		-		-
Financial liabilities:
Deposits	$	1,005,503	$	1,004,072	$	740,889	$	-	$	263,183
Borrowed funds		79,662		77,425		41,330		-		36,095
Accrued interest payable		720		720		720		-		-

	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		-		-