10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 10-K

_______________

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 000-12896

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OLD POINT FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

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Virginia	54-1265373
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1 West Mellen Street, Hampton, Virginia 23663

(Address of principal executive offices) (Zip Code)

(757) 728-1200

(Registrant's telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $5 par value	The NASDAQ Stock Market LLC
(Title of each class)	(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

None

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Act.Yes ☐No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes ☐No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes ☒No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes ☐No ☒

The aggregate market value of voting and non-voting stock held by non-affiliates of the registrant as of June 30, 2016 was $66,676,665 based on the closing sales price on the NASDAQ Capital Market of $19.18.

There were 4,975,417 shares of common stock outstanding as of March 10, 2017.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Company's Annual Meeting of Stockholders to be held on May 23, 2017, are incorporated by reference in Part III of this report.

OLD POINT FINANCIAL CORPORATION

FORM 10-K

INDEX

PART I		Page
Item 1.	Business	1
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	16
Item 4.	Mine Safety Disclosures	16
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6.	Selected Financial Data	19
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 8.	Financial Statements and Supplementary Data	44
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	89
Item 9A.	Controls and Procedures	89
Item 9B.	Other Information	90
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	90
Item 11.	Executive Compensation	90
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	91
Item 13.	Certain Relationships and Related Transactions, and Director Independence	91
Item 14.	Principal Accountant Fees and Services	91
PART IV
Item 15.	Exhibits, Financial Statement Schedules	92
	Index to Consolidated Financial Statements	92
	Index to Exhibits	92
Item 16.	Form 10-K Summary	93
	Signatures	94

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Part I

Item 1. Business

GENERAL

Old Point Financial Corporation (the Company) was incorporated under the laws of Virginia on February 16, 1984, for the purpose of acquiring all the outstanding common stock of The Old Point National Bank of Phoebus (the Bank), in connection with the reorganization of the Bank into a one-bank holding company structure. At the annual meeting of the stockholders on March 27, 1984, the proposed reorganization was approved by the requisite stockholder vote. At the effective date of the reorganization on October 1, 1984, the Bank merged into a newly formed national bank as a wholly-owned subsidiary of the Company, with each outstanding share of common stock of the Bank being converted into five shares of common stock of the Company.

The Company completed a spin-off of its trust department as of April 1, 1999. The organization is chartered as Old Point Trust & Financial Services, N.A. (Trust). Trust is a nationally chartered trust company. The purpose of the spin-off was to have a corporate structure more ready to compete in the field of wealth management. Trust is a wholly-owned subsidiary of the Company.

The Bank is a national banking association that was founded in 1922. As of the end of 2016, the Bank had 18 branch offices serving the Hampton Roads localities of Hampton, Newport News, Norfolk, Virginia Beach, Chesapeake, Williamsburg/James City County, York County and Isle of Wight County. The Bank offers a complete line of consumer, mortgage and business banking services, including loan, deposit, and cash management services to individual and commercial customers.

The Company's primary activity is as a holding company for the common stock of the Bank and Trust. The principal business of the Company is conducted through its subsidiaries, which continue to conduct business in substantially the same manner as before the reorganization and spin-off.

As of December 31, 2016, the Company had assets of $903.0 million, loans of $603.9 million, deposits of $784.5 million, and stockholders' equity of $94.0 million. At year-end, the Company and its subsidiaries had a total of 286 employees, 20 of whom were part-time.

MARKET AREA AND COMPETITION

The Company's market area is located in Hampton Roads, situated in the southeastern corner of Virginia and boasting the world's largest natural deepwater harbor. The Hampton Roads Metropolitan Statistical Area (MSA) is the 37th most populous MSA in the United States according to the U.S. Census Bureau's 2010 census and the third largest deposit market in Virginia, after Richmond and the Washington Metropolitan area, according to the Federal Deposit Insurance Corporation (FDIC). Hampton Roads includes the cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach and Williamsburg, and the counties of Isle of Wight, Gloucester, James City, Mathews, York and Surry. The market area is serviced by 63 banks, savings institutions and credit unions and, in addition, branches of virtually every major brokerage house serve the Company's market area.

The banking business in Virginia, and in the Company's primary service areas in the Hampton Roads MSA, is highly competitive and dominated by a relatively small number of large banks with many offices operating over a wide geographic area. Among the advantages such large banks have over the Company is their ability to finance wide-ranging advertising campaigns, and by virtue of their greater total capitalization, to have substantially higher lending limits than the Company. Factors such as interest rates offered, the number and location of branches and the types of products offered, as well as the reputation of the institution affect competition for deposits and loans. The Company competes by emphasizing customer service and technology, establishing long-term customer relationships and building customer loyalty, and providing products and services to address the specific needs of the Company's customers. The Company targets individual and small-to-medium size business customers.

Concurrently, the Company continues to build a stronger presence in the business banking market, where greater opportunities for fee-based revenues and cross-selling exist. In 2009, the Company expanded its treasury services offerings by adding a Corporate Banking group and expanding its product offerings to match those offered by larger institutions. This expansion has continued throughout 2016 with an aim towards growth and relationship development. Through these business banking capabilities, the Company is able to service a highly lucrative market that offers the opportunities to identify new revenue streams and cross sell additional products.

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Personal assets held by non-banks are difficult to track at a local level, so research relies on deposits reported by governmental agencies to measure market share. In 2016, the Company held tenth place with 2.41% market share of all Hampton Roads deposits, as compared to 2.62% market share in 2015. On the Peninsula, the Company retains first place in Hampton with 28.31% market share, but saw a decline in deposits from 2015 of $10.5 million. The Company saw deposit growth from 2015 for all other Peninsula markets, with an increase of $2.2 million in James City County, $2.8 million in Williamsburg, $6.0 million in Newport News, and $937 thousand in York County.

In Southside Hampton Roads, the Company increased deposit share in Virginia Beach by $6.7 million and in Norfolk by $5.6 million from 2015. However, in the Chesapeake and Isle of Wight County markets, deposits decreased from 2015 by $7.8 million and $647 thousand, respectively. Combined with heightened marketing efforts, the staff in the Company's newer locations continues to work diligently to increase the Company's name recognition in their respective regions of the Hampton Roads MSA.

The Company also faces competitive pressure from credit unions. The three largest credit unions headquartered in the Hampton Roads MSA are Chartway Federal Credit Union, Langley Federal Credit Union, and Newport News Shipbuilding Employees' Credit Union with deposits totaling approximately $1.9 billion, $1.8 billion and $1.2 billion respectively, all of which posted a positive growth rate for 2016.

AVAILABLE INFORMATION

The Company maintains a website on the Internet at www.oldpoint.com. The Company makes available free of charge, on or through its website, its proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (SEC). This reference to the Company's Internet address shall not, under any circumstances, be deemed to incorporate the information available at such Internet address into this Form 10-K or other SEC filings. The information available at the Company's Internet address is not part of this Form 10-K or any other report filed by the Company with the SEC. The public may read and copy any documents the Company files at the SEC's Public Reference Room at 100 F Street, N.E. Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company's SEC filings can also be obtained on the SEC's website on the Internet at www.sec.gov.

REGULATION AND SUPERVISION

Set forth below is a brief description of some of the material laws and regulations that affect the Company. The description of these statutes and regulations is only a summary and is not a complete discussion or analysis. This discussion is qualified in its entirety by reference to the statutes and regulations summarized below. No assurance can be given that these statutes or regulations will not change in the future.

General. The Company continues to experience a period of rapidly changing regulations and an environment of constant regulatory reform. These regulatory changes have had and will continue to have a significant impact on how the Company conducts its business. The most significant of these laws is the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), adopted on July 21, 2010, to implement significant structural reforms to the financial services industry. The full extent of the Dodd-Frank Act and other potential regulatory reforms cannot yet be fully determined and will depend to a large extent on regulations that will be adopted in the future.

As a public company, the Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), which include, but are not limited to, the filing of annual, quarterly and other reports with the SEC. The Company is also required to comply with other laws and regulations of the SEC applicable to public companies.

The Company is also a bank holding company within the meaning of the Bank Holding Company Act of 1956 (the BHCA) and is registered as such with, and subject to the supervision of, the Board of Governors of the Federal Reserve System (the FRB). Generally, a bank holding company is required to obtain the approval of the FRB before acquiring direct or indirect ownership or control of more than five percent of the voting shares of a bank or engaging in an activity considered to be a non-banking activity, either directly or through a subsidiary. Bank holding companies and their subsidiaries are also subject to restrictions on transactions with insiders and affiliates.

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As a national bank, the Bank is subject to regulation, supervision and regular examination by the Office of the Comptroller of the Currency (the Comptroller). The prior approval of the Comptroller or other appropriate bank regulatory authority is required for a national bank to merge with another bank or purchase the assets or assume the deposits of another bank. In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position of the constituent organizations and the combined organization, the risks to the stability of the U.S. banking or financial system, the applicant's performance record under the Community Reinvestment Act (the CRA) and fair housing initiatives, the data security and cybersecurity infrastructure of the constituent organizations and the combined organization, and the effectiveness of the subject organizations in combating money laundering activities. Each depositor's account with the Bank is insured by the FDIC to the maximum amount permitted by law. The Bank is also subject to certain regulations promulgated by the FRB and applicable provisions of Virginia law, insofar as they do not conflict with or are not preempted by federal banking law.

As a non-depository national banking association, Trust is subject to regulation, supervision and regular examination by the Comptroller. Trust's exercise of fiduciary powers must comply with Regulation 9 promulgated by the Comptroller and with Virginia law.

The regulations of the FRB, the Comptroller and the FDIC govern most aspects of the Company's business, including deposit reserve requirements, investments, loans, certain check clearing activities, issuance of securities, payment of dividends, branching, and numerous other matters.  Further, the federal bank regulatory agencies have adopted guidelines and released interpretive materials that establish operational and managerial standards to promote the safe and sound operation of banks and bank holding companies.  These standards relate to the institution's key operating functions, including but not limited to internal controls, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings, compensation of management, information systems, data security and cybersecurity, and risk management.  As a consequence of the extensive regulation of commercial banking activities in the United States, the Company's business is particularly susceptible to changes in state and federal legislation and regulations, which may have the effect of increasing the cost of doing business, limiting permissible activities or increasing competition.

The Bank Holding Company Act. As a bank holding company, the Company is subject to the BHCA and regulation and supervision by the FRB. A bank holding company is required to obtain the approval of the FRB before making certain acquisitions or engaging in certain activities. Bank holding companies and their subsidiaries are also subject to restrictions on transactions with insiders and affiliates.

A bank holding company is required to obtain the approval of the FRB before it may acquire all or substantially all of the assets of any bank, and before it may acquire ownership or control of the voting shares of any bank if, after giving effect to the acquisition, the bank holding company would own or control more than 5 percent of the voting shares of such bank. The approval of the FRB is also required for the merger or consolidation of bank holding companies.

Pursuant to the BHCA, the FRB has the power to order any bank holding company or its subsidiaries to terminate any activity or to terminate its ownership or control of any subsidiary when the FRB has reasonable grounds to believe that continuation of such activity or ownership constitutes a serious risk to the financial soundness, safety or stability of any bank subsidiary of the bank holding company.

The Company is required to file periodic reports with the FRB and provide any additional information the FRB may require. The FRB also has the authority to examine the Company and its subsidiaries, as well as any arrangements between the Company and its subsidiaries, with the cost of any such examinations to be borne by the Company.  Banking subsidiaries of bank holding companies are also subject to certain restrictions imposed by federal law in dealings with their holding companies and other affiliates.

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The Dodd-Frank Act. The Dodd-Frank Act implements far-reaching changes across the financial regulatory landscape, including changes that will affect all bank holding companies and banks, including the Company and the Bank. Among other provisions, the Dodd-Frank Act:

· changed the assessment base for federal deposit insurance from the amount of insured deposits to consolidated assets less tangible capital. The Dodd-Frank Act also made permanent the $250,000 limit for federal deposit insurance and increased the cash limit of Securities Investor Protection Corporation protection from $100,000 to $250,000;

· repealed the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts;

· created and centralized significant aspects of consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau (CFPB), which is discussed in more detail below;

· imposed limits for debit card interchange fees for issuers that have assets greater than $10 billion, which also could affect the amount of interchange fees collected by financial institutions with less than $10 billion in assets;

· restricted the preemption of state law by federal law and disallowed subsidiaries and affiliates of national banks from availing themselves of such preemption;

· imposed comprehensive regulation of the over-the-counter derivatives market subject to significant rulemaking processes, to include certain provisions that would effectively prohibit insured depository institutions from conducting certain derivatives businesses in the institution itself;

· required loan originators to retain 5 percent of any loan sold or securitized, unless it is a "qualified residential mortgage", subject to certain restrictions;

· prohibited banks and their affiliates from engaging in proprietary trading and investing in and sponsoring certain unregistered investment companies (the Volcker Rule); and

· implemented corporate governance revisions that apply to all public companies, not just financial institutions.

Some of the rules that have been adopted or proposed to comply with Dodd-Frank Act mandates are discussed in more detail below.

Capital Requirements and Prompt Corrective Action. The FRB, the Comptroller and the FDIC have adopted risk-based capital adequacy guidelines for bank holding companies and banks pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) and the Basel III Capital Accords. See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Capital Resources" in Item 7 of this report on Form 10-K.

The federal banking agencies have broad powers to take prompt corrective action to resolve problems of insured depository institutions.  Under the FDICIA, there are five capital categories applicable to bank holding companies and insured institutions, each with specific regulatory consequences. The extent of the agencies' powers depends on whether the institution in question is "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" or "critically undercapitalized."  These terms are defined under uniform regulations issued by each of the federal banking agencies.  If the appropriate federal banking agency determines that an insured institution is in an unsafe or unsound condition, it may reclassify the institution to a lower capital category (other than critically undercapitalized) and require the submission of a plan to correct the unsafe or unsound condition.

Failure to meet statutorily mandated capital guidelines or more restrictive ratios separately established for a financial institution could subject the Company and its subsidiaries to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting or renewing brokered deposits, limitations on the rates of interest that the institution may pay on its deposits, and other restrictions on its business.  In addition, an institution may not make a capital distribution, such as a dividend or other distribution that is in substance a distribution of capital to the owners of the institution if following such a distribution the institution would be undercapitalized. Thus, if the making of such dividend would cause the Bank to become undercapitalized, it could not pay a dividend to the Company.

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Basel III Capital Framework. The federal bank regulatory agencies have adopted rules to implement the Basel III capital framework as outlined by the Basel Committee on Banking Supervision and standards for calculating risk-weighted assets and risk-based capital measurements (collectively, the Basel III Final Rules).  For purposes of these capital rules, (i) common equity Tier 1 capital (CET1) consists principally of common stock (including surplus) and retained earnings; (ii) Tier 1 capital consists principally of CET1 plus non-cumulative preferred stock and related surplus, and certain grandfathered cumulative preferred stock and trust preferred securities; and (iii) Tier 2 capital consists principally of Tier 1 capital plus qualifying subordinated debt and preferred stock, and limited amounts of an institution's allowance for loan losses.  Each regulatory capital classification is subject to certain adjustments and limitations, as implemented by the Basel III Final Rules.  The Basel III Final Rules also establish risk weightings that are applied to many classes of assets held by community banks, including, importantly, applying higher risk weightings to certain commercial real estate loans.

The Basel III Final Rules were effective on January 1, 2015, and the Basel III Final Rules' capital conservation buffer (as described below) is being phased in beginning January 1, 2016 through 2019.  When fully phased in, the Basel III Final Rules require banks to maintain (i) a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% "capital conservation buffer" (which is added to the 4.5% CET1 ratio as that buffer is phased in, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of total (that is, Tier 1 plus Tier 2) capital to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to balance sheet exposures plus certain off-balance sheet exposures (computed as the average for each quarter of the month-end ratios for the quarter).

The Basel III Final Rules provide deductions from and adjustments to regulatory capital measures, and primarily to CET1, including deductions and adjustments that were not applied to reduce CET1 under historical regulatory capital rules.  For example, mortgage servicing rights, deferred tax assets dependent upon future taxable income and significant investments in non-consolidated financial entities must be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such categories in the aggregate exceed 15% of CET1.  These deductions from and adjustments to regulatory capital are generally subject to a phase in period, which began in 2015 and will continue through 2018.

The Basel III Final Rules also implement a "countercyclical capital buffer," generally designed to absorb losses during periods of economic stress and to be imposed when national regulators determine that excess aggregate credit growth becomes associated with a buildup of systemic risk. This buffer is a CET1 add-on to the capital conservation buffer in the range of 0% to 2.5% when fully implemented (potentially resulting in total buffers of between 2.5% and 5%).

Insurance of Accounts, Assessments and Regulation by the FDIC. The Bank's deposits are insured up to applicable limits by the Deposit Insurance Fund (DIF) of the FDIC. The basic limit on FDIC deposit insurance coverage is $250,000 per depositor.

Under the Federal Deposit Insurance Act (FDIA), the FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations as an insured institution, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC, subject to administrative and potential judicial hearing and review processes.

The DIF is funded by assessments on banks and other depository institutions calculated based on average consolidated total assets minus average tangible equity (defined as Tier 1 capital). As required by the Dodd-Frank Act, the FDIC has adopted a large-bank pricing assessment scheme, set a target "designated reserve ratio" (described in more detail below) of 2 percent for the DIF, and established a lower assessment rate schedule when the reserve ratio reaches 1.15 percent and, in lieu of dividends, provides for a lower assessment rate schedule, when the reserve ratio reaches 2 percent and 2.5 percent.

An institution's assessment rate is based on a statistical analysis of financial ratios that estimates the likelihood of failure over a three year period, which considers the institution's weighted average CAMELS component rating, and is subject to further adjustments including related to levels of unsecured debt and brokered deposits (not applicable to banks with less than $10 billion in assets).  At December 31, 2016, total base assessment rates institutions that have been insured for at least five years range from 1.5 to 40 basis points, with rates of 1.5 to 30 basis points applying to banks with less than $10 billion in assets.

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The Dodd-Frank Act transferred to the FDIC increased discretion with regard to managing the required amount of reserves for the DIF, or the "designated reserve ratio." Among other changes, the Dodd-Frank Act (i) raised the minimum designated reserve ratio to 1.35 percent and removed the upper limit on the designated reserve ratio, (ii) requires that the designated reserve ratio reach 1.35 percent by September 2020, and (iii) requires the FDIC to offset the effect on institutions with total consolidated assets of less than $10 billion of raising the designated reserve ratio from 1.15 percent to 1.35 percent – which requirement was met through rules adopted by the FDIC during 2016. On June 30, 2016, the designated reserve ratio rose to 1.17 percent, which triggered three major changes to deposit insurance assessments for the third quarter of 2016: (i) the range of initial assessment rates for all institutions declined from 5 to 35 basis points to 3 to 30 basis points (which are included in the total base assessment rates in the above paragraph); (ii) surcharges equal to an annual rate of 4.5 basis points began for insured depository institutions with total consolidated assets of $10 billion or more; and (iii) the revised assessment method described above was implemented. The FDIA requires that the FDIC consider the appropriate level for the designated reserve ratio on at least an annual basis. The FDIC has adopted a DIF restoration plan to ensure that the fund reserve ratio reaches 1.35 percent by September 30, 2020, as required by the Dodd-Frank Act.

Incentive Compensation. The FRB, the Comptroller and the FDIC have issued regulatory guidance intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking. The FRB will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Company, that are not "large, complex banking organizations." The findings will be included in reports of examination, and deficiencies will be incorporated into the organization's supervisory ratings. Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization's safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.

In addition, in 2016, the SEC and the federal banking agencies proposed rules that prohibit covered financial institutions (including bank holding companies and banks) from establishing or maintaining incentive-based compensation arrangements that encourage inappropriate risk taking by providing covered persons (consisting of senior executive officers and significant risk takers, as defined in the rules) with excessive compensation, fees or benefits that could lead to material financial loss to the financial institution.  The proposed rules outline factors to be considered when analyzing whether compensation is excessive and whether an incentive-based compensation arrangement encourages inappropriate risks that could lead to material loss to the covered financial institution, and establishes minimum requirements that incentive-based compensation arrangements must meet to be considered to not encourage inappropriate risks and to appropriately balance risk and reward.  The proposed rules also impose additional corporate governance requirements on the boards of directors of covered financial institutions and impose additional record-keeping requirements.  The comment period for these proposed rules has closed and a final rule has not yet been published.

Community Reinvestment Act. The Company is subject to the requirements of the CRA, which imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of their local communities, including low and moderate-income neighborhoods, consistent with the safe and sound operation of those institutions. A financial institution's efforts in meeting community credit needs are currently assessed based on specified factors.  These factors also are considered in evaluating mergers, acquisitions and applications to open a branch or facility.

Confidentiality and Required Disclosures of Consumer Information. The Company is subject to various laws and regulations that address the privacy of nonpublic personal financial information of consumers. The Gramm-Leach-Bliley Act and certain regulations issued thereunder protect against the transfer and use by financial institutions of consumer nonpublic personal information. A financial institution must provide to its customers, at the beginning of the customer relationship and annually thereafter, the institution's policies and procedures regarding the handling of customers' nonpublic personal financial information. These privacy provisions generally prohibit a financial institution from providing a customer's personal financial information to unaffiliated third parties unless the institution discloses to the customer that the information may be so provided and the customer is given the opportunity to opt out of such disclosure.  In 2016, the CFPB proposed rules that provide an exception to the requirement to deliver an annual privacy notice if a financial institution only provides nonpublic personal information to unaffiliated third parties under limited exceptions under the Gramm-Leach-Bliley Act and related regulations, and has not changed its policies and practices regarding disclosure of nonpublic personal financial information from those disclosed in the most recent privacy notice provided to the customer.

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The Company is also subject to various laws and regulations that attempt to combat money laundering and terrorist financing. The Bank Secrecy Act requires all financial institutions to, among other things, create a system of controls designed to prevent money laundering and the financing of terrorism, and imposes recordkeeping and reporting requirements. The USA Patriot Act facilitates information sharing among governmental entities and financial institutions for the purpose of combating terrorism and money laundering, and requires financial institutions to establish anti-money laundering programs. The Office of Foreign Assets Control (OFAC), which is a division of the U.S. Department of the Treasury, is responsible for helping to ensure that United States entities do not engage in transactions with "enemies" of the United States, as defined by various Executive Orders and Acts of Congress. If the Bank finds a name of an "enemy" of the United States on any transaction, account or wire transfer that is on an OFAC list, it must freeze such account or place transferred funds into a blocked account, file a suspicious activity report with the Treasury and notify the FBI.

Consumer Laws and Regulations. The Company is also subject to certain consumer laws and regulations that are designed to protect consumers in transactions with banks. While the list set forth herein is not exhaustive, these laws and regulations include the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act and the Fair Housing Act, among others. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions transact business with customers. The Company must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing customer relations.

The CFPB is the federal regulatory agency responsible for implementing, examining and enforcing compliance with federal consumer financial laws for institutions with more than $10 billion of assets and, to a lesser extent, smaller institutions. The CFPB supervises and regulates providers of consumer financial products and services and has rulemaking authority in connection with numerous federal consumer financial protection laws (for example, but not limited to, the Truth in Lending Act and the Real Estate Settlement Procedures Act).  As a smaller institution (i.e., with assets of $10 billion or less), most consumer protection aspects of the Dodd-Frank Act will continue to be applied to the Company by the FRB and to the Bank and Trust by the Comptroller. However, the CFPB may include its own examiners in regulatory examinations by a smaller institution's prudential regulators and may require smaller institutions to comply with certain CFPB reporting requirements. In addition, regulatory positions taken by the CFPB and administrative and legal precedents established by CFPB enforcement activities, including in connection with supervision of larger bank holding companies and banks, could influence how the FRB and Comptroller apply consumer protection laws and regulations to financial institutions that are not directly supervised by the CFPB. The precise effect of the CFPB's consumer protection activities on the Company cannot be forecast.

Mortgage Banking Regulation.  In connection with making mortgage loans, the Bank is subject to rules and regulations that, among other things, establish standards for loan origination, prohibit discrimination, provide for inspections and appraisals of property, require credit reports on prospective borrowers, in some cases, restrict certain loan features and fix maximum interest rates and fees, require the disclosure of certain basic information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the services rendered and require the maintenance and disclosure of information regarding the disposition of mortgage applications based on race, gender, geographical distribution and income level.  The Bank's mortgage origination activities are subject to the Equal Credit Opportunity Act, Truth in Lending Act, Home Mortgage Disclosure Act, Real Estate Settlement Procedures Act, and Home Ownership Equity Protection Act, and the regulations promulgated under these acts, among other additional state and federal laws, regulations and rules.

The Bank's mortgage origination activities are also subject to Regulation Z, which implements the Truth in Lending Act.  Certain provisions of Regulation Z require mortgage lenders to make a reasonable and good faith determination, based on verified and documented information, that a consumer applying for a mortgage loan has a reasonable ability to repay the loan according to its terms.  Alternatively, a  mortgage  lender  can  originate  "qualified mortgages", which are generally defined as mortgage loans without negative amortization, interest-only payments, balloon payments, terms exceeding 30 years, and points and fees paid by a consumer equal to or less than 3% of the total loan amount. Higher-priced qualified mortgages (e.g., subprime loans) receive a rebuttable presumption of compliance with ability-to-repay rules, and other qualified mortgages (e.g., prime loans) are deemed to comply with the ability-to-repay rules. The Bank does not originate first mortgage loans at this time, and the first mortgages it purchases comply with Regulation Z's "qualified mortgage" rules. The Bank does originate second mortgages, or equity loans, and these loans do not conform to the qualified mortgage criteria but comply with applicable ability-to-repay rules.

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Volcker Rule. The Dodd-Frank Act prohibits bank holding companies and their subsidiary banks from engaging in proprietary trading except in limited circumstances, and places limits on ownership of equity investments in private equity and hedge funds (the Volcker Rule). The Company believes that its financial condition and its operations are not and will not be significantly impacted by the Volcker Rule or its implementing regulations.  Smaller banks, with total consolidated assets of $10 billion or less, engaged in modest proprietary trading activities for their own accounts are subject to a simplified compliance program under the final rules.  Several portions of the Volcker Rule remain subject to regulatory rulemaking and legislative activity, including to further delay effectiveness of some provisions of the Volcker Rule.  The Company does not expect that any delays in the effectiveness of a portion of the Volcker Rule will significantly impact its financial condition.

Item 1A. Risk Factors

U.S. and international economic conditions and credit markets pose challenges for the Company and could adversely affect the results of operations, liquidity and financial condition. In recent years, economic growth and business activity in the Company's local markets as well as in the broader national and international economies, has been modest. In addition, uncertainty regarding oil prices, ongoing federal budget negotiations, the implementation of the employer mandate under the Patient Protection and Affordable Care Act, and the level of U.S. debt may present challenges to businesses and have a destabilizing effect on financial markets. Unfavorable or uncertain economic conditions generally could cause a decline in the value of the Company's securities portfolio, and could increase the regulatory scrutiny of financial institutions. Another deterioration of local economic conditions could again lead to declines in real estate values and home sales and increases in the financial stress on borrowers and unemployment rates, all of which could lead to increases in loan delinquencies, problem assets and foreclosures and reductions in loan collateral value. Such a deterioration of local economic conditions could cause the level of loan losses to exceed the level the Company has provided in its allowance for loan losses which, in turn, would reduce the Company's earnings.

Global credit market conditions could return to being disrupted and volatile. Although the Company remains well capitalized and has not suffered any liquidity issues, the cost and availability of funds may be adversely affected by illiquid credit markets. Any future turbulence in the U.S. and international markets and economy may adversely affect the Company's liquidity, financial condition and profitability.

The Company is subject to interest rate risk and variations in interest rates may negatively affect its financial performance. The Company's profitability depends in substantial part on its net interest margin, which is the difference between the rates received on loans and investments and the rates paid for deposits and other sources of funds. The net interest margin depends on many factors that are partly or completely outside of the Company's control, including competition; federal economic, monetary and fiscal policies; and economic conditions. Because of the differences in the maturities and repricing characteristics of interest-earning assets and interest-bearing liabilities, changes in interest rates do not produce equivalent changes in interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Accordingly, fluctuations in interest rates could adversely affect the Company's net interest margin and, in turn, its profitability.

In December 2015, the FRB's Federal Open Market Committee (FOMC) raised the target range for the federal funds rate, which is the interest rate at which depository institutions lend reserve balances to other depository institutions overnight, to 0.25%-0.50%, which was the first change since the target range was lowered to 0%-0.25% in 2008. In December 2016, the FOMC again raised its target range by 25 basis points, to 0.50%-0.75%. At the time of this writing, the FOMC is expected to raise rates three times in 2017. Despite these projected increases, the FOMC's monetary policy remains accommodative, and the overall low interest rate environment is expected to continue in 2017. Continued low interest rates could put further pressure on the yields generated by the Company's loan portfolio and on the Company's net interest margin. At December 31, 2016, based on scheduled maturities only, the Company's balance sheet was liability sensitive at the one-year time frame and, as a result, its net interest margin will tend to decrease in a rising interest rate environment and increase in a declining interest rate environment. However, when using decay rates to simulate maturities for non-maturing deposits, the Company's balance sheet as of December 31, 2016 is asset sensitive at the one-year time frame. When the Company is asset sensitive, the net interest margin should rise if rates rise and should fall if rates fall. For additional details, See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Interest Sensitivity" in Item 7 of this report on Form 10-K.

In addition, any substantial and prolonged increase in market interest rates could reduce the Company's customers' desire to borrow money or adversely affect their ability to repay their outstanding loans by increasing their credit costs. Interest rate changes could also affect the fair value of the Company's financial assets and liabilities. Accordingly, changes in levels of market interest rates could materially and adversely affect the Company's net interest margin, asset quality, loan origination volume, business, financial condition, results of operations and cash flows.

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System failures, interruptions, breaches of security, or the failure of a third-party provider to perform its obligations could adversely impact the Company's business operations and financial condition. Communications and information systems are essential to the conduct of the Company's businesses, as such systems are used to manage customer relationships, general ledger, deposits and loans. While the Company has established policies and procedures to prevent or limit the impact of systems failures, interruptions and security breaches, the Company's information, security, and other systems may stop operating properly or become disabled or damaged as a result of a number of factors, including events beyond the Company's control, such as sudden increases in customer transaction volume, electrical or telecommunications outages, natural disasters, and cyber-attacks. Information security risks have increased in recent years and hackers, activists and other external parties have become more technically sophisticated and well-resourced. These parties use a variety of methods to attempt to breach security systems and access the data of financial services institutions and their customers.  The Company may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. In addition, any compromise of the security systems could deter customers from using the Bank's website and online banking service, both of which involve the transmission of confidential information. The security and authentication precautions imposed by the Company and the Bank may not protect the systems from compromises or breaches of security, which would adversely affect the Company's results of operations and financial condition.

In addition, the Company outsources certain data processing to certain third-party providers. Accordingly, the Company's operations are exposed to risk that these third-party providers will not perform in accordance with the contracted arrangements under service agreements. If the third-party providers encounter difficulties, or if the Company has difficulty in communicating with them, the Company's ability to adequately process and account for customer transactions could be affected, and the Company's business operations could be adversely impacted. Further, a breach of a third-party provider's technology may cause loss to the Company's customers. Replacing these third-party providers could also create significant delay and expense. Threats to information security also exist in the processing of customer information through various other vendors and their personnel.

The occurrence of any systems failure, interruption or breach of security, or the failure of a third-party provider to perform its obligations, could expose the Company to risks of data loss or data misuse, could result in violations of applicable privacy and other laws, could damage the Company's reputation and result in a loss of customers and business, could subject it to additional regulatory scrutiny or could expose it to civil litigation, possible financial liability and costly response measures. Any of these occurrences could have a material adverse effect on the Company's financial condition and results of operations.

The Company's accounting estimates and risk management processes rely on analytical and forecasting models.Processes that management uses to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on the Company's earnings performance and liquidity, depend upon the use of analytical and forecasting models. These models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are accurate, the models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation.

If the models that management uses for interest rate risk and asset-liability management are inadequate, the Company may incur increased or unexpected losses upon changes in market interest rates or other market measures and may be unable to maintain sufficient liquidity. If the models that management uses to measure the fair value of financial instruments are inadequate, the fair value of such financial instruments may fluctuate unexpectedly or may not accurately reflect what the Company could realize upon sale or settlement of such financial instruments. Any such failure in management's analytical or forecasting models could have a material adverse effect on the Company's business, financial condition and results of operations.

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Weaknesses in the commercial real estate markets could negatively affect the Company's financial performance due to the Company's concentration in commercial real estate loans. At December 31, 2016, the Company had $308.5 million, or 51.09%, of total loans concentrated in commercial real estate, which includes, for purposes of this concentration, all construction loans, loans secured by multifamily residential properties, loans secured by farmland and loans secured by nonfarm, nonresidential properties. Commercial real estate loans expose the Company to a greater risk of loss than residential real estate and consumer loans. Commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to residential real estate loans. Consequently, an adverse development with respect to one commercial real estate loan or credit relationship exposes the Company to a significantly greater risk of loss compared to an adverse development with respect to one residential real estate loan. Commercial real estate loans carry risks associated with the successful operation of a business if the properties are owner occupied. If the properties are non-owner occupied, the repayment of these loans may be dependent upon the profitability and cash flow from rent receipts. Repayment of commercial real estate loans may, to a greater extent than residential real estate loans, be subject to adverse conditions in the real estate market or economy. Weak economic or market conditions may impair a borrower's business operations, slow the execution of new leases and lead to turnover in existing leases. The combination of these factors could result in deterioration in value of some of the Company's loans. The deterioration of one or more of the Company's significant commercial real estate loans could cause a significant increase in nonaccrual loans. An increase in nonaccrual loans could result in a loss of interest income from those loans, an increase in the provision for loan losses, and an increase in loan charge-offs, all of which could have a material adverse effect on the Company's financial performance.

The Company's profitability depends significantly on local economic conditions and changes in the federal government's military or defense spending may negatively affect the local economy. The Company's success depends primarily on the general economic conditions of the markets in which the Company operates. Unlike larger financial institutions that are more geographically diversified, the Company provides banking and financial services to customers primarily in the Hampton Roads MSA. The local economic conditions in this area have a significant impact on the demand for loans, the ability of the borrowers to repay these loans and the value of the collateral securing these loans. A significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, unemployment or other factors beyond the Company's control could impact these local economic conditions.

In addition, Hampton Roads is home to one of the largest military installations in the world and one of the largest concentrations of Department of Defense personnel in the United States. Some of the Company's customers may be particularly sensitive to the level of federal government spending on the military or on defense-related products. Federal spending is affected by numerous factors, including macroeconomic conditions, presidential administration priorities, and the ability of the federal government to enact relevant appropriations bills and other legislation. Any of these factors could result in future cuts to military or defense spending or increased uncertainty about federal spending, which could have a severe negative impact on individuals and businesses in the Company's primary service area. Any related increase in unemployment rates or reduction in business development activities in the Company's primary service area could lead to reductions in loan demand, increases in loan delinquencies, problem assets and foreclosures and reductions in loan collateral value, which could have a material adverse effect on the Company's operating results and financial condition.

The Company is subject to losses resulting from fraudulent and negligent acts on the part of loan applicants, correspondents or other third parties. The Company relies heavily upon information supplied by third parties, including the information contained in credit applications, employment and income documentation, property appraisals, title information, and equipment pricing and valuation, in deciding which loans to originate, as well as in establishing the terms of those loans. If any of the information upon which the Company relies during the loan approval process is misrepresented, either fraudulently or inadvertently, and the misrepresentation is not detected prior to asset funding, the value of the asset may be significantly lower than expected, the Company may fund a loan that it would not have otherwise funded or the Company may fund a loan on terms that it would not have otherwise extended. Whether a misrepresentation is made by the applicant or by another third party, the Company generally bears the risk of loss associated with the misrepresentation. In addition, a loan subject to a material misrepresentation is typically unsellable or subject to repurchase if it is sold prior to detection of the misrepresentation. The sources of the misrepresentation are often difficult to locate, and it may be difficult to recover any monetary loss the Company may suffer.

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Declines in loans outstanding could have a material adverse impact on the Company's operating results and financial condition. Growing and diversifying the loan portfolio is part of the Company's strategic initiative.  If quality loan demand does not continue to increase and the Company's loan portfolio begins to decline, the Company expects that excess liquidity will be invested in marketable securities. Because loans typically yield higher returns than the Company's securities portfolio, a shift towards investments in the Company's asset mix would likely result in an overall reduction in net interest income and the net interest margin. The principal source of earnings for the Company is net interest income, and as discussed above, the Company's net interest margin is a major determinant of the Company's profitability. The effects of a reduction in net interest income and the net interest margin may be exacerbated by the intense competition for quality loans in the Company's primary service area and by rate reductions on loans currently held in the portfolio. As a result, a reduction in loans could have a material adverse effect on the Company's operating results and financial condition.

The Company's substantial dependence on dividends from its subsidiaries may prevent it from paying dividends to its stockholders and adversely affect its business, results of operations or financial condition. The Company is a separate legal entity from its subsidiaries and does not have significant operations or revenues of its own. The Company substantially depends on dividends from its subsidiaries to pay dividends to stockholders and to pay its operating expenses. The availability of dividends from the subsidiaries is limited by various statutes and regulations. It is possible, depending upon the financial condition of the Company and other factors, that the Comptroller could assert that payment of dividends by the subsidiaries is an unsafe or unsound practice. In the event the subsidiaries are unable to pay dividends to the Company, the Company may not be able to pay dividends on the Company's common stock, service debt or pay operating expenses. Consequently, the inability to receive dividends from the subsidiaries could adversely affect the Company's financial condition, results of operations, cash flows and limit stockholders' return, if any, to capital appreciation.

The small-to-medium size businesses the Company targets may have fewer financial resources to weather a downturn in the economy, which could materially harm operating results. The Company targets individual and small-to-medium size business customers. Small-to-medium size businesses frequently have smaller market shares than their competitors, may be more vulnerable to economic downturns, often need substantial additional capital to expand and compete and may experience significant volatility in operating results. Any one or more of these factors may impair a borrower's ability to repay a loan. In addition, the success of a small-to-medium size business often depends on the management talents and efforts of one person or a small group of persons, and the death, disability or resignation of one or more of these persons could have a material adverse impact on the business and its ability to repay a loan. Economic downturns and other events that negatively impact businesses in the Company's primary service area could have a proportionately greater impact on small-to-medium-size businesses and accordingly could cause the Company to incur substantial credit losses that could negatively affect its results of operations and financial condition.

The ownership of foreclosed property exposes the Company to significant costs, some of which are uncertain. When the Company has to foreclose upon real property held as collateral, the Company is exposed to the risks inherent in the ownership of real estate. The amount that the Company may realize after a loan default is dependent upon factors outside of the Company's control, including environmental cleanup liability, especially with regard to non-residential real estate, neighborhood values, real estate tax rates, operating or maintenance expenses of the foreclosed properties, and supply of and demand for properties. Significant costs associated with the ownership of real estate may exceed the income earned from such real estate, and the Company may have to advance funds to protect its investment or dispose of the real estate at a loss.  These factors may materially and adversely affect the Company's business, financial condition, cash flows and result of operations.

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The Company and its subsidiaries are subject to extensive regulation which could adversely affect them. The Company is subject to extensive regulation by federal, state and local governmental authorities and is subject to various laws and judicial and administrative decisions imposing requirements and restrictions on part or all of operations, including those referenced above. Regulations adopted by these agencies, which are generally intended to protect depositors and customers rather than to benefit stockholders, govern a comprehensive range of matters including, without limitation, ownership and control of the Company's shares, acquisition of other companies and businesses, permissible activities that the Company and its subsidiaries may engage in, maintenance of adequate capital levels and other aspects of operations. These regulations could limit the Company's growth by restricting certain of its activities. The laws, rules and regulations applicable to the Company are subject to regular modification and change. Regulatory changes could subject the Company to more demanding regulatory compliance requirements which could affect the Company in unpredictable and adverse ways. Such changes could subject the Company to additional costs, limit the types of financial services and products it may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things. Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or damage to the Company's reputation, which could have a material adverse effect on the Company's business, financial condition and results of operations. Legislation and regulatory initiatives containing wide-ranging proposals for altering the structure, regulation and competitive relationship of financial institutions are introduced regularly. The Company cannot predict in what form or whether a proposed statute or regulation will be adopted or the extent to which such adoption may affect its business.

Market risk affects the earnings of Trust. The fee structure of Trust is generally based upon the market value of accounts under administration. Most of these accounts are invested in equities of publicly traded companies and debt obligations of both government agencies and publicly traded companies. As such, fluctuations in the equity and debt markets in general have had a direct impact upon the earnings of Trust.

Compliance with the CFPB regulations aimed at the mortgage banking industry may require substantial changes to mortgage lending systems and processes that may adversely affect income from the Company's residential mortgage activities. The CFPB has finalized a number of significant rules that impact nearly every aspect of the lifecycle of a residential real estate loan. Among other things, the rules adopted by the CFPB require mortgage lenders either to make a reasonable and good faith determination, based on verified and documented information, that a consumer applying for a mortgage loan has a reasonable ability to repay the loan according to its terms, or to originate "qualified mortgages." In June 2015, the CFPB issued rules that combined disclosures previously established by the Truth in Lending Act and the Real Estate Settlement Procedures Act into a single disclosure referred to as the TILA-RESPA Integrated Disclosure, or TRID. TRID applies to most closed-end mortgage loans and overhauls the manner in which mortgage loan origination disclosures are made.

Although the Company does not originate or sell first mortgage loans at this time, it may elect to do so in the future, and TRID does apply to the mortgages it purchases. TRID also applies to second mortgages originated by the Company (but not to equity lines of credit). During 2015, the Company made significant changes to its residential real estate business, including investments in technology and employee training. These CFPB rules, in addition to other previously-issued and to-be-issued CFPB regulations, could materially affect the Company's ability to originate and sell residential real estate loans or limit the terms on which the Company may offer products, which could adversely affect the Company's financial condition and results of operations.

The Basel III Final Rules require higher levels of capital and liquidity, which could adversely affect the Company's net income and return on equity. The capital adequacy and liquidity guidelines applicable to the Company and the Bank under the Basel III Final Rules began to be phased in beginning in 2015. The Basel III Final Rules, when fully phased in, will require the Company and the Bank to maintain substantially more capital as a result of higher minimum capital levels and more demanding regulatory capital risk-weightings and calculations. The changes to the standardized calculations of risk-weighted assets are complex and may create enormous compliance burdens for the Company and the Bank. The Basel III Final Rules will require the Company and the Bank to substantially change the manner in which they collect and report information to calculate risk-weighted assets, and may increase dramatically risk-weighted assets as a result of applying higher risk weightings to many types of loans and securities. As a result, the Company and the Bank may be forced to limit originations of certain types of commercial and mortgage loans, thereby reducing the amount of credit available to borrowers and limiting opportunities to earn interest income from the loan portfolio, which may have a detrimental impact on the Company's net income.

If the Company were to require additional capital as a result of the Basel III Final Rules, it could be required to access the capital markets on short notice and in relatively weak economic conditions, which could result in raising capital that significantly dilutes existing stockholders. Additionally, the Company may be forced to limit banking operations and activities, and growth of loan portfolios and interest income, to focus on retention of earnings to improve capital levels. Higher capital levels may also lower the Company's return on equity.

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The Company is dependent on key personnel and the loss of one or more of those key personnel could harm its business. The banking business in Virginia, and in the Company's primary service area in the Hampton Roads MSA, is highly competitive and dominated by a relatively small number of large banks. Competition for qualified employees and personnel in the banking industry is intense and there are a limited number of qualified persons with knowledge of and experience in the Virginia community banking industry. The Company's success depends to a significant degree upon its ability to attract and retain qualified management, loan origination, administrative, marketing and technical personnel and upon the continued contributions of and customer relationships developed by management and personnel. In particular, the Company's success is highly dependent upon the capabilities of its senior executive management. The Company believes that its management team, comprised of individuals who have worked in the banking industry for many years, is integral to implementing the Company's business plan. The Company has not entered into employment agreements with any of its executive management employees, and the loss of the services of one or more of them could harm the Company's business.

