Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

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 March 31, 2017 and December 31, 2016 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.

March 31, 2017	Level I		Level II		Level III		Total
Fair value measurements on a recurring basis:
Assets
Securities available for sale:
U.S. Agency securities	$	-	$	147,658	$	-	$	147,658
Obligations of state and
political subdivisions		-		88,243		-		88,243
Corporate obligations		-		3,095		-		3,095
Mortgage-backed securities in
government sponsored entities		-		41,118		-		41,118
Equity securities in financial institutions		1,659		-		-		1,659

December 31, 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

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

Assets measured at fair value on a nonrecurring basis as of March 31, 2017 and December 31, 2016 are included in the table below (in thousands):

March 31, 2017	Level I		Level II		Level III		Total
Impaired Loans	$	-	$	-	$	2,064	$	2,064
Other real estate owned		-		-		1,074		1,074

December 31, 2016
Impaired Loans	$	-	$	-	$	2,033	$	2,033
Other real estate owned		-		-		839		839

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
March 31, 2017	Fair Value		Valuation Technique(s)	Unobservable input	Range			Weighted average
Impaired Loans	$	2,064	Appraised Collateral Values	Discount for time since appraisal		0-90	%		28.73	%
				Selling costs		5%-10	%		7.55	%
				Holding period	6 - 12 months			12 months

Other real estate owned		1,074	Appraised Collateral Values	Discount for time since appraisal		12-47	%		21.51	%

December 31, 2016	Fair Value		Valuation Technique(s)	Unobservable input	Range
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	%

Fair value of financial instruments

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

	Carrying
March 31, 2017	Amount		Fair Value		Level I		Level II		Level III
Financial assets:
Cash and due from banks	$	14,797	$	14,797	$	14,797	$	-	$	-
Interest bearing time deposits with other banks		6,708		6,712		-		-		6,712
Available-for-sale securities		281,773		281,773		1,659		280,114
Loans held for sale		1,581		1,581		1,581
Net loans		835,902		838,299		-		-		838,299
Bank owned life insurance		26,389		26,389		26,389		-		-
Regulatory stock		3,977		3,977		3,977		-		-
Accrued interest receivable		3,618		3,618		3,618		-		-

Financial liabilities:
Deposits	$	1,037,609	$	1,036,063	$	775,628	$	-	$	260,435
Borrowed funds		46,836		45,104		6,849		-		38,255
Accrued interest payable		612		612		612		-		-

December 31, 2016
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		-