Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 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 September 30, 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.

September 30, 2017	Level I		Level II		Level III		Total
Fair value measurements on a recurring basis:
Assets
Securities available for sale:
U.S. agency securities	$	-	$	132,551	$	-	$	132,551
Obligations of state and
political subdivisions		-		81,723		-		81,723
Corporate obligations		-		3,101		-		3,101
Mortgage-backed securities in
government sponsored entities		-		44,277		-		44,277
Equity securities in financial institutions		1,936		-		-		1,936

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. treasury 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 September 30, 2017 and December 31, 2016 are included in the table below (in thousands):

September 30, 2017	Level I		Level II		Level III		Total
Impaired Loans	$	-	$	-	$	3,024	$	3,024
Other real estate owned		-		-		1,478		1,478

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).

September 30, 2017

Fair Value

Valuation Technique(s)

Unobservable input

Range

Weighted average

Impaired Loans

$ 3,024

Appraised Collateral Values

Discount for time since appraisal

0-100%

21.22%

Selling costs

5%-9%

7.13%

Holding period

0 - 24 months

8.31 months

Other real estate owned

1,478

Appraised Collateral Values

Discount for time since appraisal

12-47%

22.32%

December 31, 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%

Fair value of financial instruments

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

	Carrying
September 30, 2017	Amount		Fair Value		Level I		Level II		Level III
Financial assets:
Cash and due from banks	$	13,815	$	13,815	$	13,815	$	-	$	-
Interest bearing time deposits with other banks		10,031		10,038		-		-		10,038
Available-for-sale securities		263,588		263,588		1,936		261,652		-
Loans held for sale		1,431		1,431		1,431		-		-
Net loans		896,715		894,706		-		-		894,706
Bank owned life insurance		26,722		26,722		26,722		-		-
Regulatory stock		4,884		4,884		4,884		-		-
Accrued interest receivable		3,786		3,786		3,786		-		-

Financial liabilities:
Deposits	$	1,052,105	$	1,050,362	$	792,133	$	-	$	258,229
Borrowed funds		73,628		71,965		32,960		-		39,005
Accrued interest payable		731		731		731		-		-

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		-		-