The allowance for loan losses may not be adequate to cover actual losses. A significant source of risk arises from the possibility that losses could be sustained because borrowers, guarantors, and related parties may fail to perform in accordance with the terms of their loans and leases. There is no precise method to predict loan losses. Like all financial institutions, the Company maintains an allowance for loan losses to provide for loan defaults and non-performance. Accounting measurements related to impairment and the allowance for loan losses require significant estimates that are subject to uncertainty and changes relating to new information and changing circumstances.  The allowance for loan losses may not be adequate to cover actual loan losses. In addition, future provisions for loan losses could materially and adversely affect, and have in recent years materially and adversely affected, the Company's operating results.

The allowance for loan losses is determined by analyzing historical loan losses, current trends in delinquencies and charge-offs, plans for problem loan resolutions, changes in the size and composition of the loan portfolio and industry information. Also included in management's estimates for loan losses are considerations with respect to the impact of economic events, the outcome of which are uncertain. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and judgment. The amount of future losses is susceptible to changes in economic and other conditions, including changes in interest rates, that may be beyond the Company's control and these future losses may exceed current estimates. If management's assumptions prove to be incorrect or if the Company experiences significant loan losses in future periods, the current level of the allowance for loan losses may not be adequate to cover actual loan losses and adjustments may be necessary. In addition, federal regulatory agencies, as an integral part of their examination process, review the Company's loans and allowance for loan losses and may require an increase in the allowance for loan losses or recognition of additional loan charge-offs, based on judgments different from those of management. While management believes that the Company's allowance is adequate to cover current losses, the Company cannot assure investors that it will not need to increase the allowance or that regulators will not require the allowance to be increased. Either of these occurrences could materially and adversely affect earnings and profitability.

The Company may be adversely affected by changes in government monetary policy. As a bank holding company, the Company's business is affected by the monetary policies established by the FRB, which regulates the national money supply in order to mitigate recessionary and inflationary pressures. In setting its policy, the FRB may utilize techniques such as the following:

· Engaging in open market transactions in U.S. Government securities;

· Setting the discount rate on member bank borrowings; and

· Determining reserve requirements.

These techniques determine, to a significant extent, the Company's cost of funds for lending and investing. These techniques, all of which are outside the Company's control, may have an adverse effect on deposit levels, net interest margin, loan demand or the Company's business and operations.

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The Company's future success depends on its ability to compete effectively in the highly competitive financial services industry. The Company faces substantial competition in all phases of its operations from a variety of different competitors. Growth and success depends on the Company's ability to compete effectively in this highly competitive financial services environment. Many competitors offer products and services that are not offered by the Company, and many have substantially greater resources, name recognition and market presence that benefit them in attracting business. In addition, larger competitors may be able to price loans and deposits more aggressively and may have larger lending limits that would allow them to serve the credit needs of larger customers. In addition, financial technology start-ups are emerging in key areas of banking.  Some of the financial services organizations with which the Company competes are not subject to the same degree of regulation as is imposed on bank holding companies and federally insured national banks, and may have broader geographic services areas and lower cost structures.  As a result, these non-bank competitors have certain advantages over the Company in accessing funding and in providing various services. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Failure to compete effectively to attract new and retain current customers in the Company's markets could cause it to lose market share, slow its growth rate and may have an adverse effect on its financial condition and results of operations.

The Company may not be able to compete effectively without the appropriate use of current technology. The use of technology in the financial services market, including the banking industry, evolves frequently. The Company may be unable to attract and maintain banking relationships with certain customers if it does not offer appropriate technology-driven products and services. In addition to better serving customers, the effective use of technology may increase efficiency and reduce costs. The Company may not be able to effectively implement new technology-driven products or services or be successful in marketing these products and services to its customers. As a result, the Company's ability to compete effectively may be impaired, which could lead to a material adverse effect on the Company's financial condition and results of operations.

Negative public opinion could damage the Company's reputation and adversely impact the Company's business, financial condition and results of operation. Reputation risk, or the risk to the Company's business, financial condition and results of operation from negative public opinion, is inherent in the financial services industry. Negative public opinion can result from actual or alleged conduct in any number of activities, including lending or foreclosure practices, regulatory compliance, corporate governance and sharing or inadequately protecting customer information, and from actions taken by government regulators and community organizations in response to those activities. Negative public opinion could adversely affect the Company's ability to keep and attract customers and employees, could expose it to litigation and regulatory action, and could adversely affect its access to the capital markets. Damage to the Company's reputation could adversely affect deposits and loans and otherwise negatively affect the Company's business, financial condition and results of operation.

Deposit insurance premiums could increase in the future, which may adversely affect future financial performance. The FDIC insures deposits at FDIC insured financial institutions, including the Bank. The FDIC charges insured financial institutions premiums to maintain the DIF at a certain level. Economic conditions from 2008 to 2011 increased the rate of bank failures and expectations for further bank failures, requiring the FDIC to make payments for insured deposits from the DIF. Although the DIF has since been replenished, a similar economic downturn in the future could require measures similar to those implemented during the last financial crisis, such as special assessments or required prepayments of insurance premiums. If the FDIC takes action to replenish the DIF, or if the Bank's asset size increases, the Bank's FDIC insurance premiums could increase, which could have an adverse effect on the Company's results of operations.

The Company may need to raise additional capital in the future and such capital may not be available when needed or at all. The Company may need to raise additional capital in the future to provide it with sufficient capital resources and liquidity to meet its commitments and business needs, particularly if its asset quality or earnings were to deteriorate significantly. Economic conditions and the loss of confidence in financial institutions may increase the Company's cost of funding and limit access to certain customary sources of capital, including inter-bank borrowings, repurchase agreements and borrowings from the Federal Reserve Bank's discount window. The Company's ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of the Company's control, and the Company's financial performance.

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The Company cannot assure that such capital will be available on acceptable terms or at all. Any occurrence that may limit the Company's access to the capital markets, such as a decline in the confidence of debt purchasers, depositors of the Bank or counterparties participating in the capital markets, or a downgrade of the parent company or the Bank's ratings, may adversely affect the Company's capital costs and its ability to raise capital and, in turn, its liquidity. Moreover, if the Company needs to raise capital in the future, it may have to do so when many other financial institutions are also seeking to raise capital and would have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on the Company's liquidity, business, financial condition and results of operations.

The Company and its subsidiaries are subject to operational risk, which could adversely affect business, financial condition and results of operation. The Company and its subsidiaries, like all businesses, are subject to operational risk, including the risk of loss resulting from human error, fraud or unauthorized transactions due to inadequate or failed internal processes and systems, and external events that are wholly or partially beyond the Company's control (including, for example, sudden increases in customer transaction volume, electrical or telecommunications outages, natural disasters, and cyber-attacks). Operational risk also encompasses compliance (legal) risk, which is the risk of loss from violations of, or noncompliance with, laws, rules, regulations, prescribed practices or ethical standards. The Company and its subsidiaries have established a system of internal controls to address these risks, but there are inherent limitations to such risk management strategies as there may exist, or develop in the future, risks that are not anticipated, identified or monitored. Any losses resulting from operational risk could take the form of explicit charges, increased operational costs, litigation costs, harm to reputation or forgone opportunities, loss of customer business, or the unauthorized release, misuse, loss or destruction of proprietary information, any and all of which could have a material adverse effect on the Company's business, financial condition and results of operations.

The Company's directors and executive officers own a significant portion of the Company's common stock and can exert significant influence over its business and corporate affairs. The Company's directors and executive officers, as a group, beneficially owned 29.90% of the Company's common stock as of June 30, 2016. Consequently, if they vote their shares in concert, they can significantly influence the outcome of matters submitted to the Company's stockholders for approval, including the election of directors. The interests of the Company's directors and executive officers may conflict with the interests of other holders of the Company's common stock, and the Company's directors and executive officers may take actions affecting the Company with which other holders of the Company's common stock disagree.

Future sales of the Company's common stock by stockholders or the perception that those sales could occur may cause the common stock price to decline. Although the Company's common stock is listed for trading on the NASDAQ stock market, the trading volume in the common stock may be lower than that of other larger financial institutions. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of the common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which the Company has no control. Given the potential for lower relative trading volume in the common stock, significant sales of the common stock in the public market, or the perception that those sales may occur, could cause the trading price of the Company's common stock to decline or to be lower than it otherwise might be in the absence of these sales or perceptions.

Future issuances of the Company's common stock could adversely affect the market price of the common stock and could be dilutive. The Company may issue additional shares of common stock or securities that are convertible into or exchangeable for, or that represent the right to receive, shares of the Company's common stock. Issuances of a substantial number of shares of common stock, or the expectation that such issuances might occur, could materially adversely affect the market price of the common stock and could be dilutive to stockholders. Any decision the Company makes to issue common stock in the future will depend on market conditions and other factors, and the Company cannot predict or estimate the amount, timing, or nature of possible future issuances of common stock. Accordingly, holders of the Company's common stock bear the risk that future issuances of securities will reduce the market price of the common stock and dilute their stock holdings in the Company.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of December 31, 2016, the Company owned its main office, which includes a branch, located in Hampton, Virginia; the corporate headquarters, which includes a branch; six office buildings; and 12 branches. All of these are owned directly and free of any encumbrances. One of the office buildings is currently listed for sale and held in other real estate owned.

- 15 -

The land at the Fort Monroe branch is leased by the Company under an agreement that expires in June 2017. Two of the remaining three branches are leased from unrelated parties. The Crown Center branch is leased from Crown Center Associates, LLC, which is indirectly owned by Michael Glasser, a member of the Company's Board of Directors. These three branch leases have renewal options that expire anywhere within one to eight years from December 31, 2016.

For more information concerning the commitments under current leasing agreements, see Note 6 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this report on Form 10-K.

Item 3. Legal Proceedings

Neither the Company nor any of its subsidiaries is a party to any material pending legal proceedings before any court, administrative agency, or other tribunal.

Item 4. Mine Safety Disclosures

None.

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EXECUTIVE OFFICERS OF THE REGISTRANT

Name (Age) And Present Position	Served in Current Position Since	Principal Occupation During Past Five Years
Robert F. Shuford, Sr. (79)
Chairman, President & Chief Executive Officer Old Point Financial Corporation	1965	Chairman of the Board, President & Chief Executive Officer of the Company Chairman of the Board of the Bank
Robert F. Shuford, Jr. (52)
Executive Vice President/Bank Old Point Financial Corporation	2015	Executive Vice President/Bank of the Company since 2015; Chief Operating Officer & Senior Vice President/Operations of the Company from 2003 to 2015 President & Chief Executive Officer of the Bank since 2015; Senior Executive Vice President & Chief Operating Officer of the Bank from 2012 to 2015; Executive Vice President & Chief Operating Officer of the Bank from 2003 to 2012
Laurie D. Grabow (59)
Chief Financial Officer & Senior Vice President/Finance Old Point Financial Corporation	1999	Chief Financial Officer & Senior Vice President/Finance of the Company Chief Financial Officer & Executive Vice President of the Bank
Eugene M. Jordan, II (62)
Secretary to the Board & Executive Vice President/Trust Old Point Financial Corporation	2003	Secretary to the Board & Executive Vice President/Trust of the Company since 2015; Executive Vice President/ Trust of the Company from 2003 to 2015 President and Chief Executive Officer of Trust since 2003
Joseph R. Witt (56)
Chief Business Development Officer & Senior Vice President Old Point Financial Corporation	2008	Chief Business Development Officer & Senior Vice President of the Company since 2015; Chief Administrative Officer & Senior Vice President/Administration of the Company from 2012 to 2015; Senior Vice President/ Corporate Banking/Human Resources of the Company from 2010 to 2012; Senior Vice President/Corporate Banking of  the Company from 2008 to 2010 Senior Executive Vice President & Chief Business Development Officer of the Bank since 2015; Senior Executive Vice President & Chief Administrative Officer of the Bank from 2012 to 2015; Executive Vice President/ Corporate Banking & Human Resources Director of the Bank from 2010 to 2012
Donald S. Buckless (52)
Chief Lending Officer & Senior Vice President Old Point Financial Corporation	2016	Chief Lending Officer & Senior Vice President of the Company since 2016 Chief Lending Officer & Executive Vice President of the Bank since 2016; Chief Lending Officer & Senior Vice  President of the Bank from 2015 to 2016; Senior Vice  President/Commercial Lending Officer of the Bank from  May 2012 to 2015; Senior Vice President of SunTrust from December 2000 to May 2012

- 17 -

Part II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The common stock of the Company is quoted on the NASDAQ Capital Market under the symbol "OPOF". The approximate number of stockholders of record as of March 10, 2017 was 1,184. On that date, the closing price of the Company's common stock on the NASDAQ Capital Market was $28.32. The range of high and low sale prices and dividends paid per share of the Company's common stock for each quarter during 2016 and 2015 is presented in Item 7 of this report on Form 10-K under "Capital Resources" and is incorporated herein by reference. Additional information related to restrictions on funds available for dividend declaration can be found in Note 17 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this report on Form 10-K.

On January 12, 2010, the Company authorized a program to repurchase during any given calendar year up to an aggregate of 5 percent of the shares of the Company's common stock outstanding as of January 1 of that calendar year. The Company did not repurchase any shares of the Company's common stock under this plan during 2016. There is currently no stated expiration date for this program.

Pursuant to the Company's stock option plans, participants may exercise stock options by surrendering shares of the Company's common stock that the participants already own. Shares surrendered by participants of these plans are repurchased at current market value pursuant to the terms of the applicable stock options. No such repurchases occurred during 2016.

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Item 6. Selected Financial Data

The following table summarizes the Company's performance for the past five years.

SELECTED FINANCIAL HIGHLIGHTS
Years ended December 31,	2016			2015			2014			2013			2012
(dollars in thousands except per share data)
RESULTS OF OPERATIONS
Interest income	$	29,826		$	30,295		$	30,289		$	29,823		$	32,580
Interest expense		2,574			3,632			3,849			4,680			5,774
Net interest income		27,252			26,663			26,440			25,143			26,806
Provision for loan losses		1,930			1,025			600			1,300			2,400
Net interest income after provision for loan losses		25,322			25,638			25,840			23,843			24,406
Net gains (losses) on available-for-sale securities		522			76			2			(26	)		2,313
Noninterest income		12,944			13,060			12,642			12,799			12,646
Noninterest expenses		34,831			35,086			34,172			33,105			34,183
Income before income taxes		3,957			3,688			4,312			3,511			5,182
Income tax expense		160			54			196			348			995
Net income	$	3,797		$	3,634		$	4,116		$	3,163		$	4,187
FINANCIAL CONDITION
Total assets	$	902,966		$	896,787		$	876,280		$	864,288		$	907,499
Total deposits	$	784,502		$	746,471		$	716,654		$	725,405		$	753,816
Total loans	$	603,882		$	568,475		$	535,994		$	500,699		$	471,133
Stockholders' equity	$	93,990		$	93,176		$	88,497		$	80,761		$	89,300
Average assets	$	886,058		$	884,386		$	869,965		$	881,378		$	869,436
Average equity	$	95,280		$	90,433		$	85,550		$	84,695		$	87,912
PERTINENT RATIOS
Return on average assets		0.43	%		0.41	%		0.47	%		0.36	%		0.48	%
Return on average equity		3.99	%		4.02	%		4.81	%		3.73	%		4.76	%
Dividends paid as a percent of net income		52.23	%		46.40	%		31.32	%		34.49	%		23.67	%
Average equity as a percent of average assets		10.75	%		10.23	%		9.83	%		9.61	%		10.11	%
PER SHARE DATA
Basic earnings per share	$	0.77		$	0.73		$	0.83		$	0.64		$	0.84
Diluted earnings per share	$	0.77		$	0.73		$	0.83		$	0.64		$	0.84
Cash dividends declared	$	0.40		$	0.34		$	0.26		$	0.22		$	0.20
Book value	$	18.94		$	18.79		$	17.85		$	16.29		$	18.01
GROWTH RATES
Year-end assets		0.69	%		2.34	%		1.39	%		-4.76	%		6.83	%
Year-end deposits		5.09	%		4.16	%		-1.21	%		-3.77	%		9.11	%
Year-end loans		6.23	%		6.06	%		7.05	%		6.28	%		-9.45	%
Year-end equity		0.87	%		5.29	%		9.58	%		-9.56	%		4.00	%
Average assets		0.19	%		1.66	%		-1.29	%		1.37	%		1.83	%
Average equity		5.36	%		5.71	%		1.01	%		-3.66	%		5.51	%
Net income		4.49	%		-11.71	%		30.13	%		-24.46	%		27.26	%
Cash dividends declared		17.65	%		30.77	%		18.18	%		10.00	%		0.00	%
Book value		0.80	%		5.27	%		9.58	%		-9.55	%		4.04	%

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist readers in understanding and evaluating the financial condition, changes in financial condition and the results of operations of the Company, consisting of the parent company (the Parent) and its wholly-owned subsidiaries, the Bank and Trust. This discussion should be read in conjunction with the Consolidated Financial Statements and other financial information contained elsewhere in this report.

Caution About Forward-Looking Statements

In addition to historical information, this report may contain forward-looking statements. For this purpose, any statement that is not a statement of historical fact may be deemed to be a forward-looking statement. These forward-looking statements may include, but are not limited to, statements regarding profitability, including the focus on reducing time deposits; the net interest margin; strategies for managing the net interest margin and the expected impact of such efforts; levels and sources of liquidity; the loan portfolio and expected trends in the quality of the loan portfolio; the allowance and provision for loan losses; the effect of a sustained increase in nonperforming assets; the securities portfolio; monetary policy actions of the Federal Open Market Committee; changes in interest rates; interest rate sensitivity; asset quality; levels of net loan charge-offs and nonperforming assets; sales of OREO properties; levels of interest expense; levels and components of noninterest income and noninterest expense; lease expense; income taxes; expected impact of efforts to restructure the balance sheet; expected yields on the loan and securities portfolios; expected rates on interest-bearing liabilities; expected timing of and expense in connection with the anticipated termination of the pension plan; expected timing of and effect of the purchase of the outstanding interest in Old Point Mortgage, LLC; market risk; business and growth strategies; investment strategy; and financial and other goals. Forward-looking statements often use words such as "believes," "expects," "plans," "may," "will," "should," "projects," "contemplates," "anticipates," "forecasts," "intends" or other words of similar meaning. These statements can also be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements.

There are many factors that could have a material adverse effect on the operations and future prospects of the Company including, but not limited to, changes in interest rates and yields; general economic and general business conditions, including unemployment levels; uncertainty over future federal spending or the budget priorities of the new presidential administration, particularly in connection with the Department of Defense, on the Company's service area; effects of the transfer of the securities portfolio from held-to-maturity securities to available-for-sale securities; the quality or composition of the loan or securities portfolios; changes in the volume and mix of interest-earning assets and interest-bearing liabilities; the effects of management's investment strategy and strategy to manage the net interest margin; the adequacy of the Company's credit quality review processes; the level of nonperforming assets and related charge-offs and recoveries; turnover times experienced by the mortgage companies to which the Company has extended warehouse lines of credit; the performance of the Company's re-opened dealer lending program; the federal government's guarantee of repayment of student loans purchased by the Company; the ability of the Company to diversify its sources of noninterest income; new incentive structure for securities brokerage activities; the local real estate market; volatility and disruption in national and international financial markets; government intervention in the U.S. financial system; application of the Basel III capital standards to the Company and its subsidiaries; FDIC premiums and/or assessments; demand for loan and other banking products and financial services in the Company's primary service area; levels of noninterest income and expense; deposit flows; competition; the use of inaccurate assumptions in management's modeling systems; technology; any interruption or breach of security in the Company's information systems or those of the Company's third party vendors or other service providers; reliance on third parties for key services; adequacy of the allowance for loan losses; and changes in accounting principles, policies and guidelines. The Company could also be adversely affected by monetary and fiscal policies of the U.S. Government, as well as any regulations or programs implemented pursuant to the Dodd-Frank Act or other legislation and policies of the Comptroller, U.S. Treasury and the Federal Reserve Board.

These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made. In addition, past results of operations are not necessarily indicative of future results.

Executive Overview

Description of Operations

Headquartered in Hampton, Virginia, the Company is the parent company of Trust and the Bank. Trust is a wealth management services provider. The Bank offers a complete line of consumer, mortgage and business banking services, including loan, deposit, and cash management services to individual and commercial customers. The Bank is an independent community bank and has 18 branches throughout the Hampton Roads localities of Chesapeake, Hampton, Isle of Wight County, Newport News, Norfolk, Virginia Beach, Williamsburg/James City County and York County.

- 20 -

Management Initiatives in 2016

Management's two main 2016 initiatives were to grow the loan portfolio and reduce the Company's noninterest expense. Management believes substantial progress was made with respect to both initiatives. The loan portfolio grew by $34.9 million when comparing net loans on December 31, 2015 to December 31, 2016, while noninterest expense was $255 thousand lower in 2016 than in 2015. Noninterest expense declined despite a $391 thousand prepayment penalty for the early payoff of the Company's single most expensive source of funding. This early payoff is discussed in more detail below.

Primary Financial Data for 2016

In 2016, the Company's net income increased $163 thousand to $3.8 million, as compared to net income of $3.6 million in 2015,  or an increase of 4.49%. The increase in net income was due to higher net interest income, higher noninterest income, and lower noninterest expense. Net interest income increased mainly due to reduced interest expense on Federal Home Loan Bank advances, while the increase in noninterest income was primarily the result of gains on sales of available-for-sale securities. Decreases in salaries and employee benefits and losses on other real estate owned, partially offset by increases in legal and audit expenses, were the main drivers of the decline in noninterest expense.

Assets as of December 31, 2016 were $903.0 million, an increase of $6.2 million or 0.69% compared to assets as of December 31, 2015. During 2016, the Company continued the loan growth seen in prior years, funding this growth mainly from increases in low-cost deposits and cash flows from the securities portfolio. Net loans grew $34.9 million, or 6.22%, over the year, while low-cost deposits increased $36.6 million, or 6.83%, and securities declined $14.8 million, or 6.92%. In years prior to 2013, the Company experienced a lack of quality loan demand in its market area and invested excess funds in securities that could be readily liquidated as the Company waited for loan demand to recover. This recovery began in the second half of 2013 and continued through 2016.

Critical Accounting Estimates

The accounting and reporting policies of the Company are in accordance with U.S. generally accepted accounting principles (GAAP) and conform to general practices within the banking industry. The Company's financial position and results of operations are affected by management's application of accounting policies, including estimates, assumptions and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses and related disclosures. Different assumptions in the application of these policies could result in material changes in the Company's consolidated financial position and/or results of operations. The accounting policy that required management's most difficult, subjective or complex judgments is the Company's allowance for loan losses, which is described below.

Allowance for Loan Losses

The allowance for loan losses is an estimate of the losses that may be sustained in the loan portfolio. The allowance is based on three basic principles of accounting which require: (i) that losses be accrued when they are probable of occurring and estimable, (ii) that losses be accrued based on the differences between the loan balances and the value of collateral, present value of expected future cash flows (discounted at the loan's effective interest rate) or values that are observable in the secondary market and (iii) that adequate documentation exist to support the allowance for loan losses estimate.

The Company's allowance for loan losses is the accumulation of various components that are calculated based on independent methodologies. Management's estimate is based on certain observable, historical data and other factors that management believes are most reflective of the underlying credit losses being estimated. This evaluation includes credit quality trends; collateral values; discounted cash flow analysis; loan volumes; geographic, borrower and industry concentrations; the findings of internal credit quality assessments; and results from external bank regulatory examinations. These factors, as well as identified impaired loans, historical losses and current economic and business conditions, are used in developing estimated loss factors used in the calculations.

Authoritative accounting literature requires that the impairment of loans that have been separately identified for evaluation be measured based on the present value of expected future cash flows (discounted at the loan's effective interest rate) or, alternatively, the observable market price of the loans or the fair value of the collateral. However, for those loans that are collateral dependent (that is, if repayment of those loans is expected to be provided solely by the underlying collateral) and for which management has determined foreclosure is probable, the measure of impairment is to be based on the net realizable value of the collateral. Authoritative accounting literature, as amended, also requires certain disclosures about investments in impaired loans and the allowance for loan losses and interest income recognized on loans.

- 21 -

For loans not individually evaluated for impairment, the loan portfolio is segmented into pools, based on the loan classifications as defined by Schedule RC-C of the Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income Form 041 (Call Report) and collectively evaluated for impairment. Consumer loans not secured by real estate and made to individuals for household, family and other personal expenditures are segmented into pools based on whether the loan's payments are current (including loans 1-29 days past due), 30 – 59 days past due, 60 – 89 days past due, or 90 days or more past due. All other loans, including loans to consumers that are secured by real estate, are segmented by the Company's internally assigned risk grades: substandard, other assets especially mentioned (rated just above substandard), and pass (all other loans). The Company may also assign loans to the risk grades of doubtful or loss, but as of December 31, 2016 and December 31, 2015, the Company had no loans in these categories.

Specific reserves are determined on a loan-by-loan basis based on management's evaluation of the Company's exposure for each credit, given the current payment status of the loan and the net market value of any underlying collateral.

While management uses the best information available to establish the allowance for loan losses, future adjustment to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the valuations or if required by regulators, based upon information available to them at the time of their examinations. Such adjustments to original estimates, as necessary, are made in the period in which these factors and other relevant considerations indicate that loss levels may vary from previous estimates.

During the third quarter of 2016, the Company changed its method for calculating the allowance for loan and lease losses.  This change is discussed in detail in Note 4 of the Notes to the Consolidated Financial Statements included in this annual report on Form 10-K.

Impairment of Securities

Impairment of securities occurs when the fair value of a security is less than its amortized cost. For debt securities, impairment is considered other-than-temporary and recognized in its entirety in net income if either (i) the Company intends to sell the security or (ii) it is more-likely-than-not that the Company will be required to sell the security before recovery of its amortized cost basis. If, however, the Company does not intend to sell the security and it is not more-likely-than-not that the Company will be required to sell the security before recovery, management must determine what portion of the impairment is attributable to a credit loss, which occurs when the amortized cost basis of the security exceeds the present value of the cash flows expected to be collected from the security. If there is no credit loss, there is no other-than-temporary impairment. If there is a credit loss, other-than-temporary impairment exists, and the credit loss must be recognized in net income and the remaining portion of impairment must be recognized in other comprehensive income. For equity securities, impairment is considered to be other-than-temporary based on the Company's ability and intent to hold the investment until a recovery of fair value. Other-than-temporary impairment of an equity security results in a write-down that must be included in net income. Management regularly reviews each investment security for other-than-temporary impairment based on criteria that includes the extent to which cost exceeds market price, the duration of that market decline, the financial health of and specific prospects for the issuer, management's best estimate of the present value of cash flows expected to be collected from debt securities, management's intention with regard to holding the security to maturity and the likelihood that the Company would be required to sell the security before recovery.

Other Real Estate Owned (OREO)

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less costs to sell at the date of foreclosure. Subsequent to foreclosure, management periodically performs valuations of the foreclosed assets based on updated appraisals, general market conditions, recent sales of similar properties, length of time the properties have been held, and management's ability and intention with regard to continued ownership of the properties. The Company may incur additional write-downs of foreclosed assets to fair value less costs to sell if valuations indicate a further deterioration in market conditions.

Retirement Plan

The Company maintains a non-contributory, defined benefit pension plan for eligible full-time employees as specified by the plan. Plan assets, which consist primarily of mutual funds invested in marketable equity securities and corporate and government fixed income securities, are valued using market quotations. The Company's actuary determines plan obligations and annual pension expense using a number of key assumptions. Key assumptions may include the discount rate, the interest crediting rate, the estimated future return on plan assets and the anticipated rate of future salary increases. Changes in these assumptions in the future, if any, or in the method under which benefits are calculated may affect pension assets, liabilities or expense.

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Income Taxes

The Company recognizes expense for federal income and state bank franchise taxes payable as well as deferred federal income taxes for estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the Consolidated Financial Statements. Income and franchise tax returns are subject to audit by the Internal Revenue Service (IRS) and state taxing authorities. Income and franchise tax expense for current and prior periods is subject to adjustment based on the outcome of such audits. The Company believes it has adequately provided for all taxes payable.

Earnings Summary

Net income was $3.8 million ($0.77 per diluted share) in 2016 compared to $3.6 million ($0.73 per diluted share) in 2015. The increase in net income was due to higher net interest income, higher noninterest income, and lower noninterest expense. Net interest income increased mainly due to reduced interest expense on Federal Home Loan Bank advances, while the increase in noninterest income was primarily the result of gains on sales of available-for-sale securities. Decreases in salaries and employee benefits and losses on other real estate owned, partially offset by increases in legal and audit expenses, were the main drivers of the decline in noninterest expense.

Net Interest Income

The principal source of earnings for the Company is net interest income. Net interest income is the difference between interest and fees generated by earning assets and interest expense paid to fund them. Changes in the volume and mix of interest-earning assets and interest-bearing liabilities, as well as their respective yields and rates, have a significant impact on the level of net interest income. The net interest margin is calculated by dividing tax-equivalent net interest income by average earning assets. Net interest income, on a fully tax-equivalent basis, was $28.2 million in 2016, an increase of $518 thousand from 2015 and an increase of $777 thousand from 2014. The net interest margin was 3.66% in 2016 as compared to 3.56% in 2015 and 3.57% in 2014, primarily as a result of lower interest expense.

When comparing 2016 to 2015, the following changes occurred. Tax equivalent interest income decreased $540 thousand, or 1.73%. Average earning assets decreased $7.3 million, or 0.94%. Total average loans increased $21.7 million, or 3.85%, and average investment securities decreased $31.3 million, or 15.47%, as continued loan demand allowed the Company to shift its assets from securities to loans. The Company's portfolio of mortgage-backed securities generates cash flows on a monthly basis, which are typically re-invested into loans.

In 2016, the Company began holding more of its excess liquidity in a noninterest-bearing account at a correspondent bank, as evidenced by the $10.3 million increase in average cash and due from banks. Although this account does not earn interest, the Company receives an earnings credit based on balances held in the account. The earnings credit rate is higher than the interest rate earned on accounts at other correspondent banks. For further discussion of this earnings credit, see the Noninterest Expense section below.

Interest income was also impacted by continued declines in average loan yields, from 4.63% in 2015 to 4.52% in 2016. Management expects that the Company's loan yields will continue to decline, due to intense competition for quality loans and rate reductions on loans currently held in the portfolio. The Federal Open Market Committee (FOMC) raised the target range for the federal funds rate in December of both 2015 and 2016. Management currently expects the FOMC to raise rates three times in 2017, possibly beginning in March 2017. Despite these projected increases, management expects the FOMC's monetary policy to remain accommodative and the overall low interest rate environment to continue in 2017. Accordingly, management expects continued pressure on loan yields and the net interest margin and plans to continue to manage the mix of the Company's liabilities to increase low cost funds and reduce high cost funds when possible.

As part of its strategy to reduce interest expense, the Company prepaid a $25.0 million Federal Home Loan Bank (FHLB) advance. This advance, which would have matured in June of 2016, was instead paid off in February of 2016. In past years, the prepayment penalty on this advance made an early payoff prohibitively expensive, but in the first quarter of 2016, volatility in the markets simultaneously reduced the prepayment penalty on the advance and increased the value of the Company's securities portfolio. As a result, the Company was able to sell for a gain certain securities that management expected to perform poorly in a rising rate environment. The liquidity from these sales was used to prepay the FHLB advance. The prepayment penalty on the advance was $391 thousand, compared to $456 thousand in interest expense that would have been paid if the advance had been allowed to mature in June.

Average interest-bearing liabilities decreased $24.2 million, or 4.08%, partially due to the prepayment of the FHLB advance and partially due to decreases in interest-bearing deposits. As discussed above, management has focused on adjusting the composition of its interest-bearing liabilities, specifically by allowing high-cost time deposits to reduce. Management expects that the reduction of the Company's interest expense will slow or stop in 2017, as the majority of higher-cost time deposits have repriced to current, lower market rates and management anticipates increases in market rates in 2017. To mitigate the expected increase in market rates, management will continue to focus on the mix of deposits by actively targeting new noninterest-bearing deposits.

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Overall, interest expense decreased $1.1 million, or 29.13% in 2016 as compared to 2015, and the cost of interest-bearing liabilities decreased 16 basis points.

The following table shows an analysis of average earning assets, interest-bearing liabilities and rates and yields. Nonaccrual loans are included in loans outstanding.

TABLE I
AVERAGE BALANCE SHEETS, NET INTEREST INCOME* AND RATES*
Years ended December 31,	2016								2015								2014
				Interest								Interest								Interest
	Average			Income/		Yield/			Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate**			Balance			Expense		Rate**			Balance			Expense		Rate**
	(dollars in thousands)
ASSETS
Loans*	$	585,206		$	26,451		4.52	%	$	563,534		$	26,106		4.63	%	$	517,183		$	24,959		4.83	%
Investment securities:
Taxable		104,549			1,802		1.72	%		130,541			2,510		1.92	%		164,755			3,562		2.16	%
Tax-exempt*		66,509			2,326		3.50	%		71,831			2,520		3.51	%		74,112			2,580		3.48	%
Total investment securities		171,058			4,128		2.41	%		202,372			5,030		2.49	%		238,867			6,142		2.57	%
Interest-bearing due from banks		9,226			48		0.52	%		5,848			15		0.26	%		5,356			13		0.24	%
Federal funds sold		1,667			6		0.36	%		1,860			2		0.11	%		3,515			5		0.14	%
Other investments		1,562			113		7.23	%		2,373			133		5.60	%		2,944			125		4.25	%
Total earning assets		768,719			30,746		4.00	%		775,987			31,286		4.03	%		767,865			31,244		4.07	%
Allowance for loan losses		(7,895	)							(7,404	)							(7,062	)
		760,824								768,583								760,803
Cash and due from banks		42,111								31,858								25,700
Bank premises and equipment, net		40,480								41,988								42,277
Other assets		42,643								41,957								41,185
Total assets	$	886,058							$	884,386							$	869,965
LIABILITIES AND STOCKHOLDERS' EQUITY
Time and savings deposits:
Interest-bearing transaction accounts	$	20,045		$	9		0.04	%	$	11,219		$	4		0.04	%	$	11,537		$	5		0.04	%
Money market deposit accounts		221,339			179		0.08	%		228,627			186		0.08	%		213,918			179		0.08	%
Savings accounts		78,305			39		0.05	%		74,436			37		0.05	%		73,576			46		0.06	%
Time deposits, $100,000 or more		110,963			1,170		1.05	%		113,945			1,111		0.98	%		108,630			1,038		0.96	%
Other time deposits		99,376			946		0.95	%		107,142			1,033		0.96	%		128,383			1,316		1.03	%
Total time and savings deposits		530,028			2,343		0.44	%		535,369			2,371		0.44	%		536,044			2,584		0.48	%
Federal funds purchased, repurchase agreements and other borrowings		25,348			25		0.10	%		30,777			30		0.10	%		32,848			32		0.10	%
Federal Home Loan Bank advances		14,016			206		1.47	%		27,466			1,231		4.48	%		28,507			1,233		4.33	%
Total interest-bearing liabilities		569,392			2,574		0.45	%		593,612			3,632		0.61	%		597,399			3,849		0.64	%
Demand deposits		214,876								194,677								184,555
Other liabilities		6,510								5,664								2,461
Total liabilities		790,778								793,953								784,415
Stockholders' equity		95,280								90,433								85,550
Total liabilities and stockholders' equity	$	886,058							$	884,386							$	869,965
Net interest margin				$	28,172		3.66	%				$	27,654		3.56	%				$	27,395		3.57	%

* Computed on a fully tax-equivalent basis using a 34% rate.

- 24 -

The following table summarizes changes in net interest income attributable to changes in the volume of interest-bearing assets and liabilities and changes in interest rates.

TABLE II
VOLUME AND RATE ANALYSIS*
	2016 vs. 2015									2015 vs. 2014									2014 vs. 2013
	Increase (Decrease)									Increase (Decrease)									Increase (Decrease)
	Due to Changes in:									Due to Changes in:									Due to Changes in:
	Volume			Rate			Total			Volume			Rate			Total			Volume			Rate			Total
	(in thousands)
EARNING ASSETS
Loans	$	1,004		$	(659	)	$	345		$	2,237		$	(1,090	)	$	1,147		$	2,319		$	(1,129	)	$	1,190
Investment securities:
Taxable		(500	)		(208	)		(708	)		(740	)		(312	)		(1,052	)		(1,289	)		304			(985	)
Tax-exempt		(187	)		(7	)		(194	)		(79	)		19			(60	)		673			(135	)		538
Total investment securities		(687	)		(215	)		(902	)		(819	)		(293	)		(1,112	)		(616	)		169			(447	)
Federal funds sold		0			4			4			(2	)		(1	)		(3	)		1			3			4
Other investments **		46			(33	)		13			(1	)		11			10			(153	)		99			(54	)
Total earning assets		363			(903	)		(540	)		1,415			(1,373	)		42			1,551			(858	)		693
INTEREST-BEARING LIABILITIES
Interest-bearing transaction accounts		5			0			5			0			(1	)		(1	)		0			(1	)		(1	)
Money market deposit accounts		(7	)		0			(7	)		12			(5	)		7			16			(71	)		(55	)
Savings accounts		2			0			2			1			(10	)		(9	)		11			(27	)		(16	)
Time deposits, $100,000 or more		(29	)		88			59			51			22			73			(199	)		(199	)		(398	)
Other time deposits		(75	)		(12	)		(87	)		(218	)		(65	)		(283	)		(308	)		(59	)		(367	)
Total time and savings deposits		(104	)		76			(28	)		(154	)		(59	)		(213	)		(480	)		(357	)		(837	)
Federal funds purchased, repurchase
agreements and other borrowings		(5	)		0			(5	)		(2	)		0			(2	)		2			(5	)		(3	)
Federal Home Loan Bank advances		(603	)		(422	)		(1,025	)		(45	)		43			(2	)		172			(163	)		9
Total interest-bearing liabilities		(712	)		(346	)		(1,058	)		(201	)		(16	)		(217	)		(306	)		(525	)		(831	)
Change in net interest income	$	1,075		$	(557	)	$	518		$	1,616		$	(1,357	)	$	259		$	1,857		$	(333	)	$	1,524

* Computed on a fully tax-equivalent basis using a 34% rate.

** Other investments include interest-bearing balances due from banks.

Interest Sensitivity

An important element of earnings performance and the maintenance of sufficient liquidity is proper management of the interest sensitivity gap. The interest sensitivity gap is the difference between interest-sensitive assets and interest-sensitive liabilities in a specific time interval. This gap can be managed by repricing assets or liabilities, which are variable rate instruments, by replacing an asset or liability at maturity or by adjusting the interest rate during the life of the asset or liability. Matching the amounts of assets and liabilities maturing in the same time interval helps to hedge interest rate risk and to minimize the impact of rising or falling interest rates on net interest income.

The Company determines the overall magnitude of interest sensitivity risk and then formulates policies governing asset generation and pricing, funding sources and pricing, and off-balance sheet commitments. These decisions are based on management's expectations regarding future interest rate movements, the state of the national and regional economy, and other financial and business risk factors. The Company uses computer simulations to measure the effect of various interest rate scenarios on net interest income. This modeling reflects interest rate changes and the related impact on net interest income and net income over specified time horizons.

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Based on scheduled maturities only, the Company was liability sensitive at the one-year timeframe as of December 31, 2016. It should be noted, however, that non-maturing, interest-bearing deposit liabilities, which consist of interest checking, money market and savings accounts, are less interest sensitive than other market driven deposits. On December 31, 2016 non-maturing, interest-bearing deposit liabilities totaled $344.5 million, or 61.97%, of total interest-bearing deposits. In a rising rate environment, changes in these deposit rates have historically lagged behind the changes in earning asset rates, thus mitigating the impact from the liability sensitive position indicated by the static gap analysis. Income simulation analysis allows the Company to reflect the expected differences in re-pricing behavior among various assets and liabilities to more reliably measure the potential effects on income from changes in the interest rate environment. Utilizing this income simulation methodology, the model reveals that the Company is asset sensitive at the one-year timeframe as of December 31, 2016.

When the Company is liability sensitive, net interest income should improve if interest rates fall since liabilities will reprice faster than assets (depending on the optionality or prepayment speeds of the assets). Conversely, if interest rates rise, net interest income should decline. When the Company is asset sensitive, net interest income should improve if interest rates rise and fall if rates fall.

The Company's interest rate sensitivity position is illustrated in the following table. The carrying amounts of assets and liabilities are presented in the periods they are expected to reprice or mature.

TABLE III
INTEREST SENSITIVITY ANALYSIS
	Within				4-12			1-5		Over 5
As of December 31, 2016	3 Months			Months			Years			Years		Total
	(in thousands)
USES OF FUNDS
Interest-bearing due from banks	$	1,667		$	0		$	0		$	0	$	1,667
Federal funds sold		2,302			0			0			0		2,302
Taxable investments		30,401			8,018			9,904			79,024		127,347
Tax-exempt investments		301			0			12,618			59,099		72,018
Total federal funds sold and investment securities		34,671			8,018			22,522			138,123		203,334
Loans
Commercial	$	15,649		$	5,185		$	21,197		$	12,403	$	54,434
Consumer		19,056			167			10,602			29,082		58,907
Real estate		70,065			41,310			239,918			120,231		471,524
Other		10,329			0			582			8,106		19,017
Total loans		115,099			46,662			272,299			169,822		603,882
Total earning assets	$	149,770		$	54,680		$	294,821		$	307,945	$	807,216
SOURCES OF FUNDS
Interest-bearing transaction accounts	$	30,165		$	0		$	0		$	0	$	30,165
Money market deposit accounts		234,799			0			0			0		234,799
Savings accounts		79,488			0			0			0		79,488
Time deposits $100,000 or more		15,439			40,332			59,263			0		115,034
Other time deposits		14,893			29,262			52,220			0		96,375
Federal funds purchased and other borrowings		0			0			0			0		0
Overnight repurchase agreements		18,704			0			0			0		18,704
Term repurchase agreements		0			0			0			0		0
FHLB advances		0			0			0			0		0
Total interest bearing liabilities	$	393,488		$	69,594		$	111,483		$	0	$	574,565
Rate sensitivity GAP	$	(243,718	)	$	(14,914	)	$	183,338		$	307,945	$	232,651
Cumulative GAP	$	(243,718	)	$	(258,632	)	$	(75,294	)	$	232,651

The most likely scenario represents the rate environment as management forecasts it to occur. Management uses a "static" test to measure the effects of changes in interest rates on net interest income. This test assumes that management takes no steps to adjust the balance sheet to respond to the shock by repricing assets/liabilities, as discussed in the first paragraph of this section.

- 26 -

Under the rate environment forecasted by management, rate shocks in 50 to 100 basis point increments are applied to estimate the impact on the Company's net interest income. The table below shows the estimated impact of changes in interest rates on net interest income as of December 31, 2016, assuming gradual and parallel changes in interest rates, and consistent levels of assets and liabilities. Net interest income for the following twelve months is projected to increase when interest rates are higher than current rates. Due to the current low interest rate environment, no measurement was considered necessary for a further decline in interest rates.

Estimated Changes in Net Interest Income
As of December 31, 2016
Changes in Net Interest Income
Changes in Interest Rates	Amount (in thousands)			Percent
Up 4.00%		$	499		1.78	%
Up 3.00%		$	380		1.35	%
Up 2.00%		$	248		0.88	%
Up 1.00%		$	117		0.42	%
No change		$	0		0.00	%

Management cannot predict future interest rates or their exact effect on net interest income. Computations of future effects of hypothetical interest rate changes are based on numerous assumptions and should not be relied upon as indicative of actual results. Certain limitations are inherent in such computations. Assets and liabilities may react differently than projected to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while rates on other types of assets and liabilities may lag changes in market interest rates. Interest rate shifts may not be parallel.

Changes in interest rates can cause substantial changes in the amount of prepayments of loans and mortgage-backed securities, which may in turn affect the Company's interest rate sensitivity position. Additionally, credit risk may rise if an interest rate increase adversely affects the ability of borrowers to service their debt.

Provision for Loan Losses

The provision for loan losses is a charge against earnings necessary to maintain the allowance for loan losses at a level consistent with management's evaluation of the portfolio. This expense is based on management's estimate of probable credit losses inherent to the loan portfolio. Management's evaluation included credit quality trends, collateral values, discounted cash flow analysis, loan volumes, geographic, borrower and industry concentrations, the findings of internal credit quality assessments and results from external regulatory examinations. These factors, as well as identified impaired loans, historical losses and current economic and business conditions, were used in developing estimated loss factors for determining the loan loss provision. Based on its analysis of the adequacy of the allowance for loan losses, management concluded that the provision was appropriate.

The provision for loan losses was $1.9 million for the year ended December 31, 2016 as compared to $1.0 million for 2015. A portion of the increase is due to loan growth during 2016, which required the Company to set aside additional funds. The provision was also impacted by higher levels of charge offs in 2016 than in 2015. Charged-off loans totaled $1.8 million in 2016, compared to $897 thousand in 2015. Recoveries amounted to $347 thousand in 2016 and $535 thousand in 2015. The Company's net loans charged off to year-end loans were 0.24% in 2016 as compared to 0.06% in 2015.

Net loan charge-offs for 2016 were higher than in 2015 primarily due to a charge-off in the second quarter of 2016, on a single borrowing relationship whose condition deteriorated rapidly. None of the loans in this relationship had been more than sixty days past due until the second quarter of 2016, when the Company became aware of the potential impairment on these loans. Working through the assessment and collection process, the Company charged off a total of $876 thousand on this borrowing relationship in 2016.

Management believes that net loan charge-offs in subsequent years will be lower than what was experienced in 2016, as no similarly large charge off is expected in 2017. The state of the local economy also significantly impacts the level of loan charge-offs. If the economy begins to contract, nonperforming assets could increase as a result of declines in real estate values and home sales or increases in unemployment rates and financial stress on borrowers. Increased nonperforming assets would increase charge-offs and reduce earnings due to larger contributions to the loan loss provision. If current economic conditions remain stable and net loan charge-offs are consistent with management's forecast, management expects that the loan loss provision will be lower in 2017 than in 2016.

- 27 -

Noninterest Income

Unless otherwise noted, all comparisons in this section are between the twelve months ended December 31, 2016 and the twelve months ended December 31, 2015.

Noninterest income increased $330 thousand or 2.51% for the year ended December 31, 2016 as compared to the year ended December 31, 2015. Noninterest income in 2016 was positively impacted by sales of securities during the year, sales that are congruent with management's current strategy for the Company's investment portfolio. These investment portfolio sales resulted in a net gain of $509 thousand in the first quarter of 2016. In the second quarter, sharp declines in market interest rates provided the Company with the opportunity to sell certain under-performing securities for a gain, which allowed the Company to fund loan growth and reduce the portfolio's susceptibility to interest rate risk. Smaller gains were recognized in the third quarter of 2016.

In addition to these gains, two other categories of noninterest income increased: service charges on deposit accounts (up $31 thousand or 0.77%) and other operating income (up $144 thousand or 31.79%). Service charges on deposit accounts increased primarily due to deposit growth and new product offerings introduced in the third quarter of 2015. The increases from these changes were partially offset by continued declines in overdraft fee income. Regulatory changes in recent years have curtailed this income source for most banks, including the Company, and while management expects to see continued overall improvements in service charges on deposit accounts, overdraft fee income is expected to remain flat or decline in 2017.

The increase in other operating income was due to an additional $154 thousand in income from Old Point Mortgage LLC (Old Point Mortgage), a joint venture between the Bank and Tidewater Mortgage Services. Old Point Mortgage has been working to improve its efficiencies and re-define its incentive structure for its sales staff. Management believes that the success of these efforts is evident in the increased income seen in 2016, compared to 2015.

In addition to the increase in income from Old Point Mortgage, other operating income was also impacted by foreclosed property income and income from early withdrawal penalties on time deposits. Foreclosed property income decreased due to the sale of foreclosed properties. As the Bank no longer holds any tenant-occupied foreclosed properties, management does not expect to have any foreclosed property income in 2017. Income from early withdrawal penalties increased due to a change in the Bank's fee structure for early withdrawals. With this change, management hopes to better control its interest expense when rates rise.

The remaining categories of noninterest income decreased, with the largest decrease in other service charges, commissions and fees (down $144 thousand or 3.53%). Within this category, declines in securities brokerage income and ATM interchange fees were only partially offset by increases in merchant processing fee income. In 2017, management has instituted a new incentive structure and anticipates an increase in securities brokerage income. The 2016 trends for ATM interchange fees and merchant processing fee income are expected to continue in 2017.

Income from bank-owned life insurance was down $90 thousand or 10.17% as lower market rates reduced yields on the underlying assets. Management does not expect a similar decline in 2017 and expects 2017 income to match or be slightly above income for 2016.

Income from fiduciary activities decreased $57 thousand or 1.58%. This category is heavily impacted by the market value of assets under management. Fluctuations in the stock market during the first half of 2016 reduced income by $116 thousand when compared to the first half of 2015. As markets stabilized in the third and fourth quarters of 2016, income from fiduciary activities began to increase again, offsetting some of the declines from the first half of the year. Income from fiduciary activities was up $58 thousand for the second half of 2016 when compared to the second half of 2015. This category is difficult to project, due to the unpredictable nature of its primary source. However, management does expect that, in general, income from fiduciary activities will continue to trend upward in future years as a result of business development efforts.

The Company continues to focus on diversifying noninterest income through efforts to expand Trust relationships and a continued focus on business checking and other corporate services.

- 28 -

Noninterest Expense

Unless otherwise noted, all comparisons in this section are between the twelve months ended December 31, 2016 and the twelve months ended December 31, 2015.

The Company's noninterest expense decreased $255 thousand or 0.73% due to a number of factors. Since 2014, the Company has maintained a portion of its excess liquidity in a noninterest-bearing account at a correspondent bank. Balances held at the correspondent receive an earnings credit 25 basis points higher than the highest interest rate the Company can earn on its interest-bearing accounts. Beginning in the third quarter of 2016, the Company has made more strategic use of this earnings credit, which can be used to offset the Company's courier and data processing expenses, in addition to normal service charges assessed by the correspondent. The reduction in noninterest expense (and thus the increase in net income) is higher than the reduction in interest income. Due to this strategy, the Company saved $152 thousand in the year ended December 31, 2016.

Although noninterest expense decreased overall, certain categories did increase. The prepayment fee on the Company's $25.0 million FHLB advance was one of the largest increases in noninterest expense. Although this $391 thousand fee had a significant impact on noninterest expense, it was more than offset by reduced interest expense on FHLB advances 2016 as compared to 2015.

Of the remaining categories of noninterest expense, the most significant increases when comparing 2016 to 2015 were in legal and audit expenses, occupancy and equipment, other outside service fees, employee professional development, and capital stock tax.

· Legal and audit expenses ($595 thousand or 82.64%): The Company's 2016 proxy statement included numerous proposals, including changes to the Company's articles of incorporation, the addition of an employee stock purchase plan, and the addition of a new stock incentive plan, all of which required extensive review by outside legal counsel. The implementation of stockholder-approved proposals following the 2016 Annual Meeting of Stockholders also increased legal and audit expense during this period.

· Occupancy and equipment ($245 thousand or 4.60%): The Company implemented a new, more sophisticated disaster recovery plan in the third quarter of 2015. This new plan increased both depreciation and service contract expenses.

· Other outside service fees ($114 thousand or 16.45%): Beginning in the second quarter of 2015, the Company outsourced certain loan review functions. Also in the second quarter of 2015, the Company purchased an additional $14.0 million student loan portfolio, with servicing expenses increased accordingly.

· Employee professional development ($68 thousand or 11.51%): Higher recruitment expense was the main cause of the increase in this category. As part of management's ongoing effort to improve income, during 2016 the Company occasionally relied on the services of employment agencies and recruiters to fill certain positions, particularly those in the lending areas.

· Capital stock tax ($66 thousand or 15.03%): Increases in equity and decreases in other real estate owned both contributed to this increase. Capital stock tax is calculated based on the total equity, with tax credits for real estate taxes paid. As the Company has reduced its holdings of other real estate owned, it has paid less in real estate taxes, thus reducing credits available to offset capital stock tax.

These increased expenses were more than offset by decreases in other areas, primarily salaries and employee benefits, loss on other real estate owned, and FDIC insurance.

· Salaries and employee benefits ($869 thousand or 4.19%): Lower expenses for employee medical insurance accounted for the majority of the decrease in salaries and employee benefits expense. This category was also impacted by the benefits package for an executive officer who retired in the third quarter of 2015. Although the retirement package was paid in 2016, accounting rules required that the entire amount of $353 thousand be expensed in 2015. In 2017, management expects this category of noninterest expense to be higher than in 2016 due to four factors. As discussed in Item 9B of this Form 10-K, the Company's Chief Financial Officer will be retiring in 2017. As with the benefits package expensed in 2015, the retirement package provided to the CFO will be expensed in 2017. In addition to the retirement package, the Company expects employee benefits expenses to increase in 2017 due to higher medical insurance expense and the termination of the Company's pension plan (discussed in more detail below). The addition of Old Point Mortgage to the Company's consolidated financial statements (discussed in more detail under Loan Portfolio in this Item 7) will also increase salaries and employee benefits expenses.

· Loss on other real estate owned ($803 thousand or 83.91%): The Company has made significant progress on reducing its holdings of other real estate owned, with the balance decreasing from $2.7 million at December 31, 2015 to $1.1 million at December 31, 2016. As these properties are sold, both write-downs and expenses related to these properties will decrease.

· FDIC insurance ($103 thousand or 17.58%): Beginning in the third quarter of 2016, the FDIC made changes to the way that insurance premiums are calculated. Management expects the lower levels of expense to continue into the foreseeable future.

- 29 -

The Company provides pension benefits for eligible participants through a non-contributory defined-benefit pension plan (the Plan). Benefits are based on years of service and average earnings during the highest average 60 month period during the final 120 months of employment. Effective September 30, 2006, the Plan was closed to new entrants and benefit accruals for existing participants were frozen. Under current rules, the Company had no funding obligation as of December 31, 2015 or 2016.

On November 23, 2016, the Company's Board of Directors (the Board) voted to terminate the Plan, effective January 31, 2017. In order to settle its liabilities under the Plan, the Company will offer participants the option to receive either an annuity purchased from an insurance carrier or a lump-sum cash payment. If the total value of the Plan's assets is insufficient to cover the lump-sum payouts and annuity purchases, the Company will contribute the necessary funds to complete the termination of the Plan. The exact amount that will be required is subject to a number of factors, including changes in interest rates and the exact proportion of participants electing a lump-sum distribution versus an annuity. The Company currently estimates that its before-tax expense will be between $3.1 million and $3.3 million, all of which would be recognized in 2017. Other expenses associated with terminating the Plan are currently estimated to be $20 thousand.

The Company anticipates completing the transfer of all liabilities and administrative responsibilities under the Plan by the end of the fourth quarter of 2017. Once this process is complete, the Company will no longer have any remaining pension obligations and thus no periodic pension expense. By comparison, annual pension expense for 2016 was $392 thousand and is currently estimated to be $529 thousand for 2017.

Income tax expense was higher in 2016 than in 2015 due to higher income and a higher effective tax rate. When comparing 2016 to 2015, tax-exempt income was a smaller percent of total income, increasing the effective tax rate from 1.46% to 4.04%. Despite the increase from 2015 to 2016, the Company's effective tax rate remains low, primarily due to its receipt of federal income tax credits for its investment in certain housing projects.

Balance Sheet Review

At December 31, 2016, the Company had total assets of $903.0 million, an increase of $6.2 million or 0.69% compared to assets as of December 31, 2015.

In 2016, the Company built on progress made in 2015 by continuing to move funds from lower-yielding to higher-yielding assets. Cash and cash equivalents decreased $11.1 million or 30.11% from December 31, 2015 to December 31, 2016 as funds were re-invested into loans in 2016. Net loans increased $34.9 million or 6.22%, from $560.7 million at December 31, 2015 to $595.6 million at December 31, 2016. Loan demand began to increase in 2013 and has continued at a moderate pace throughout 2014, 2015, and 2016, but until loan demand recovers significantly, the Company will likely continue to manage the interest margin by focusing deposit-gathering efforts on lower cost funds in the form of noninterest-bearing and savings deposits. These low-cost funds increased $36.6 million or 6.83% between December 31, 2015 and December 31, 2016, while in the same time period, high-cost time deposits increased $1.4 million or 0.67% .

The Company's holdings of Alternative A-paper, or "Alt-A", type mortgage loans such as adjustable rate and nontraditional type loans were inconsequential, amounting to less than 1.00% of the Company's loan portfolio as of December 31, 2016.

The Company does not have a formal program for subprime lending. The Company is, however, required by law to comply with the CRA, which imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of their local communities, including low- and moderate-income borrowers. In order to comply with the CRA and meet the credit needs of its local communities, the Company finds it necessary to make certain loans with subprime characteristics.

For the purposes of this discussion, a "subprime loan" is defined as a loan to a borrower having a credit score of 660 or below. The majority of the Company's subprime loans are to customers in the Company's primary service area.

- 30 -

The following table details, as of December 31, 2016, the Company's loans with subprime characteristics that were secured by 1-4 family first mortgages, 1-4 family open-end (i.e., equity lines of credit) and 1-4 family junior lien loans (i.e., second mortgages) for which the Company has recorded a credit score in its system.

Loans Secured by 1 - 4 Family First Mortgages,
1 - 4 Family Open-end and 1 - 4 Family Junior Liens
As of December 31, 2016
	Amount (in thousands)		Percent
Subprime	$	21,675		13.9	%
Non-subprime		134,163		86.1	%
	$	155,838		100.0	%
Total loans	$	603,882
Percentage of Real Estate-Secured Subprime Loans to Total Loans				3.59	%

In addition to the subprime loans secured by real estate discussed above, as of December 31, 2016, the Company had an additional $2.8 million in subprime consumer loans that were either unsecured or secured by collateral other than real estate. Together with the subprime loans secured by real estate, the Company's total subprime loans as of December 31, 2016 were $24.5 million, amounting to 4.05% of the Company's total loans at December 31, 2016.

The Company has no investments secured by "Alt-A" type mortgage loans such as adjustable rate and nontraditional type mortgages or subprime loans.

Securities Portfolio

When comparing December 31, 2016 to December 31, 2015, securities available-for-sale decreased $14.8 million, or 6.92%. The Company sold certain securities in the first and second quarters of 2016 to limit the portfolio's susceptibility to interest rate risk, help fund loan growth, and provide liquidity to prepay the $25.0 million FHLB advance in February 2016. With the volatility in market interest rates during 2016, the Company was able to sell for a gain certain under-performing securities. The securities sold were all mortgage-backed securities with rates that have been below market for some time. As management expects that rates will continue to increase, and loan growth necessitated a need for additional funding, the Company sold these securities while the market value was above the Company's book value of the securities. The Company also purchased securities in the third and fourth quarters of 2016 to further management's strategy and absorb temporary excess liquidity.

Restricted securities decreased $1.0 million or 51.88% from December 31, 2015 to December 31, 2016 as a result of lower balances in FHLB stock. The Company is required to hold FHLB stock based on its borrowings; with the repayment of the $25.0 million FHLB advance, the FHLB repurchased a portion of its stock held by the Company.

The Company routinely purchases short-term U.S. Treasury and government agency securities as part of a strategy to reduce its capital stock tax expense.  While both of these types of securities have very low yields, the reduction in capital stock tax, a component of noninterest expense, more than offsets the reduction in interest income.

The Company's strategy for the securities portfolio is primarily intended to manage the portfolio's susceptibility to interest rate risk and to provide liquidity to fund loan growth.  The securities portfolio is also adjusted to achieve other asset/liability objectives, including pledging requirements, and to manage tax exposure when necessary.

- 31 -

The following table sets forth a summary of the securities portfolio:

TABLE IV
SECURITIES PORTFOLIO
As of December 31,	2016		2015		2014
	(in thousands)
Available-for-sale securities, at fair value:
U.S. Treasury securities	$	20,000	$	0	$	20,000
Obligations of U.S. Government agencies		9,195		24,240		4,618
Obligations of state and political subdivisions		77,987		78,433		50,246
Mortgage-backed securities		83,694		107,396		60,888
Money market investments		647		631		719
Corporate bonds		7,678		3,393		2,790
Other marketable equity securities		164		99		85
	$	199,365	$	214,192	$	139,346
Held-to-maturity securities, at cost:
Obligations of U.S. Government agencies	$	0	$	0	$	100
Obligations of state and political subdivisions		0		0		29,529
Mortgage-backed securities		0		0		60,460
	$	0	$	0	$	90,089
Restricted securities:
Federal Home Loan Bank stock	$	801	$	1,847	$	2,124
Federal Reserve Bank stock		169		169		169
	$	970	$	2,016	$	2,293
Total	$	200,335	$	216,208	$	231,728

The following table summarizes the contractual maturity of the securities portfolio and their weighted average yields as of December 31, 2016:

	1 year				1-5			5-10		Over 10
	or less			years			years			years			Total
	(dollars in thousands)
U.S. Treasury securities	$	20,000		$	0		$	0		$	0		$	20,000
Weighted average yield		0.35	%		0.00	%		0.00	%		0.00	%		0.35	%
Obligations of U.S. Government Agencies	$	0		$	297		$	0		$	8,898		$	9,195
Weighted average yield		0.00	%		1.17	%		0.00	%		1.61	%		1.59	%
Obligations of state and political subdivisions	$	301		$	12,618		$	21,850		$	43,218		$	77,987
Weighted average yield		2.07	%		2.64	%		3.15	%		3.79	%		3.42	%
Mortgage-backed securities	$	0		$	3,618		$	22,090		$	57,986		$	83,694
Weighted average yield		0.00	%		1.64	%		1.98	%		1.48	%		1.62	%
Money market investments	$	647		$	0		$	0		$	0		$	647
Weighted average yield		0.25	%		0.00	%		0.00	%		0.00	%		0.25	%
Corporate bonds	$	1,499		$	1,902		$	4,277		$	0		$	7,678
Weighted average yield		1.23	%		1.53	%		5.26	%		0.00	%		3.55	%
Federal Home Loan Bank stock - restricted	$	0		$	0		$	0		$	801		$	801
Weighted average yield		0.00	%		0.00	%		0.00	%		4.64	%		4.64	%
Federal Reserve Bank stock - restricted	$	0		$	0		$	0		$	169		$	169
Weighted average yield		0.00	%		0.00	%		0.00	%		6.00	%		6.00	%
Other marketable equity securities	$	0		$	0		$	0		$	164		$	164
Weighted average yield		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Total securities	$	22,447		$	18,435		$	48,217		$	111,236		$	200,335
Weighted average yield		0.43	%		2.31	%		2.80	%		2.41	%		2.27	%

The table above is based on maturity. Therefore, it does not reflect cash flow from principal payments or prepayments prior to maturity. The weighted average life of the $83.7 million in mortgage-backed securities as of December 31, 2016 was 4.50 years. Yields are calculated on a fully tax-equivalent basis using a 34% rate.

- 32 -

Loan Portfolio

The following table shows a breakdown of total loans by segment at December 31 for years 2012 through 2016:

TABLE V
LOAN PORTFOLIO
As of December 31,	2016			2015		2014		2013		2012
	(in thousands)
Commercial		$	54,434	$	43,197	$	37,698	$	30,702	$	25,341
Real estate-construction			23,116		19,685		9,082		14,505		12,005
Real estate-mortgage (1)			448,408		437,159		435,914		416,966		398,522
Consumer			58,907		50,427		30,493		19,791		13,146
Other			19,017		18,007		22,807		18,735		22,119
Total		$	603,882	$	568,475	$	535,994	$	500,699	$	471,133
(1) The real estate-mortgage segment includes residential 1 – 4 family, commercial real estate, second mortgages and equity lines of credit.

Based on the North American Industry Classification System code, there are no categories of loans that exceed 10% of total loans other than the categories disclosed in the preceding table.

As of December 31, 2016, the total loan portfolio increased by $35.4 million or 6.23% from December 31, 2015. Although competition for quality loans remains fierce, the Company continued to grow its loan portfolio in 2016. As part of management's strategy to grow the loan portfolio, the Company re-opened its dealer lending division in September 2016. Since that time, the consumer auto loan portfolio has grown $9.6 million, which management expects will contribute positively to interest income in 2017. While there are risks inherent in any new loan program, the Company has hired knowledgeable staff and put in place programs and policies to mitigate those risks. Management is monitoring the allowance for loan losses carefully and will make changes as the portfolio ages.

In addition to the loan growth generated by the re-opening of the dealer department, the Company worked with Old Point Mortgage to generate 1-4 family mortgage loans and continued to market the fixed-rate equity line product developed in 2013. Old Point Mortgage is a joint venture between the Bank and Tidewater Mortgage Services, Inc. (TMSI); the Bank owns 49% of Old Point Mortgage, while TMSI owns 51% and is the managing member.

In addition to the 1-4 family mortgage loans purchased from Old Point Mortgage, the Company purchased two other types of loans in 2016. The Company purchased $3.7 million in commercial loans; the entire principal balance of these purchased commercial loans is guaranteed by either the Small Business Administration (SBA) or the United States Department of Agriculture. Also, the Company purchased $3.8 million in consumer installment loans in 2016. The Company maintains a dedicated reserve account funded by the seller of the consumer installment loans. The balance in the reserve account averages 10 - 12% of the outstanding principal balance of these purchased consumer loans. Any loan losses in this portfolio are covered first by the reserve account; loans are charged against the allowance for loan losses only if the funds available in the reserve account are not sufficient.

As part of its strategy to grow the loan portfolio, in 2017, the Company entered into an agreement with TMSI to purchase TMSI's ownership interest in Old Point Mortgage. The purchase is expected to be completed on or before May 1, 2017, at which point the Bank will be the sole member of Old Point Mortgage. Once the purchase is complete, Old Point Mortgage will be included in the Company's consolidated financial statements. The purchase agreement was filed as Exhibit 10.1 to the report on Form 8-K filed by the Company on January 20, 2017.

The maturity distribution and rate sensitivity of certain categories of the Company's loan portfolio at December 31, 2016 is presented below:

TABLE VI
MATURITY SCHEDULE OF SELECTED LOANS
December 31, 2016	Within 1 year			1 to 5 years		After 5 years		Total
	(in thousands)
Commercial		$	15,782	$	19,141	$	19,511	$	54,434
Real estate - construction			3,890		17,111		2,115		23,116
Total		$	19,672	$	36,252	$	21,626	$	77,550
Loans due after 1 year with:
Fixed interest rate				$	23,483	$	12,290	$	35,773
Variable interest rate					12,769		9,336		22,105
Total				$	36,252	$	21,626	$	57,878

- 33 -

Nonperforming Assets

Nonperforming assets consist of nonaccrual loans, loans past due 90 days or more and accruing interest, nonperforming restructured loans, and other real estate owned (OREO). Restructured loans are loans with terms that were modified in a troubled debt restructuring (TDR) for borrowers experiencing financial difficulties. During the year ended December 31, 2016, the Company restructured twelve loans.

Nonperforming assets increased by $431 thousand or 4.04%, from $10.7 million at December 31, 2015 to $11.1 million at December 31, 2016. The 2016 total consisted of $1.1 million of OREO, $2.9 million in loans still accruing interest but past due 90 days or more and $7.2 million in nonaccrual loans. Of the $7.2 million in nonaccrual loans, $6.8 million was secured by real estate. All of the nonaccrual loans are classified as substandard. Substandard loans are a component of the allowance for loan losses. When a loan changes from "90 days past due but still accruing interest" to "nonaccrual" status, the loan is normally reviewed for impairment. If the loan is considered impaired, then the Company records a charge-off based on the value of the collateral or the present value of the loan's expected future cash flows, discounted at the loan's effective interest rate. If the Company is waiting on an appraisal to determine the collateral's value, management allocates funds to cover the deficiency to the allowance for loan losses based on information available to management at the time.

The recorded investment in impaired loans increased to $20.1 million as of December 31, 2016 from $13.1 million as of December 31, 2015 as detailed in Note 4 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this report on Form 10-K. The majority of these loans were collateralized.

- 34 -

The following table presents information concerning the aggregate amount of nonperforming assets, which includes nonaccrual loans, past due loans, TDRs and OREO:

TABLE VII
NONPERFORMING ASSETS
As of December 31,	2016		2015		2014		2013		2012
	(in thousands)
Nonaccrual loans
Commercial	$	231	$	276	$	0	$	149	$	97
Real estate-construction		0		0		499		2,545		3,065
Real estate-mortgage (1)		6,847		4,306		5,071		8,630		7,470
Consumer		81		0		0		0		0
Total nonaccrual loans	$	7,159	$	4,582	$	5,570	$	11,324	$	10,632
Loans past due 90 days or more and accruing interest
Commercial	$	0	$	164	$	10	$	0	$	25
Real estate-construction		0		0		0		0		0
Real estate-mortgage (1)		276		23		107		527		408
Consumer (2)		2,603		3,163		1,019		5		11
Other		5		6		5		14		3
Total loans past due 90 days or more and accruing interest	$	2,884	$	3,356	$	1,141	$	546	$	447
Restructured loans
Commercial	$	144	$	0	$	0	$	0	$	0
Real estate-construction		96		99		102		0		0
Real estate-mortgage (1)		11,616		11,077		12,203		12,076		8,810
Consumer		0		12		13		15		16
Total restructured loans	$	11,856	$	11,188	$	12,318	$	12,091	$	8,826
Less nonaccrual restructured loans (included above)		2,838		2,497		4,240		3,630		1,908
Less restructured loans in compliance (3)		9,018		8,691		8,078		8,461		6,918
Net nonperforming restructured loans	$	0	$	0	$	0	$	0	$	0
Other real estate owned
Construction, land development, and other land	$	940	$	1,090	$	2,138	$	2,783	$	3,804
1-4 family residential properties		0		724		884		457		676
Multifamily (5 or more) residential properties		0		0		0		0		0
Former branch sites		127		0		886		886		0
Nonfarm nonresidential properties		0		927		1,198		2,289		2,094
	$	1,067	$	2,741	$	5,106	$	6,415	$	6,574
Total nonperforming assets	$	11,110	$	10,679	$	11,817	$	18,285	$	17,653
Interest income that would have been recorded under original loan terms on nonaccrual loans included above	$	318	$	196	$	301	$	762	$	673
Interest income recorded for the period on nonaccrual loans included above	$	269	$	141	$	265	$	251	$	121

(1) The real estate-mortgage segment includes residential 1 – 4 family, commercial real estate, second mortgages and equity lines of credit.

(2) Amounts listed include student loans with principal and interest amounts that are 97 - 98% guaranteed by the federal government.  The past due principal portion of these guaranteed loans totaled $4.8 million at December 31, 2016 and $5.7 million at December 31, 2015. For additional information, refer to Note 4 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this report on Form 10-K.

(3) Amounts listed represent restructured loans that are in compliance with their modified terms as of the date presented.

As shown in the table above, as of December 31, 2016 compared to December 31, 2015, the nonaccrual loan category increased by $2.6 million or 56.24% and the 90-days past due and still accruing interest category decreased by $472 thousand or 14.06%.

Two loan relationships totaling $4.5 million were placed in nonaccrual status in the third quarter of 2016, based on declines in the borrowers' performance. In the fourth quarter, one relationship was paid down by $528 thousand, while balances on the other relationship remained stable. The addition of these relationships to nonaccrual was partially offset by $1.5 million in payoffs and/or charge-offs on other loans that were on nonaccrual status at December 31, 2015. These relationships are also responsible for the majority of the increase in loans rated substandard between December 31, 2015 and December 31, 2016. Although increases in nonaccrual loans and loans rated substandard would typically warrant an increase in the allowance, management believes that the collateral and/or cash flow on these loans will be sufficient to cover balances for which it has no specific allocation.

- 35 -

Loans past due 90 days or more and still accruing interest decreased primarily due to reductions in past dues in the Company's student loan portfolio. Although this category decreased between December 31, 2015 and December 31, 2016, it may increase in future periods. Because the federal government has provided guarantees of repayment of these student loans in an amount ranging from 97% to 98% of the total principal and interest of the loans, management does not expect even significant increases in charged off student loans to have a material effect on the Company.

OREO decreased by $1.7 million or 61.07% when comparing December 31, 2016 to December 31, 2015, as the Company worked to sell these properties in 2016, including the former bank property. Other than the former bank property, as of December 31, 2016, the balance in OREO was for a single property which is currently under contract. The sale is expected to close in the first quarter of 2017.

Management believes the Company has an excellent credit quality review process in place to identify problem loans quickly. For a detailed discussion of the Company's nonperforming assets, refer to Note 4 and Note 5 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this report on Form 10-K.

Management is cautiously optimistic about the future and is well aware that if the economy begins to decline, nonperforming assets could increase in future periods. As the Company experienced in 2009, 2010 and 2011, the effect of a sustained increase in nonperforming assets would be lower earnings caused by larger contributions to the loan loss provision, which in turn would be driven by larger impairments in the loan portfolio and higher levels of loan charge-offs.

The Allowance for Loan Losses

The allowance for loan losses is based on several components. In evaluating the adequacy of the allowance, each segment of the loan portfolio is divided into several pools of loans:

1. Specific identification (regardless of risk rating)

2. Pool–substandard

3. Pool–other assets especially mentioned (OAEM) (rated just above substandard)

4. Pool–pass loans (all other rated loans)

The first component of the allowance for loan losses is determined based on specifically identified loans that are impaired. These loans are individually analyzed for impairment and include nonperforming loans and both performing and nonperforming TDRs. This component may also include loans considered impaired for other reasons, such as outdated financial information on the borrower or guarantors or financial problems of the borrower, including operating losses, marginal working capital, inadequate cash flow, or business interruptions. Changes in TDRs and nonperforming loans affect the dollar amount of the allowance. Increases in the impairment allowance for TDRs and nonperforming loans are reflected as an increase in the allowance for loan losses except in situations where the TDR or nonperforming loan does not require a specific allocation (i.e., the discounted present value of expected future cash flows or the collateral value is considered sufficient).

The majority of the Company's TDRs and nonperforming loans are collateralized by real estate. When reviewing loans for impairment, the Company obtains current appraisals when applicable. If the Company has not yet received a current appraisal on loans being reviewed for impairment, any loan balance that is in excess of the estimated appraised value is allocated in the allowance. As of December 31, 2016 and December 31, 2015, the impaired loan component of the allowance for loan losses amounted to $800 thousand and $798 thousand, respectively. Improvements in the condition of certain borrowers were offset by additional allocations for loans that moved from the pool to specifically identified during 2016. The impaired loan component of the allowance for loan losses is reflected as a valuation allowance related to impaired loans in Note 4 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this report on Form 10-K.

The second component of the allowance consists of qualitative factors and includes items such as economic conditions, growth trends, loan concentrations, changes in certain loans, changes in underwriting, changes in management and legal and regulatory changes. For the December 31, 2016 calculation, the qualitative factors which had the most significant impact on the allowance were those affected by changes in the economy and past due and nonaccrual loans. Continued incremental improvements in the economy allowed for a reduction in the allowance. At the same time, past due and nonaccrual loans increased in several categories when comparing December 31, 2016 to December 31, 2015.

Historical loss is the final component of the allowance for loan losses. The calculation of the historical loss component is conducted on loans evaluated collectively for impairment and uses migration analysis on pooled segments. These segments are based on the loan classifications set by the Federal Financial Institutions Examination Council in the instructions for the Call Report applicable to the Bank.

- 36 -

Consumer loans not secured by real estate and made to individuals for household, family and other personal expenditures are segmented into pools based on whether the loan's payments are current (including loans 1 – 29 days past due), 30 – 59 days past due, 60 – 89 days past due, or 90 days or more past due. All other loans, including loans to consumers that are secured by real estate, are segmented by the Company's internally assigned risk grades: substandard, other assets especially mentioned (rated just above substandard), and pass (all other loans). The Company may also assign loans to the risk grades of doubtful or loss, but as of December 31, 2016 and December 31, 2015, the Company had no loans in these categories.

With the December 31, 2015 calculation, the historical loss was based on a migration period covering the past twelve quarters. The calculation for December 31, 2016 incorporated several changes, which are described in detail below. On a combined basis, the historical loss and qualitative factor components amounted to $7.4 million and $6.9 million as of December 31, 2016 and December 31, 2015, respectively. Growth in the loan portfolio is the major reason for the increase in these combined components when comparing the allowance calculation as of December 31, 2016 to the allowance calculation as of December 31, 2015.

For the December 31, 2016 calculation, management made the following changes to its methodology in order to ensure the allowance accurately reflects probable losses inherent in the loan portfolio.

Change in Migration Periods

Historical loss rates calculated by migration analysis are determined by the performance of a loan over a period of time (the migration period). Multiple migration periods can also be calculated, allowing the Company to assess the migration of loans based on more than one starting point. For example, the Company could run a migration analysis that begins on June 30, 2013 and follows the performance of the loans outstanding on that date through June 30, 2016, assessing changes in risk ratings and the amount of any charge-offs to determine the historical loss rate. The Company could then run a second migration analysis that begins on September 30, 2013 and follows those loans through September 30, 2016 to calculate a second historical loss rate. These two loss rates would then be averaged to determine the overall loss rate applied to the loan portfolio.

The length of a migration period can also be extended. Adding additional quarters to the migration analysis extends the period over which the loan could cease to perform, increasing the number of loans that default and thus also increasing the historical loss rates. While a longer migration period provides a more conservative estimate of expected future losses, extending the migration period too far can provide less accurate estimates if there have been changes in the economy or the Company's loan management processes.

Increasing the number of migration periods, as opposed to lengthening the individual migration periods, provides the Company with an average loss rate that is less affected by unusual balances in the segments of the portfolio. Because migration analysis follows only those loans outstanding at the beginning of the migration period, a significant change in the balance of a loan pool during the migration period can produce results that are not indicative of the performance of the pool.

For example, a particular migration period of twelve quarters (three years) may apply to a pool of loans that had a balance of $300 thousand at the beginning of the migration period. If a new loan of $150 thousand is added to the pool in the following quarter, and this loan is charged off ten quarters later, the migration analysis would show a loss rate of 50%, based on the original outstanding balance of $300 thousand and a charge-off of $150 thousand. In this example, the 50% loss rate calculated for the migration period would result from the unique timing and loan balance factors within the period and would not necessarily provide an appropriate reflection of the performance of the loans in the pool. By using multiple migration periods, such unusual situations have less of an impact on the calculated historical loss rate, providing a more accurate representation of the losses expected to be incurred.

As part of the quarterly calculation, management reviews the length of the migration periods and the number of migration periods used. To better reflect the risks inherent in the loan portfolio, in the third quarter of 2016, the Company increased the number of migration periods from one to four. As with the methodology in prior quarters, one migration period continues to include the twelve most recent quarters.  The three new migration periods that are now averaged with the original migration period also include twelve quarters.  The migration periods used for the fourth quarter 2016 allowance calculation included the twelve quarters ended December 31, 2016, September 30, 2016, June 30, 2016, and March 31, 2016.

- 37 -

Change in Segments for Pooled Loans

In addition to this change in the number of migration periods, the Company also further sub-segmented its pool of consumer loans not secured by real estate. In quarters prior to September 30, 2016, the Company segmented its consumer loans not secured by real estate into four pools: revolving loans, loans for the purchase of and secured by automobiles, student loans, and all other consumer loans. Beginning in the third quarter of 2016, the Company further divided the last category (all other consumer loans) by separating certain purchased loans into their own pool because this group of loans shares characteristics that are not shared with other consumer loans.

These loans were all purchased from a single source and, in addition to the collateral pledged by the borrower, are covered by an agreement between the Company and the note seller that requires the seller to maintain a reserve account with the Company. The balance in this reserve account, which exists to absorb future losses on these purchased loans, is between ten and fifteen percent of the outstanding balance of the purchased loans, with an average of twelve percent. Given the protection provided by this reserve, management does not anticipate any charge-offs against the allowance on these accounts. Accordingly, beginning with the third quarter of 2016, the historic loss factor does not apply to this group of loans.

Change in Qualitative Factors

Management periodically analyzes the qualitative factors applied to the segments of the loan portfolio. Beginning with the September 30, 2016 calculation, management determined that it was appropriate to modify the number of qualitative factors applied to its student loan portfolio and to the new segment discussed above. Applying the relevant qualitative factors to this new segment resulted in a lower allowance for this new sub-segment.

Overall Change in Allowance

As a result of management's analysis, the Company added, through the provision, $1.9 million to the allowance for loan losses for the year ended December 31, 2016. The allowance for loan losses, as a percentage of year-end loans, was 1.37% in 2016 and 1.36% in 2015. Management believes that the allowance has been appropriately funded for losses on existing loans, based on currently available information. The Company will continue to monitor the loan portfolio and levels of nonperforming assets closely and make changes to the allowance for loan losses when necessary.

See Note 4 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this report on Form 10-K for a discussion of the financial statement impact of these changes.

- 38 -

The following table shows an analysis of the allowance for loan losses:

TABLE VIII
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
As of December 31,	2016			2015			2014			2013			2012
	(dollars in thousands)
Balance at the beginning of period	$	7,738		$	7,075		$	6,831		$	7,324		$	8,498
Charge-offs:
Commercial		915			293			286			200			138
Real estate-construction		0			0			51			501			831
Real estate-mortgage (1)		504			321			563			1,548			2,554
Consumer		204			92			163			141			259
Other		147			191			175			316			187
Total charge-offs		1,770			897			1,238			2,706			3,969
Recoveries:
Commercial		79			50			55			76			67
Real estate-construction		3			1			173			6			30
Real estate-mortgage (1)		197			393			524			513			162
Consumer		28			39			64			111			70
Other		40			52			66			207			66
Total recoveries		347			535			882			913			395
Net charge-offs		1,423			362			356			1,793			3,574
Provision for loan losses		1,930			1,025			600			1,300			2,400
Balance at end of period	$	8,245		$	7,738		$	7,075		$	6,831		$	7,324
Selected loan loss statistics
Loans (net of unearned income):
End of period balance	$	603,882		$	568,475		$	535,994		$	500,699		$	471,133
Average balance	$	585,206		$	563,534		$	517,183		$	471,203		$	478,220
Net charge-offs to average total loans		0.24	%		0.06	%		0.07	%		0.38	%		0.75	%
Provision for loan losses to average total loans		0.33	%		0.18	%		0.12	%		0.28	%		0.50	%
Provision for loan losses to net charge-offs		135.63	%		283.15	%		168.54	%		72.50	%		67.15	%
Allowance for loan losses to period end loans		1.37	%		1.36	%		1.32	%		1.36	%		1.55	%
Earnings to loan loss coverage (2)		4.14			13.02			13.80			2.68			2.12
Allowance for loan losses to nonperforming loans		82.10	%		97.48	%		105.42	%		57.55	%		66.11	%

(1) The real estate-mortgage segment includes residential 1 – 4 family, commercial real estate, second mortgages and equity lines of credit.

(2) Income before taxes plus provision for loan losses, divided by net charge-offs.

The following table shows the amount of the allowance for loan losses allocated to each category at December 31 of the years presented.

TABLE IX
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
As of December 31,	2016						2015						2014						2013						2012
	Amount			Percent of Loans to Total Loans			Amount			Percent of Loans to Total Loans			Amount			Percent of Loans to Total Loans			Amount			Percent of Loans to Total Loans			Amount			Percent of Loans to Total Loans
	(dollars in thousands)
Commercial		$	1,493		9.16	%		$	633		7.60	%		$	595		7.03	%		$	350		6.13	%		$	677		5.38	%
Real estate-construction			846		3.83	%			985		3.46	%			703		1.69	%			662		2.90	%			187		2.55	%
Real estate-mortgage (1)			5,267		74.25	%			5,628		76.90	%			5,347		81.33	%			5,357		83.28	%			6,179		84.59	%
Consumer			455		9.61	%			279		8.87	%			219		5.69	%			294		3.95	%			204		2.79	%
Other			184		3.15	%			213		3.17	%			211		4.26	%			168		3.74	%			77		4.70	%
Total		$	8,245		100.00	%		$	7,738		100.00	%		$	7,075		100.00	%		$	6,831		100.00	%		$	7,324		100.00	%

(1) The real estate-mortgage segment includes residential 1 – 4 family, commercial real estate, second mortgages and equity lines of credit.

For the year ended December 31, 2016 as compared to the year ended December 31, 2015, there was an increase in the allowance for loan losses due to growth in the loan portfolio. The change in the allowance was distributed among the loan segments based on the composition of loans in each segment. See Note 4 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this report on Form 10-K for further information related to the effect of the change in the calculation method.

- 39 -

Although the allowance for loan losses is allocated into these categories, the entire allowance for loan losses is available to cover loan losses in any category. For example, if real estate-construction loans experienced losses of $1.0 million, the allowance for loan losses could absorb these losses even though only $846 thousand is allocated to that category.

Deposits

The following table shows the average balances and average rates paid on deposits for the periods presented.

TABLE X
DEPOSITS
Years ended December 31,	2016						2015						2014
	Average			Average			Average			Average			Average			Average
	Balance			Rate			Balance			Rate			Balance			Rate
	(dollars in thousands)
Interest-bearing transaction accounts		$	20,045		0.04	%		$	11,219		0.04	%		$	11,537		0.04	%
Money market deposit accounts			221,339		0.08	%			228,627		0.08	%			213,918		0.08	%
Savings accounts			78,305		0.05	%			74,436		0.05	%			73,576		0.06	%
Time deposits, $100,000 or more			110,963		1.05	%			113,945		0.98	%			108,630		0.96	%
Other time deposits			99,376		0.95	%			107,142		0.96	%			128,383		1.03	%
Total interest-bearing deposits			530,028		0.44	%			535,369		0.44	%			536,044		0.48	%
Demand deposits			214,876						194,677						184,555
Total deposits		$	744,904					$	730,046					$	720,599

The Company's average total deposits were $744.9 million for the year ended December 31, 2016, an increase of $14.9 million or 2.04% from average total deposits for the year ended December 31, 2015. The demand deposit accounts category had the largest increase, totaling $20.2 million. In addition, average time deposits, which are currently the Company's most expensive deposit categories, decreased by a total of $10.7 million, as seen in the table above. The rates paid on interest-bearing deposits by the Company remained at 0.44% for the year ended December 31, 2016 compared to the year ended December 31, 2015.

To manage its net interest margin, during 2015 and 2016 the Company focused on reducing higher-cost time deposits by lowering deposit rates and allowing time deposits to shrink through attrition. As loan growth continued in 2016, the Company made strategic increases in the rates on time deposits in certain maturities to fund loan growth and manage its interest-rate risk. The Company is also focused on increasing lower-cost deposits by actively targeting new noninterest-bearing deposits and savings deposits.

The following table shows time deposits in amounts of $100 thousand or more by time remaining until maturity at the dates presented.

TABLE XI
TIME DEPOSITS OF $100,000 OR MORE
As of December 31,	2016			2015			2014
	(in thousands)
Maturing in:
Within 3 months		$	15,074		$	23,844		$	32,995
3 through 6 months			21,183			11,474			12,212
6 through 12 months			19,276			8,572			12,628
Greater than 12 months			59,501			65,207			47,197
		$	115,034		$	109,097		$	105,032

Return on Equity and Assets

The return on average stockholders' equity and assets, the dividend pay-out ratio, and the average equity to average assets ratio for the past three years are presented below.

As of December 31,	2016			2015			2014
Return on average assets		0.43	%		0.41	%		0.47	%
Return on average equity		3.99	%		4.02	%		4.81	%
Dividend pay-out ratio		52.23	%		46.40	%		31.32	%
Average equity to average assets		10.75	%		10.23	%		9.83	%

Capital Resources

Total stockholders' equity as of December 31, 2016 was $94.0 million, up 0.87% from $93.2 million on December 31, 2015 as net income exceeded dividends paid and the mark-to-market adjustment on available-for-sale securities.

- 40 -

The Company's capital position remains strong as evidenced by the regulatory capital measurements. Under the banking regulations, Total Capital is composed of core capital (Tier 1) and supplemental capital (Tier 2). Tier 1 capital consists of common stockholders' equity less goodwill. Tier 2 capital consists of certain qualifying debt and a qualifying portion of the allowance for loan losses.

In June 2013, the federal bank regulatory agencies adopted the Basel III Final Rules (i) to implement the Basel III capital framework and (ii) for calculating risk-weighted assets. These rules became effective January 1, 2015, subject to limited phase-in periods. For an overview of the Basel III Final Rules, refer to "Regulation and Supervision" included in Item 1, "Business" of this report on Form 10-K.

The following is a summary of the Company's capital ratios for the past three years. As shown below, these ratios were all well above the regulatory minimum levels.

	2016 Regulatory Minimums			2016			2015			2014
Common Equity Tier 1 Capital		5.125	%		13.39	%		13.78	%		N/A
Tier 1 Capital		6.625	%		13.39	%		13.78	%		14.36	%
Total Capital		8.625	%		14.51	%		14.89	%		15.44	%
Tier 1 Leverage		4.000	%		10.68	%		10.93	%		10.75	%

Year-end book value per share was $18.94 in 2016, $18.79 in 2015, and $17.85in 2014. Cash dividends were $2.0 million or $0.40 per share in 2016, $1.7 million or $0.34 per share in 2015, and $1.3 million or $0.26 per share in 2014. The common stock of the Company has not been extensively traded. The table below shows the high and low sales prices and dividends paid for each quarter of 2016 and 2015. The stock is quoted on the NASDAQ Capital Market under the symbol "OPOF" and the prices below are based on trade information as reported by The NASDAQ Stock Market, LLC. There were 1,184 stockholders of record of the Company as of March 10, 2017. This stockholder count does not include stockholders who hold their stock in a nominee registration.

The following is a summary of the quarterly dividends paid and high and low sales prices of Old Point Financial Corporation common stock for the previous two years.

	2016									2015
	Dividend			Sales Price						Dividend			Sales Price
				High			Low						High			Low
1st Quarter		$	0.10		$	20.25		$	17.38		$	0.08		$	15.44		$	14.85
2nd Quarter		$	0.10		$	20.50		$	18.50		$	0.08		$	15.75		$	14.83
3rd Quarter		$	0.10		$	21.45		$	18.30		$	0.09		$	16.00		$	14.71
4th Quarter		$	0.10		$	26.00		$	19.34		$	0.09		$	19.00		$	15.40

Liquidity

Liquidity is the ability of the Company to meet present and future financial obligations through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. Liquid assets include cash, interest-bearing deposits with banks, federal funds sold, investments in securities and loans maturing within one year.

In addition, secondary sources are available through the use of borrowed funds if the need should arise. The Company's sources of funds include a large stable deposit base and secured advances from the Federal Home Loan Bank of Atlanta (FHLB). As of December 31, 2016, the Company had $270.0 million in FHLB borrowing availability. The increase in availability for FHLB advances is mainly due to the payoff of a $25.0 million advance in February of 2016, discussed further below. The Company also has available short-term unsecured borrowed funds in the form of federal funds with correspondent banks. As of year-end 2016 and 2015, the Company had $55.0 million and $50.0 million available in federal funds lines of credit to address any short-term borrowing needs.

As a result of the Company's management of liquid assets, the availability of borrowed funds and the ability to generate liquidity through liability funding, management believes that the Company maintains overall liquidity sufficient to satisfy its depositors' requirements and to meet its customers' future borrowing needs.

Notwithstanding the foregoing, the Company's ability to maintain sufficient liquidity may be affected by numerous factors, including economic conditions nationally and in the Company's markets. Depending on its liquidity levels, its capital position, conditions in the capital markets and other factors, the Company may from time to time consider the issuance of debt, equity, other securities or other possible capital markets transactions, the proceeds of which could provide additional liquidity for the Company's operations.

- 41 -

The following table sets forth information relating to the Company's sources of liquidity and the outstanding commitments for use of liquidity at December 31, 2016 and December 31, 2015. Dividing the total short-term sources of liquidity by the outstanding commitments for use of liquidity derives the liquidity coverage ratio.

LIQUIDITY SOURCES AND USES
	December 31, 2016							December 31, 2015
	Total		In Use		Available			Total		In Use		Available
	(dollars in thousands)
SOURCES
Federal funds lines of credit	$	55,000	$	0	$	55,000		$	50,000	$	0	$	50,000
Federal Home Loan Bank advances		270,048		0		270,048			262,196		25,000		237,196
Federal funds sold  & balances at the Federal Reserve						3,718							3,195
Securities, available-for-sale and unpledged at fair value						126,457							94,402
Total short-term funding sources						455,223							384,793
USES
Unfunded loan commitments and lending lines of credit						69,389							63,039
Letters of credit						1,079							1,042
Commitments to purchase assets						165							165
Total potential short-term funding uses						70,633							64,246
Liquidity coverage ratio						644.5	%						598.9	%

The fair value of unpledged available-for-sale securities increased from December 31, 2015 to December 31, 2016 primarily due to changes in the Bank's pledging requirements for public deposits. Unpledged available-for-sale securities also increased due to a $7.2 million reduction in customer repurchase agreements. The 27.92% decrease in repurchase agreements from December 31, 2015 to December 31, 2016 was primarily a result of balance fluctuations in the account of a single customer.

Management is not aware of any market or institutional trends, events or uncertainties that are expected to have a material effect on the liquidity, capital resources or operations of the Company. Nor is management aware of any current recommendations by regulatory authorities that would have a material effect on liquidity or operations. The Company's internal sources of liquidity are deposits, loan and investment repayments and securities available-for-sale. The Company's primary external source of liquidity is advances from the FHLB.

The Company's operating activities provided $8.7 million of cash during the year ended December 31, 2016, compared to $7.8 million provided during 2015, primarily due to increases in net income before depreciation and amortization. The Company's investing activities used $23.6 million of cash during 2016, compared to $15.4 million used during 2015, principally due to additional loan growth. The Company's financing activities provided $3.8 million of cash during 2016 compared to $11.3 million provided of cash during 2015. This change is principally due to increases in deposits, partially offset by a net decrease in FHLB advances and overnight repurchase agreements.

In February of 2016, the Company elected to prepay a $25.0 million FHLB advance. This $25.0 million advance, which would have matured in June of 2016, bore an interest rate of 4.83%, significantly higher than other borrowing sources in the current rate environment. Although prepayment of the advance subjected the Company to a prepayment penalty equal to the cost to the FHLB to unwind its underlying hedge plus an administrative fee, the Company determined that the interest expense saved was more than the cost to prepay the advance.

Effects of Inflation

Management believes changes in interest rates affect the financial condition of the Company, and other financial institutions, to a far greater degree than changes in the inflation rate. While interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate. Interest rates are highly sensitive to many factors that are beyond the control of the Company, including changes in the expected rate of inflation, the influence of general and local economic conditions and the monetary and fiscal policies of the U.S. government, its agencies and various other governmental regulatory authorities.

Management believes that the key to achieving satisfactory performance in an inflationary environment is the Company's ability to maintain or improve its net interest margin and to generate additional fee income. The Company's policy of investing in and funding with interest-sensitive assets and liabilities is intended to reduce the risks inherent in a volatile inflationary economy.

Off-Balance Sheet Lending Related Commitments

The Company had $145.2 million in consumer and commercial commitments at December 31, 2016. As of the same date, the Company also had $3.6 million in letters of credit that the Company will fund if certain future events occur. It is expected that only a portion of these commitments will ever actually be funded.

- 42 -

Management believes that the Company has the liquidity and capital resources to handle these commitments in the normal course of business. See Note 15 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this report on Form 10-K.

Contractual Obligations

In the normal course of business, there are various outstanding contractual obligations of the Company that will require future cash outflows. In addition, there are commitments and contingent liabilities, such as commitments to extend credit, that may or may not require future cash outflows. The following table provides the Company's contractual obligations as of December 31, 2016:

Payments due by period
	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
	(in thousands)
Contractual Obligations
Short-Term Debt Obligations	$	18,704	$	18,704	$	0	$	0	$	0
Long-Term Debt Obligations		0		0		0		0		0
Operating Lease Obligations		632		236		396		0		0
Commitment to purchase assets		165		165		0		0		0
Total contractual cash obligations excluding deposits		19,501		19,105		396		0		0
Deposits		784,502		672,221		52,805		59,476		0
Total	$	804,003	$	691,326	$	53,201	$	59,476	$	0

Short-term debt obligations include federal funds purchased, overnight repurchase agreements and term repurchase agreements.

After December 31, 2016 but prior to the filing of this annual report on Form 10-K, the Company signed additional contracts for fixed asset purchases and professional services. These contracts will require payments of approximately $165 thousand in 2017.

Short-Term Borrowings

Certain short-term borrowings at December 31, 2016, 2015 and 2014 are presented below. Information is presented only on those categories whose average balance at December 31 exceeded 30 percent of total stockholders' equity at the same date.

TABLE XII
SHORT-TERM BORROWINGS
	2016						2015						2014
	Balance			Rate			Balance			Rate			Balance			Rate
	(dollars in thousands)
Balance at December 31,
Repurchase agreements		$	18,704		0.10	%		$	25,950		0.09	%		$	37,816		0.10	%
Average daily balance for the year ended December 31,
Repurchase agreements		$	25,144		0.10	%		$	30,654		0.10	%		$	32,780		0.10	%
Maximum month-end outstanding balance:
Repurchase agreements		$	34,519					$	44,614					$	42,429

- 43 -

Quarterly Data

The table below contains a comparison of the Company's quarterly income and expenses for the periods indicated:

	Years Ended December 31,
	2016												2015
	Fourth			Third			Second			First			Fourth			Third			Second			First
	Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter
	(in thousands, except per share data)
Interest and dividend income	$	7,590		$	7,436		$	7,435		$	7,365		$	7,632		$	7,609		$	7,550		$	7,504
Interest expense		(640	)		(633	)		(582	)		(719	)		(906	)		(915	)		(918	)		(893	)
Net interest income		6,950			6,803			6,853			6,646			6,726			6,694			6,632			6,611
Provision for loan losses		(630	)		100			(1,250	)		(150	)		(775	)		50			(25	)		(275	)
Net interest income, after provision for loan losses		6,320			6,903			5,603			6,496			5,951			6,744			6,607			6,336
Noninterest income		3,188			3,327			3,286			3,665			3,277			3,223			3,359			3,277
Noninterest expenses		(8,566	)		(8,689	)		(8,485	)		(9,091	)		(9,154	)		(9,151	)		(8,494	)		(8,287	)
Income before income taxes		942			1,541			404			1,070			74			816			1,472			1,326
Provision for income taxes		(47	)		(212	)		148			(49	)		236			24			(193	)		(121	)
Net income	$	895		$	1,329		$	552		$	1,021		$	310		$	840		$	1,279		$	1,205
Earnings per common share:
Basic	$	0.18		$	0.27		$	0.11		$	0.21		$	0.06		$	0.17		$	0.26		$	0.24
Diluted	$	0.18		$	0.27		$	0.11		$	0.21		$	0.06		$	0.17		$	0.26		$	0.24

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

This information is incorporated herein by reference from Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", on pages 20 through 44 of this report on Form 10-K.

Item 8. Financial Statements and Supplementary Data

The Consolidated Financial Statements and related footnotes of the Company are presented below followed by the financial statements of the Parent.

- 44 -

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Old Point Financial Corporation

Hampton, Virginia

We have audited the accompanying consolidated balance sheets of Old Point Financial Corporation and Subsidiaries (the "Company") as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, changes in stockholders' equity, and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Old Point Financial Corporation and Subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Yount, Hyde & Barbour, P.C.

Winchester, Virginia

March 15, 2017

- 45 -

Old Point Financial Corporation and Subsidiaries

Consolidated Balance Sheets

	December 31, 2016			December 31, 2015
	(dollars in thousands, except share data)
Assets
Cash and due from banks	$	21,885		$	33,514
Interest-bearing due from banks		1,667			1,064
Federal funds sold		2,302			2,412
Cash and cash equivalents		25,854			36,990
Securities available-for-sale, at fair value		199,365			214,192
Restricted securities		970			2,016
Loans, net of allowance for loan losses of $8,245 and $7,738		595,637			560,737
Premises and equipment, net		39,324			41,282
Bank-owned life insurance		25,206			24,411
Other real estate owned, net of valuation allowance of $1,026 and $2,549		1,067			2,741
Other assets		15,543			14,418
	$	902,966		$	896,787
Liabilities & Stockholders' Equity
Deposits:
Noninterest-bearing deposits	$	228,641		$	215,090
Savings deposits		344,452			321,370
Time deposits		211,409			210,011
Total deposits		784,502			746,471
Overnight repurchase agreements		18,704			25,950
Federal Home Loan Bank advances		0			25,000
Accrued expenses and other liabilities		5,770			6,190
Total liabilities		808,976			803,611
Stockholders' equity:
Common stock, $5 par value, 10,000,000 shares authorized; 4,961,258 and 4,959,009 shares issued and outstanding		24,806			24,795
Additional paid-in capital		16,427			16,392
Retained earnings		56,965			55,151
Accumulated other comprehensive loss, net		(4,208	)		(3,162	)
Total stockholders' equity		93,990			93,176
Total liabilities and stockholders' equity	$	902,966		$	896,787
See Notes to Consolidated Financial Statements.

- 46 -

Old Point Financial Corporation and Subsidiaries

Consolidated Statements of Income

	Years Ended December 31,
	2016		2015
	(dollars in thousands, except per share data)
Interest and Dividend Income:
Interest and fees on loans	$	26,322	$	25,972
Interest on due from banks		48		15
Interest on federal funds sold		6		2
Interest on securities:
Taxable		1,802		2,510
Tax-exempt		1,535		1,663
Dividends and interest on all other securities		113		133
Total interest and dividend income		29,826		30,295
Interest Expense:
Interest on savings deposits		227		227
Interest on time deposits		2,116		2,144
Interest on federal funds purchased, securities sold under agreements to repurchase and other borrowings		25		30
Interest on Federal Home Loan Bank advances		206		1,231
Total interest expense		2,574		3,632
Net interest income		27,252		26,663
Provision for loan losses		1,930		1,025
Net interest income, after provision for loan losses		25,322		25,638
Noninterest Income:
Income from fiduciary activities		3,560		3,617
Service charges on deposit accounts		4,052		4,021
Other service charges, commissions and fees		3,940		4,084
Income from bank-owned life insurance		795		885
Gain on sale of available-for-sale securities, net		522		76
Other operating income		597		453
Total noninterest income		13,466		13,136
Noninterest Expense:
Salaries and employee benefits		19,878		20,747
Occupancy and equipment		5,575		5,330
Data processing		1,620		1,625
FDIC insurance		483		586
Customer development		612		584
Legal and audit expenses		1,315		720
Other outside service fees		807		693
Employee professional development		659		591
Capital stock tax		505		439
ATM and other losses		477		452
Prepayment fee on Federal Home Loan Bank advance		391		0
Loss on other real estate owned		154		957
Other operating expenses		2,355		2,362
Total noninterest expense		34,831		35,086
Income before income taxes		3,957		3,688
Income tax expense		160		54
Net income	$	3,797	$	3,634
Basic earnings per share
Weighted average shares outstanding		4,959,173		4,959,009
Net income per share of common stock	$	$0.77	$	$0.73
Diluted earnings per share
Weighted average shares outstanding		4,960,934		4,959,009
Net income per share of common stock	$	$0.77	$	$0.73
See Notes to Consolidated Financial Statements.

- 47 -

Old Point Financial Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
	Years Ended December 31,
	2016				2015
	(dollars in thousands)
Net income		$	3,797			$	3,634
Other comprehensive income (loss), net of tax
Net unrealized losses on available-for-sale securities			(1,163	)			(498	)
Net change in unrealized losses on securities transferred from available-for-sale to held-to-maturity			0				3,386
Net change in defined benefit plan assets and benefit obligations			117				(157	)
Other comprehensive income (loss)			(1,046	)			2,731
Comprehensive income		$	2,751			$	6,365
See Notes to Consolidated Financial Statements.

- 48 -

Old Point Financial Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

	Shares of Common Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
	(dollars in thousands, except per share data)
Balance at  December 31, 2014		4,959,009	$	24,795	$	16,392	$	53,203		$	(5,893	)	$	88,497
Net income		0		0		0		3,634			0			3,634
Other comprehensive income, net of tax		0		0		0		0			2,731			2,731
Cash dividends ($0.34 per share)		0		0		0		(1,686	)		0			(1,686	)
Balance at  December 31, 2015		4,959,009	$	24,795	$	16,392	$	55,151		$	(3,162	)	$	93,176
Net income		0		0		0		3,797			0			3,797
Other comprehensive loss, net of tax		0		0		0		0			(1,046	)		(1,046	)
Exercise of stock options		1,250		6		19		0			0			25
Employee Stock Purchase Plan share issuance		999		5		16		0			0			21
Cash dividends ($0.40 per share)		0		0		0		(1,983	)		0			(1,983	)
Balance at  December 31, 2016		4,961,258	$	24,806	$	16,427	$	56,965		$	(4,208	)	$	93,990
See Notes to Consolidated Financial Statements.

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Old Point Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31,	2016			2015
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	3,797		$	3,634
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,725			2,543
Provision for loan losses		1,930			1,025
Net gain on sale of available-for-sale securities		(522	)		(76	)
Net amortization of securities		2,196			2,188
Net (gain) loss on disposal of premises and equipment		(3	)		6
Net loss on write-down/sale of other real estate owned		154			957
Income from bank owned life insurance		(795	)		(885	)
Deferred tax benefit		(19	)		(227	)
Increase in other assets		(567	)		(3,969	)
Increase (decrease) in other liabilities		(243	)		3,637
Pension plan contribution		0			(1,000	)
Net cash provided by operating activities		8,653			7,833
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale securities		(151,204	)		(104,103	)
Proceeds from redemption of restricted securities		1,046			277
Proceeds from maturities and calls of available-for-sale securities		43,660			80,790
Proceeds from maturities and calls of held-to-maturity securities		0			300
Proceeds from sales of available-for-sale securities		107,647			23,005
Paydowns on available-for-sale securities		11,288			9,353
Paydowns on held-to-maturity securities		0			8,161
Purchases of government-guaranteed student loans		0			(14,315	)
Net increase in all other loans (including repayments on student loans)		(36,830	)		(19,081	)
Proceeds from sales of other real estate owned		1,699			1,956
Payments for improvements to other real estate owned		(52	)		0
Purchases of premises and equipment		(891	)		(1,756	)
Net cash used in investing activities		(23,637	)		(15,413	)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in noninterest-bearing deposits		13,551			28,810
Increase in savings deposits		23,082			14,292
Increase (decrease) in time deposits		1,398			(13,285	)
Decrease in federal funds purchased, repurchase agreements and other borrowings, net		(7,246	)		(11,866	)
Increase in Federal Home Loan Bank advances		55,000			20,000
Repayment of Federal Home Loan Bank advances		(80,000	)		(25,000	)
Proceeds from sale of stock		46			0
Cash dividends paid on common stock		(1,983	)		(1,686	)
Net cash provided by financing activities		3,848			11,265
Net increase (decrease) in cash and cash equivalents		(11,136	)		3,685
Cash and cash equivalents at beginning of period		36,990			33,305
Cash and cash equivalents at end of period	$	25,854		$	36,990
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest	$	2,587		$	3,646
Income tax	$	0		$	200
SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS
Unrealized loss on securities available-for-sale	$	(1,762	)	$	(755	)
Loans transferred to other real estate owned	$	0		$	553
Former bank property transferred from fixed assets to foreclosed properties	$	127		$	0
(Increase) decrease in pension liability	$	177		$	(237	)
Securities transferred from held-to-maturity to available-for-sale	$	0		$	85,555
Unamortized losses on transfer date on securities transferred from available-for-sale to held-to-maturity, eliminated upon transfer back to available-for-sale	$	0		$	4,197
Amortization of unrealized loss on securities transferred to held-to-maturity	$	0		$	934
See Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1, Significant Accounting Policies

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements include the accounts of Old Point Financial Corporation (the Company) and its wholly-owned subsidiaries, The Old Point National Bank of Phoebus (the Bank) and Old Point Trust & Financial Services N.A. (Trust). All significant intercompany balances and transactions have been eliminated in consolidation. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50 percent of the voting rights or where it exercises control. Entities where the Company holds 20 to 50 percent of the voting rights, or has the ability to exercise significant influence, or both, are accounted for under the equity method. As discussed below, the Company consolidates entities deemed to be variable interest entities (VIEs) when it is determined to be the primary beneficiary.

NATURE OF OPERATIONS

Old Point Financial Corporation is a holding company that conducts substantially all of its operations through two subsidiaries, The Old Point National Bank of Phoebus and Old Point Trust & Financial Services, N.A. The Bank serves individual and commercial customers, the majority of which are in Hampton Roads, Virginia. As of December 31, 2016, the Bank had 18 branch offices. The Bank offers a full range of deposit and loan products to its retail and commercial customers. Trust offers a full range of services for individuals and businesses. Products and services include retirement planning, estate planning, financial planning, estate and trust administration, retirement plan administration, tax services and investment management services.

VARIABLE INTEREST ENTITIES

A legal entity is referred to as a VIE if any of the following conditions exist, which are outlined in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) variable interest accounting guidance (FASB ASC 810-10-15-14): (1) the total equity investment at risk is insufficient to permit the legal entity to finance its activities without additional subordinated financial support from other parties, or (2) the entity has equity investors that cannot make significant decisions about the entity's operations or that do not absorb their proportionate share of the expected losses or receive the expected returns of the entity.

In addition, as specified in VIE accounting guidance (FASB ASC 810-10-25-38), a VIE must be consolidated by the Company if it is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that will absorb a majority of the expected losses, receive a majority of the expected residual returns, or both. At this time, the Company has no VIEs that are consolidated. The Company does have an interest in one VIE, Old Point Mortgage, LLC (Old Point Mortgage), which is not consolidated because the Company has determined that it is not the primary beneficiary.

On January 13, 2017, the Bank entered into a membership interest purchase agreement (the Purchase Agreement) with TMSI to purchase TMSI's 51% interest in Old Point Mortgage. Upon completion of the purchase, the Bank will be the sole member of Old Point Mortgage. The purchase is expected to be completed on or before May 1, 2017.

USE OF ESTIMATES

In preparing Consolidated Financial Statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, other-than-temporary impairment of securities, the valuation allowance on other real estate owned and the determination of defined benefit obligations.

SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

Most of the Company's activities are with customers located within the Hampton Roads region. The types of securities that the Company invests in are included in Note 3. The types of lending that the Company engages in are included in Note 4. The Company has significant concentrations in the following industries: construction, lessors of real estate, activities related to real estate, ambulatory health care and religious organizations. The Company does not have any significant concentrations to any one customer.

At December 31, 2016 and 2015, there were $308.5 million and $297.4 million, or 51.09% and 52.32%, respectively, of total loans concentrated in commercial real estate. Commercial real estate for purposes of this note includes all construction loans, loans secured by multifamily residential properties, loans secured by farmland and loans secured by nonfarm, nonresidential properties.

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CASH AND CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, cash and cash equivalents includes cash and balances due from banks and federal funds sold, all of which mature within 90 days.

INTEREST-BEARING DEPOSITS IN BANKS

Interest-bearing deposits in banks mature within one year and are carried at cost.

SECURITIES

Certain debt securities that management has the positive intent and ability to hold until maturity are classified as "held-to-maturity" and recorded at amortized cost. Securities not classified as held-to-maturity, including equity securities with readily determinable fair values, are classified as "available-for-sale" and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company employs a systematic methodology that considers available evidence in evaluating potential impairment of its investments. In the event that the cost of an investment exceeds its fair value, the Company evaluates, among other factors, the magnitude and duration of the decline in fair value; the expected cash flows of the securities; the financial health of and business outlook for the issuer; the performance of the underlying assets for interests in securitized assets; and the Company's intent and ability to hold the investment. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in investment income and a new cost basis in the investment is established.

FEDERAL HOME LOAN BANK STOCK

The Company, as a member of the Federal Home Loan Bank of Atlanta (FHLB), is required to maintain an investment in the capital stock of the FHLB. Based on the redemption provisions of the FHLB, the stock has no quoted market value, is carried at cost and is listed as a restricted security. The Company reviews its holdings for impairment based on the ultimate recoverability of the cost basis in the FHLB stock.

LOANS

The Company extends loans to individual consumers and commercial customers for various purposes. Most of the Company's loans are secured by real estate, including real estate construction loans and real estate mortgage loans (i.e., residential 1-4 family mortgages, commercial real estate loans, second mortgages and equity lines of credit).  Other loans are secured by collateral that is not real estate, which may include inventory, accounts receivable, equipment or other personal property. A substantial portion of the loan portfolio is represented by real estate mortgage loans throughout Hampton Roads. The ability of the Company's debtors to honor their contracts is dependent in part upon the real estate and general economic conditions in this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for unearned income, the allowance for loan losses and any unamortized deferred fees or costs on originated loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

The accrual of interest on commercial loans (including construction loans and commercial loans secured and not secured by real estate) is generally discontinued at the time the loan is 90 days past due unless the credit is well-secured and in the process of collection. Consumer loans not secured by real estate and consumer real estate secured loans (i.e., residential 1-4 family mortgages, second mortgages and equity lines of credit) are generally placed on nonaccrual status when payments are 120 days past due. Past due status is based on the contractual terms of the loan, and loans are considered past due when a payment of principal and/or interest is due but not paid. Regular payments not received within the payment cycle are considered to be 30, 60, or 90 or more days past due accordingly. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual status or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are generally returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured, or when the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments for at least six months.

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ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired, such as a loan that is considered a TDR (discussed in detail below). These loans are excluded from pooled loss forecasts and a separate reserve is provided under the accounting guidance for loan impairment. All loans, including consumer loans, whose terms have been modified in a TDR are also individually analyzed for estimated impairment. Impairment is measured on a loan-by-loan basis for construction loans and commercial loans (i.e., commercial mortgage loans on real estate and commercial loans not secured by real estate) by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. For those loans that are classified as impaired, an allowance is established when the discounted value of expected future cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

The general component covers loans that are not classified as impaired. Loans collectively evaluated for impairment are pooled, with a historical loss rate, based on migration analysis, applied to each pool, segmented by risk grade or days past due, depending on the type of loan.  Based on credit risk assessments and management's analysis of qualitative factors, additional loss factors are applied to loan balances. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and consumer loans secured by real estate (i.e., residential 1-4 family mortgages, second mortgages and equity lines of credit) for impairment disclosures, unless the terms of such loans have been modified in a TDR due to financial difficulties of the borrower.

LOAN CHARGE-OFF POLICIES

Loans are generally fully charged off or partially charged down to the fair value of collateral securing the asset when:

· Management determines the asset to be uncollectible;

· Repayment is deemed to be protracted beyond reasonable time frames;

· The asset has been classified as a loss by either the internal loan review process or external examiners;

· The borrower has filed for bankruptcy protection and the loss becomes evident due to a lack of borrower assets; or

· The loan is 120 days or more past due unless the loan is both well secured and in the process of collection.

TROUBLED DEBT RESTRUCTURINGS

In situations where, for economic or legal reasons related to a borrower's financial difficulties, management grants a concession for other than an insignificant period of time to the borrower that would not otherwise be considered, the related loan is classified as a TDR. Management strives to identify borrowers in financial difficulty before their loans reach nonaccrual status and works with them to grant appropriate concessions, if necessary, and modify their loans to more affordable terms. These modified terms could include reduction in the interest rate below current market rates for borrowers with similar risk profiles, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal, management measures any impairment on the restructuring as noted above for impaired loans. The Company had $11.9 million and $11.2 million in loans classified as TDRs as of December 31, 2016 and 2015, respectively.

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TRANSFERS OF FINANCIAL ASSETS

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company (i.e., put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership); (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

OTHER REAL ESTATE OWNED (OREO)

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance (direct write-downs) are included in net expenses from foreclosed assets.

BANK-OWNED LIFE INSURANCE

The Company owns insurance on the lives of a certain group of key employees. The policies were purchased to help offset the increase in the costs of various benefit plans. The cash surrender value of these policies is included as an asset on the consolidated balance sheets, and the increase in cash surrender value is recorded as noninterest income on the consolidated statements of income. In the event of the death of an insured individual under these policies, the Company would receive a death benefit payment.  Any excess in the amount received over the recorded cash surrender value would be recorded as other income on the consolidated statements of income.

PREMISES AND EQUIPMENT

Land is carried at cost. Buildings and equipment are stated at cost, less accumulated depreciation and amortization computed on the straight-line method over the estimated useful lives of the assets. Buildings and equipment are depreciated over their estimated useful lives ranging from 3 to 39 years; leasehold improvements are amortized over the lives of the respective leases or the estimated useful life of the leasehold improvement, whichever is less. Software is amortized over its estimated useful life ranging from 3 to 5 years.

OFF-BALANCE SHEET CREDIT RELATED FINANCIAL INSTRUMENTS

In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under commercial letters of credit and lines of credit. Such financial instruments are recorded when they are funded.

PENSION PLAN

The Company has a non-contributory defined benefit pension plan, which was frozen by the Company in 2006. Benefits for participants will remain frozen in the plan until such time as further action occurs. No additional participants will be added to the plan.

The compensation cost of the pension plan is recognized on the projected unit credit method. The aggregate cost method is utilized for funding purposes.

STOCK COMPENSATION PLANS

Stock compensation accounting guidance (FASB ASC 718, "Compensation -- Stock Compensation") requires that the compensation cost related to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black Scholes model is used to estimate the fair value of the stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock awards.

INCOME TAXES

The Company accounts for income taxes in accordance with income tax accounting guidance (FASB ASC 740, "Income Taxes"). The Company adopted the accounting guidance related to accounting for uncertainty in income taxes, which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions.

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Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability or balance sheet method. Under this method, the net deferred tax asset or liability is based on the tax effects of the difference between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more-likely-than-not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more-likely-than-not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management's judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

No uncertain tax positions were recorded in 2016 or 2015.

EARNINGS PER COMMON SHARE

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and shares to be issued as part of the employee stock purchase plan and are determined using the treasury stock method.

TRUST ASSETS AND INCOME

Securities and other property held by Trust in a fiduciary or agency capacity are not assets of the Company and are not included in the accompanying Consolidated Financial Statements.

ADVERTISING EXPENSES

Advertising expenses are expensed as incurred. Advertising expense for the years ended 2016 and 2015 was $273 thousand and $217 thousand, respectively.

COMPREHENSIVE INCOME

Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available-for-sale, unrealized losses on securities transferred from available-for-sale to held-to-maturity, and unrealized losses related to changes in the funded status of the pension plan which are also recognized as separate components of equity.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 16. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern".  This update is intended to provide guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. Management is required under the new guidance to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued when preparing financial statements for each interim and annual reporting period. If conditions or events are identified, the ASU specifies the process that must be followed by management and also clarifies the timing and content of going concern footnote disclosures in order to reduce diversity in practice. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Early adoption is permitted.  The Company does not expect the adoption of ASU 2014-15 to have a material impact on its consolidated financial statements.

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In January 2016, the FASB issued ASU 2016-01, "Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities".  The amendments in ASU 2016-01, among other things: 1) Require equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 3) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). 4) Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently assessing the impact that ASU 2016-01 will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)". Among other things, in the amendments in ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) A lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently assessing the impact that ASU 2016-02 will have on its consolidated financial statements.

During March 2016, the FASB issued ASU No. 2016-05, "Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships". The amendments in this ASU clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria remain intact. The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2016-05 to have a material impact on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-07, "Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting". The amendments in this ASU eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required.  In addition, the amendments in this ASU require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Early Adoption is permitted. The Company does not expect the adoption of ASU 2016-07 to have a material impact on its consolidated financial statements.

During March 2016, the FASB issued ASU No. 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Shares-Based Payment Accounting". The amendments in this ASU simplify several aspects of the accounting for share-based payment award transactions including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is currently assessing the impact that ASU 2016-09 will have on its consolidated financial statements.

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During June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments".  The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this ASU are effective for Securities and Exchange Commission (SEC) filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For public companies that are not SEC filers, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company is currently assessing the impact that ASU 2016-13 will have on its consolidated financial statements.

During August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments", to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. If retrospective application is impractical for some of the issues addressed by the update, the amendments for those issues would be applied prospectively as of the earliest date practicable. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements.

During January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current implementation guidance in Topic 805, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a "set") that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs. The amendments in this ASU provide a screen to determine when a set is not a business. If the screen is not met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The ASU provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The amendments in this ASU are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. The Company does not expect the adoption of ASU 2017-01 to have a material impact on its consolidated financial statements.

During January 2017, the FASB issued ASU No. 2017-04, "Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The amendments in this ASU simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Public business entities that are SEC filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Public business entities that are not SEC filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements.

NOTE 2, Restrictions on Cash and Amounts Due from Banks

The Company is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31, 2016 and 2015, the Company had no balance requirements on any of its accounts. The Company had approximately $9.9 million and $25.2 million in deposits in financial institutions in excess of amounts insured by the FDIC at December 31, 2016 and December 31, 2015, respectively.

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NOTE 3, Securities Portfolio

The Company had no held-to-maturity-securities at December 31, 2016 or December 31, 2015 due to a decision in February of 2016 to transfer the portfolio to available-for-sale to allow for greater liquidity and flexibility in the future. Although the decision was made after December 31, 2015, the transfer was effective dated back to year-end as the primary difference between held-to-maturity and available-for-sale is management's intent to hold the securities to maturity. The transfer in 2016 demonstrated a change in management's intent as of year-end.

As a result of the decision to transfer securities from held-to-maturity to available-for-sale, management will not be able to classify any securities as held-to-maturity until 2018.

The amortized cost and fair value, with gross unrealized gains and losses, of securities available-for-sale were:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2016
U.S. Treasury securities	$	20,000	$	0	$	0		$	20,000
Obligations of U.S. Government agencies		9,361		0		(166	)		9,195
Obligations of state and political subdivisions		78,645		358		(1,016	)		77,987
Mortgage-backed securities		85,649		18		(1,973	)		83,694
Money market investments		647		0		0			647
Corporate bonds and other securities		7,598		92		(12	)		7,678
Other marketable equity securities		100		64		0			164
Total	$	202,000	$	532	$	(3,167	)	$	199,365
December 31, 2015
U.S. Treasury securities	$	0	$	0	$	0		$	0
Obligations of  U.S. Government agencies		24,353		1		(114	)		24,240
Obligations of state and political subdivisions		77,223		1,323		(113	)		78,433
Mortgage-backed securities		109,360		0		(1,964	)		107,396
Money market investments		631		0		0			631
Corporate bonds and other securities		3,397		4		(8	)		3,393
Other marketable equity securities		100		0		(1	)		99
Total	$	215,064	$	1,328	$	(2,200	)	$	214,192

Securities with a fair value of $72.9 million and $119.8 million at December 31, 2016 and 2015, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, FHLB advances and for other purposes required or permitted by law.

At December 31, 2016, the Company held no securities of any single issuer (excluding U.S. Government agencies) with a book value that exceeded 10 percent of stockholders' equity.

The amortized cost and fair value of securities by contractual maturity are shown below.

	December 31, 2016
	Available-for-Sale
	Amortized Cost			Fair Value
	(in thousands)
Due in one year or less		$	21,801		$	21,800
Due after one year through five years			18,471			18,435
Due after five years through ten years			48,840			48,217
Due after ten years			112,141			110,102
Total debt securities			201,253			198,554
Other securities without stated maturities			747			811
Total securities		$	202,000		$	199,365

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The following table provides information about securities sold in the years ended December 31:

	2016			2015
	(in thousands)
Proceeds from sales		$	107,647		$	23,005
Gross realized gains		$	578		$	76
Gross realized losses		$	56		$	0

OTHER-THAN-TEMPORARILY IMPAIRED SECURITIES

Management assesses whether the Company intends to sell or it is more-likely-than-not that the Company will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that the Company does not intend to sell and will not be required to sell prior to recovery of the amortized cost basis, the Company separates the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security's amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security's fair value and the present value of expected future cash flows is due to factors that are not credit related and is recognized in other comprehensive income.

The present value of expected future cash flows is determined using the best-estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best-estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds, and structural support, including subordination and guarantees.

The Company has a process in place to identify debt securities that could potentially have a credit or interest-rate related impairment that is other than temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues. On a quarterly basis, management reviews all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. Management considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other-than-temporary. Relevant facts and circumstances considered include: (a) the extent and length of time the fair value has been below cost; (b) the reasons for the decline in value; (c) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (d) for fixed maturity securities, the Company's intent to sell a security or whether it is more-likely-than-not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, the Company's ability and intent to hold the security for a period of time that allows for the recovery in value.

The Company has not recorded impairment charges on securities for the years ended December 31, 2016 and 2015.

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The following table shows the number of securities with unrealized losses, the gross unrealized losses and fair value of the Company's investments with unrealized losses that are deemed to be temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated:

	December 31, 2016
	Less Than Twelve Months						More Than Twelve Months						Total
	Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Number of Securities
	(dollars in thousands)
Securities Available-for-Sale
Obligations of U.S. Government agencies		$	166		$	9,195		$	0		$	0		$	166		$	9,195		6
Obligations of state and political subdivisions			1,016			38,020			0			0			1,016			38,020		56
Mortgage-backed securities			1,973			80,680			0			0			1,973			80,680		23
Corporate bonds and other securities			11			1,787			1			100			12			1,887		13
Total securities available-for-sale		$	3,166		$	129,682		$	1		$	100		$	3,167		$	129,782		98

	December 31, 2015
	Less Than Twelve Months						More Than Twelve Months						Total
	Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Number of Securities
	(dollars in thousands)
Securities Available-for-Sale
Obligations of U. S. Government agencies		$	0		$	0		$	114		$	3,940		$	114		$	3,940		2
Obligations of state and political subdivisions			42			4,177			71			3,545			113			7,722		13
Mortgage-backed securities			848			62,698			1,116			44,698			1,964			107,396		13
Corporate bonds and other securities			6			2,091			2			198			8			2,289		16
Other marketable equity securities			1			99			0			0			1			99		1
Total securities available-for-sale		$	897		$	69,065		$	1,303		$	52,381		$	2,200		$	121,446		45

Certain investments within the Company's portfolio had unrealized losses at December 31, 2016 and December 31, 2015, as shown in the tables above. The unrealized losses were caused by increases in market interest rates. The Company purchases only highly-rated securities, including U.S. government agencies and mortgage-backed securities guaranteed by government-sponsored entities. The municipal and corporate securities portfolios are reviewed regularly to ensure that ratings of individual securities have not deteriorated below the threshold established by the Company's policy.

Because the Company does not intend to sell the investments and management believes it is unlikely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at December 31, 2016 or December 31, 2015.

Restricted Securities

The restricted security category is comprised of FHLB and Federal Reserve Bank stock. These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and the securities lack a market. Therefore, FHLB and Federal Reserve Bank stock is carried at cost and evaluated for impairment. When evaluating these stocks for impairment, their value is determined based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Restricted stock is viewed as a long-term investment and management believes that the Company has the ability and the intent to hold this stock until its value is recovered.

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NOTE 4, Loans and the Allowance for Loan Losses

The following is a summary of the balances in each class of the Company's loan portfolio as of the dates indicated:

	December 31, 2016			December 31, 2015
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	94,827		$	96,997
Commercial		285,429			277,758
Construction		23,116			19,685
Second mortgages		17,128			15,148
Equity lines of credit		51,024			47,256
Total mortgage loans on real estate		471,524			456,844
Commercial loans		54,434			43,197
Consumer loans		58,907			50,427
Other		19,017			18,007
Total loans		603,882			568,475
Less: Allowance for loan losses		(8,245	)		(7,738	)
Loans, net of allowance and deferred fees (1)	$	595,637		$	560,737
(1) Net deferred loan fees totaled $522 thousand and $407 thousand at December 31, 2016 and December 31, 2015, respectively.

Overdrawn deposit accounts are reclassified as loans and included in the Other category in the table above. Overdrawn deposit accounts totaled $536 thousand and $648 thousand at December 31, 2016 and December 31, 2015, respectively.

CREDIT QUALITY INFORMATION

The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company's internal risk grade system is based on experiences with similarly graded loans. Credit risk grades are updated at least quarterly as additional information becomes available, at which time management analyzes the resulting scores to track loan performance.

The Company's internally assigned risk grades are as follows:

· Pass: Loans are of acceptable risk.

· Other Assets Especially Mentioned (OAEM): Loans have potential weaknesses that deserve management's close attention.

· Substandard: Loans reflect significant deficiencies due to several adverse trends of a financial, economic or managerial nature.

· Doubtful: Loans have all the weaknesses inherent in a substandard loan with added characteristics that make collection or liquidation in full based on currently existing facts, conditions and values highly questionable or improbable.

· Loss: Loans have been charged off because they are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

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The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information As of December 31, 2016
	Pass		OAEM		Substandard		Total
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	92,458	$	1,138	$	1,231	$	94,827
Commercial		260,948		10,014		14,467		285,429
Construction		22,219		162		735		23,116
Second mortgages		16,445		475		208		17,128
Equity lines of credit		50,387		500		137		51,024
Total mortgage loans on real estate		442,457		12,289		16,778		471,524
Commercial loans		49,979		2,278		2,177		54,434
Consumer loans		58,741		0		166		58,907
Other		19,017		0		0		19,017
Total	$	570,194	$	14,567	$	19,121	$	603,882

Credit Quality Information As of December 31, 2015
	Pass		OAEM		Substandard		Total
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	94,576	$	0	$	2,421	$	96,997
Commercial		261,749		7,394		8,615		277,758
Construction		18,931		0		754		19,685
Second mortgages		14,835		0		313		15,148
Equity lines of credit		47,161		0		95		47,256
Total mortgage loans on real estate		437,252		7,394		12,198		456,844
Commercial loans		40,268		467		2,462		43,197
Consumer loans		50,327		0		100		50,427
Other		18,007		0		0		18,007
Total	$	545,854	$	7,861	$	14,760	$	568,475

As of December 31, 2016 and 2015 the Company did not have any loans internally classified as Loss or Doubtful.

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AGE ANALYSIS OF PAST DUE LOANS BY CLASS

All classes of loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging analysis of the recorded investment in past due loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection. Loans in nonaccrual status that are also past due are included in the aging categories in the table below.

Age Analysis of Past Due Loans as of December 31, 2016
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	564	$	0	$	496	$	1,060	$	93,767	$	94,827	$	218
Commercial		2,280		1,625		227		4,132		281,297		285,429		0
Construction		162		0		0		162		22,954		23,116		0
Second mortgages		0		200		188		388		16,740		17,128		58
Equity lines of credit		394		9		86		489		50,535		51,024		0
Total mortgage loans on real estate		3,400		1,834		997		6,231		465,293		471,524		276
Commercial loans		5		0		86		91		54,343		54,434		0
Consumer loans		1,876		713		2,684		5,273		53,634		58,907		2,603
Other		41		12		5		58		18,959		19,017		5
Total	$	5,322	$	2,559	$	3,772	$	11,653	$	592,229	$	603,882	$	2,884

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

In the table above, the consumer category includes student loans with principal and interest amounts that are 97 - 98% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $4.8 million at December 31, 2016.

Age Analysis of Past Due Loans as of December 31, 2015
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	309	$	1,042	$	275	$	1,626	$	95,371	$	96,997	$	0
Commercial		1,266		31		23		1,320		276,438		277,758		23
Construction		161		0		0		161		19,524		19,685		0
Second mortgages		21		39		165		225		14,923		15,148		0
Equity lines of credit		170		0		0		170		47,086		47,256		0
Total mortgage loans on real estate		1,927		1,112		463		3,502		453,342		456,844		23
Commercial loans		500		88		232		820		42,377		43,197		164
Consumer loans		1,673		1,350		3,163		6,186		44,241		50,427		3,163
Other		64		3		6		73		17,934		18,007		6
Total	$	4,164	$	2,553	$	3,864	$	10,581	$	557,894	$	568,475	$	3,356

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

In the table above, the consumer category includes student loans with principal and interest amounts that are 97 - 98% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $5.7 million at December 31, 2015.

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NONACCRUAL LOANS

The Company generally places commercial loans (including construction loans and commercial loans secured and not secured by real estate) in nonaccrual status when the full and timely collection of interest or principal becomes uncertain, part of the principal balance has been charged off and no restructuring has occurred or the loan reaches 90 days past due, unless the credit is well-secured and in the process of collection.

Under regulatory rules, consumer loans, which are loans to individuals for household, family and other personal expenditures, and consumer loans secured by real estate (including residential 1 - 4 family mortgages, second mortgages, and equity lines of credit) are not required to be placed in nonaccrual status. Although consumer loans and consumer loans secured by real estate are not required to be placed in nonaccrual status, the Company may elect to place these loans in nonaccrual status, if necessary to avoid a material overstatement of interest income. Generally, consumer loans secured by real estate are placed in nonaccrual status only when payments are 120 days past due.

Generally, consumer loans not secured by real estate are placed in nonaccrual status only when part of the principal has been charged off. If a charge-off has not occurred sooner for other reasons, a consumer loan not secured by real estate will generally be placed in nonaccrual status when payments are 120 days past due. These loans are charged off or written down to the net realizable value of the collateral when deemed uncollectible, due to bankruptcy or other factors as discussed in the Loan Charge-Off Policies section of  Note 1, or when they are past due based on loan product, industry practice, terms and other factors.

When management places a loan in nonaccrual status, the accrued unpaid interest receivable is reversed against interest income and the loan is accounted for by the cash basis or cost recovery method, until it qualifies for return to accrual status or is charged off. Generally, loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured, or when the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments for at least six months.

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

Nonaccrual Loans by Class

	December 31, 2016		December 31, 2015
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	598	$	1,457
Commercial		6,033		2,623
Second mortgages		129		226
Equity lines of credit		87		0
Total mortgage loans on real estate		6,847		4,306
Commercial loans		231		276
Consumer loans		81		0
Total	$	7,159	$	4,582

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Years Ended December 31,
	2016			2015
	(in thousands)
Interest income that would have been recorded under original loan terms		$	318	$	196
Actual interest income recorded for the period			269		141
Reduction in interest income on nonaccrual loans		$	49	$	55

TROUBLED DEBT RESTRUCTURINGS

The Company's loan portfolio includes certain loans classified as TDRs, where economic concessions have been granted to borrowers who are experiencing financial difficulties. These concessions typically result from the Company's loss mitigation activities and could include reduction in the interest rate below current market rates for borrowers with similar risk profiles, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. The Company defines a TDR as nonperforming if the TDR is in nonaccrual status or is 90 days or more past due and still accruing interest at the report date.

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When the Company modifies a loan, management evaluates any possible impairment as discussed further under Impaired Loans below.

The following table presents TDRs during the period indicated, by class of loan:

Troubled Debt Restructurings by Class For the Year Ended December 31, 2016
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on December 31, 2016
	(dollars in thousands)
Mortgage loans on real estate:
Residential 1-4 family		6	$	1,061	$	1,061	$	992
Commercial		1		150		150		0
Second mortgages		1		53		53		53
Equity lines of credit		1		93		93		86
Total mortgage loans on real estate		9	$	1,357	$	1,357	$	1,131
Commercial loans		1		152		152		144
Consumer loans		2		8		8		0
Total		12	$	1,517	$	1,517	$	1,275

Troubled Debt Restructurings by Class For the Year Ended December 31, 2015
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on December 31, 2015
	(dollars in thousands)
Mortgage loans on real estate:
Commercial		5	$	2,094	$	2,594	$	2,400
Construction		1		435		435		0
Second mortgages		1		61		61		61
Total		7	$	2,590	$	3,090	$	2,461

All of the loans restructured in 2016 and 5 of the loans restructured in 2015 were given below-market rates for debt with similar risk characteristics. The remaining 2 loans restructured in 2015 were given terms not otherwise available to borrowers with similar risk characteristics.

At December 31, 2016 and 2015, the Company had no outstanding commitments to disburse additional funds on any TDR. Also at December 31, 2016 and 2015, the Company had $10 thousand and $53 thousand, respectively, in loans secured by residential 1 - 4 family real estate that were in the process of foreclosure.

In the years ended December 31, 2016 and 2015 there were no defaulting TDRs where the default occurred within twelve months of restructuring. The Company considers a TDR in default when any of the following occurs: the loan, as restructured, becomes 90 days or more past due; the loan is moved to nonaccrual status following the restructure; the loan is restructured again under terms that would qualify it as a TDR if it were not already so classified; or any portion of the loan is charged off.

All TDRs are factored into the determination of the allowance for loan losses and included in the impaired loan analysis, as discussed below.

IMPAIRED LOANS

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impaired loans include nonperforming loans and loans modified in a TDR. When management identifies a loan as impaired, the impairment is measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, except when the sole or remaining source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, when foreclosure is probable, instead of the discounted cash flows. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance.

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When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is in nonaccrual status, all payments are applied to principal under the cost recovery method. For financial statement purposes, the recorded investment in the loan is the actual principal balance reduced by payments that would otherwise have been applied to interest. When reporting information on these loans to the applicable customers, the unpaid principal balance is reported as if payments were applied to principal and interest under the original terms of the loan agreements. Therefore, the unpaid principal balance reported to the customer would be higher than the recorded investment in the loan for financial statement purposes. When the ultimate collectability of the total principal of the impaired loan is not in doubt and the loan is in nonaccrual status, contractual interest is credited to interest income when received under the cash basis method.

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.

Impaired Loans by Class
	As of December 31, 2016												For the Year Ended December 31, 2016
				Recorded Investment
	Unpaid Principal Balance			Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family		$	2,496		$	1,835		$	622		$	75		$	2,741		$	119
Commercial			16,193			11,095			4,274			415			11,885			727
Construction			619			528			96			22			496			43
Second mortgages			526			309			141			17			511			25
Equity lines of credit			87			86			0			0			46			3
Total mortgage loans on real estate		$	19,921		$	13,853		$	5,133		$	529		$	15,679		$	917
Commercial loans			1,077			0			989			271			827			74
Consumer loans			81			81			0			0			68			1
Total		$	21,079		$	13,934		$	6,122		$	800		$	16,574		$	992

Impaired Loans by Class
	As of December 31, 2015												For the Year Ended December 31, 2015
				Recorded Investment
	Unpaid Principal Balance			Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family		$	2,994		$	1,530		$	1,261		$	146		$	2,267		$	132
Commercial			10,203			6,166			3,208			608			9,305			473
Construction			99			0			99			36			465			5
Second mortgages			535			499			0			0			571			21
Total mortgage loans on real estate		$	13,831		$	8,195		$	4,568		$	790		$	12,608		$	631
Commercial loans			330			207			68			8			952			28
Consumer loans			12			12			0			0			13			1
Total		$	14,173		$	8,414		$	4,636		$	798		$	$ 13,573		$	660

MONITORING OF LOANS AND EFFECT OF MONITORING FOR THE ALLOWANCE FOR LOAN LOSSES

Loan officers are responsible for continual portfolio analysis and prompt identification and reporting of problem loans, which includes assigning a risk grade to each applicable loan at its origination and revising such grade as the situation dictates. Loan officers maintain frequent contact with borrowers, which should enable the loan officer to identify potential problems before other personnel. In addition, meetings with loan officers and upper management are held to discuss problem loans and review risk grades. Nonetheless, in order to avoid over-reliance upon loan officers for problem loan identification, the Company's loan review system provides for review of loans and risk grades by individuals who are independent of the loan approval process. Risk grades and migration analysis by risk grades are used as a component of the calculation of the allowance for loan losses.

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ALLOWANCE FOR LOAN LOSSES

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. The Company segments the loans in the portfolio by the categories defined by Schedule RC-C of the Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income Form 041 (Call Report). Loans are segmented into the following pools: commercial, real estate-construction, real estate-mortgage, consumer and other loans. The Company also sub-segments the real estate-mortgage segment into four classes: residential 1-4 family, commercial real estate, second mortgages and equity lines of credit.

The Company uses an internally developed risk evaluation model in the estimation of the credit risk process. The model and assumptions used to determine the allowance are independently validated and reviewed to ensure that the theoretical foundation, assumptions, data integrity, computational processes and reporting practices are appropriate and properly documented.

Each portfolio segment has risk characteristics as follows:

· Commercial: Commercial loans carry risks associated with the successful operation of a business or project, in addition to other risks associated with the ownership of a business. The repayment of these loans may be dependent upon the profitability and cash flows of the business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision.

· Real estate-construction: Construction loans carry risks that the project will not be finished according to schedule, the project will not be finished according to budget and the value of the collateral may at any point in time be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be the loan customer, may be unable to finish the construction project as planned because of financial pressure unrelated to the project.

· Real estate-mortgage: Residential mortgage loans and equity lines of credit carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral. Commercial real estate loans carry risks associated with the successful operation of a business if owner occupied. If non-owner occupied, the repayment of these loans may be dependent upon the profitability and cash flow from rent receipts.

· Consumer loans: Consumer loans carry risks associated with the continued credit-worthiness of the borrowers and the value of the collateral. Consumer loans are more likely than real estate loans to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy.

· Other loans: Other loans are loans to mortgage companies, loans for purchasing or carrying securities, and loans to insurance, investment and finance companies. These loans carry risks associated with the successful operation of a business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time, depend on interest rates or fluctuate in active trading markets.

Each segment of the portfolio is pooled by risk grade or by days past due.  Loans not secured by real estate and made to individuals for household, family and other personal expenditures are segmented into pools based on days past due, while all other loans, including loans to consumers that are secured by real estate, are segmented by risk grades.  A historical loss percentage is then calculated by migration analysis and applied to each pool.  The migration analysis applied to all pools is able to track the risk grading and historical performance of individual loans throughout a number of periods set by management, which provides management with information regarding trends (or migrations) in a particular loan segment.  At December 31, 2016 management used four twelve-quarter migration periods, and at December 31, 2015, management used one twelve-quarter migration period. See Changes in Accounting Methodology below for details.

THE COMPANY'S ESTIMATION PROCESS

Loans are either individually evaluated for impairment or pooled with like loans and collectively evaluated for impairment. Also, various qualitative factors are applied to each segment of the loan portfolio. The allowance for loan losses is the accumulation of these components. Management's estimate is based on certain observable, historical data and other factors that management believes are most reflective of the underlying credit losses being estimated.

Management provides an allocated component of the allowance for loans that are individually evaluated for impairment. An allocated allowance is established when the discounted value of expected future cash flows from the impaired loan (or the collateral value or observable market price of the impaired loan) is lower than the carrying value of that loan. This allocation represents the sum of management's estimated losses on each loan.

Loans collectively evaluated for impairment are pooled, with a historical loss rate, based on migration analysis, applied to each pool, segmented by risk grade or days past due, depending on the type of loan. Based on credit risk assessments and management's analysis of qualitative factors, additional loss factors are applied to loan balances. These additional qualitative factors include: economic conditions, trends in growth, loan concentrations, changes in certain loans, changes in underwriting, changes in management and changes in the legal and regulatory environment.

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ALLOWANCE FOR LOAN LOSSES BY SEGMENT

The total allowance reflects management's estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $8.2 million adequate to cover loan losses inherent in the loan portfolio at December 31, 2016.

The following table presents, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS
(in thousands)
For the Year Ended December 31, 2016	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	633		$	985		$	5,628		$	279		$	213		$	7,738
Charge-offs		(915	)		0			(504	)		(204	)		(147	)		(1,770	)
Recoveries		79			3			197			28			40			347
Provision for loan losses		1,696			(142	)		(54	)		352			78			1,930
Ending balance		1,493			846			5,267			455			184			8,245
Ending balance individually evaluated for impairment		271			22			507			0			0			800
Ending balance collectively evaluated for impairment		1,222			824			4,760			455			184			7,445
Ending balance		1,493			846			5,267			455			184			8,245
Loan Balances:
Ending balance individually evaluated for impairment		989			624			18,362			81			0			20,056
Ending balance collectively evaluated for impairment		53,445			22,492			430,046			58,826			19,017			583,826
Ending balance	$	54,434		$	23,116		$	448,408		$	58,907		$	19,017		$	603,882
For the Year Ended December 31, 2015	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	595		$	703		$	5,347		$	219		$	211		$	7,075
Charge-offs		(293	)		0			(321	)		(92	)		(191	)		(897	)
Recoveries		50			1			393			39			52			535
Provision for loan losses		281			281			209			113			141			1,025
Ending balance		633			985			5,628			279			213			7,738
Ending balance individually evaluated for impairment		8			36			754			0			0			798
Ending balance collectively evaluated for impairment		625			949			4,874			279			213			6,940
Ending balance		633			985			5,628			279			213			7,738
Loan Balances:
Ending balance individually evaluated for impairment		275			99			12,664			12			0			13,050
Ending balance collectively evaluated for impairment		42,922			19,586			424,495			50,415			18,007			555,425
Ending balance	$	43,197		$	19,685		$	437,159		$	50,427		$	18,007		$	568,475

CHANGES IN ACCOUNTING METHODOLOGY

Historical loss rates calculated by migration analysis are determined by the performance of a loan over a period of time (the migration period). This migration period can be lengthened or shortened based on management's assessment of the most appropriate length of time over which to analyze losses in the loan portfolio. The Company can also calculate multiple migration periods, allowing management to assess the migration of loans based on more than one starting point.

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In the third quarter of 2016, management made several changes to its method for calculating the allowance. These changes and the effects on the allowance for loan losses at December 31, 2016 are as follows:

 The number of migration periods was changed from one to four. Each migration period remains at twelve quarters, the length of the migration period used by the Company in prior periods. This change decreased the provision for most categories of loans but increased it for construction loans. The net effect on the provision for loan losses as a result of this change was an increase of $77 thousand compared to the prior methodology.

 The Company further sub-segmented its pool of consumer loans not secured by real estate to separate a pool of loans that share characteristics with each other that are not shared with other consumer loans. The new sub-segment is comprised of loans purchased from a single source for which management does not expect any charge-offs against the allowance. Accordingly, beginning with the third quarter of 2016, the historic loss factor does not apply to this group of loans. In addition, management determined that some of the qualitative factors that had previously been applied to these loans when they were grouped with all other consumer loans were no longer appropriate once these loans were separated into a new sub-segment. Creating this new sub-segment, which includes no anticipated losses, and applying the relevant qualitative factors to it decreased the provision for loan losses by $366 thousand compared to the prior methodology.

 As part of the process to determine whether a new sub-segment was appropriate, management analyzed the qualitative factors applied to each segment of the portfolio. Based on this analysis, management changed its qualitative factor adjustments on the Company's student loan portfolio to better reflect those factors that could potentially have an impact on the portfolio. This change decreased the provision for loan losses by $38 thousand compared to the prior methodology.

The following table represents the effect on the loan loss provision as a result of these changes in methodology. It compares the methodology actually used for the year ended December 31, 2016 to that used in prior periods.

	Calculated Provision Based on Current Methodology			Calculated Provision Based on Prior Methodology			Difference
	(in thousands)
Portfolio Segment:
Commercial	$	1,696		$	2,054		$	(358	)
Real estate - construction		(142	)		(858	)		716
Real estate - mortgage		(54	)		73			(127	)
Consumer loans		352			910			(558	)
Other		78			78			0
Total	$	1,930		$	2,257		$	(327	)

The allowance for loan losses was 1.37% of total loans at December 31, 2016, compared to 1.36% at December 31, 2015.

NOTE 5, Other Real Estate Owned (OREO)

The Company holds certain parcels of real estate due to completed foreclosure proceedings on defaulted loans or the closing of former branches. An analysis of the balance in OREO is as follows:

	Years Ended December 31,
	2016			2015
	(in thousands)
Balance at beginning of year	$	5,290		$	8,014
Transfers to OREO due to foreclosure		0			553
Other additions to foreclosed properties		52			0
Closed branch locations transferred to OREO		127			0
Properties sold		(3,376	)		(3,277	)
Balance at end of year	$	2,093		$	5,290

Other additions to foreclosed properties in the table above are for capital improvements on existing properties.

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OREOs are presented net of a valuation allowance for losses. As the fair values of OREOs change, adjustments are made to the recorded investment in the properties through the valuation allowance to ensure that all properties are recorded at the lower of cost or fair value.  Properties written down in previous periods can be written back up if a current property valuation warrants the change, though never above the original cost of the property. An analysis of the valuation allowance on OREOs is as follows:

	Years Ended December 31,
	2016				2015
	(in thousands)
Balance at beginning of year		$	2,549		$	2,908
Additions and write-downs			60			1,011
Reductions due to sales or increases in value			(1,583	)		(1,370	)
Balance at end of year		$	1,026		$	2,549

Expenses applicable to OREOs include the following:

	Years Ended December 31,
	2016		2015
	(in thousands)
Net loss (gain) on sales of real estate	$	94	$	(54	)
Provision for losses (net write-downs)		60		1,011
Operating expenses, net of income (1)		160		219
Total Expenses	$	314	$	1,176
(1) Included in other operating income and other operating expense on the Consolidated Statements of Income.

NOTE 6, Premises and Equipment

Premises and equipment consisted of the following at December 31:

	2016		2015
	(in thousands)
Land	$	7,663	$	7,688
Buildings		37,890		37,848
Construction in process		43		555
Leasehold improvements		852		852
Furniture, fixtures and equipment		19,220		18,303
		65,668		65,246
Less accumulated depreciation and amortization		26,344		23,964
	$	39,324	$	41,282

Depreciation expense for the years ended December 31, 2016 and 2015 amounted to $2.7 and $2.5 million, respectively.

The Company has noncancellable leases on premises and equipment expiring at various dates, not including extensions, to the year 2020. Certain leases provide for increased annual payments based on increases in real estate taxes and the Consumer Price Index.

The total approximate minimum rental commitment at December 31, 2016 under noncancellable leases is $632 thousand which is due as follows (in thousands):

2017	$	236
2018		169
2019		150
2020		77
Total	$	632

The aggregate rental expense of premises and equipment was $239 thousand and $270 thousand for December 31, 2016 and 2015, respectively.

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NOTE 7, Low-Income Housing Tax Credits

The Company was invested in four separate housing equity funds at both December 31, 2016 and December 31, 2015. The general purpose of these funds is to encourage and assist participants in investing in low-income residential rental properties located in the Commonwealth of Virginia, develop and implement strategies to maintain projects as low-income housing, deliver Federal Low Income Housing Credits to investors, allocate tax losses and other possible tax benefits to investors, and preserve and protect project assets.

The investments in these funds were recorded as other assets on the consolidated balance sheets and were $3.9 million and $4.2 million at December 31, 2016 and December 31, 2015, respectively. The expected terms of these investments and the related tax benefits run through 2032. Additional committed capital calls expected for the funds totaled $2.5 million and $3.0 million at December 31, 2016 and December 31, 2015, respectively, and are recorded in accrued expenses and other liabilities on the corresponding consolidated balance sheets. During the years ended December 31, 2016 and 2015, the Company recognized amortization expense of $300,000 thousand and $219,000 thousand, respectively, which was included within noninterest expense on the consolidated statements of income.

The table below summarizes thetax credits and other tax benefits recognized by the Company and related to these investments, as of the periods indicated:

	Years Ended December 31,
	2016			2015
	(in thousands)
Tax credits received		$	384	$	291
Tax benefit from losses			102		74
Total tax benefit		$	486	$	365

NOTE 8, Deposits

The aggregate amount of time deposits in denominations of $250 thousand or more at December 31, 2016 and 2015 was $38.1 million and $36.4 million, respectively. As of December 31, 2016, no single customer relationship exceeded 5 percent of total deposits.

At December 31, 2016 the scheduled maturities of time deposits (in thousands) are as follows:

2017	$	99,128
2018		23,173
2019		29,632
2020		40,737
2021		18,739
Total	$	211,409

NOTE 9, Short Term and Long Term Borrowings

The Company's short-term borrowing sources include federal funds purchased and overnight repurchase agreements. The Company had no federal funds purchased on December 31, 2016 or 2015.  At December 31, 2016, the Company had $55.0 million available in federal funds lines of credit to address any short-term borrowing needs.

Overnight repurchase agreements, which totaled $18.7 million and $26.0 million as of December 31, 2016 and 2015, respectively, are classified as secured borrowings that generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities.

As of December 31, 2016, four customer relationships exceeded 5 percent of total repurchase agreements, with a combined outstanding balance of $15.7 million, or 83.83% of total repurchase agreements.

The Company has a line of credit with the FHLB enabling it to borrow up to 30% of total assets, or $270.0 million as of December 31, 2016. FHLB advances are secured by a blanket lien on qualified 1 – 4 family residential real estate loans. These pledged loans totaled $90.3 million at December 31, 2016.

At December 31, 2016, the Company had no long-term FHLB advances outstanding.

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Long-term debt as of December 31, 2015 was as follows:

	Fixed				Weighted
	Rate		Total		Avg Rate
	(in thousands)
Due in 2016	$	25,000	$	25,000		4.83	%
Total long-term debt	$	25,000	$	25,000		4.83	%

NOTE 10, Share-Based Compensation

EQUITY COMPENSATION PLANS

The Company's 1998 Stock Option Plan, pursuant to which stock options could be granted to key employees and non-employee directors, expired on March 9, 2008.  Stock options that were outstanding on March 9, 2008 remained outstanding in accordance with their terms, but no new awards can be granted under the plan after March 9, 2008. At December 31, 2016, options to purchase 60,605 shares of common stock granted under the stock option plan were outstanding. The exercise price of each option equals the market price of the Company's common stock on the date of the grant, and each option's maximum term is ten years.

Stock option plan activity for the year ended December 31, 2016 is summarized below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding, January 1, 2016		74,960		$	20.05
Granted		0			0.00
Exercised		(1,250	)		20.05
Canceled or expired		(13,105	)		20.05
Options outstanding, December 31, 2016		60,605		$	20.05		0.79		$	300
Options exercisable, December 31, 2016		60,605		$	20.05		0.79		$	300

The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on December 31, 2016.This amount changes based on changes in the market value of the Company's common stock.

During 2016, the Company received $25 thousand from the exercise of stock options. No options were exercised in 2015.

No options were granted during the years ended December 31, 2016 or December 31, 2015. As of December 31, 2016 and December 31, 2015, all outstanding stock options were fully vested and there was no unrecognized stock-based compensation expense.

Information pertaining to options outstanding at December 31, 2016 is as follows:

			Options Outstanding							Options Exercisable
Range of Exercise Prices			Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price			Number Exercisable		Weighted Average Exercise Price
	$	20.05		60,605		0.79		$	20.05		60,605		$	20.05

On May 24, 2016, the Company's stockholders approved the Old Point Financial Corporation 2016 Incentive Stock Plan. The Incentive Stock Plan permits the issuance of up to 300,000 shares of common stock for awards to key employees and non-employee directors of the Company and its subsidiaries in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, stock awards and performance units. Although the Company did not award any equity compensation under the Incentive Stock Plan during 2016, management anticipates beginning to award equity compensation to key employees and non-employee directors in 2017. Accordingly, as of December 31, 2016, there were no awards outstanding under the Incentive Stock Plan. Complete details of the Incentive Stock Plan are contained in the plan itself, which is Appendix A of the Proxy Statement for the Company's 2016 Annual Meeting of Stockholders.

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EMPLOYEE STOCK PURCHASE PLAN

On May 24, 2016, the Company's stockholders approved the Old Point Financial Corporation Employee Stock Purchase Plan (ESPP). Under the ESPP, substantially all employees of the Company can authorize a specific payroll deduction from their base compensation for the periodic purchase of the Company's common stock. Shares of stock are issued quarterly at a discount to the market price of the Company's stock on the day of purchase, which can range from 0-15% and for 2016 was set at 5 %.

Total stock purchases amounted to 999 shares during 2016. At December 31, 2016, the Company had 249,001 shares reserved for issuance under this plan.

Complete details of the ESPP are contained in the plan itself, which is Appendix B of the Proxy Statement for the Company's 2016 Annual Meeting of Stockholders.

NOTE 11, Stockholders' Equity and Earnings per Common Share

STOCKHOLDERS' EQUITY--OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents information on amounts reclassified out of accumulated other comprehensive loss, by category, during the periods indicated:

	Years Ended
	December 31,						Affected Line Item on Consolidated Statement of Income
	2016			2015
	(in thousands)
Available-for-sale securities
Realized gains (losses) on sales of securities	$	522		$	76		Gain (loss) on sale of available-for-sale securities, net
Tax effect		177			26		Income tax (benefit) expense
	$	345		$	50
Defined-benefit pension plan
Amortization of actuarial loss (1)	$	(504	)	$	(390	)	Salaries and employee benefits
Tax effect		(171	)		(133	)	Income tax benefit
	$	(333	)	$	(257	)
Total reclassifications for the period	$	12		$	(207	)
(1) This accumulated other comprehensive loss component is included in the computation of net periodic pension cost (see Note 14. Pension Plan and 401(k) Plan for additional details).

The following table presents the changes in accumulated other comprehensive loss, by category, net of tax, for the periods indicated:

	Unrealized Gains (Losses) on Available-for-Sale Securities			Unrealized Losses on Securities Transferred from Available-for-Sale to Held-to-Maturity (1)			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
	(in thousands)
Balance at December 31, 2014	$	(78	)	$	(3,386	)	$	(2,429	)	$	(5,893	)
Net change for the year ended December 31, 2015		(498	)		3,386			(157	)		2,731
Balance at December 31, 2015		(576	)		0			(2,586	)		(3,162	)
Net change for the year ended December 31, 2016		(1,163	)		0			117			(1,046	)
Balance at December 31, 2016	$	(1,739	)	$	0		$	(2,469	)	$	(4,208	)
(1) Net change for the year ended December 31, 2015 represents reclassification due to the transfer of securities held-to-maturity to available-for-sale. See Note 3. Securities.

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The following table presents the change in each component of other comprehensive income (loss) on a pre-tax and after-tax basis for the periods indicated.

	Year Ended December 31, 2016
	Pretax			Tax Effect			Net-of-Tax
	(in thousands)
Unrealized losses on available-for-sale securities:
Unrealized holding losses arising during the period	$	(1,240	)	$	(422	)	$	(818	)
Reclassification adjustment for gains recognized in income		(522	)		(177	)		(345	)
Net unrealized losses on securities		(1,762	)		(599	)		(1,163	)
Defined benefit pension plans:
Net actuarial loss for the period		(327	)		(111	)		(216	)
Amortization of actuarial loss from prior period		504			171			333
Net change		177			60			117
Total change in accumulated other comprehensive loss	$	(1,585	)	$	(539	)	$	(1,046	)

	Year Ended December 31, 2015
	Pretax			Tax Effect			Net-of-Tax
	(in thousands)
Unrealized losses on available-for-sale securities:
Unrealized holding losses arising during the period	$	(679	)	$	(231	)	$	(448	)
Reclassification adjustment for gains recognized in income		(76	)		(26	)		(50	)
Net change		(755	)		(257	)		(498	)
Unrealized losses on securities transferred from available-for-sale to held-to-maturity:
Elimination upon transfer back to available-for-sale		4,197			1,427			2,770
Amortization		934			318			616
Net change		5,131			1,745			3,386
Defined benefit pension plans:
Net actuarial loss for the period		(627	)		(213	)		(414	)
Amortization of actuarial loss from prior period		390			133			257
Net change		(237	)		(80	)		(157	)
Total change in accumulated other comprehensive loss	$	4,139		$	1,408		$	2,731

EARNINGS PER COMMON SHARE

Earnings per common share has been computed based on the following:

	Years Ended December 31,
	2016			2015
	(dollars in thousands)
Net income (in thousands)		$	3,797	$	3,634
Average number of common shares outstanding			4,959,173		4,959,009
Effect of dilutive options			1,761		0
Average number of common shares outstanding used to calculate diluted earnings per common share			4,960,934		4,959,009

The Company did not include an average of 52 thousand and 76 thousand potential common shares attributable to outstanding stock options in the diluted earnings per share calculation for 2016 and 2015, respectively, because they were antidilutive.

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NOTE 12, Related Party Transactions

In the ordinary course of business, the Company has granted loans to principal stockholders, executive officers and directors and their affiliates. These loans were made on substantially the same terms and conditions, including interest rates, collateral and repayment terms, as those prevailing at the same time for comparable transactions with unrelated persons, and, in the opinion of management and the Company's board of directors, do not involve more than normal risk or present other unfavorable features. None of the principal stockholders, executive officers or directors had direct or indirect loans exceeding 10 percent of stockholders' equity at December 31, 2016.

Annual activity consisted of the following:

	2016			2015
	(in thousands)
Balance, beginning of year	$	4,429		$	5,787
Additions		110			4
Reductions		(185	)		(1,362	)
Balance, end of year	$	4,354		$	4,429

Deposits from related parties held by the Company at December 31, 2016 and 2015 amounted to $13.8 million and $14.4 million, respectively.

NOTE 13, Income Taxes

The components of income tax expense for the current and prior year-ends are as follows:

	2016				2015
	(in thousands)
Current income tax expense		$	179		$	281
Deferred income tax benefit			(19	)		(227	)
Reported income tax expense		$	160		$	54

A reconciliation of the expected federal income tax expense on income before income taxes with the reported income tax expense for the same periods follows:

	Years Ended December 31,
	2016			2015
	(in thousands)
Expected tax expense (34%)	$	1,345		$	1,254
Interest expense on tax-exempt assets		15			22
Low-income housing tax credits		(384	)		(274	)
Tax-exempt interest		(608	)		(654	)
Bank-owned life insurance		(270	)		(301	)
Other, net		62			7
Reported income tax expense	$	160		$	54

The effective tax rates for 2016 and 2015 were 4.0% and 1.5%, respectively.

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The components of the net deferred tax asset, included in other assets, are as follows:

	December 31,
	2016			2015
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	2,803		$	2,631
Interest on nonaccrual loans		71			67
Other real estate owned		349			867
Pension - other comprehensive income		1,272			1,332
Bank owned life insurance benefit		94			88
Charitable contributions carried forward		1			109
Net unrealized loss on securities available-for-sale		896			297
Unexercised nonqualified options		36			36
Alternative minimum tax		1,019			610
Deferred benefits and compensation		256			347
Other		89			78
	$	6,886		$	6,462
Deferred tax liabilities:
Depreciation	$	(822	)	$	(854	)
Accretion of discounts on securities		(1	)		(1	)
Deferred loan fees and costs		(325	)		(293	)
Pension		(740	)		(874	)
		(1,888	)		(2,022	)
Net deferred tax assets	$	4,998		$	4,440

The Company files income tax returns in the U.S. federal jurisdiction and the Commonwealth of Virginia. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2013.

NOTE 14, Pension Plan and 401(k) Plan

PENSION PLAN

The Company provides pension benefits for eligible participants through a non-contributory defined-benefit pension plan. The plan was frozen effective September 30, 2006; therefore no additional participants have been or will be added to the plan since such date.

On November 23, 2016 the Company's Board of Directors voted to terminate the pension plan, effective January 31, 2017. The Company anticipates completing the transfer of all liabilities and administrative responsibilities under the Plan by the end of the fourth quarter of 2017.

Information pertaining to the activity in the plan, using a measurement date of December 31, is as follows:

	Years ended December 31,
	2016			2015
	(in thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	7,039		$	7,104
Service cost		0			0
Interest cost		279			260
Benefits paid		(461	)		(294	)
Actuarial (gain) loss		205			(31	)
Benefit obligation at end of year	$	7,062		$	7,039
Change in plan assets
Fair value of plan assets at beginning of year	$	5,691		$	5,268
Actual return on plan assets		269			(283	)
Employer contribution		0			1,000
Benefits paid		(461	)		(294	)
Fair value of plan assets at end of year	$	5,499		$	5,691
Funded Status at end of year	$	(1,563	)	$	(1,348	)

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	December 31,
	2016			2015
	(in thousands)
Amounts recognized in the consolidated balance sheets
Accrued pension liability	$	(1,563	)	$	(1,348	)
Amounts recognized in other comprehensive income (loss)
Loss	$	3,741		$	3,918
Deferred taxes		(1,272	)		(1,332	)
Net loss	$	2,469		$	2,586
Accumulated benefit obligation	$	7,062		$	7,039

Assumptions used to determine the benefit obligations at December 31,	2016		2015
Discount rate		3.86%		4.03%
	During the years ending December 31,
Weighted-average assumptions used to determine net periodic pension cost	2016		2015
Discount rate		4.03%		3.73%
Expected long-term rate of return on plan assets		7.00%		7.00%

	Years ended December 31,
	2016			2015
Components of net periodic pension cost	(in thousands)
Interest cost	$	279		$	260
Expected return on plan assets		(391	)		(376	)
Amortization of unrecognized loss		504			390
Net periodic pension cost	$	392		$	274
Components of other amounts recognized in other comprehensive income (loss)
Net actuarial (gain) loss	$	327		$	627
Settlement loss		0			0
Amortization of actuarial loss		(504	)		(390	)
Total recognized in other comprehensive income (loss)	$	(177	)	$	237
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	215		$	511

The estimated net loss for the pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next year is $490 thousand.

The overall expected long-term rate of return on plan assets was determined based on the current asset allocation and the related volatility of those investments.

The Company's overall investment strategy is growth with income. The emphasis of the objective is on both capital appreciation and income. The portfolio contains a blend of securities expected to grow in value over the long term and those expected to produce income. Moderate market value volatility is expected.

The pension plan invests primarily in large and mid-cap equities and government and corporate bonds, with the following target allocations: equities 55 percent, fixed income 40 percent and cash 5 percent. The pension plan has small investments in precious metals and emerging markets equity mutual funds, each of which represents less than 1 percent of the total account value.

Fair value is discussed in detail in Note 16. The fair value of the Company's pension plan assets by asset category are as follows:

Assets at Fair Value as of December 31, 2016
Asset Category	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	2,839	$	0	$	0	$	2,839
Mutual funds		0		0		0		0
Common stock		1,129		0		0		1,129
Corporate bonds		0		1,472		0		1,472
Partnerships		0		59		0		59
Total assets at fair value	$	3,968	$	1,531	$	0	$	5,499

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Assets at Fair Value as of December 31, 2015
Asset Category	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	654	$	0	$	0	$	654
Mutual funds		74		0		0		74
Common stock		2,766		0		0		2,766
Corporate bonds		0		2,133		0		2,133
Partnerships		0		64		0		64
Total assets at fair value	$	$3,494	$	$2,197	$	$0	$	$5,691

The Company made no contributions to the pension plan in 2016, and contributed $1.0 million in 2015. Management has not determined at this time the amount, if any, it will contribute to the plan for the year ending December 31, 2017.

Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows (in thousands):

2017	$	256
2018		273
2019		288
2020		348
2021		351
Thereafter		2,106
Total	$	3,622

401(K) PLAN

The Company has a 401(k) Plan in which substantially all employees are eligible to participate. Employees may contribute to the plan subject to certain limits based on federal tax laws. The Company makes matching contributions equal to 100 percent of the first 4 percent of an employee's compensation contributed to the plan. Matching contributions vest to the employee immediately. The Company may make profit sharing contributions to the plan as determined by the Board of Directors. Profit sharing contributions vest to the employee over a six-year period. For the years ended December 31, 2016 and 2015, expense attributable to the plan amounted to $523 thousand and $519 thousand, respectively.

NOTE 15, Commitments and Contingencies

CREDIT-RELATED FINANCIAL INSTRUMENTS

The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business in order to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and commercial letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Company's exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making such commitments as it does for on-balance-sheet instruments.

The following financial instruments whose contract amounts represent credit risk were outstanding at December 31:

	2016		2015
	(in thousands)
Commitments to extend credit:
Home equity lines of credit	$	47,243	$	41,995
Commercial real estate, construction and development loans committed but not funded		15,948		18,113
Other lines of credit (principally commercial)		81,966		73,213
Total	$	145,157	$	133,321
Letters of credit	$	3,597	$	3,473

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extensions of credit is based on management's credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

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Unfunded commitments under commercial lines of credit, revolving credit lines, and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit are not collateralized and usually do not contain a specified maturity date, and ultimately may or may not be drawn upon to the total extent to which the Company is committed.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year, with the exception of one letter of credit which expires in 2020. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds various collateral supporting those commitments for which collateral is deemed necessary.

LEGAL CONTINGENCIES

Various legal claims arise from time to time in the normal course of business, which, in the opinion of management, will not have a material effect on the Company's Consolidated Financial Statements.

NOTE 16, Fair Value Measurements

DETERMINATION OF FAIR VALUE

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the "Fair Value Measurements and Disclosures" topics of FASB ASU 2010-06 and FASB ASU 2011-04, the fair value of a financial instrument is the price that would be received in the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value can be a reasonable point within a range that is most representative of fair value under current market conditions.

In estimating the fair value of assets and liabilities, the Company relies mainly on two models. The first model, used by the Company's bond accounting service provider, determines the fair value of securities. Securities are priced based on an evaluation of observable market data, including benchmark yield curves, reported trades, broker/dealer quotes, and issuer spreads. Pricing is also impacted by credit information about the issuer, perceived market movements, and current news events impacting the individual sectors. For assets other than securities and for all liabilities, fair value is determined using the Company's asset/liability modeling software. The software uses current yields, anticipated yield changes, and estimated duration of assets and liabilities to calculate fair value.

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In accordance with ASC 820, "Fair Value Measurements and Disclosures," the Company groups its financial assets and financial liabilities generally measured at fair value into three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

An instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Debt and equity securities with readily determinable fair values that are classified as "available-for-sale" are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2). In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of the Company's available-for-sale securities are considered to be Level 2 securities.

The following table presents the balances of certain assets measured at fair value on a recurring basis as of the dates indicated:

			Fair Value Measurements at December 31, 2016 Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description	Balance
	(in thousands)
Available-for-sale securities
U.S. Treasury securities	$	20,000	$	0	$	20,000	$	0
Obligations of  U.S. Government agencies		9,195		0		9,195		0
Obligations of state and political subdivisions		77,987		0		77,987		0
Mortgage-backed securities		83,694		0		83,694		0
Money market investments		647		0		647		0
Corporate bonds		7,678		0		7,678		0
Other marketable equity securities		164		0		164		0
Total available-for-sale securities	$	199,365	$	0	$	199,365	$	0

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			Fair Value Measurements at December 31, 2015 Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description	Balance
	(in thousands)
Available-for-sale securities
Obligations of  U.S. Government agencies	$	24,240	$	0	$	24,240	$	0
Obligations of state and political subdivisions		78,433		0		78,433		0
Mortgage-backed securities		107,396		0		107,396		0
Money market investments		631		0		631		0
Corporate bonds		3,393		0		3,393		0
Other marketable equity securities		99		0		99		0
Total available-for-sale securities	$	214,192	$	0	$	214,192	$	0

ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

Under certain circumstances, adjustments are made to the fair value for assets and liabilities although they are not measured at fair value on an ongoing basis.

Impaired loans

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The measurement of fair value and loss associated with impaired loans can be based on the observable market price of the loan, the fair value of the collateral securing the loan, or the present value of the loan's expected future cash flows, discounted at the loan's effective interest rate. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable, with the vast majority of the collateral in real estate.

The value of real estate collateral is determined utilizing an income, market, or cost valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company. In the case of loans with lower balances, the Company may obtain a real estate evaluation instead of an appraisal. Evaluations utilize many of the same techniques as appraisals, and are typically performed by independent appraisers. Once received, appraisals and evaluations are reviewed by trained staff independent of the lending function to verify consistency and reasonability. Appraisals and evaluations are based on significant unobservable inputs, including but not limited to: adjustments made to comparable properties, judgments about the condition of the subject property, the availability and suitability of comparable properties, capitalization rates, projected income of the subject or comparable properties, vacancy rates, projected depreciation rates, and the state of the local and regional economy. The Company may also elect to make additional reductions in the collateral value based on management's best judgment, which represents another source of unobservable inputs. Because of the subjective nature of collateral valuation, impaired loans are considered Level 3.

Impaired loans may be secured by collateral other than real estate. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business' financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports (Level 3). If a loan is not collateral-dependent, its impairment may be measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate. Because the loan is discounted at its effective rate of interest, rather than at a market rate, the loan is not considered to be held at fair value and is not included in the tables below. Collateral-dependent impaired loans allocated to the allowance for loan losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as part of the provision for loan losses on the Consolidated Statements of Income.

Other Real Estate Owned (OREO)

Loans are transferred to OREO when the collateral securing them is foreclosed on. The measurement of loss associated with OREOs is based on the fair value of the collateral compared to the unpaid loan balance and anticipated costs to sell the property. If there is a contract for the sale of a property, and management reasonably believes the transaction will be consummated in accordance with the terms of the contract, fair value is based on the sale price in that contract (Level 1). If management has recent information about the sale of identical properties, such as when selling multiple condominium units on the same property, the remaining units would be valued based on the observed market data (Level 2). Lacking either a contract or such recent data, management would obtain an appraisal or evaluation of the value of the collateral as discussed above under Impaired Loans (Level 3). After the asset has been booked, a new appraisal or evaluation is obtained when management has reason to believe the fair value of the property may have changed and no later than two years after the last appraisal or evaluation was received. Any fair value adjustments to OREOs below the original book value are recorded in the period incurred and expensed against current earnings.

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The following table presents the assets carried on the consolidated balance sheets for which a nonrecurring change in fair value has been recorded. Assets are shown by class of loan and by level in the fair value hierarchy, as of the dates indicated. Certain impaired loans are valued by the present value of the loan's expected future cash flows, discounted at the loan's effective interest rate. These loans are not carried on the consolidated balance sheets at fair value and, as such, are not included in the table below. Former branch sites are carried at the lower of cost or market. Those carried at cost are not included in the table below.

			Carrying Value at December 31, 2016 Using
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	400	$	0	$	0	$	400
Commercial		1,483		0		0		1,483
Construction		74		0		0		74
Total mortgage loans on real estate		1,957		0		0		1,957
Commercial loans		718		0		0		718
Total	$	2,675	$	0	$	0	$	2,675
Other real estate owned
Construction	$	940	$	0	$	0	$	940
Total	$	940	$	0	$	0	$	940

			Carrying Value at December 31, 2015 Using
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	952	$	0	$	0	$	952
Commercial		267		0		0		267
Construction		62		0		0		62
Total	$	1,281	$	0	$	0	$	1,281
Other real estate owned
Residential 1-4 family	$	724	$	0	$	0	$	724
Commercial		927		0		0		927
Construction		1,090		0		0		1,090
Total	$	2,741	$	0	$	0	$	2,741

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The following table displays quantitative information about Level 3 Fair Value Measurements as of the dates indicated:

Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at December 31, 2016 (dollars in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate	$	400	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Commercial real estate		1,483	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Construction		74	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Commercial		718	Market comparables	Selling costs		0.00	%
				Liquidation discount		0.00% - 38.58% (32.40	%)
Other real estate owned
Construction		940	Market comparables	Selling costs		7.25	%
				Liquidation discount		0.00	%

Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at December 31, 2015 (dollars in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate	$	952	Market comparables	Selling costs		7.25	%
				Liquidation discount		0.00% - 4.00% (3.75	%)
Commercial real estate		267	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Construction		62	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Other real estate owned
Residential 1-4 family		724	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00% - 7.17% (4.79	%)
Commercial		927	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00% - 24.70% (11.77	%)
Construction		1,090	Market comparables	Selling costs		6.72	%
				Liquidation discount		33.05	%

FASB ASC 825, "Financial Instruments," requires disclosure about fair value of financial instruments and excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company's assets.

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments not discussed above:

CASH AND CASH EQUIVALENTS

The carrying amounts of cash and short-term instruments, including interest-bearing due from banks, approximate fair values.

RESTRICTED SECURITIES

The restricted security category is comprised of FHLB and Federal Reserve Bank stock. These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and they lack a market. When the FHLB or Federal Reserve Bank repurchases stock, they repurchase at the stock's book value. Therefore, the carrying amounts of restricted securities approximate fair value.

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LOANS RECEIVABLE

The fair value of a loan is based on its interest rate in relation to its risk profile, in comparison to what an investor could earn on a different investment with a similar risk profile. Variations in risk tolerance between lenders, and thus in risk pricing, can result in the same loan being priced differently at different institutions. A bank's experience with the type of lending (such as commercial real estate) can also impact its assessment of the riskiness of a loan. A comprehensive picture of competitors' rates in relation to borrower risk profiles is not available. Since the rate and risk profile are the primary factors in determining the fair value of a loan, both of which are unobservable in the market, the Company classifies loans as Level 3 in the fair value hierarchy. The Company uses a model which estimates market value based on the loan's interest rate (regardless of its risk level) and rates for debt of similar maturities where market data is available. Fair values for non-performing loans are estimated as described above.

BANK-OWNED LIFE INSURANCE

Bank-owned life insurance represents insurance policies on certain current and former officers of the Company. The cash value of the policies is estimated using information provided by the insurance carrier. The insurance carrier uses actuarial data to estimate the value of each policy, based on the age and health of the insured relative to other individuals about whom the carrier has information. Health information can be broken down into quantitative, observable inputs, such as smoking habits, blood pressure, and weight, which, along with the insured's age, can be compared to observable data the insurance carrier has available. The carrier can then estimate the cash value of each policy. Since the cash value represents the amount of cash the Company would receive when the policies are paid, the cash value closely approximates the fair value of the policies. Accordingly, bank-owned life insurance is classified as Level 2.

DEPOSIT LIABILITIES

The fair value of demand deposits, savings and certain money market deposits is the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities. Information about the rates paid by other institutions for deposits of similar terms is readily available, and rates are mainly influenced by the term of the deposit itself. As a result, fair value calculations are based on observable inputs, and are classified as Level 2.

SHORT-TERM BORROWINGS

The carrying amounts of federal funds purchased, overnight repurchase agreements, and other short-term borrowings maturing within 90 days approximate their fair values. Since the contractual terms of these borrowings provide all information necessary to calculate the amounts that will be due at maturity, these liabilities are classified as Level 2.

LONG-TERM BORROWINGS

The fair values of the Company's long-term borrowings are estimated based on the current cost to repay the debt in full, discounted to current values and including any prepayment penalties that may apply. As the contractual terms of the borrowing provide all the necessary inputs for this calculation, long-term borrowings are classified as Level 2.

ACCRUED INTEREST

The calculation of accrued interest is based on readily observable information, such as the rate and term of the underlying asset or liability. Since these amounts are expected to be realized quickly (generally within 30 to 90 days), the carrying value approximates fair value and is classified as Level 2.

COMMITMENTS TO EXTEND CREDIT AND IRREVOCABLE LETTERS OF CREDIT

The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit-worthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. At December 31, 2016 and December 31, 2015, the fair value of fees charged for loan commitments and irrevocable letters of credit was immaterial.

- 84 -

The estimated fair values, and related carrying or notional amounts, of the Company's financial instruments as of the dates indicated are as follows:

			Fair Value Measurements at December 31, 2016 Using
Description	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Cash and cash equivalents	$	25,854	$	25,854	$	0	$	0
Securities available-for-sale		199,365		0		199,365		0
Restricted securities		970		0		970		0
Loans, net of allowances for loan losses		595,637		0		0		594,190
Bank owned life insurance		25,206		0		25,206		0
Accrued interest receivable		3,189		0		3,189		0
Liabilities
Deposits	$	784,502	$	0	$	783,450	$	0
Overnight repurchase agreements		18,704		0		18,704		0
Accrued interest payable		228		0		228		0

			Fair Value Measurements at December 31, 2015 Using
Description	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Cash and cash equivalents	$	36,990	$	36,990	$	0	$	0
Securities available-for-sale		214,192		0		214,192		0
Restricted securities		2,016		0		2,016		0
Loans, net of allowances for loan losses		560,737		0		0		559,488
Bank owned life insurance		24,411		0		24,411		0
Accrued interest receivable		3,059		0		3,059		0
Liabilities
Deposits	$	746,471	$	0	$	746,740	$	0
Overnight repurchase agreements		25,950		0		25,950		0
Federal Home Loan Bank advances		25,000		0		25,501		0
Accrued interest payable		241		0		241		0

NOTE 17, Regulatory Matters

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can cause certain mandatory and possibly additional discretionary actions to be initiated by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1, and common equity tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. The terms Tier 1 and common equity tier 1 capital, risk-weighted assets and average assets, as used in this note, are as defined in the applicable regulations. Management believes, as of December 31, 2016 and 2015, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

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As of December 31, 2016, the most recent notification from the Comptroller categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, common equity tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Bank's category. The Company's and the Bank's actual capital amounts and ratios as of December 31, 2016 and 2015 are also presented in the table.

	Capital					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
December 31, 2016:
Total Capital to Risk Weighted Assets:
Consolidated	$	106,443		14.51	%	$	63,263		8.625	%		N/A		N/A
Old Point National Bank		98,237		13.47	%		62,909		8.625	%	$	72,938		10.00	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		98,198		13.39	%		48,593		6.625	%		N/A		N/A
Old Point National Bank		89,992		12.34	%		48,321		6.625	%		58,350		8.00	%
Common Equity Tier 1 Capital to Risk Weighted Assets:
Consolidated		98,198		13.39	%		37,591		5.125	%		N/A		N/A
Old Point National Bank		89,992		12.34	%		37,381		5.125	%		47,410		6.50	%
Tier 1 Capital to Average Assets:
Consolidated		98,198		10.68	%		36,768		4.000	%		N/A		N/A
Old Point National Bank		89,992		9.85	%		36,549		4.000	%		45,686		5.00	%
December 31, 2015:
Total Capital to Risk Weighted Assets:
Consolidated	$	104,076		14.89	%	$	55,910		8.00	%		N/A		N/A
Old Point National Bank		96,079		13.83	%		55,589		8.00	%	$	69,486		10.00	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		96,338		13.78	%		41,932		6.00	%		N/A		N/A
Old Point National Bank		88,341		12.71	%		41,692		6.00	%		55,589		8.00	%
Common Equity Tier 1 Capital to Risk Weighted Assets:
Consolidated		96,338		13.78	%		31,449		4.50	%		N/A		N/A
Old Point National Bank		88,341		12.71	%		31,269		4.50	%		45,166		6.50	%
Tier 1 Capital to Average Assets:
Consolidated		96,338		10.93	%		35,260		4.00	%		N/A		N/A
Old Point National Bank		88,341		10.06	%		35,124		4.00	%		43,905		5.00	%

The approval of the Comptroller is required if the total of all dividends declared by a national bank in any calendar year exceeds the bank's net profits for that year combined with its retained net profits for the preceding two calendar years. Under this formula, the Bank and Trust can distribute as dividends to the Company in 2017, without approval of the Comptroller, $2.8 million plus an additional amount equal to the Bank's and Trust's retained net profits for 2017 up to the date of any dividend declaration.

NOTE 18, Segment Reporting

The Company operates in a decentralized fashion in three principal business segments: the Bank, the Trust, and the Parent. Revenues from the Bank's operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Trust's operating revenues consist principally of income from fiduciary activities. The Parent company's revenues are mainly interest and dividends received from the Bank and Trust companies. The Company has no other segments.

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The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each segment appeals to different markets and, accordingly, requires different technologies and marketing strategies.

Information about reportable segments, and reconciliation of such information to the Consolidated Financial Statements as of and for the years ended December 31 follows:

2016	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
	(in thousands)
Revenues
Interest and dividend income	$	29,765	$	61	$	4,590		$	(4,590	)	$	29,826
Income from fiduciary activities		0		3,560		0			0			3,560
Other income		9,058		910		200			(262	)		9,906
Total operating income		38,823		4,531		4,790			(4,852	)		43,292
Expenses
Interest expense		2,574		0		0			0			2,574
Provision for loan losses		1,930		0		0			0			1,930
Salaries and employee benefits		16,801		2,671		406			0			19,878
Other expenses		13,179		1,041		995			(262	)		14,953
Total operating expenses		34,484		3,712		1,401			(262	)		39,335
Income before taxes		4,339		819		3,389			(4,590	)		3,957
Income tax expense (benefit)		288		280		(408	)		0			160
Net income	$	4,051	$	539	$	3,797		$	(4,590	)	$	3,797
Capital expenditures	$	887	$	4	$	0		$	0		$	891
Total assets	$	897,966	$	5,761	$	93,998		$	(94,759	)	$	902,966

2015	Bank			Trust		Unconsolidated Parent			Eliminations			Consolidated
	(in thousands)
Revenues
Interest and dividend income	$	30,242		$	54	$	4,009		$	(4,010	)	$	30,295
Income from fiduciary activities		0			3,617		0			0			3,617
Other income		8,548			1,032		200			(261	)		9,519
Total operating income		38,790			4,703		4,209			(4,271	)		43,431
Expenses
Interest expense		3,633			0		0			(1	)		3,632
Provision for loan losses		1,025			0		0			0			1,025
Salaries and employee benefits		17,630			2,685		432			0			20,747
Other expenses		13,254			1,010		336			(261	)		14,339
Total operating expenses		35,542			3,695		768			(262	)		39,743
Income before taxes		3,248			1,008		3,441			(4,009	)		3,688
Income tax expense (benefit)		(96	)		343		(193	)		0			54
Net income	$	3,344		$	665	$	3,634		$	(4,009	)	$	3,634
Capital expenditures	$	1,682		$	74	$	0		$	0		$	1,756
Total assets	$	891,877		$	5,694	$	93,191		$	(93,975	)	$	896,787

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The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before income taxes not including nonrecurring gains or losses.

Both the Parent and the Trust companies maintain deposit accounts with the Bank, on terms substantially similar to those available to other customers. These transactions are eliminated to reach consolidated totals.

The Company operates in one geographical area and does not have a single external customer from which it derives 10 percent or more of its revenues.

NOTE 19, Condensed Financial Statements of Parent Company

Financial information pertaining to Old Point Financial Corporation (parent company only) is as follows:

	December 31,
Balance Sheets	2016			2015
	(in thousands)
Assets
Cash and cash equivalents	$	2,366		$	2,198
Securities available-for-sale		164			99
Investment in common stock of subsidiaries		91,437			90,836
Other assets		31			58
Total assets	$	93,998		$	93,191
Liabilities and Stockholders' Equity
Note payable - subsidiary	$	8		$	15
Common stock		24,806			24,795
Additional paid-in capital		16,427			16,392
Retained earnings		56,965			55,151
Accumulated other comprehensive loss		(4,208	)		(3,162	)
Total liabilities and stockholders' equity	$	93,998		$	93,191

	Years Ended December 31,
Statements of Income	2016			2015
	(in thousands)
Income:
Dividends from subsidiaries	$	2,900		$	2,900
Other income		200			200
Total income		3,100			3,100
Expenses:
Salaries and benefits		406			432
Legal expenses		774			180
Service fees		166			137
Other operating expenses		55			19
Total expenses		1,401			768
Income before income taxes and equity in undistributed net income of subsidiaries		1,699			2,332
Income tax benefit		(408	)		(193	)
		2,107			2,525
Equity in undistributed net income of subsidiaries		1,690			1,109
Net income	$	3,797		$	3,634

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	Years Ended December 31,
Statements of Cash Flows	2016			2015
	(in thousands)
Cash flows from operating activities:
Net income	$	3,797		$	3,634
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of subsidiaries		(1,690	)		(1,109	)
(Increase) decrease in other assets		5			(5	)
Increase (decrease) in other liabilities		(7	)		15
Net cash provided by operating activities		2,105			2,535
Cash flows from investing activities:		0			0
Cash flows from financing activities:
Proceeds from sale of stock		46			0
Cash dividends paid on common stock		(1,983	)		(1,686	)
Net cash used in financing activities		(1,937	)		(1,686	)
Net increase in cash and cash equivalents		168			849
Cash and cash equivalents at beginning of year		2,198			1,349
Cash and cash equivalents at end of year	$	2,366		$	2,198
Supplemental schedule of noncash transactions:
Unrealized gain (loss) on securities available-for-sale	$	64		$	(1	)

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures. Management evaluated, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating its disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Management's Report on Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act.

Because of its inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management evaluated, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company's internal control over financial reporting as of December 31, 2016. In conducting this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework in 2013. Based on this evaluation, using those criteria, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2016.

Changes in Internal Control over Financial Reporting. There was no change in the Company's internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2016 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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Item 9B. Other Information

As previously disclosed by the Company, on January 10, 2017, Laurie D. Grabow, Chief Financial Officer and Senior Vice President/Finance, notified the Chairman of the Board of Directors and President and Chief Executive Officer of the Company of her intent to retire from her positions with the Company and the Bank in mid-2017. On March 10, 2017, the Company and Mrs. Grabow entered into a Retirement Agreement, Waiver and General Release (the Agreement). The Agreement is effective March 18, 2017, if not revoked before then.

The Agreement sets the effective date for Mrs. Grabow's retirement as May 31, 2017, unless an earlier date is agreed upon between Mrs. Grabow and the Company. At that time, Mrs. Grabow will cease serving as the Company's Chief Financial Officer and will retire from all positions with the Company and the Bank.  In connection with her retirement, Mrs. Grabow will receive 39 weeks' base salary compensation from the Company (based on an annual base salary of $204,000), less applicable withholdings and paid in installments in accordance with the Company's regular pay periods from June 1, 2017 through February 28, 2018. Under the Agreement, Mrs. Grabow will also be entitled to reimbursement for health insurance premiums for continuing coverage under the Company's health and dental insurance plans through February 28, 2018.  In consideration of the payments and benefits under the Agreement, Mrs. Grabow will be subject to certain confidentiality covenants.

The foregoing description of the Agreement is only a summary and is qualified in its entirety by reference to the Agreement itself, a copy of which is attached as an exhibit to this Form 10-K as Exhibit 10.17 and is incorporated by reference herein.

Part III

Except as otherwise indicated, information called for by the following items under Part III is contained in the Proxy Statement for the Company's 2017 Annual Meeting of Stockholders (the 2017 Proxy Statement) to be held on May 23, 2017.

Item 10. Directors, Executive Officers and Corporate Governance

The information with respect to the directors of the Company is set forth under the caption "Election of Directors" in the 2017 Proxy Statement and is incorporated herein by reference.

The information regarding the Section 16(a) reporting requirements of the directors and executive officers is set forth under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" in the 2017 Proxy Statement and is incorporated herein by reference.

The information concerning the executive officers of the Company required by this item is included in Part I of this report on Form 10-K under the caption "Executive Officers of the Registrant."

The information regarding the Company's Audit Committee and its Audit Committee Financial Expert is set forth under the caption "Board Committees and Attendance" in the 2017 Proxy Statement and is incorporated herein by reference.

The Company has a Code of Ethics which details principles and responsibilities governing ethical conduct for all Company directors, officers, employees and principal stockholders.

A copy of the Code of Ethics will be provided free of charge, upon written request made to the Company's secretary at 1 West Mellen Street, Hampton, Virginia 23663 or by calling (757) 728-1200. The Code of Ethics is also posted on the Company's website at www.oldpoint.com in the "Community" section, under "Investor Relations" and then "Governance Documents." The Company intends to satisfy the disclosure requirements of Form 8-K with respect to waivers of or amendments to the Code of Ethics with respect to certain officers of the Company by posting such disclosures on its website under "Waivers of or amendments to the Code of Ethics." The Company may, however, elect to disclose any such amendment or waiver in a report on Form 8-K filed with the SEC either in addition to or in lieu of the website disclosure.

Item 11. Executive Compensation

The information set forth under the captions "Compensation and Benefits Committee Interlocks and Insider Participation" and "Executive Compensation" in the 2017 Proxy Statement is incorporated herein by reference.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information set forth under the caption "Securities Authorized for Issuance Under Equity Compensation Plans" in the 2017 Proxy Statement is incorporated herein by reference.

The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" in the 2017 Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information set forth under the caption "Interest of Management in Certain Transactions" in the 2017 Proxy Statement is incorporated herein by reference.

The information regarding director independence set forth under the caption "Board Committees and Attendance" in the 2017 Proxy Statement is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information set forth under the captions "Principal Accountant Fees" and "Audit Committee Pre-Approval Policy" in the 2017 Proxy Statement is incorporated herein by reference.

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Part IV

Item 15. Exhibits, Financial Statement Schedules

(a)(1)     Consolidated Financial Statements

The following Consolidated Financial Statements and reports are included in Part II, Item 8, of this report on Form 10-K.

Report of Independent Registered Public Accounting Firm (Yount, Hyde & Barbour, P.C.)

Consolidated Balance Sheets – December 31, 2016 and 2015

Consolidated Statements of Income – Years Ended December 31, 2016 and 2015

Consolidated Statements of Comprehensive Income – Years Ended December 31, 2016 and 2015

Consolidated Statements of Changes in Stockholders' Equity – Years Ended December 31, 2016 and 2015

Consolidated Statements of Cash Flows – Years Ended December 31, 2016 and 2015

Notes to Consolidated Financial Statements

(a)(2)    Consolidated Financial Statement Schedules

All schedules are omitted since they are not required, are not applicable, or the required information is shown in the Consolidated Financial Statements or notes thereto.

(a)(3)    Exhibits

The following exhibits are filed as part of this Form 10-K and this list includes the Exhibit Index.

Exhibit No.		Description
	3.1	Articles of Incorporation of Old Point Financial Corporation, as amended June 22, 2000 (incorporated by reference to Exhibit 3.1 to Form 10-K filed on March 12, 2009)
	3.1.1	Articles of Amendment to Articles of Incorporation of Old Point Financial Corporation, effective May 26, 2016 (incorporated by reference to Exhibit 3.1.1 to Form 8-K filed May 31, 2016)
	3.2	Bylaws of Old Point Financial Corporation, as amended and restated August 9, 2016 (incorporated by reference to Exhibit 3.2 to Form 10-Q filed August 10, 2016)
	10.1*	Old Point Financial Corporation 1998 Stock Option Plan, as amended April 24, 2001 (incorporated by reference to Exhibit 4.4 to Form S-8 filed July 24, 2001)
	10.2*	Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.2 to Form 10-K filed March 30, 2005)
	10.3*	Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.3 to Form 10-K filed March 30, 2005)
	10.4*	Form of Life Insurance Endorsement Method Split Dollar Plan Agreement with The Northwestern Mutual Life Insurance Company entered into with each of Robert F. Shuford, Sr., Laurie D. Grabow and Eugene M. Jordan, II (incorporated by reference to Exhibit 10.4 to Form 10-K filed March 30, 2005)
	10.5*	Directors' Compensation
	10.6*	Base Salaries of Executive Officers of the Registrant
	10.7*	Summary of Old Point Financial Corporation Incentive Plan (incorporated by reference to Exhibit 10.7 to Form 10-K filed March 30, 2015)
	10.8*	Form of Life Insurance Endorsement Method Split Dollar Plan Agreement with Ohio National Life Assurance Corporation entered into with each of Laurie D. Grabow and Eugene M. Jordan, II (incorporated by reference to Exhibit 10.8 to Form 10-K filed March 14, 2008)

- 92 -

	10.9	Memorandum of Understanding between The Old Point National Bank of Phoebus and Tidewater Mortgage Services, Inc., dated September 10, 2007 (incorporated by reference to Exhibit 10.8 to Form 10-Q filed November 9, 2007)
	10.10*	Form of 162 Insurance Plan (incorporated by reference to Exhibit 10.10 to Form 10-K filed March 12, 2009)
	10.11*	Form of Life Insurance Endorsement Method Split Dollar Plan Agreement with Ohio National Life Assurance Corporation entered into with Joseph R. Witt (incorporated by reference to Exhibit 10.11 to Form 10-K filed March 12, 2010)
	10.12*	Form of Life Insurance Endorsement Method Split Dollar Plan Agreement with New York Life Insurance and Annuity Corporation entered into with Eugene M. Jordan, II, Robert F. Shuford, Jr., and Joseph R. Witt (incorporated by reference to Exhibit 10.12 to Form 10-K filed March 30, 2012)
	10.13*	Separation Agreement and General Release by and between Louis G. Morris and Old Point Financial Corporation and The Old Point National Bank of Phoebus, dated September 8, 2015 (incorporated by reference to Exhibit 10.13 to Form 10-Q filed November 9, 2015)
	10.14	Settlement Agreement dated March 16, 2016 among Old Point Financial Corporation, Financial Edge Fund, L.P., Financial Edge-Strategic Fund, L.P., PL Capital/Focused Fund, L.P., PL Capital, LLC, PL Capital Advisors, LLC, Goodbody/PL Capital, L.P., Goodbody/PL Capital, LLC, Mr. John W. Palmer and Mr. Richard J. Lashley, as Managing Members of PL Capital, LLC, PL Capital Advisors, LLC and Goodbody/PL Capital, LLC and Mr. William F. Keefe (incorporated by reference to Exhibit 10.1 to Form 8-K filed March 17, 2016)
	10.15*	Old Point Financial Corporation 2016 Incentive Stock Plan (incorporated by reference to Exhibit 10.15 to Form 8-K filed May 31, 2016)
	10.16	Membership Interest Purchase Agreement dated January 13, 2017 between Tidewater Mortgage Services, Inc. and The Old Point National Bank of Phoebus (incorporated by reference to Exhibit 10.1 to Form 8-K filed January 20, 2017)
	10.17*	Retirement Agreement, Waiver and General Release by and among Laurie D. Grabow and Old Point Financial Corporation, The Old Point National Bank of Phoebus and Old Point Trust & Financial Services, N.A., dated March 10, 2017
	21	Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to Form 10-K filed March 30, 2005)
	23	Consent of Yount, Hyde & Barbour, P.C.
	24	Powers of Attorney
	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101	The following materials from Old Point Financial Corporation's annual report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (Extensible Business Reporting Language), filed herewith: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements
* Denotes management contract.

Item 16. Form 10-K Summary

Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

OLD POINT FINANCIAL CORPORATION
	/s/Robert F. Shuford, Sr.
	Robert F. Shuford, Sr.,
	Chairman, President & Chief Executive Officer
	Date: March 15, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/Robert F. Shuford, Sr.	Chairman, President & Chief Executive Officer and Director
Robert F. Shuford, Sr.	Principal Executive Officer
Date: March 15, 2017
/s/Laurie D. Grabow	Chief Financial Officer & Senior Vice President/Finance
Laurie D. Grabow	Principal Financial & Accounting Officer
Date: March 15, 2017
/s/Stephen C. Adams*	Director
Stephen C. Adams
/s/James Reade Chisman*	Director
James Reade Chisman
/s/Russell S. Evans, Jr.*	Director
Russell S. Evans, Jr.
/s/Michael A. Glasser*	Director
Michael A. Glasser
/s/Dr. Arthur D. Greene*	Director
Dr. Arthur D. Greene
/s/John Cabot Ishon*	Director
John Cabot Ishon
/s/William F. Keefe	Director
William F. Keefe
/s/Tom B. Langley*	Director
Tom B. Langley
/s/Dr. H. Robert Schappert*	Director
Dr. H. Robert Schappert
/s/Robert F. Shuford, Jr.*	Director
Robert F. Shuford, Jr.
/s/Ellen Clark Thacker*	Director
Ellen Clark Thacker
/s/Joseph R. Witt*	Director
Joseph R. Witt

*By Robert F. Shuford, Sr., as Attorney in Fact

Date: March 15, 2017

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EX-10.5

EXHIBIT 10.5

Directors' Compensation

All non-employee directors of The Old Point National Bank of Phoebus (the Bank) and Old Point Trust & Financial Services, N.A. (the Trust Company) receive $500 and $300, respectively, for each board meeting they attend. The non-employee directors of the Bank and Trust Company receive $150 for each committee meeting they attend except for the Bank's Investment Committee meetings, for which members receive $100 for attendance, and the Bank's Directors Loan Committee and Audit Committee meetings, for which members receive $200 for attendance.

In addition, non-employee directors of the Bank and Trust Company receive an annual retainer fee of $10,000 and $3,000, respectively.  In addition, the chairman of the Audit Committee and the chairman of the Trust Company Board receive an additional $2,000 annual retainer, the Lead Director of the Bank Board receives an additional $7,000 annual retainer, and the chairman of the Directors Loan Committee receives an additional $1,000 annual retainer.

All directors of Old Point Financial Corporation (the Company) have been elected as directors of the Bank, but there is no assurance that this practice will continue. However, not all Company directors serve as directors of the Trust Company. There are no additional fees paid for being a Company director.

The Company reimburses travel, lodging and meal expense for all directors living outside of Virginia to attend board and committee meetings. The Company also pays for all directors and their spouses to attend regular director seminars.

Non-employee directors were eligible to receive awards of non-qualified stock options under the Company's 1998 Stock Option Plan; however, the 1998 Stock Option Plan expired in 2008, and no further awards may be granted under the plan.

Non-employee directors are eligible to receive equity compensation awards under the Company’s 2016 Incentive Stock Plan.

EX-10.6

EXHIBIT 10.6

Base Salaries of Executive Officers of the Registrant

As of April 1, 2017, the following are the base salaries (on an annual basis) of the executive officers of Old Point Financial Corporation:

Robert F. Shuford, Sr.	$	300,000
Chairman, President & Chief Executive Officer Old Point Financial Corporation
Robert F. Shuford, Jr.	$	330,000
Executive Vice President/Bank Old Point Financial Corporation
Joseph R. Witt	$	297,030
Chief Business Development Officer & Senior Vice President Old Point Financial Corporation
Laurie D. Grabow	$	208,080
Chief Financial Officer & Senior Vice President/Finance Old Point Financial Corporation
Eugene M. Jordan, II	$	190,000
Secretary to the Board & Executive Vice President/Trust Old Point Financial Corporation
Donald S. Buckless (52)	$	187,200
Chief Lending Officer & Senior Vice President Old Point Financial Corporation

EX-10.17

EXHIBIT 10.17

RETIREMENT AGREEMENT, WAIVER AND GENERAL RELEASE

This Retirement Agreement (the "Agreement") dated March 10, 2017 confirms the following understandings and agreements with Old Point Financial Corporation, its officers, directors, employees, agents, successors, assigns, affiliates, and subsidiaries, including but not limited to, The Old Point National Bank of Phoebus and Old Point Trust & Financial Services, N.A., along with their affiliates, successors, assigns, officers, directors, employees, and agents (hereinafter collectively called the "Company", "Old Point") and Laurie Grabow ("Employee", "you" or "your", "her or herself") with respect to Employee's retirement from the Company.

NOW, THEREFORE, in consideration of the premises, the mutual covenants set forth herein, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto stipulate and agree as follows:

1. Employee hereby makes a voluntary election to retire.

2. Employee acknowledges that she will be retiring from employment with the Company effective May 31, 2017 (the "Retirement Date") or earlier date by mutual agreement by the Company and Employee.  During the remainder of Employee's employment, Employee will have those duties and responsibilities as the Chief Financial Officer of Old Point. Employee further acknowledges that officials of the Company have explained to Employee that Employee will receive payment of her regular base salary to the Retirement Date and accrued vacation, whether or not Employee signs this Agreement.  On the Retirement Date, Employee also shall be deemed to have resigned from all officer, director and other positions with the Company, and to the extent that Employee is a trustee, or is a member of any committee of the Company or its benefits plans, as of the Retirement Date, Employee shall be deemed to have resigned from such capacities and agrees to execute any additional, more specific resignation documents the Company may request.

3. In consideration of this AGREEMENT, and upon receipt of a validly executed copy of this AGREEMENT, the expiration of the 7-day revocation period referenced in paragraph 14 below, and following the Retirement Date, Old Point agrees to provide Employee with the following additional compensation and benefits:

A. Retirement Benefit.  Provided that Employee signs this Agreement, does not revoke the Agreement and abides by its terms, and in return for Employee's promises in this Agreement, the Company agrees to pay Employee 39 weeks of base salary at the rate in effect on the Retirement Date as severance pay (the "Severance Period") following the Retirement Date.  All salary payments shall be made at a time and in accord with the regular payroll practices of the Company with respect to its executive officers. All such amounts shall be subject to and reduced by any applicable federal and state withholding taxes or other deductions authorized by Employee. Employee agrees and acknowledges that Retirement Benefit is above and beyond anything to which Employee is otherwise entitled to and is payable to Employee only in exchange for execution of this Agreement and that the Retirement Benefit represents full and complete consideration for the release Employee is giving the Company in this Agreement.

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B. Health/Dental Plan Continuation.  If Employee is enrolled in an Old Point sponsored health and/or Dental insurance plan on the Retirement Date, notwithstanding anything in the plan to the contrary, Employee will be eligible to continued health and/or dental insurance coverage under the Old Point sponsored insurance plan for herself and her covered spouse.  Employee, however, shall not be entitled to guaranteed or continued coverage under any specific policy or plan and Old Point reserves the right to make changes in any policy or policies of insurance it offers. In the event Old Point ceases to offer the policy or plan in which Employee participates, Employee shall be entitled to participate in the nearest equivalent policy or plan replacing such terminated policy or plan in accordance with the terms of such plan.  In the event Old Point ceases to offer any group plan coverage to its employees, Employee's right to continued plan coverage will cease.

C. Health and Dental Insurance Premium Benefit. If Employee is eligible for Health Plan and Dental plan Continuation under paragraph 3.B. above, the Company shall reimburse the Employee for the insurance premiums resulting from continuing coverage under the Company insurance plan pursuant to the Consolidated Omnibus Budget Reconciliation Act ("COBRA") for 39 weeks.

D. 401(k) and Health Savings Account.  Employee may not defer any portion of the Retirement Benefit to any retirement plan sponsored by Old Point, including Old Point's 401(k), or any health-savings accounts sponsored by Old Point, including Employee's HSA.  However, Employee may still be deemed an eligible individual for purposes of making post-tax contributions to his or her HSA, if applicable, and should consult with appropriate tax advisors or attorneys to determine the same.

4. Employee acknowledges that the above delineated payment and benefits represent additional monies and benefits to which he or she is not otherwise entitled.  Employee and Old Point acknowledge that this Agreement does not modify the benefits to which he or she is already entitled as a terminating employee.

5.  In exchange for the payment and benefits described in paragraph 3 above, Employee, for herself and her heirs, legal representatives, beneficiaries, assigns and successors in interest, hereby releases and forever discharges Old Point, its successors, assigns, officers, directors, employees, agents, representatives and subsidiaries, whether in their individual or official capacities (hereinafter collectively referred to as the "RELEASED PARTIES") of and from any and all actions or causes of action, suits, debts, claims, complaints, contracts, controversies, agreements, promises, damages, claims for attorney's fees, punitive damages and reinstatement, judgments, and demands whatsoever, in law or in equity, that her or she has or ever had from the beginning of the world to the date of this AGREEMENT, including, but without limiting the generality of the foregoing, any claim arising out of or in any way connected with her employment relationship with Old Point or any claim alleging discrimination, harassment, retaliation or violation of Title VII of the Civil Rights Act of 1964, as amended, and as amended by the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Americans with Disabilities Act, as amended, the Virginia Human Rights Act, Virginia Code §2.1-714 through §2.1-725, violation of any other local, state or federal law, regulation or ordinance, or any other claim arising under any common law theory of tort or contract, including, but not limited to, wrongful discharge, libel, slander, defamation or intentional infliction of emotional distress.  The parties recognize, however, that nothing contained in this AGREEMENT shall prohibit either party from instituting legal action to enforce any provisions of this AGREEMENT.

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EMPLOYEE UNDERSTANDS AND AGREES THAT, OTHER THAN CLAIMS THAT CANNOT BE WAIVED BY LAW, HE OR SHE IS WAIVING AND RELEASING ANY AND ALL CLAIMS AGAINST OLD POINT TO THE DATE ON WHICH HE OR SHE SIGNS THIS AGREEMENT IN EXCHANGE FOR CONSIDERATION TO WHICH HE OR SHE IS NOT OTHERWISE ENTITLED.

6. Employee acknowledges that she is over the age of forty (40) years and that, as such, she is covered by the Age Discrimination in Employment Act, 29 U.S.C. § 621 ("ADEA").  Employee further acknowledges that this AGREEMENT constitutes a release in accord with the provisions of the ADEA.

7. Acknowledgements and Affirmations.

a. Employee represents and affirms that Employee has not filed any claim or charge against Old Point.

b. Employee also represents and affirms that Employee has reported all hours worked as of the date she signs this release and has been paid and/or has received all compensation, wages, bonuses, commissions, and/or benefits to which she may be entitled.  Employee represents and affirms that she has been granted any leave to which she was entitled under the Family and Medical Leave Act or related state or local leave or disability accommodation laws.

c. Employee further represents and affirms that she has no known workplace injuries or occupational diseases.

d. Employee also represents and affirms that she has not divulged any proprietary or confidential information of Old Point and will continue to maintain the confidentiality of such information consistent with Old Point's policies and/or common law.

e. Employee further represents and affirms that she has not been retaliated against for reporting any allegations of wrongdoing by Old Point, including any allegations of corporate fraud.  Both Parties acknowledge that this Agreement does not limit either party's right, where applicable, to file or participate in an investigative proceeding of any federal, state or local governmental agency.

f. Employee represents and affirms that all of Old Point's decisions regarding calculation of Employee's pay and benefits earned through the date of Employee's separation from employment were not discriminatorily based on age, disability, race, color, sex, religion, national origin or any other classification protected by law.

8. In consideration of the benefits provided to Employee pursuant to this Agreement, Employee agrees to keep the terms and conditions of this Agreement confidential and private and not to divulge the terms, conditions, or benefits of this Early Retirement Agreement to the general public, media, or press. This provision shall not be interpreted to prevent Employee from disclosing information concerning this Agreement to Employee's spouse, pursuant to a valid court order or legal requirement, or to Employee's financial, tax, or legal advisor. Should Employee violate this paragraph 8, Old Point's obligation to provide the benefits provided in this Agreement shall immediately cease.

9. This AGREEMENT may not be modified, altered or changed except upon the express prior written consent of the parties.

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10. This AGREEMENT contains all the terms and conditions agreed upon by the parties hereto with reference to the subject matters hereof.  No other agreements, oral or otherwise, shall be deemed to exist or to bind either of the parties hereto.  No representative of either party hereto had or has any authority to make any representation or promise not contained in this AGREEMENT, and each of the parties hereto acknowledges that each has not executed this AGREEMENT in reliance upon any such representation or promise.

11. This AGREEMENT may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

12. This AGREEMENT shall in all respects be interpreted, enforced, governed and construed by and under the laws of the Commonwealth of Virginia.

13. The invalidity, illegality or unenforceability of any provision hereof or any particular application thereof shall not be deemed to affect or impair in any manner the validity, legality or enforceability of any other provision of this AGREEMENT, and this AGREEMENT shall continue in full force and effect and shall be interpreted so as to implement as nearly as possible the intention of the parties in the absence of such provision or application.

14. Employee acknowledges that Old Point has advised her that she has a right to consult with an attorney prior to signing this AGREEMENT; and, after such consultation or declining to seek such consultation, Employee freely and voluntarily enters into this AGREEMENT.  Employee further acknowledges that Old Point has given her a period of forty-five (45) days from the date of receipt of this AGREEMENT, in which to consider the terms and binding effect of this AGREEMENT and decide whether she wishes to sign it.  Employee further understands that if she signs this AGREEMENT, she will have seven (7) days thereafter in which she can change her mind and revoke it.  Employee agrees that if she decides to revoke this AGREEMENT within the seven (7) day revocation period, she will provide such revocation notice in writing to Rachel Blankenship, Senior Vice President, Human Resources, Old Point National Bank, 101 East Queen Street, Hampton, Virginia 23669.  Employee understands and agrees that this AGREEMENT is not effective or enforceable until the expiration of the seven (7) day revocation period.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals on the date first above written.

	OLD POINT FINANCIAL CORPORATION
By:	/s/ Robert F. Shuford, Sr.
Name:	Robert F. Shuford, Sr.
Its:	Chairman, President & Chief Executive Officer

	THE OLD POINT NATIONAL BANK OF PHOEBUS
By:	/s/ Robert F. Shuford, Jr.
Name:	Robert F. Shuford, Jr.
Its:	President & Chief Executive Officer

	OLD POINT TRUST & FINANCIAL SERVICES, N.A.
By:	/s/ Eugene M. Jordan, II
Name:	Eugene M. Jordan, II
Its:	President and Chief Executive Officer

March 10, 2017	/s/ Laurie D. Grabow
Date	Employee

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EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements (No. 333-211800, 333-211799, 333-65684, 333-83175) on Form S-8 of Old Point Financial Corporation and Subsidiaries of our report dated March 15, 2017, relating to our audit of the consolidated financial statements, which appear in this Annual Report on Form 10-K of Old Point Financial Corporation and Subsidiaries for the year ended December 31, 2016.

/s/ Yount, Hyde & Barbour, P.C.

Winchester, Virginia

March 15, 2017

EX-24

EXHIBIT 24

Old Point Financial Corporation

Power of Attorney

I, Stephen C. Adams, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Stephen C. Adams                 (SEAL)

Stephen C. Adams

Old Point Financial Corporation

Power of Attorney

I, James Reade Chisman, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ James Reade Chisman      (SEAL)

James Reade Chisman

Old Point Financial Corporation

Power of Attorney

I, Russell S. Evans, Jr., do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Russell S. Evans, Jr.      (SEAL)

Russell S. Evans, Jr.

Old Point Financial Corporation

Power of Attorney

I, Michael A. Glasser, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Michael A. Glasser      (SEAL)

Michael A. Glasser

Old Point Financial Corporation

Power of Attorney

I, Dr. Arthur D. Greene, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Dr. Arthur D. Greene      (SEAL)

Dr. Arthur D. Greene

Old Point Financial Corporation

Power of Attorney

I, John Cabot Ishon, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ John Cabot Ishon      (SEAL)

John Cabot Ishon

Old Point Financial Corporation

Power of Attorney

I, William F. Keefe, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ William F. Keefe      (SEAL)

William F. Keefe

Old Point Financial Corporation

Power of Attorney

I, Tom B. Langley, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Tom B. Langley      (SEAL)

Tom B. Langley

Old Point Financial Corporation

Power of Attorney

I, Dr. H. Robert Schappert, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Dr. H. Robert Schappert      (SEAL)

Dr. H. Robert Schappert

Old Point Financial Corporation

Power of Attorney

I, Robert F. Shuford, Sr., do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Robert F. Shuford, Sr.      (SEAL)

Robert F. Shuford, Sr.

Old Point Financial Corporation

Power of Attorney

I, Robert F. Shuford, Jr., do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Robert F. Shuford, Jr.      (SEAL)

Robert F. Shuford, Jr.

Old Point Financial Corporation

Power of Attorney

I, Ellen Clark Thacker, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Ellen Clark Thacker      (SEAL)

Ellen Clark Thacker

Old Point Financial Corporation

Power of Attorney

I, Joseph R. Witt, do hereby constitute and appoint Robert F. Shuford, Sr. and Robert F. Shuford, Jr. my true and lawful attorney-in-fact, any of whom acting singly is hereby authorized for me and in my name and on my behalf as a director and/or officer of Old Point Financial Corporation (the "Corporation"), to act and to execute any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended ("Act"), and any rules, regulations, policies or requirements of the Securities Exchange Commission (the "Commission") in respect thereof in connection with the preparation and filing by the Corporation with the Commission of its Annual Report on Form 10-K for the year ended December 31, 2016 and any and all amendments to such Report, together with such other supplements, statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

I do hereby ratify and confirm all my said attorneys or attorney shall do or cause to be done by virtue hereof.

WITNESS my execution hereof this 14th day of December, 2016.

/s/ Joseph R. Witt      (SEAL)

Joseph R. Witt

EX-31

EXHIBIT 31.1

CERTIFICATIONS

I, Robert F. Shuford, Sr., certify that:

1.  I have reviewed this annual report on Form 10-K of Old Point Financial Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  March 15, 2017
	/s/Robert F. Shuford, Sr.
	Robert F. Shuford, Sr.
	Chairman, President & Chief Executive Officer

EX-31

EXHIBIT 31.2

CERTIFICATIONS

I, Laurie D. Grabow, certify that:

1.  I have reviewed this annual report on Form 10-K of Old Point Financial Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  March 15, 2017
	/s/Laurie D. Grabow
	Laurie D. Grabow
	Chief Financial Officer & Senior Vice President/Finance

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Old Point Financial Corporation (the "Company") on Form 10-K for the fiscal year ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Chief Executive Officer and Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that based on their knowledge and belief:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

/s/Robert F. Shuford, Sr.                        

Robert F. Shuford, Sr.

Chairman, President & Chief Executive Officer

March 15, 2017

/s/Laurie D. Grabow                         

Laurie D. Grabow

Chief Financial Officer & Senior Vice President/Finance

March 15, 2017

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2016	Mar. 10, 2017	Jun. 30, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	OLD POINT FINANCIAL CORP
Entity Central Index Key	0000740971
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 66,676,665
Entity Common Stock, Shares Outstanding		4,975,417
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2016

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 21,885	$ 33,514
Interest-bearing due from banks	1,667	1,064
Federal funds sold	2,302	2,412
Cash and cash equivalents	25,854	36,990
Securities available-for-sale, at fair value	199,365	214,192
Securities held-to-maturity	0	0
Restricted securities	970	2,016
Loans, net of allowance for loan losses	595,637	560,737
Premises and equipment, net	39,324	41,282
Bank-owned life insurance	25,206	24,411
Foreclosed assets, net of valuation allowance	1,067	2,741
Other assets	15,543	14,418
Total Assets	902,966	896,787
Deposits:
Noninterest-bearing deposits	228,641	215,090
Savings deposits	344,452	321,370
Time deposits	211,409	210,011
Total deposits	784,502	746,471
Overnight repurchase agreements	18,704	25,950
Federal Home Loan Bank advances	0	25,000
Accrued expenses and other liabilities	5,770	6,190
Total liabilities	808,976	803,611
Commitments and contingencies
Stockholders' equity:
Common stock, $5 par value, 10,000,000 shares authorized; 4,959,009 and 4,959,009 shares issued and outstanding	24,806	24,795
Additional paid-in capital	16,427	16,392
Retained earnings	56,965	55,151
Accumulated other comprehensive loss, net	(4,208)	(3,162)
Total stockholders' equity	93,990	93,176
Total liabilities and stockholders' equity	$ 902,966	$ 896,787

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Assets
Securities held-to-maturity, fair value	$ 0	$ 0
Allowance for loan losses	8,245	7,738
Foreclosed assets, valuation allowance	$ 1,026	$ 2,549
Stockholders' equity:
Common stock, par value (in dollars per share)	$ 5	$ 5
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	4,961,258	4,959,009
Common stock, shares outstanding (in shares)	4,961,258	4,959,009

XML

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Interest and Dividend Income:
Interest and fees on loans	$ 26,322	$ 25,972
Interest on due from banks	48	15
Interest on federal funds sold	6	2
Interest on securities:
Taxable	1,802	2,510
Tax-exempt	1,535	1,663
Dividends and interest on all other securities	113	133
Total interest and dividend income	29,826	30,295
Interest Expense:
Interest on savings deposits	227	227
Interest on time deposits	2,116	2,144
Interest on federal funds purchased, securities sold under agreements to repurchase and other borrowings	25	30
Interest on Federal Home Loan Bank advances	206	1,231
Total interest expense	2,574	3,632
Net interest income	27,252	26,663
Provision for loan losses	1,930	1,025
Net interest income, after provision for loan losses	25,322	25,638
Noninterest Income:
Income from fiduciary activities	3,560	3,617
Service charges on deposit accounts	4,052	4,021
Other service charges, commissions and fees	3,940	4,084
Income from bank owned-life insurance	795	885
Gain on sale of available-for-sale securities, net	522	76
Other operating income	597	453
Total noninterest income	13,466	13,136
Noninterest Expense:
Salaries and employee benefits	19,878	20,747
Occupancy and equipment	5,575	5,330
Data processing	1,620	1,625
FDIC insurance	483	586
Customer development	612	584
Legal and audit expense	1,315	720
Other outside service fees	807	693
Employee professional development	659	591
Postage and courier expense	0	0
Stationary and supplies	0	0
Capital stock tax	505	439
ATM and check losses	477	452
Prepayment fee on Federal Home Loan Bank Advance	391	0
Loss on write-down/sale of foreclosed assets	154	957
Other operating expense	2,355	2,362
Total noninterest expense	34,831	35,086
Income before income taxes	3,957	3,688
Income tax expense	160	54
Net income	$ 3,797	$ 3,634
Basic Earnings per Share:
Average shares outstanding (in shares)	4,959,173	4,959,009
Net income per share of common stock (in dollars per share)	$ 0.77	$ 0.73
Diluted Earnings per Share:
Average shares outstanding (in shares)	4,960,934	4,959,009
Net income per share of common stock (in dollars per share)	$ 0.77	$ 0.73

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Consolidated Statement of Comprehensive Income [Abstract]
Net income	$ 3,797	$ 3,634
Other comprehensive income (loss)
Net unrealized gains (losses) on available-for-sale securities	(1,163)	(498)
Net change in unrealized losses on securities transferred from available-for-sale to held-to-maturity	0	3,386
Net change in defined benefit plan assets and benefit obligations	117	(157)
Other comprehensive income, net of tax (total)	(1,046)	2,731
Comprehensive income	$ 2,751	$ 6,365

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Beginning Balance at Dec. 31, 2014	$ 24,795	$ 16,392	$ 53,203	$ (5,893)	$ 88,497
Beginning Balance (in shares) at Dec. 31, 2014	4,959,009
Comprehensive income:
Net income	$ 0	0	3,634	0	3,634
Other comprehensive income, net of tax	0	0	0	2,731	2,731
Cash dividends	0	0	(1,686)	0	(1,686)
Ending Balance at Dec. 31, 2015	$ 24,795	16,392	55,151	(3,162)	$ 93,176
Ending Balance (in shares) at Dec. 31, 2015	4,959,009				4,959,009
Comprehensive income:
Net income	$ 0	0	3,797	0	$ 3,797
Other comprehensive income, net of tax	0	0	0	(1,046)	(1,046)
Stock Issued During Period, Value, Stock Options Exercised	$ 6	19	0	0	$ 25
Exercise of stock options (in shares)	1,250				1,250
Stock Issued During Period, Value, Employee Stock Purchase Plan	$ 5	16	0	0	$ 21
Stock Issued During Period, Shares, Employee Stock Purchase Plans	999
Cash dividends	$ 0	0	(1,983)	0	(1,983)
Ending Balance at Dec. 31, 2016	$ 24,806	$ 16,427	$ 56,965	$ (4,208)	$ 93,990
Ending Balance (in shares) at Dec. 31, 2016	4,961,258				4,961,258

XML

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Consolidated Statements of Changes in Stockholders' Equity [Abstract]
Cash dividends (in dollars per share)	$ 0.40	$ 0.34

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 3,797	$ 3,634
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,725	2,543
Provision for loan losses	1,930	1,025
Net gain on sale of available-for-sale securities	(522)	(76)
Net amortization of securities	2,196	2,188
Net loss on disposal of premises and equipment	(3)	6
Net loss on write-down/sale of other real estate owned	154	957
Income from bank owned life insurance	(795)	(885)
Deferred tax benefit	(19)	(227)
Increase in other assets	(567)	(3,969)
Increase in other liabilities	(243)	3,637
Pension Contributions	0	(1,000)
Net cash provided by operating activities	8,653	7,833
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale securities	(151,204)	(104,103)
Proceeds from redemption (cash used in purchases) of restricted securities	1,046	277
Proceeds from maturities and calls of available-for-sale securities	43,660	80,790
Proceeds from maturities and calls of held-to-maturity securities	0	300
Proceeds from sales of available-for-sale securities	107,647	23,005
Paydowns on available-for-sale securities	11,288	9,353
Paydowns on held-to-maturity securities	0	8,161
Purchases of government-guaranteed student loans	0	(14,315)
Net increase in all other loans (including repayments on student loans)	(36,830)	(19,081)
Proceeds from sales of other real estate owned	1,699	1,956
Foreclosed Assets Other Additions	(52)	0
Purchases of premises and equipment	(891)	(1,756)
Net cash used in investing activities	(23,637)	(15,413)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in noninterest-bearing deposits	13,551	28,810
Increase in savings deposits	23,082	14,292
Increase (decrease) in time deposits	1,398	(13,285)
Decrease in federal funds purchased, repurchase agreements and other borrowings, net	(7,246)	(11,866)
Proceeds from Federal Home Loan Bank Borrowings	55,000	20,000
Decrease in Federal Home Loan Bank advances	(80,000)	(25,000)
Proceeds from Issuance of Common Stock	46	0
Cash dividends paid on common stock	(1,983)	(1,686)
Net cash provided by financing activities	3,848	11,265
Net increase (decrease) in cash and cash equivalents	(11,136)	3,685
Cash and cash equivalents at beginning of period	36,990	33,305
Cash and cash equivalents at end of period	25,854	36,990
Cash payments for:
Interest	2,587	3,646
Income tax	0	200
SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS
Unrealized loss on securities available-for-sale	(1,762)	(755)
Loans transferred to foreclosed assets	0	553
Former bank building transferred from fixed assets to other real estate owned	127	0
(Increase) decrease in pension liability	177	(237)
Securities transferred from held-to-maturity to available-for-sale	0	85,555
Unamortized losses on transfer date on securities transferred from available-for-sale to held-to-maturity, eliminated upon transfer back to available-for-sale	0	4,197
Amortization of unrealized loss on securities transferred to held-to-maturity	$ 0	$ 934

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Significant Accounting Policies [Abstract]

Significant Accounting Policies

NOTE 1, Significant Accounting Policies

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements include the accounts of Old Point Financial Corporation (the Company) and its wholly-owned subsidiaries, The Old Point National Bank of Phoebus (the Bank) and Old Point Trust & Financial Services N.A. (Trust). All significant intercompany balances and transactions have been eliminated in consolidation. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50 percent of the voting rights or where it exercises control. Entities where the Company holds 20 to 50 percent of the voting rights, or has the ability to exercise significant influence, or both, are accounted for under the equity method. As discussed below, the Company consolidates entities deemed to be variable interest entities (VIEs) when it is determined to be the primary beneficiary.

NATURE OF OPERATIONS

Old Point Financial Corporation is a holding company that conducts substantially all of its operations through two subsidiaries, The Old Point National Bank of Phoebus and Old Point Trust & Financial Services, N.A. The Bank serves individual and commercial customers, the majority of which are in Hampton Roads, Virginia. As of December 31, 2016, the Bank had 18 branch offices. The Bank offers a full range of deposit and loan products to its retail and commercial customers. Trust offers a full range of services for individuals and businesses. Products and services include retirement planning, estate planning, financial planning, estate and trust administration, retirement plan administration, tax services and investment management services.

VARIABLE INTEREST ENTITIES

A legal entity is referred to as a VIE if any of the following conditions exist, which are outlined in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) variable interest accounting guidance (FASB ASC 810-10-15-14): (1) the total equity investment at risk is insufficient to permit the legal entity to finance its activities without additional subordinated financial support from other parties, or (2) the entity has equity investors that cannot make significant decisions about the entity's operations or that do not absorb their proportionate share of the expected losses or receive the expected returns of the entity.

In addition, as specified in VIE accounting guidance (FASB ASC 810-10-25-38), a VIE must be consolidated by the Company if it is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that will absorb a majority of the expected losses, receive a majority of the expected residual returns, or both. At this time, the Company has no VIEs that are consolidated. The Company does have an interest in one VIE, Old Point Mortgage, LLC (Old Point Mortgage), which is not consolidated because the Company has determined that it is not the primary beneficiary.

On January 13, 2017, the Bank entered into a membership interest purchase agreement (the Purchase Agreement) with TMSI to purchase TMSI's 51% interest in Old Point Mortgage. Upon completion of the purchase, the Bank will be the sole member of Old Point Mortgage. The purchase is expected to be completed on or before May 1, 2017.

USE OF ESTIMATES

In preparing Consolidated Financial Statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, other-than-temporary impairment of securities, the valuation allowance on other real estate owned and the determination of defined benefit obligations.

SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

Most of the Company's activities are with customers located within the Hampton Roads region. The types of securities that the Company invests in are included in Note 3. The types of lending that the Company engages in are included in Note 4. The Company has significant concentrations in the following industries: construction, lessors of real estate, activities related to real estate, ambulatory health care and religious organizations. The Company does not have any significant concentrations to any one customer.

At December 31, 2016 and 2015, there were $308.5 million and $297.4 million, or 51.09% and 52.32%, respectively, of total loans concentrated in commercial real estate. Commercial real estate for purposes of this note includes all construction loans, loans secured by multifamily residential properties, loans secured by farmland and loans secured by nonfarm, nonresidential properties.

CASH AND CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, cash and cash equivalents includes cash and balances due from banks and federal funds sold, all of which mature within 90 days.

INTEREST-BEARING DEPOSITS IN BANKS

Interest-bearing deposits in banks mature within one year and are carried at cost.

SECURITIES

Certain debt securities that management has the positive intent and ability to hold until maturity are classified as "held-to-maturity" and recorded at amortized cost. Securities not classified as held-to-maturity, including equity securities with readily determinable fair values, are classified as "available-for-sale" and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company employs a systematic methodology that considers available evidence in evaluating potential impairment of its investments. In the event that the cost of an investment exceeds its fair value, the Company evaluates, among other factors, the magnitude and duration of the decline in fair value; the expected cash flows of the securities; the financial health of and business outlook for the issuer; the performance of the underlying assets for interests in securitized assets; and the Company's intent and ability to hold the investment. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in investment income and a new cost basis in the investment is established.

FEDERAL HOME LOAN BANK STOCK

The Company, as a member of the Federal Home Loan Bank of Atlanta (FHLB), is required to maintain an investment in the capital stock of the FHLB. Based on the redemption provisions of the FHLB, the stock has no quoted market value, is carried at cost and is listed as a restricted security. The Company reviews its holdings for impairment based on the ultimate recoverability of the cost basis in the FHLB stock.

LOANS

The Company extends loans to individual consumers and commercial customers for various purposes. Most of the Company's loans are secured by real estate, including real estate construction loans and real estate mortgage loans (i.e., residential 1-4 family mortgages, commercial real estate loans, second mortgages and equity lines of credit).  Other loans are secured by collateral that is not real estate, which may include inventory, accounts receivable, equipment or other personal property. A substantial portion of the loan portfolio is represented by real estate mortgage loans throughout Hampton Roads. The ability of the Company's debtors to honor their contracts is dependent in part upon the real estate and general economic conditions in this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for unearned income, the allowance for loan losses and any unamortized deferred fees or costs on originated loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

The accrual of interest on commercial loans (including construction loans and commercial loans secured and not secured by real estate) is generally discontinued at the time the loan is 90 days past due unless the credit is well-secured and in the process of collection. Consumer loans not secured by real estate and consumer real estate secured loans (i.e., residential 1-4 family mortgages, second mortgages and equity lines of credit) are generally placed on nonaccrual status when payments are 120 days past due. Past due status is based on the contractual terms of the loan, and loans are considered past due when a payment of principal and/or interest is due but not paid. Regular payments not received within the payment cycle are considered to be 30, 60, or 90 or more days past due accordingly. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual status or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are generally returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured, or when the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments for at least six months.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired, such as a loan that is considered a TDR (discussed in detail below). These loans are excluded from pooled loss forecasts and a separate reserve is provided under the accounting guidance for loan impairment. All loans, including consumer loans, whose terms have been modified in a TDR are also individually analyzed for estimated impairment. Impairment is measured on a loan-by-loan basis for construction loans and commercial loans (i.e., commercial mortgage loans on real estate and commercial loans not secured by real estate) by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. For those loans that are classified as impaired, an allowance is established when the discounted value of expected future cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

The general component covers loans that are not classified as impaired. Loans collectively evaluated for impairment are pooled, with a historical loss rate, based on migration analysis, applied to each pool, segmented by risk grade or days past due, depending on the type of loan.  Based on credit risk assessments and management's analysis of qualitative factors, additional loss factors are applied to loan balances. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and consumer loans secured by real estate (i.e., residential 1-4 family mortgages, second mortgages and equity lines of credit) for impairment disclosures, unless the terms of such loans have been modified in a TDR due to financial difficulties of the borrower.

LOAN CHARGE-OFF POLICIES

Loans are generally fully charged off or partially charged down to the fair value of collateral securing the asset when:

· Management determines the asset to be uncollectible;

· Repayment is deemed to be protracted beyond reasonable time frames;

· The asset has been classified as a loss by either the internal loan review process or external examiners;

· The borrower has filed for bankruptcy protection and the loss becomes evident due to a lack of borrower assets; or

· The loan is 120 days or more past due unless the loan is both well secured and in the process of collection.

TROUBLED DEBT RESTRUCTURINGS

In situations where, for economic or legal reasons related to a borrower's financial difficulties, management grants a concession for other than an insignificant period of time to the borrower that would not otherwise be considered, the related loan is classified as a TDR. Management strives to identify borrowers in financial difficulty before their loans reach nonaccrual status and works with them to grant appropriate concessions, if necessary, and modify their loans to more affordable terms. These modified terms could include reduction in the interest rate below current market rates for borrowers with similar risk profiles, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal, management measures any impairment on the restructuring as noted above for impaired loans. The Company had $11.9 million and $11.2 million in loans classified as TDRs as of December 31, 2016 and 2015, respectively.

TRANSFERS OF FINANCIAL ASSETS

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company (i.e., put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership); (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

OTHER REAL ESTATE OWNED (OREO)

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance (direct write-downs) are included in net expenses from foreclosed assets.

BANK-OWNED LIFE INSURANCE

The Company owns insurance on the lives of a certain group of key employees. The policies were purchased to help offset the increase in the costs of various benefit plans. The cash surrender value of these policies is included as an asset on the consolidated balance sheets, and the increase in cash surrender value is recorded as noninterest income on the consolidated statements of income. In the event of the death of an insured individual under these policies, the Company would receive a death benefit payment.  Any excess in the amount received over the recorded cash surrender value would be recorded as other income on the consolidated statements of income.

PREMISES AND EQUIPMENT

Land is carried at cost. Buildings and equipment are stated at cost, less accumulated depreciation and amortization computed on the straight-line method over the estimated useful lives of the assets. Buildings and equipment are depreciated over their estimated useful lives ranging from 3 to 39 years; leasehold improvements are amortized over the lives of the respective leases or the estimated useful life of the leasehold improvement, whichever is less. Software is amortized over its estimated useful life ranging from 3 to 5 years.

OFF-BALANCE SHEET CREDIT RELATED FINANCIAL INSTRUMENTS

In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under commercial letters of credit and lines of credit. Such financial instruments are recorded when they are funded.

PENSION PLAN

The Company has a non-contributory defined benefit pension plan, which was frozen by the Company in 2006. Benefits for participants will remain frozen in the plan until such time as further action occurs. No additional participants will be added to the plan.

The compensation cost of the pension plan is recognized on the projected unit credit method. The aggregate cost method is utilized for funding purposes.

STOCK COMPENSATION PLANS

Stock compensation accounting guidance (FASB ASC 718, "Compensation -- Stock Compensation") requires that the compensation cost related to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black Scholes model is used to estimate the fair value of the stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock awards.

INCOME TAXES

The Company accounts for income taxes in accordance with income tax accounting guidance (FASB ASC 740, "Income Taxes"). The Company adopted the accounting guidance related to accounting for uncertainty in income taxes, which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions.

Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability or balance sheet method. Under this method, the net deferred tax asset or liability is based on the tax effects of the difference between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more-likely-than-not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more-likely-than-not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management's judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

No uncertain tax positions were recorded in 2016 or 2015.

EARNINGS PER COMMON SHARE

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and shares to be issued as part of the employee stock purchase plan and are determined using the treasury stock method.

TRUST ASSETS AND INCOME

Securities and other property held by Trust in a fiduciary or agency capacity are not assets of the Company and are not included in the accompanying Consolidated Financial Statements.

ADVERTISING EXPENSES

Advertising expenses are expensed as incurred. Advertising expense for the years ended 2016 and 2015 was $273 thousand and $217 thousand, respectively.

COMPREHENSIVE INCOME

Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available-for-sale, unrealized losses on securities transferred from available-for-sale to held-to-maturity, and unrealized losses related to changes in the funded status of the pension plan which are also recognized as separate components of equity.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 16. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern".  This update is intended to provide guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. Management is required under the new guidance to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued when preparing financial statements for each interim and annual reporting period. If conditions or events are identified, the ASU specifies the process that must be followed by management and also clarifies the timing and content of going concern footnote disclosures in order to reduce diversity in practice. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Early adoption is permitted.  The Company does not expect the adoption of ASU 2014-15 to have a material impact on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities".  The amendments in ASU 2016-01, among other things: 1) Require equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 3) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). 4) Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently assessing the impact that ASU 2016-01 will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)". Among other things, in the amendments in ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) A lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently assessing the impact that ASU 2016-02 will have on its consolidated financial statements.

During March 2016, the FASB issued ASU No. 2016-05, "Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships". The amendments in this ASU clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria remain intact. The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2016-05 to have a material impact on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-07, "Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting". The amendments in this ASU eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required.  In addition, the amendments in this ASU require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Early Adoption is permitted. The Company does not expect the adoption of ASU 2016-07 to have a material impact on its consolidated financial statements.

During March 2016, the FASB issued ASU No. 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Shares-Based Payment Accounting". The amendments in this ASU simplify several aspects of the accounting for share-based payment award transactions including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is currently assessing the impact that ASU 2016-09 will have on its consolidated financial statements.

During June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments".  The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this ASU are effective for Securities and Exchange Commission (SEC) filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For public companies that are not SEC filers, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company is currently assessing the impact that ASU 2016-13 will have on its consolidated financial statements.

During August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments", to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. If retrospective application is impractical for some of the issues addressed by the update, the amendments for those issues would be applied prospectively as of the earliest date practicable. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements.

During January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current implementation guidance in Topic 805, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a "set") that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs. The amendments in this ASU provide a screen to determine when a set is not a business. If the screen is not met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The ASU provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The amendments in this ASU are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. The Company does not expect the adoption of ASU 2017-01 to have a material impact on its consolidated financial statements.

During January 2017, the FASB issued ASU No. 2017-04, "Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The amendments in this ASU simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Public business entities that are SEC filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Public business entities that are not SEC filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements.

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Restrictions on Cash and Amounts Due from Banks

12 Months Ended

Dec. 31, 2016

Restrictions on Cash and Amounts Due from Banks [Abstract]

Restrictions on Cash and Amounts Due from Banks

NOTE 2, Restrictions on Cash and Amounts Due from Banks

The Company is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31, 2016 and 2015, the Company had no balance requirements on any of its accounts. The Company had approximately $9.9 million and $25.2 million in deposits in financial institutions in excess of amounts insured by the FDIC at December 31, 2016 and December 31, 2015, respectively.

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Securities Portfolio

12 Months Ended

Dec. 31, 2016

Securities Portfolio [Abstract]

Securities Portfolio

NOTE 3, Securities Portfolio

The Company had no held-to-maturity-securities at December 31, 2016 or December 31, 2015 due to a decision in February of 2016 to transfer the portfolio to available-for-sale to allow for greater liquidity and flexibility in the future. Although the decision was made after December 31, 2015, the transfer was effective dated back to year-end as the primary difference between held-to-maturity and available-for-sale is management's intent to hold the securities to maturity. The transfer in 2016 demonstrated a change in management's intent as of year-end.

As a result of the decision to transfer securities from held-to-maturity to available-for-sale, management will not be able to classify any securities as held-to-maturity until 2018.

The amortized cost and fair value, with gross unrealized gains and losses, of securities available-for-sale were:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2016
U.S. Treasury securities	$	20,000	$	0	$	0		$	20,000
Obligations of U.S. Government agencies		9,361		0		(166	)		9,195
Obligations of state and political subdivisions		78,645		358		(1,016	)		77,987
Mortgage-backed securities		85,649		18		(1,973	)		83,694
Money market investments		647		0		0			647
Corporate bonds and other securities		7,598		92		(12	)		7,678
Other marketable equity securities		100		64		0			164
Total	$	202,000	$	532	$	(3,167	)	$	199,365
December 31, 2015
U.S. Treasury securities	$	0	$	0	$	0		$	0
Obligations of  U.S. Government agencies		24,353		1		(114	)		24,240
Obligations of state and political subdivisions		77,223		1,323		(113	)		78,433
Mortgage-backed securities		109,360		0		(1,964	)		107,396
Money market investments		631		0		0			631
Corporate bonds and other securities		3,397		4		(8	)		3,393
Other marketable equity securities		100		0		(1	)		99
Total	$	215,064	$	1,328	$	(2,200	)	$	214,192

Securities with a fair value of $72.9 million and $119.8 million at December 31, 2016 and 2015, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, FHLB advances and for other purposes required or permitted by law.

At December 31, 2016, the Company held no securities of any single issuer (excluding U.S. Government agencies) with a book value that exceeded 10 percent of stockholders' equity.

The amortized cost and fair value of securities by contractual maturity are shown below.

	December 31, 2016
	Available-for-Sale
	Amortized Cost			Fair Value
	(in thousands)
Due in one year or less		$	21,801		$	21,800
Due after one year through five years			18,471			18,435
Due after five years through ten years			48,840			48,217
Due after ten years			112,141			110,102
Total debt securities			201,253			198,554
Other securities without stated maturities			747			811
Total securities		$	202,000		$	199,365

The following table provides information about securities sold in the years ended December 31:

	2016			2015
	(in thousands)
Proceeds from sales		$	107,647		$	23,005
Gross realized gains		$	578		$	76
Gross realized losses		$	56		$	0

OTHER-THAN-TEMPORARILY IMPAIRED SECURITIES

Management assesses whether the Company intends to sell or it is more-likely-than-not that the Company will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that the Company does not intend to sell and will not be required to sell prior to recovery of the amortized cost basis, the Company separates the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security's amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security's fair value and the present value of expected future cash flows is due to factors that are not credit related and is recognized in other comprehensive income.

The present value of expected future cash flows is determined using the best-estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best-estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds, and structural support, including subordination and guarantees.

The Company has a process in place to identify debt securities that could potentially have a credit or interest-rate related impairment that is other than temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues. On a quarterly basis, management reviews all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. Management considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other-than-temporary. Relevant facts and circumstances considered include: (a) the extent and length of time the fair value has been below cost; (b) the reasons for the decline in value; (c) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (d) for fixed maturity securities, the Company's intent to sell a security or whether it is more-likely-than-not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, the Company's ability and intent to hold the security for a period of time that allows for the recovery in value.

The Company has not recorded impairment charges on securities for the years ended December 31, 2016 and 2015.

The following table shows the number of securities with unrealized losses, the gross unrealized losses and fair value of the Company's investments with unrealized losses that are deemed to be temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated:

	December 31, 2016
	Less Than Twelve Months						More Than Twelve Months						Total
	Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Number of Securities
	(dollars in thousands)
Securities Available-for-Sale
Obligations of U.S. Government agencies		$	166		$	9,195		$	0		$	0		$	166		$	9,195		6
Obligations of state and political subdivisions			1,016			38,020			0			0			1,016			38,020		56
Mortgage-backed securities			1,973			80,680			0			0			1,973			80,680		23
Corporate bonds and other securities			11			1,787			1			100			12			1,887		13
Total securities available-for-sale		$	3,166		$	129,682		$	1		$	100		$	3,167		$	129,782		98

	December 31, 2015
	Less Than Twelve Months						More Than Twelve Months						Total
	Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Number of Securities
	(dollars in thousands)
Securities Available-for-Sale
Obligations of U. S. Government agencies		$	0		$	0		$	114		$	3,940		$	114		$	3,940		2
Obligations of state and political subdivisions			42			4,177			71			3,545			113			7,722		13
Mortgage-backed securities			848			62,698			1,116			44,698			1,964			107,396		13
Corporate bonds and other securities			6			2,091			2			198			8			2,289		16
Other marketable equity securities			1			99			0			0			1			99		1
Total securities available-for-sale		$	897		$	69,065		$	1,303		$	52,381		$	2,200		$	121,446		45

Certain investments within the Company's portfolio had unrealized losses at December 31, 2016 and December 31, 2015, as shown in the tables above. The unrealized losses were caused by increases in market interest rates. The Company purchases only highly-rated securities, including U.S. government agencies and mortgage-backed securities guaranteed by government-sponsored entities. The municipal and corporate securities portfolios are reviewed regularly to ensure that ratings of individual securities have not deteriorated below the threshold established by the Company's policy.

Because the Company does not intend to sell the investments and management believes it is unlikely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at December 31, 2016 or December 31, 2015.

Restricted Securities

The restricted security category is comprised of FHLB and Federal Reserve Bank stock. These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and the securities lack a market. Therefore, FHLB and Federal Reserve Bank stock is carried at cost and evaluated for impairment. When evaluating these stocks for impairment, their value is determined based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Restricted stock is viewed as a long-term investment and management believes that the Company has the ability and the intent to hold this stock until its value is recovered.

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Loans and the Allowance for Loan Losses

12 Months Ended

Dec. 31, 2016

Loans and the Allowance for Loan Losses [Abstract]

Loans and the Allowance for Loan Losses

NOTE 4, Loans and the Allowance for Loan Losses

The following is a summary of the balances in each class of the Company's loan portfolio as of the dates indicated:

	December 31, 2016			December 31, 2015
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	94,827		$	96,997
Commercial		285,429			277,758
Construction		23,116			19,685
Second mortgages		17,128			15,148
Equity lines of credit		51,024			47,256
Total mortgage loans on real estate		471,524			456,844
Commercial loans		54,434			43,197
Consumer loans		58,907			50,427
Other		19,017			18,007
Total loans		603,882			568,475
Less: Allowance for loan losses		(8,245	)		(7,738	)
Loans, net of allowance and deferred fees (1)	$	595,637		$	560,737
(1) Net deferred loan fees totaled $522 thousand and $407 thousand at December 31, 2016 and December 31, 2015, respectively.

Overdrawn deposit accounts are reclassified as loans and included in the Other category in the table above. Overdrawn deposit accounts totaled $536 thousand and $648 thousand at December 31, 2016 and December 31, 2015, respectively.

CREDIT QUALITY INFORMATION

The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company's internal risk grade system is based on experiences with similarly graded loans. Credit risk grades are updated at least quarterly as additional information becomes available, at which time management analyzes the resulting scores to track loan performance.

The Company's internally assigned risk grades are as follows:

· Pass: Loans are of acceptable risk.

· Other Assets Especially Mentioned (OAEM): Loans have potential weaknesses that deserve management's close attention.

· Substandard: Loans reflect significant deficiencies due to several adverse trends of a financial, economic or managerial nature.

· Doubtful: Loans have all the weaknesses inherent in a substandard loan with added characteristics that make collection or liquidation in full based on currently existing facts, conditions and values highly questionable or improbable.

· Loss: Loans have been charged off because they are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information As of December 31, 2016
	Pass		OAEM		Substandard		Total
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	92,458	$	1,138	$	1,231	$	94,827
Commercial		260,948		10,014		14,467		285,429
Construction		22,219		162		735		23,116
Second mortgages		16,445		475		208		17,128
Equity lines of credit		50,387		500		137		51,024
Total mortgage loans on real estate		442,457		12,289		16,778		471,524
Commercial loans		49,979		2,278		2,177		54,434
Consumer loans		58,741		0		166		58,907
Other		19,017		0		0		19,017
Total	$	570,194	$	14,567	$	19,121	$	603,882

Credit Quality Information As of December 31, 2015
	Pass		OAEM		Substandard		Total
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	94,576	$	0	$	2,421	$	96,997
Commercial		261,749		7,394		8,615		277,758
Construction		18,931		0		754		19,685
Second mortgages		14,835		0		313		15,148
Equity lines of credit		47,161		0		95		47,256
Total mortgage loans on real estate		437,252		7,394		12,198		456,844
Commercial loans		40,268		467		2,462		43,197
Consumer loans		50,327		0		100		50,427
Other		18,007		0		0		18,007
Total	$	545,854	$	7,861	$	14,760	$	568,475

As of December 31, 2016 and 2015 the Company did not have any loans internally classified as Loss or Doubtful.

AGE ANALYSIS OF PAST DUE LOANS BY CLASS

All classes of loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging analysis of the recorded investment in past due loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection. Loans in nonaccrual status that are also past due are included in the aging categories in the table below.

Age Analysis of Past Due Loans as of December 31, 2016
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	564	$	0	$	496	$	1,060	$	93,767	$	94,827	$	218
Commercial		2,280		1,625		227		4,132		281,297		285,429		0
Construction		162		0		0		162		22,954		23,116		0
Second mortgages		0		200		188		388		16,740		17,128		58
Equity lines of credit		394		9		86		489		50,535		51,024		0
Total mortgage loans on real estate		3,400		1,834		997		6,231		465,293		471,524		276
Commercial loans		5		0		86		91		54,343		54,434		0
Consumer loans		1,876		713		2,684		5,273		53,634		58,907		2,603
Other		41		12		5		58		18,959		19,017		5
Total	$	5,322	$	2,559	$	3,772	$	11,653	$	592,229	$	603,882	$	2,884

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

In the table above, the consumer category includes student loans with principal and interest amounts that are 97 - 98% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $4.8 million at December 31, 2016.

Age Analysis of Past Due Loans as of December 31, 2015
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	309	$	1,042	$	275	$	1,626	$	95,371	$	96,997	$	0
Commercial		1,266		31		23		1,320		276,438		277,758		23
Construction		161		0		0		161		19,524		19,685		0
Second mortgages		21		39		165		225		14,923		15,148		0
Equity lines of credit		170		0		0		170		47,086		47,256		0
Total mortgage loans on real estate		1,927		1,112		463		3,502		453,342		456,844		23
Commercial loans		500		88		232		820		42,377		43,197		164
Consumer loans		1,673		1,350		3,163		6,186		44,241		50,427		3,163
Other		64		3		6		73		17,934		18,007		6
Total	$	4,164	$	2,553	$	3,864	$	10,581	$	557,894	$	568,475	$	3,356

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

In the table above, the consumer category includes student loans with principal and interest amounts that are 97 - 98% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $5.7 million at December 31, 2015.

NONACCRUAL LOANS

The Company generally places commercial loans (including construction loans and commercial loans secured and not secured by real estate) in nonaccrual status when the full and timely collection of interest or principal becomes uncertain, part of the principal balance has been charged off and no restructuring has occurred or the loan reaches 90 days past due, unless the credit is well-secured and in the process of collection.

Under regulatory rules, consumer loans, which are loans to individuals for household, family and other personal expenditures, and consumer loans secured by real estate (including residential 1 - 4 family mortgages, second mortgages, and equity lines of credit) are not required to be placed in nonaccrual status. Although consumer loans and consumer loans secured by real estate are not required to be placed in nonaccrual status, the Company may elect to place these loans in nonaccrual status, if necessary to avoid a material overstatement of interest income. Generally, consumer loans secured by real estate are placed in nonaccrual status only when payments are 120 days past due.

Generally, consumer loans not secured by real estate are placed in nonaccrual status only when part of the principal has been charged off. If a charge-off has not occurred sooner for other reasons, a consumer loan not secured by real estate will generally be placed in nonaccrual status when payments are 120 days past due. These loans are charged off or written down to the net realizable value of the collateral when deemed uncollectible, due to bankruptcy or other factors as discussed in the Loan Charge-Off Policies section of  Note 1, or when they are past due based on loan product, industry practice, terms and other factors.

When management places a loan in nonaccrual status, the accrued unpaid interest receivable is reversed against interest income and the loan is accounted for by the cash basis or cost recovery method, until it qualifies for return to accrual status or is charged off. Generally, loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured, or when the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments for at least six months.

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

Nonaccrual Loans by Class

	December 31, 2016		December 31, 2015
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	598	$	1,457
Commercial		6,033		2,623
Second mortgages		129		226
Equity lines of credit		87		0
Total mortgage loans on real estate		6,847		4,306
Commercial loans		231		276
Consumer loans		81		0
Total	$	7,159	$	4,582

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Years Ended December 31,
	2016			2015
	(in thousands)
Interest income that would have been recorded under original loan terms		$	318	$	196
Actual interest income recorded for the period			269		141
Reduction in interest income on nonaccrual loans		$	49	$	55

TROUBLED DEBT RESTRUCTURINGS

The Company's loan portfolio includes certain loans classified as TDRs, where economic concessions have been granted to borrowers who are experiencing financial difficulties. These concessions typically result from the Company's loss mitigation activities and could include reduction in the interest rate below current market rates for borrowers with similar risk profiles, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. The Company defines a TDR as nonperforming if the TDR is in nonaccrual status or is 90 days or more past due and still accruing interest at the report date.

When the Company modifies a loan, management evaluates any possible impairment as discussed further under Impaired Loans below.

The following table presents TDRs during the period indicated, by class of loan:

Troubled Debt Restructurings by Class For the Year Ended December 31, 2016
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on December 31, 2016
	(dollars in thousands)
Mortgage loans on real estate:
Residential 1-4 family		6	$	1,061	$	1,061	$	992
Commercial		1		150		150		0
Second mortgages		1		53		53		53
Equity lines of credit		1		93		93		86
Total mortgage loans on real estate		9	$	1,357	$	1,357	$	1,131
Commercial loans		1		152		152		144
Consumer loans		2		8		8		0
Total		12	$	1,517	$	1,517	$	1,275

Troubled Debt Restructurings by Class For the Year Ended December 31, 2015
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on December 31, 2015
	(dollars in thousands)
Mortgage loans on real estate:
Commercial		5	$	2,094	$	2,594	$	2,400
Construction		1		435		435		0
Second mortgages		1		61		61		61
Total		7	$	2,590	$	3,090	$	2,461

All of the loans restructured in 2016 and 5 of the loans restructured in 2015 were given below-market rates for debt with similar risk characteristics. The remaining 2 loans restructured in 2015 were given terms not otherwise available to borrowers with similar risk characteristics.

At December 31, 2016 and 2015, the Company had no outstanding commitments to disburse additional funds on any TDR. Also at December 31, 2016 and 2015, the Company had $10 thousand and $53 thousand, respectively, in loans secured by residential 1 - 4 family real estate that were in the process of foreclosure.

In the years ended December 31, 2016 and 2015 there were no defaulting TDRs where the default occurred within twelve months of restructuring. The Company considers a TDR in default when any of the following occurs: the loan, as restructured, becomes 90 days or more past due; the loan is moved to nonaccrual status following the restructure; the loan is restructured again under terms that would qualify it as a TDR if it were not already so classified; or any portion of the loan is charged off.

All TDRs are factored into the determination of the allowance for loan losses and included in the impaired loan analysis, as discussed below.

IMPAIRED LOANS

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impaired loans include nonperforming loans and loans modified in a TDR. When management identifies a loan as impaired, the impairment is measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, except when the sole or remaining source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, when foreclosure is probable, instead of the discounted cash flows. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance.

When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is in nonaccrual status, all payments are applied to principal under the cost recovery method. For financial statement purposes, the recorded investment in the loan is the actual principal balance reduced by payments that would otherwise have been applied to interest. When reporting information on these loans to the applicable customers, the unpaid principal balance is reported as if payments were applied to principal and interest under the original terms of the loan agreements. Therefore, the unpaid principal balance reported to the customer would be higher than the recorded investment in the loan for financial statement purposes. When the ultimate collectability of the total principal of the impaired loan is not in doubt and the loan is in nonaccrual status, contractual interest is credited to interest income when received under the cash basis method.

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.

Impaired Loans by Class
	As of December 31, 2016												For the Year Ended December 31, 2016
				Recorded Investment
	Unpaid Principal Balance			Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family		$	2,496		$	1,835		$	622		$	75		$	2,741		$	119
Commercial			16,193			11,095			4,274			415			11,885			727
Construction			619			528			96			22			496			43
Second mortgages			526			309			141			17			511			25
Equity lines of credit			87			86			0			0			46			3
Total mortgage loans on real estate		$	19,921		$	13,853		$	5,133		$	529		$	15,679		$	917
Commercial loans			1,077			0			989			271			827			74
Consumer loans			81			81			0			0			68			1
Total		$	21,079		$	13,934		$	6,122		$	800		$	16,574		$	992

Impaired Loans by Class
	As of December 31, 2015												For the Year Ended December 31, 2015
				Recorded Investment
	Unpaid Principal Balance			Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family		$	2,994		$	1,530		$	1,261		$	146		$	2,267		$	132
Commercial			10,203			6,166			3,208			608			9,305			473
Construction			99			0			99			36			465			5
Second mortgages			535			499			0			0			571			21
Total mortgage loans on real estate		$	13,831		$	8,195		$	4,568		$	790		$	12,608		$	631
Commercial loans			330			207			68			8			952			28
Consumer loans			12			12			0			0			13			1
Total		$	14,173		$	8,414		$	4,636		$	798		$	$ 13,573		$	660

MONITORING OF LOANS AND EFFECT OF MONITORING FOR THE ALLOWANCE FOR LOAN LOSSES

Loan officers are responsible for continual portfolio analysis and prompt identification and reporting of problem loans, which includes assigning a risk grade to each applicable loan at its origination and revising such grade as the situation dictates. Loan officers maintain frequent contact with borrowers, which should enable the loan officer to identify potential problems before other personnel. In addition, meetings with loan officers and upper management are held to discuss problem loans and review risk grades. Nonetheless, in order to avoid over-reliance upon loan officers for problem loan identification, the Company's loan review system provides for review of loans and risk grades by individuals who are independent of the loan approval process. Risk grades and migration analysis by risk grades are used as a component of the calculation of the allowance for loan losses.

ALLOWANCE FOR LOAN LOSSES

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. The Company segments the loans in the portfolio by the categories defined by Schedule RC-C of the Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income Form 041 (Call Report). Loans are segmented into the following pools: commercial, real estate-construction, real estate-mortgage, consumer and other loans. The Company also sub-segments the real estate-mortgage segment into four classes: residential 1-4 family, commercial real estate, second mortgages and equity lines of credit.

The Company uses an internally developed risk evaluation model in the estimation of the credit risk process. The model and assumptions used to determine the allowance are independently validated and reviewed to ensure that the theoretical foundation, assumptions, data integrity, computational processes and reporting practices are appropriate and properly documented.

Each portfolio segment has risk characteristics as follows:

· Commercial: Commercial loans carry risks associated with the successful operation of a business or project, in addition to other risks associated with the ownership of a business. The repayment of these loans may be dependent upon the profitability and cash flows of the business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision.

· Real estate-construction: Construction loans carry risks that the project will not be finished according to schedule, the project will not be finished according to budget and the value of the collateral may at any point in time be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be the loan customer, may be unable to finish the construction project as planned because of financial pressure unrelated to the project.

· Real estate-mortgage: Residential mortgage loans and equity lines of credit carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral. Commercial real estate loans carry risks associated with the successful operation of a business if owner occupied. If non-owner occupied, the repayment of these loans may be dependent upon the profitability and cash flow from rent receipts.

· Consumer loans: Consumer loans carry risks associated with the continued credit-worthiness of the borrowers and the value of the collateral. Consumer loans are more likely than real estate loans to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy.

· Other loans: Other loans are loans to mortgage companies, loans for purchasing or carrying securities, and loans to insurance, investment and finance companies. These loans carry risks associated with the successful operation of a business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time, depend on interest rates or fluctuate in active trading markets.

Each segment of the portfolio is pooled by risk grade or by days past due.  Loans not secured by real estate and made to individuals for household, family and other personal expenditures are segmented into pools based on days past due, while all other loans, including loans to consumers that are secured by real estate, are segmented by risk grades.  A historical loss percentage is then calculated by migration analysis and applied to each pool.  The migration analysis applied to all pools is able to track the risk grading and historical performance of individual loans throughout a number of periods set by management, which provides management with information regarding trends (or migrations) in a particular loan segment.  At December 31, 2016 management used four twelve-quarter migration periods, and at December 31, 2015, management used one twelve-quarter migration period. See Changes in Accounting Methodology below for details.

THE COMPANY'S ESTIMATION PROCESS

Loans are either individually evaluated for impairment or pooled with like loans and collectively evaluated for impairment. Also, various qualitative factors are applied to each segment of the loan portfolio. The allowance for loan losses is the accumulation of these components. Management's estimate is based on certain observable, historical data and other factors that management believes are most reflective of the underlying credit losses being estimated.

Management provides an allocated component of the allowance for loans that are individually evaluated for impairment. An allocated allowance is established when the discounted value of expected future cash flows from the impaired loan (or the collateral value or observable market price of the impaired loan) is lower than the carrying value of that loan. This allocation represents the sum of management's estimated losses on each loan.

Loans collectively evaluated for impairment are pooled, with a historical loss rate, based on migration analysis, applied to each pool, segmented by risk grade or days past due, depending on the type of loan. Based on credit risk assessments and management's analysis of qualitative factors, additional loss factors are applied to loan balances. These additional qualitative factors include: economic conditions, trends in growth, loan concentrations, changes in certain loans, changes in underwriting, changes in management and changes in the legal and regulatory environment.

ALLOWANCE FOR LOAN LOSSES BY SEGMENT

The total allowance reflects management's estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $8.2 million adequate to cover loan losses inherent in the loan portfolio at December 31, 2016.

The following table presents, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS
(in thousands)
For the Year Ended December 31, 2016	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	633		$	985		$	5,628		$	279		$	213		$	7,738
Charge-offs		(915	)		0			(504	)		(204	)		(147	)		(1,770	)
Recoveries		79			3			197			28			40			347
Provision for loan losses		1,696			(142	)		(54	)		352			78			1,930
Ending balance		1,493			846			5,267			455			184			8,245
Ending balance individually evaluated for impairment		271			22			507			0			0			800
Ending balance collectively evaluated for impairment		1,222			824			4,760			455			184			7,445
Ending balance		1,493			846			5,267			455			184			8,245
Loan Balances:
Ending balance individually evaluated for impairment		989			624			18,362			81			0			20,056
Ending balance collectively evaluated for impairment		53,445			22,492			430,046			58,826			19,017			583,826
Ending balance	$	54,434		$	23,116		$	448,408		$	58,907		$	19,017		$	603,882
For the Year Ended December 31, 2015	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	595		$	703		$	5,347		$	219		$	211		$	7,075
Charge-offs		(293	)		0			(321	)		(92	)		(191	)		(897	)
Recoveries		50			1			393			39			52			535
Provision for loan losses		281			281			209			113			141			1,025
Ending balance		633			985			5,628			279			213			7,738
Ending balance individually evaluated for impairment		8			36			754			0			0			798
Ending balance collectively evaluated for impairment		625			949			4,874			279			213			6,940
Ending balance		633			985			5,628			279			213			7,738
Loan Balances:
Ending balance individually evaluated for impairment		275			99			12,664			12			0			13,050
Ending balance collectively evaluated for impairment		42,922			19,586			424,495			50,415			18,007			555,425
Ending balance	$	43,197		$	19,685		$	437,159		$	50,427		$	18,007		$	568,475

CHANGES IN ACCOUNTING METHODOLOGY

Historical loss rates calculated by migration analysis are determined by the performance of a loan over a period of time (the migration period). This migration period can be lengthened or shortened based on management's assessment of the most appropriate length of time over which to analyze losses in the loan portfolio. The Company can also calculate multiple migration periods, allowing management to assess the migration of loans based on more than one starting point.

In the third quarter of 2016, management made several changes to its method for calculating the allowance. These changes and the effects on the allowance for loan losses at December 31, 2016 are as follows:

 The number of migration periods was changed from one to four. Each migration period remains at twelve quarters, the length of the migration period used by the Company in prior periods. This change decreased the provision for most categories of loans but increased it for construction loans. The net effect on the provision for loan losses as a result of this change was an increase of $77 thousand compared to the prior methodology.

 The Company further sub-segmented its pool of consumer loans not secured by real estate to separate a pool of loans that share characteristics with each other that are not shared with other consumer loans. The new sub-segment is comprised of loans purchased from a single source for which management does not expect any charge-offs against the allowance. Accordingly, beginning with the third quarter of 2016, the historic loss factor does not apply to this group of loans. In addition, management determined that some of the qualitative factors that had previously been applied to these loans when they were grouped with all other consumer loans were no longer appropriate once these loans were separated into a new sub-segment. Creating this new sub-segment, which includes no anticipated losses, and applying the relevant qualitative factors to it decreased the provision for loan losses by $366 thousand compared to the prior methodology.

 As part of the process to determine whether a new sub-segment was appropriate, management analyzed the qualitative factors applied to each segment of the portfolio. Based on this analysis, management changed its qualitative factor adjustments on the Company's student loan portfolio to better reflect those factors that could potentially have an impact on the portfolio. This change decreased the provision for loan losses by $38 thousand compared to the prior methodology.

The following table represents the effect on the loan loss provision as a result of these changes in methodology. It compares the methodology actually used for the year ended December 31, 2016 to that used in prior periods.

	Calculated Provision Based on Current Methodology			Calculated Provision Based on Prior Methodology			Difference
	(in thousands)
Portfolio Segment:
Commercial	$	1,696		$	2,054		$	(358	)
Real estate - construction		(142	)		(858	)		716
Real estate - mortgage		(54	)		73			(127	)
Consumer loans		352			910			(558	)
Other		78			78			0
Total	$	1,930		$	2,257		$	(327	)

The allowance for loan losses was 1.37% of total loans at December 31, 2016, compared to 1.36% at December 31, 2015.

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Other Real Estate Owned (OREO)

12 Months Ended

Dec. 31, 2016

Other Real Estate Owned (OREO) [Abstract]

Foreclosed Assets

NOTE 5, Other Real Estate Owned (OREO)

The Company holds certain parcels of real estate due to completed foreclosure proceedings on defaulted loans or the closing of former branches. An analysis of the balance in OREO is as follows:

	Years Ended December 31,
	2016			2015
	(in thousands)
Balance at beginning of year	$	5,290		$	8,014
Transfers to OREO due to foreclosure		0			553
Other additions to foreclosed properties		52			0
Closed branch locations transferred to OREO		127			0
Properties sold		(3,376	)		(3,277	)
Balance at end of year	$	2,093		$	5,290

Other additions to foreclosed properties in the table above are for capital improvements on existing properties.

OREOs are presented net of a valuation allowance for losses. As the fair values of OREOs change, adjustments are made to the recorded investment in the properties through the valuation allowance to ensure that all properties are recorded at the lower of cost or fair value.  Properties written down in previous periods can be written back up if a current property valuation warrants the change, though never above the original cost of the property. An analysis of the valuation allowance on OREOs is as follows:

	Years Ended December 31,
	2016				2015
	(in thousands)
Balance at beginning of year		$	2,549		$	2,908
Additions and write-downs			60			1,011
Reductions due to sales or increases in value			(1,583	)		(1,370	)
Balance at end of year		$	1,026		$	2,549

Expenses applicable to OREOs include the following:

	Years Ended December 31,
	2016		2015
	(in thousands)
Net loss (gain) on sales of real estate	$	94	$	(54	)
Provision for losses (net write-downs)		60		1,011
Operating expenses, net of income (1)		160		219
Total Expenses	$	314	$	1,176
(1) Included in other operating income and other operating expense on the Consolidated Statements of Income.

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Premises and Equipment

12 Months Ended

Dec. 31, 2016

Premises and Equipment [Abstract]

Premises and Equipment

NOTE 6, Premises and Equipment

Premises and equipment consisted of the following at December 31:

	2016		2015
	(in thousands)
Land	$	7,663	$	7,688
Buildings		37,890		37,848
Construction in process		43		555
Leasehold improvements		852		852
Furniture, fixtures and equipment		19,220		18,303
		65,668		65,246
Less accumulated depreciation and amortization		26,344		23,964
	$	39,324	$	41,282

Depreciation expense for the years ended December 31, 2016 and 2015 amounted to $2.7 and $2.5 million, respectively.

The Company has noncancellable leases on premises and equipment expiring at various dates, not including extensions, to the year 2020. Certain leases provide for increased annual payments based on increases in real estate taxes and the Consumer Price Index.

The total approximate minimum rental commitment at December 31, 2016 under noncancellable leases is $632 thousand which is due as follows (in thousands):

2017	$	236
2018		169
2019		150
2020		77
Total	$	632

The aggregate rental expense of premises and equipment was $239 thousand and $270 thousand for December 31, 2016 and 2015, respectively.

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Low-Income Housing Tax Credits

12 Months Ended

Dec. 31, 2016

Low-Income Housing Tax Credits [Abstract]

Low-Income Housing Tax Credits

NOTE 7, Low-Income Housing Tax Credits

The Company was invested in four separate housing equity funds at both December 31, 2016 and December 31, 2015. The general purpose of these funds is to encourage and assist participants in investing in low-income residential rental properties located in the Commonwealth of Virginia, develop and implement strategies to maintain projects as low-income housing, deliver Federal Low Income Housing Credits to investors, allocate tax losses and other possible tax benefits to investors, and preserve and protect project assets.

The investments in these funds were recorded as other assets on the consolidated balance sheets and were $3.9 million and $4.2 million at December 31, 2016 and December 31, 2015, respectively. The expected terms of these investments and the related tax benefits run through 2032. Additional committed capital calls expected for the funds totaled $2.5 million and $3.0 million at December 31, 2016 and December 31, 2015, respectively, and are recorded in accrued expenses and other liabilities on the corresponding consolidated balance sheets. During the years ended December 31, 2016 and 2015, the Company recognized amortization expense of $300,000 thousand and $219,000 thousand, respectively, which was included within noninterest expense on the consolidated statements of income.

The table below summarizes thetax credits and other tax benefits recognized by the Company and related to these investments, as of the periods indicated:

	Years Ended December 31,
	2016			2015
	(in thousands)
Tax credits received		$	384	$	291
Tax benefit from losses			102		74
Total tax benefit		$	486	$	365

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Deposits

12 Months Ended

Dec. 31, 2016

Deposits [Abstract]

Deposits

NOTE 8, Deposits

The aggregate amount of time deposits in denominations of $250 thousand or more at December 31, 2016 and 2015 was $38.1 million and $36.4 million, respectively. As of December 31, 2016, no single customer relationship exceeded 5 percent of total deposits.

At December 31, 2016 the scheduled maturities of time deposits (in thousands) are as follows:

2017	$	99,128
2018		23,173
2019		29,632
2020		40,737
2021		18,739
Total	$	211,409

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Short Term and Long Term Borrowings

12 Months Ended

Dec. 31, 2016

Short Term and Long Term Borrowings [Abstract]

Short Term and Long Term Borrowings

NOTE 9, Short Term and Long Term Borrowings

The Company's short-term borrowing sources include federal funds purchased and overnight repurchase agreements. The Company had no federal funds purchased on December 31, 2016 or 2015.  At December 31, 2016, the Company had $55.0 million available in federal funds lines of credit to address any short-term borrowing needs.

Overnight repurchase agreements, which totaled $18.7 million and $26.0 million as of December 31, 2016 and 2015, respectively, are classified as secured borrowings that generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities.

As of December 31, 2016, four customer relationships exceeded 5 percent of total repurchase agreements, with a combined outstanding balance of $15.7 million, or 83.83% of total repurchase agreements.

The Company has a line of credit with the FHLB enabling it to borrow up to 30% of total assets, or $270.0 million as of December 31, 2016. FHLB advances are secured by a blanket lien on qualified 1 – 4 family residential real estate loans. These pledged loans totaled $90.3 million at December 31, 2016.

At December 31, 2016, the Company had no long-term FHLB advances outstanding.

Long-term debt as of December 31, 2015 was as follows:

	Fixed				Weighted
	Rate		Total		Avg Rate
	(in thousands)
Due in 2016	$	25,000	$	25,000		4.83	%
Total long-term debt	$	25,000	$	25,000		4.83	%

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Stock Option Plan

12 Months Ended

Dec. 31, 2016

Stock Option Plan [Abstract]

Stock Option Plan

NOTE 10, Share-Based Compensation

EQUITY COMPENSATION PLANS

The Company's 1998 Stock Option Plan, pursuant to which stock options could be granted to key employees and non-employee directors, expired on March 9, 2008.  Stock options that were outstanding on March 9, 2008 remained outstanding in accordance with their terms, but no new awards can be granted under the plan after March 9, 2008. At December 31, 2016, options to purchase 60,605 shares of common stock granted under the stock option plan were outstanding. The exercise price of each option equals the market price of the Company's common stock on the date of the grant, and each option's maximum term is ten years.

Stock option plan activity for the year ended December 31, 2016 is summarized below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding, January 1, 2016		74,960		$	20.05
Granted		0			0.00
Exercised		(1,250	)		20.05
Canceled or expired		(13,105	)		20.05
Options outstanding, December 31, 2016		60,605		$	20.05		0.79		$	300
Options exercisable, December 31, 2016		60,605		$	20.05		0.79		$	300

The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on December 31, 2016.This amount changes based on changes in the market value of the Company's common stock.

During 2016, the Company received $25 thousand from the exercise of stock options. No options were exercised in 2015.

No options were granted during the years ended December 31, 2016 or December 31, 2015. As of December 31, 2016 and December 31, 2015, all outstanding stock options were fully vested and there was no unrecognized stock-based compensation expense.

Information pertaining to options outstanding at December 31, 2016 is as follows:

			Options Outstanding							Options Exercisable
Range of Exercise Prices			Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price			Number Exercisable		Weighted Average Exercise Price
	$	20.05		60,605		0.79		$	20.05		60,605		$	20.05

On May 24, 2016, the Company's stockholders approved the Old Point Financial Corporation 2016 Incentive Stock Plan. The Incentive Stock Plan permits the issuance of up to 300,000 shares of common stock for awards to key employees and non-employee directors of the Company and its subsidiaries in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, stock awards and performance units. Although the Company did not award any equity compensation under the Incentive Stock Plan during 2016, management anticipates beginning to award equity compensation to key employees and non-employee directors in 2017. Accordingly, as of December 31, 2016, there were no awards outstanding under the Incentive Stock Plan. Complete details of the Incentive Stock Plan are contained in the plan itself, which is Appendix A of the Proxy Statement for the Company's 2016 Annual Meeting of Stockholders.

EMPLOYEE STOCK PURCHASE PLAN

On May 24, 2016, the Company's stockholders approved the Old Point Financial Corporation Employee Stock Purchase Plan (ESPP). Under the ESPP, substantially all employees of the Company can authorize a specific payroll deduction from their base compensation for the periodic purchase of the Company's common stock. Shares of stock are issued quarterly at a discount to the market price of the Company's stock on the day of purchase, which can range from 0-15% and for 2016 was set at 5 %.

Total stock purchases amounted to 999 shares during 2016. At December 31, 2016, the Company had 249,001 shares reserved for issuance under this plan.

Complete details of the ESPP are contained in the plan itself, which is Appendix B of the Proxy Statement for the Company's 2016 Annual Meeting of Stockholders.

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Stockholders' Equity and Earnings per Common Share

12 Months Ended

Dec. 31, 2016

Stockholders' Equity and Earnings Per Common Share [Abstract]

Stockholders' Equity and Earnings Per Common Share

NOTE 11, Stockholders' Equity and Earnings per Common Share

STOCKHOLDERS' EQUITY--OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents information on amounts reclassified out of accumulated other comprehensive loss, by category, during the periods indicated:

	Years Ended
	December 31,						Affected Line Item on Consolidated Statement of Income
	2016			2015
	(in thousands)
Available-for-sale securities
Realized gains (losses) on sales of securities	$	522		$	76		Gain (loss) on sale of available-for-sale securities, net
Tax effect		177			26		Income tax (benefit) expense
	$	345		$	50
Defined-benefit pension plan
Amortization of actuarial loss (1)	$	(504	)	$	(390	)	Salaries and employee benefits
Tax effect		(171	)		(133	)	Income tax benefit
	$	(333	)	$	(257	)
Total reclassifications for the period	$	12		$	(207	)
(1) This accumulated other comprehensive loss component is included in the computation of net periodic pension cost (see Note 14. Pension Plan and 401(k) Plan for additional details).

The following table presents the changes in accumulated other comprehensive loss, by category, net of tax, for the periods indicated:

	Unrealized Gains (Losses) on Available-for-Sale Securities			Unrealized Losses on Securities Transferred from Available-for-Sale to Held-to-Maturity (1)			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
	(in thousands)
Balance at December 31, 2014	$	(78	)	$	(3,386	)	$	(2,429	)	$	(5,893	)
Net change for the year ended December 31, 2015		(498	)		3,386			(157	)		2,731
Balance at December 31, 2015		(576	)		0			(2,586	)		(3,162	)
Net change for the year ended December 31, 2016		(1,163	)		0			117			(1,046	)
Balance at December 31, 2016	$	(1,739	)	$	0		$	(2,469	)	$	(4,208	)
(1) Net change for the year ended December 31, 2015 represents reclassification due to the transfer of securities held-to-maturity to available-for-sale. See Note 3. Securities.

The following table presents the change in each component of other comprehensive income (loss) on a pre-tax and after-tax basis for the periods indicated.

	Year Ended December 31, 2016
	Pretax			Tax Effect			Net-of-Tax
	(in thousands)
Unrealized losses on available-for-sale securities:
Unrealized holding losses arising during the period	$	(1,240	)	$	(422	)	$	(818	)
Reclassification adjustment for gains recognized in income		(522	)		(177	)		(345	)
Net unrealized losses on securities		(1,762	)		(599	)		(1,163	)
Defined benefit pension plans:
Net actuarial loss for the period		(327	)		(111	)		(216	)
Amortization of actuarial loss from prior period		504			171			333
Net change		177			60			117
Total change in accumulated other comprehensive loss	$	(1,585	)	$	(539	)	$	(1,046	)

	Year Ended December 31, 2015
	Pretax			Tax Effect			Net-of-Tax
	(in thousands)
Unrealized losses on available-for-sale securities:
Unrealized holding losses arising during the period	$	(679	)	$	(231	)	$	(448	)
Reclassification adjustment for gains recognized in income		(76	)		(26	)		(50	)
Net change		(755	)		(257	)		(498	)
Unrealized losses on securities transferred from available-for-sale to held-to-maturity:
Elimination upon transfer back to available-for-sale		4,197			1,427			2,770
Amortization		934			318			616
Net change		5,131			1,745			3,386
Defined benefit pension plans:
Net actuarial loss for the period		(627	)		(213	)		(414	)
Amortization of actuarial loss from prior period		390			133			257
Net change		(237	)		(80	)		(157	)
Total change in accumulated other comprehensive loss	$	4,139		$	1,408		$	2,731

EARNINGS PER COMMON SHARE

Earnings per common share has been computed based on the following:

	Years Ended December 31,
	2016			2015
	(dollars in thousands)
Net income (in thousands)		$	3,797	$	3,634
Average number of common shares outstanding			4,959,173		4,959,009
Effect of dilutive options			1,761		0
Average number of common shares outstanding used to calculate diluted earnings per common share			4,960,934		4,959,009

The Company did not include an average of 52 thousand and 76 thousand potential common shares attributable to outstanding stock options in the diluted earnings per share calculation for 2016 and 2015, respectively, because they were antidilutive.

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Related Party Transactions

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 12, Related Party Transactions

In the ordinary course of business, the Company has granted loans to principal stockholders, executive officers and directors and their affiliates. These loans were made on substantially the same terms and conditions, including interest rates, collateral and repayment terms, as those prevailing at the same time for comparable transactions with unrelated persons, and, in the opinion of management and the Company's board of directors, do not involve more than normal risk or present other unfavorable features. None of the principal stockholders, executive officers or directors had direct or indirect loans exceeding 10 percent of stockholders' equity at December 31, 2016.

Annual activity consisted of the following:

	2016			2015
	(in thousands)
Balance, beginning of year	$	4,429		$	5,787
Additions		110			4
Reductions		(185	)		(1,362	)
Balance, end of year	$	4,354		$	4,429

Deposits from related parties held by the Company at December 31, 2016 and 2015 amounted to $13.8 million and $14.4 million, respectively.

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Income Taxes

12 Months Ended

Dec. 31, 2016

Income Taxes [Abstract]

Income Taxes

NOTE 13, Income Taxes

The components of income tax expense for the current and prior year-ends are as follows:

	2016				2015
	(in thousands)
Current income tax expense		$	179		$	281
Deferred income tax benefit			(19	)		(227	)
Reported income tax expense		$	160		$	54

A reconciliation of the expected federal income tax expense on income before income taxes with the reported income tax expense for the same periods follows:

	Years Ended December 31,
	2016			2015
	(in thousands)
Expected tax expense (34%)	$	1,345		$	1,254
Interest expense on tax-exempt assets		15			22
Low-income housing tax credits		(384	)		(274	)
Tax-exempt interest		(608	)		(654	)
Bank-owned life insurance		(270	)		(301	)
Other, net		62			7
Reported income tax expense	$	160		$	54

The effective tax rates for 2016 and 2015 were 4.0% and 1.5%, respectively.

The components of the net deferred tax asset, included in other assets, are as follows:

	December 31,
	2016			2015
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	2,803		$	2,631
Interest on nonaccrual loans		71			67
Other real estate owned		349			867
Pension - other comprehensive income		1,272			1,332
Bank owned life insurance benefit		94			88
Charitable contributions carried forward		1			109
Net unrealized loss on securities available-for-sale		896			297
Unexercised nonqualified options		36			36
Alternative minimum tax		1,019			610
Deferred benefits and compensation		256			347
Other		89			78
	$	6,886		$	6,462
Deferred tax liabilities:
Depreciation	$	(822	)	$	(854	)
Accretion of discounts on securities		(1	)		(1	)
Deferred loan fees and costs		(325	)		(293	)
Pension		(740	)		(874	)
		(1,888	)		(2,022	)
Net deferred tax assets	$	4,998		$	4,440

The Company files income tax returns in the U.S. federal jurisdiction and the Commonwealth of Virginia. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2013.

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Pension Plan

12 Months Ended

Dec. 31, 2016

Pension Plan [Abstract]

Pension Plan

NOTE 14, Pension Plan and 401(k) Plan

PENSION PLAN

The Company provides pension benefits for eligible participants through a non-contributory defined-benefit pension plan. The plan was frozen effective September 30, 2006; therefore no additional participants have been or will be added to the plan since such date.

On November 23, 2016 the Company's Board of Directors voted to terminate the pension plan, effective January 31, 2017. The Company anticipates completing the transfer of all liabilities and administrative responsibilities under the Plan by the end of the fourth quarter of 2017.

Information pertaining to the activity in the plan, using a measurement date of December 31, is as follows:

	Years ended December 31,
	2016			2015
	(in thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	7,039		$	7,104
Service cost		0			0
Interest cost		279			260
Benefits paid		(461	)		(294	)
Actuarial (gain) loss		205			(31	)
Benefit obligation at end of year	$	7,062		$	7,039
Change in plan assets
Fair value of plan assets at beginning of year	$	5,691		$	5,268
Actual return on plan assets		269			(283	)
Employer contribution		0			1,000
Benefits paid		(461	)		(294	)
Fair value of plan assets at end of year	$	5,499		$	5,691
Funded Status at end of year	$	(1,563	)	$	(1,348	)

	December 31,
	2016			2015
	(in thousands)
Amounts recognized in the consolidated balance sheets
Accrued pension liability	$	(1,563	)	$	(1,348	)
Amounts recognized in other comprehensive income (loss)
Loss	$	3,741		$	3,918
Deferred taxes		(1,272	)		(1,332	)
Net loss	$	2,469		$	2,586
Accumulated benefit obligation	$	7,062		$	7,039

Assumptions used to determine the benefit obligations at December 31,	2016		2015
Discount rate		3.86%		4.03%
	During the years ending December 31,
Weighted-average assumptions used to determine net periodic pension cost	2016		2015
Discount rate		4.03%		3.73%
Expected long-term rate of return on plan assets		7.00%		7.00%

	Years ended December 31,
	2016			2015
Components of net periodic pension cost	(in thousands)
Interest cost	$	279		$	260
Expected return on plan assets		(391	)		(376	)
Amortization of unrecognized loss		504			390
Net periodic pension cost	$	392		$	274
Components of other amounts recognized in other comprehensive income (loss)
Net actuarial (gain) loss	$	327		$	627
Settlement loss		0			0
Amortization of actuarial loss		(504	)		(390	)
Total recognized in other comprehensive income (loss)	$	(177	)	$	237
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	215		$	511

The estimated net loss for the pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next year is $490 thousand.

The overall expected long-term rate of return on plan assets was determined based on the current asset allocation and the related volatility of those investments.

The Company's overall investment strategy is growth with income. The emphasis of the objective is on both capital appreciation and income. The portfolio contains a blend of securities expected to grow in value over the long term and those expected to produce income. Moderate market value volatility is expected.

The pension plan invests primarily in large and mid-cap equities and government and corporate bonds, with the following target allocations: equities 55 percent, fixed income 40 percent and cash 5 percent. The pension plan has small investments in precious metals and emerging markets equity mutual funds, each of which represents less than 1 percent of the total account value.

Fair value is discussed in detail in Note 16. The fair value of the Company's pension plan assets by asset category are as follows:

Assets at Fair Value as of December 31, 2016
Asset Category	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	2,839	$	0	$	0	$	2,839
Mutual funds		0		0		0		0
Common stock		1,129		0		0		1,129
Corporate bonds		0		1,472		0		1,472
Partnerships		0		59		0		59
Total assets at fair value	$	3,968	$	1,531	$	0	$	5,499

Assets at Fair Value as of December 31, 2015
Asset Category	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	654	$	0	$	0	$	654
Mutual funds		74		0		0		74
Common stock		2,766		0		0		2,766
Corporate bonds		0		2,133		0		2,133
Partnerships		0		64		0		64
Total assets at fair value	$	$3,494	$	$2,197	$	$0	$	$5,691

The Company made no contributions to the pension plan in 2016, and contributed $1.0 million in 2015. Management has not determined at this time the amount, if any, it will contribute to the plan for the year ending December 31, 2017.

Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows (in thousands):

2017	$	256
2018		273
2019		288
2020		348
2021		351
Thereafter		2,106
Total	$	3,622

401(K) PLAN

The Company has a 401(k) Plan in which substantially all employees are eligible to participate. Employees may contribute to the plan subject to certain limits based on federal tax laws. The Company makes matching contributions equal to 100 percent of the first 4 percent of an employee's compensation contributed to the plan. Matching contributions vest to the employee immediately. The Company may make profit sharing contributions to the plan as determined by the Board of Directors. Profit sharing contributions vest to the employee over a six-year period. For the years ended December 31, 2016 and 2015, expense attributable to the plan amounted to $523 thousand and $519 thousand, respectively.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies [Abstract]

Commitments and Contingencies

NOTE 15, Commitments and Contingencies

CREDIT-RELATED FINANCIAL INSTRUMENTS

The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business in order to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and commercial letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Company's exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making such commitments as it does for on-balance-sheet instruments.

The following financial instruments whose contract amounts represent credit risk were outstanding at December 31:

	2016		2015
	(in thousands)
Commitments to extend credit:
Home equity lines of credit	$	47,243	$	41,995
Commercial real estate, construction and development loans committed but not funded		15,948		18,113
Other lines of credit (principally commercial)		81,966		73,213
Total	$	145,157	$	133,321
Letters of credit	$	3,597	$	3,473

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extensions of credit is based on management's credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

Unfunded commitments under commercial lines of credit, revolving credit lines, and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit are not collateralized and usually do not contain a specified maturity date, and ultimately may or may not be drawn upon to the total extent to which the Company is committed.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year, with the exception of one letter of credit which expires in 2020. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds various collateral supporting those commitments for which collateral is deemed necessary.

LEGAL CONTINGENCIES

Various legal claims arise from time to time in the normal course of business, which, in the opinion of management, will not have a material effect on the Company's Consolidated Financial Statements.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2016

Fair Value Measurements [Abstract]

Fair Value Measurements

NOTE 16, Fair Value Measurements

DETERMINATION OF FAIR VALUE

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the "Fair Value Measurements and Disclosures" topics of FASB ASU 2010-06 and FASB ASU 2011-04, the fair value of a financial instrument is the price that would be received in the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value can be a reasonable point within a range that is most representative of fair value under current market conditions.

In estimating the fair value of assets and liabilities, the Company relies mainly on two models. The first model, used by the Company's bond accounting service provider, determines the fair value of securities. Securities are priced based on an evaluation of observable market data, including benchmark yield curves, reported trades, broker/dealer quotes, and issuer spreads. Pricing is also impacted by credit information about the issuer, perceived market movements, and current news events impacting the individual sectors. For assets other than securities and for all liabilities, fair value is determined using the Company's asset/liability modeling software. The software uses current yields, anticipated yield changes, and estimated duration of assets and liabilities to calculate fair value.

In accordance with ASC 820, "Fair Value Measurements and Disclosures," the Company groups its financial assets and financial liabilities generally measured at fair value into three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

An instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Debt and equity securities with readily determinable fair values that are classified as "available-for-sale" are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2). In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of the Company's available-for-sale securities are considered to be Level 2 securities.

The following table presents the balances of certain assets measured at fair value on a recurring basis as of the dates indicated:

			Fair Value Measurements at December 31, 2016 Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description	Balance
	(in thousands)
Available-for-sale securities
U.S. Treasury securities	$	20,000	$	0	$	20,000	$	0
Obligations of  U.S. Government agencies		9,195		0		9,195		0
Obligations of state and political subdivisions		77,987		0		77,987		0
Mortgage-backed securities		83,694		0		83,694		0
Money market investments		647		0		647		0
Corporate bonds		7,678		0		7,678		0
Other marketable equity securities		164		0		164		0
Total available-for-sale securities	$	199,365	$	0	$	199,365	$	0

			Fair Value Measurements at December 31, 2015 Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description	Balance
	(in thousands)
Available-for-sale securities
Obligations of  U.S. Government agencies	$	24,240	$	0	$	24,240	$	0
Obligations of state and political subdivisions		78,433		0		78,433		0
Mortgage-backed securities		107,396		0		107,396		0
Money market investments		631		0		631		0
Corporate bonds		3,393		0		3,393		0
Other marketable equity securities		99		0		99		0
Total available-for-sale securities	$	214,192	$	0	$	214,192	$	0

ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

Under certain circumstances, adjustments are made to the fair value for assets and liabilities although they are not measured at fair value on an ongoing basis.

Impaired loans

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The measurement of fair value and loss associated with impaired loans can be based on the observable market price of the loan, the fair value of the collateral securing the loan, or the present value of the loan's expected future cash flows, discounted at the loan's effective interest rate. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable, with the vast majority of the collateral in real estate.

The value of real estate collateral is determined utilizing an income, market, or cost valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company. In the case of loans with lower balances, the Company may obtain a real estate evaluation instead of an appraisal. Evaluations utilize many of the same techniques as appraisals, and are typically performed by independent appraisers. Once received, appraisals and evaluations are reviewed by trained staff independent of the lending function to verify consistency and reasonability. Appraisals and evaluations are based on significant unobservable inputs, including but not limited to: adjustments made to comparable properties, judgments about the condition of the subject property, the availability and suitability of comparable properties, capitalization rates, projected income of the subject or comparable properties, vacancy rates, projected depreciation rates, and the state of the local and regional economy. The Company may also elect to make additional reductions in the collateral value based on management's best judgment, which represents another source of unobservable inputs. Because of the subjective nature of collateral valuation, impaired loans are considered Level 3.

Impaired loans may be secured by collateral other than real estate. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business' financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports (Level 3). If a loan is not collateral-dependent, its impairment may be measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate. Because the loan is discounted at its effective rate of interest, rather than at a market rate, the loan is not considered to be held at fair value and is not included in the tables below. Collateral-dependent impaired loans allocated to the allowance for loan losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as part of the provision for loan losses on the Consolidated Statements of Income.

Other Real Estate Owned (OREO)

Loans are transferred to OREO when the collateral securing them is foreclosed on. The measurement of loss associated with OREOs is based on the fair value of the collateral compared to the unpaid loan balance and anticipated costs to sell the property. If there is a contract for the sale of a property, and management reasonably believes the transaction will be consummated in accordance with the terms of the contract, fair value is based on the sale price in that contract (Level 1). If management has recent information about the sale of identical properties, such as when selling multiple condominium units on the same property, the remaining units would be valued based on the observed market data (Level 2). Lacking either a contract or such recent data, management would obtain an appraisal or evaluation of the value of the collateral as discussed above under Impaired Loans (Level 3). After the asset has been booked, a new appraisal or evaluation is obtained when management has reason to believe the fair value of the property may have changed and no later than two years after the last appraisal or evaluation was received. Any fair value adjustments to OREOs below the original book value are recorded in the period incurred and expensed against current earnings.

The following table presents the assets carried on the consolidated balance sheets for which a nonrecurring change in fair value has been recorded. Assets are shown by class of loan and by level in the fair value hierarchy, as of the dates indicated. Certain impaired loans are valued by the present value of the loan's expected future cash flows, discounted at the loan's effective interest rate. These loans are not carried on the consolidated balance sheets at fair value and, as such, are not included in the table below. Former branch sites are carried at the lower of cost or market. Those carried at cost are not included in the table below.

			Carrying Value at December 31, 2016 Using
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	400	$	0	$	0	$	400
Commercial		1,483		0		0		1,483
Construction		74		0		0		74
Total mortgage loans on real estate		1,957		0		0		1,957
Commercial loans		718		0		0		718
Total	$	2,675	$	0	$	0	$	2,675
Other real estate owned
Construction	$	940	$	0	$	0	$	940
Total	$	940	$	0	$	0	$	940

			Carrying Value at December 31, 2015 Using
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	952	$	0	$	0	$	952
Commercial		267		0		0		267
Construction		62		0		0		62
Total	$	1,281	$	0	$	0	$	1,281
Other real estate owned
Residential 1-4 family	$	724	$	0	$	0	$	724
Commercial		927		0		0		927
Construction		1,090		0		0		1,090
Total	$	2,741	$	0	$	0	$	2,741

The following table displays quantitative information about Level 3 Fair Value Measurements as of the dates indicated:

Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at December 31, 2016 (dollars in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate	$	400	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Commercial real estate		1,483	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Construction		74	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Commercial		718	Market comparables	Selling costs		0.00	%
				Liquidation discount		0.00% - 38.58% (32.40	%)
Other real estate owned
Construction		940	Market comparables	Selling costs		7.25	%
				Liquidation discount		0.00	%

Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at December 31, 2015 (dollars in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate	$	952	Market comparables	Selling costs		7.25	%
				Liquidation discount		0.00% - 4.00% (3.75	%)
Commercial real estate		267	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Construction		62	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Other real estate owned
Residential 1-4 family		724	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00% - 7.17% (4.79	%)
Commercial		927	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00% - 24.70% (11.77	%)
Construction		1,090	Market comparables	Selling costs		6.72	%
				Liquidation discount		33.05	%

FASB ASC 825, "Financial Instruments," requires disclosure about fair value of financial instruments and excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company's assets.

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments not discussed above:

CASH AND CASH EQUIVALENTS

The carrying amounts of cash and short-term instruments, including interest-bearing due from banks, approximate fair values.

RESTRICTED SECURITIES

The restricted security category is comprised of FHLB and Federal Reserve Bank stock. These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and they lack a market. When the FHLB or Federal Reserve Bank repurchases stock, they repurchase at the stock's book value. Therefore, the carrying amounts of restricted securities approximate fair value.

LOANS RECEIVABLE

The fair value of a loan is based on its interest rate in relation to its risk profile, in comparison to what an investor could earn on a different investment with a similar risk profile. Variations in risk tolerance between lenders, and thus in risk pricing, can result in the same loan being priced differently at different institutions. A bank's experience with the type of lending (such as commercial real estate) can also impact its assessment of the riskiness of a loan. A comprehensive picture of competitors' rates in relation to borrower risk profiles is not available. Since the rate and risk profile are the primary factors in determining the fair value of a loan, both of which are unobservable in the market, the Company classifies loans as Level 3 in the fair value hierarchy. The Company uses a model which estimates market value based on the loan's interest rate (regardless of its risk level) and rates for debt of similar maturities where market data is available. Fair values for non-performing loans are estimated as described above.

BANK-OWNED LIFE INSURANCE

Bank-owned life insurance represents insurance policies on certain current and former officers of the Company. The cash value of the policies is estimated using information provided by the insurance carrier. The insurance carrier uses actuarial data to estimate the value of each policy, based on the age and health of the insured relative to other individuals about whom the carrier has information. Health information can be broken down into quantitative, observable inputs, such as smoking habits, blood pressure, and weight, which, along with the insured's age, can be compared to observable data the insurance carrier has available. The carrier can then estimate the cash value of each policy. Since the cash value represents the amount of cash the Company would receive when the policies are paid, the cash value closely approximates the fair value of the policies. Accordingly, bank-owned life insurance is classified as Level 2.

DEPOSIT LIABILITIES

The fair value of demand deposits, savings and certain money market deposits is the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities. Information about the rates paid by other institutions for deposits of similar terms is readily available, and rates are mainly influenced by the term of the deposit itself. As a result, fair value calculations are based on observable inputs, and are classified as Level 2.

SHORT-TERM BORROWINGS

The carrying amounts of federal funds purchased, overnight repurchase agreements, and other short-term borrowings maturing within 90 days approximate their fair values. Since the contractual terms of these borrowings provide all information necessary to calculate the amounts that will be due at maturity, these liabilities are classified as Level 2.

LONG-TERM BORROWINGS

The fair values of the Company's long-term borrowings are estimated based on the current cost to repay the debt in full, discounted to current values and including any prepayment penalties that may apply. As the contractual terms of the borrowing provide all the necessary inputs for this calculation, long-term borrowings are classified as Level 2.

ACCRUED INTEREST

The calculation of accrued interest is based on readily observable information, such as the rate and term of the underlying asset or liability. Since these amounts are expected to be realized quickly (generally within 30 to 90 days), the carrying value approximates fair value and is classified as Level 2.

COMMITMENTS TO EXTEND CREDIT AND IRREVOCABLE LETTERS OF CREDIT

The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit-worthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. At December 31, 2016 and December 31, 2015, the fair value of fees charged for loan commitments and irrevocable letters of credit was immaterial.

The estimated fair values, and related carrying or notional amounts, of the Company's financial instruments as of the dates indicated are as follows:

			Fair Value Measurements at December 31, 2016 Using
Description	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Cash and cash equivalents	$	25,854	$	25,854	$	0	$	0
Securities available-for-sale		199,365		0		199,365		0
Restricted securities		970		0		970		0
Loans, net of allowances for loan losses		595,637		0		0		594,190
Bank owned life insurance		25,206		0		25,206		0
Accrued interest receivable		3,189		0		3,189		0
Liabilities
Deposits	$	784,502	$	0	$	783,450	$	0
Overnight repurchase agreements		18,704		0		18,704		0
Accrued interest payable		228		0		228		0

			Fair Value Measurements at December 31, 2015 Using
Description	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Cash and cash equivalents	$	36,990	$	36,990	$	0	$	0
Securities available-for-sale		214,192		0		214,192		0
Restricted securities		2,016		0		2,016		0
Loans, net of allowances for loan losses		560,737		0		0		559,488
Bank owned life insurance		24,411		0		24,411		0
Accrued interest receivable		3,059		0		3,059		0
Liabilities
Deposits	$	746,471	$	0	$	746,740	$	0
Overnight repurchase agreements		25,950		0		25,950		0
Federal Home Loan Bank advances		25,000		0		25,501		0
Accrued interest payable		241		0		241		0

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Regulatory Matters

12 Months Ended

Dec. 31, 2016

Regulatory Matters [Abstract]

Regulatory Matters

NOTE 17, Regulatory Matters

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can cause certain mandatory and possibly additional discretionary actions to be initiated by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1, and common equity tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. The terms Tier 1 and common equity tier 1 capital, risk-weighted assets and average assets, as used in this note, are as defined in the applicable regulations. Management believes, as of December 31, 2016 and 2015, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2016, the most recent notification from the Comptroller categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, common equity tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Bank's category. The Company's and the Bank's actual capital amounts and ratios as of December 31, 2016 and 2015 are also presented in the table.

	Capital					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
December 31, 2016:
Total Capital to Risk Weighted Assets:
Consolidated	$	106,443		14.51	%	$	63,263		8.625	%		N/A		N/A
Old Point National Bank		98,237		13.47	%		62,909		8.625	%	$	72,938		10.00	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		98,198		13.39	%		48,593		6.625	%		N/A		N/A
Old Point National Bank		89,992		12.34	%		48,321		6.625	%		58,350		8.00	%
Common Equity Tier 1 Capital to Risk Weighted Assets:
Consolidated		98,198		13.39	%		37,591		5.125	%		N/A		N/A
Old Point National Bank		89,992		12.34	%		37,381		5.125	%		47,410		6.50	%
Tier 1 Capital to Average Assets:
Consolidated		98,198		10.68	%		36,768		4.000	%		N/A		N/A
Old Point National Bank		89,992		9.85	%		36,549		4.000	%		45,686		5.00	%
December 31, 2015:
Total Capital to Risk Weighted Assets:
Consolidated	$	104,076		14.89	%	$	55,910		8.00	%		N/A		N/A
Old Point National Bank		96,079		13.83	%		55,589		8.00	%	$	69,486		10.00	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		96,338		13.78	%		41,932		6.00	%		N/A		N/A
Old Point National Bank		88,341		12.71	%		41,692		6.00	%		55,589		8.00	%
Common Equity Tier 1 Capital to Risk Weighted Assets:
Consolidated		96,338		13.78	%		31,449		4.50	%		N/A		N/A
Old Point National Bank		88,341		12.71	%		31,269		4.50	%		45,166		6.50	%
Tier 1 Capital to Average Assets:
Consolidated		96,338		10.93	%		35,260		4.00	%		N/A		N/A
Old Point National Bank		88,341		10.06	%		35,124		4.00	%		43,905		5.00	%

The approval of the Comptroller is required if the total of all dividends declared by a national bank in any calendar year exceeds the bank's net profits for that year combined with its retained net profits for the preceding two calendar years. Under this formula, the Bank and Trust can distribute as dividends to the Company in 2017, without approval of the Comptroller, $2.8 million plus an additional amount equal to the Bank's and Trust's retained net profits for 2017 up to the date of any dividend declaration.

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Segment Reporting

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Reporting

NOTE 18, Segment Reporting

The Company operates in a decentralized fashion in three principal business segments: the Bank, the Trust, and the Parent. Revenues from the Bank's operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Trust's operating revenues consist principally of income from fiduciary activities. The Parent company's revenues are mainly interest and dividends received from the Bank and Trust companies. The Company has no other segments.

The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each segment appeals to different markets and, accordingly, requires different technologies and marketing strategies.

Information about reportable segments, and reconciliation of such information to the Consolidated Financial Statements as of and for the years ended December 31 follows:

2016	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
	(in thousands)
Revenues
Interest and dividend income	$	29,765	$	61	$	4,590		$	(4,590	)	$	29,826
Income from fiduciary activities		0		3,560		0			0			3,560
Other income		9,058		910		200			(262	)		9,906
Total operating income		38,823		4,531		4,790			(4,852	)		43,292
Expenses
Interest expense		2,574		0		0			0			2,574
Provision for loan losses		1,930		0		0			0			1,930
Salaries and employee benefits		16,801		2,671		406			0			19,878
Other expenses		13,179		1,041		995			(262	)		14,953
Total operating expenses		34,484		3,712		1,401			(262	)		39,335
Income before taxes		4,339		819		3,389			(4,590	)		3,957
Income tax expense (benefit)		288		280		(408	)		0			160
Net income	$	4,051	$	539	$	3,797		$	(4,590	)	$	3,797
Capital expenditures	$	887	$	4	$	0		$	0		$	891
Total assets	$	897,966	$	5,761	$	93,998		$	(94,759	)	$	902,966

2015	Bank			Trust		Unconsolidated Parent			Eliminations			Consolidated
	(in thousands)
Revenues
Interest and dividend income	$	30,242		$	54	$	4,009		$	(4,010	)	$	30,295
Income from fiduciary activities		0			3,617		0			0			3,617
Other income		8,548			1,032		200			(261	)		9,519
Total operating income		38,790			4,703		4,209			(4,271	)		43,431
Expenses
Interest expense		3,633			0		0			(1	)		3,632
Provision for loan losses		1,025			0		0			0			1,025
Salaries and employee benefits		17,630			2,685		432			0			20,747
Other expenses		13,254			1,010		336			(261	)		14,339
Total operating expenses		35,542			3,695		768			(262	)		39,743
Income before taxes		3,248			1,008		3,441			(4,009	)		3,688
Income tax expense (benefit)		(96	)		343		(193	)		0			54
Net income	$	3,344		$	665	$	3,634		$	(4,009	)	$	3,634
Capital expenditures	$	1,682		$	74	$	0		$	0		$	1,756
Total assets	$	891,877		$	5,694	$	93,191		$	(93,975	)	$	896,787

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before income taxes not including nonrecurring gains or losses.

Both the Parent and the Trust companies maintain deposit accounts with the Bank, on terms substantially similar to those available to other customers. These transactions are eliminated to reach consolidated totals.

The Company operates in one geographical area and does not have a single external customer from which it derives 10 percent or more of its revenues.

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Condensed Financial Statements of Parent Company

12 Months Ended

Dec. 31, 2016

Condensed Financial Statements of Parent Company [Abstract]

Condensed Financial Statements of Parent Company

NOTE 19, Condensed Financial Statements of Parent Company

Financial information pertaining to Old Point Financial Corporation (parent company only) is as follows:

	December 31,
Balance Sheets	2016			2015
	(in thousands)
Assets
Cash and cash equivalents	$	2,366		$	2,198
Securities available-for-sale		164			99
Investment in common stock of subsidiaries		91,437			90,836
Other assets		31			58
Total assets	$	93,998		$	93,191
Liabilities and Stockholders' Equity
Note payable - subsidiary	$	8		$	15
Common stock		24,806			24,795
Additional paid-in capital		16,427			16,392
Retained earnings		56,965			55,151
Accumulated other comprehensive loss		(4,208	)		(3,162	)
Total liabilities and stockholders' equity	$	93,998		$	93,191

	Years Ended December 31,
Statements of Income	2016			2015
	(in thousands)
Income:
Dividends from subsidiaries	$	2,900		$	2,900
Other income		200			200
Total income		3,100			3,100
Expenses:
Salaries and benefits		406			432
Legal expenses		774			180
Service fees		166			137
Other operating expenses		55			19
Total expenses		1,401			768
Income before income taxes and equity in undistributed net income of subsidiaries		1,699			2,332
Income tax benefit		(408	)		(193	)
		2,107			2,525
Equity in undistributed net income of subsidiaries		1,690			1,109
Net income	$	3,797		$	3,634

	Years Ended December 31,
Statements of Cash Flows	2016			2015
	(in thousands)
Cash flows from operating activities:
Net income	$	3,797		$	3,634
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of subsidiaries		(1,690	)		(1,109	)
(Increase) decrease in other assets		5			(5	)
Increase (decrease) in other liabilities		(7	)		15
Net cash provided by operating activities		2,105			2,535
Cash flows from investing activities:		0			0
Cash flows from financing activities:
Proceeds from sale of stock		46			0
Cash dividends paid on common stock		(1,983	)		(1,686	)
Net cash used in financing activities		(1,937	)		(1,686	)
Net increase in cash and cash equivalents		168			849
Cash and cash equivalents at beginning of year		2,198			1,349
Cash and cash equivalents at end of year	$	2,366		$	2,198
Supplemental schedule of noncash transactions:
Unrealized gain (loss) on securities available-for-sale	$	64		$	(1	)

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Significant Accounting Policies [Abstract]

PRINCIPLES OF CONSOLIDATION

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements include the accounts of Old Point Financial Corporation (the Company) and its wholly-owned subsidiaries, The Old Point National Bank of Phoebus (the Bank) and Old Point Trust & Financial Services N.A. (Trust). All significant intercompany balances and transactions have been eliminated in consolidation. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50 percent of the voting rights or where it exercises control. Entities where the Company holds 20 to 50 percent of the voting rights, or has the ability to exercise significant influence, or both, are accounted for under the equity method. As discussed below, the Company consolidates entities deemed to be variable interest entities (VIEs) when it is determined to be the primary beneficiary.

NATURE OF OPERATIONS

NATURE OF OPERATIONS

Old Point Financial Corporation is a holding company that conducts substantially all of its operations through two subsidiaries, The Old Point National Bank of Phoebus and Old Point Trust & Financial Services, N.A. The Bank serves individual and commercial customers, the majority of which are in Hampton Roads, Virginia. As of December 31, 2016, the Bank had 18 branch offices. The Bank offers a full range of deposit and loan products to its retail and commercial customers. Trust offers a full range of services for individuals and businesses. Products and services include retirement planning, estate planning, financial planning, estate and trust administration, retirement plan administration, tax services and investment management services.

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

A legal entity is referred to as a VIE if any of the following conditions exist, which are outlined in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) variable interest accounting guidance (FASB ASC 810-10-15-14): (1) the total equity investment at risk is insufficient to permit the legal entity to finance its activities without additional subordinated financial support from other parties, or (2) the entity has equity investors that cannot make significant decisions about the entity's operations or that do not absorb their proportionate share of the expected losses or receive the expected returns of the entity.

In addition, as specified in VIE accounting guidance (FASB ASC 810-10-25-38), a VIE must be consolidated by the Company if it is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that will absorb a majority of the expected losses, receive a majority of the expected residual returns, or both. At this time, the Company has no VIEs that are consolidated. The Company does have an interest in one VIE, Old Point Mortgage, LLC (Old Point Mortgage), which is not consolidated because the Company has determined that it is not the primary beneficiary.

On January 13, 2017, the Bank entered into a membership interest purchase agreement (the Purchase Agreement) with TMSI to purchase TMSI's 51% interest in Old Point Mortgage. Upon completion of the purchase, the Bank will be the sole member of Old Point Mortgage. The purchase is expected to be completed on or before May 1, 2017.

USE OF ESTIMATES

USE OF ESTIMATES

In preparing Consolidated Financial Statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, other-than-temporary impairment of securities, the valuation allowance on other real estate owned and the determination of defined benefit obligations.

SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

Most of the Company's activities are with customers located within the Hampton Roads region. The types of securities that the Company invests in are included in Note 3. The types of lending that the Company engages in are included in Note 4. The Company has significant concentrations in the following industries: construction, lessors of real estate, activities related to real estate, ambulatory health care and religious organizations. The Company does not have any significant concentrations to any one customer.

At December 31, 2016 and 2015, there were $308.5 million and $297.4 million, or 51.09% and 52.32%, respectively, of total loans concentrated in commercial real estate. Commercial real estate for purposes of this note includes all construction loans, loans secured by multifamily residential properties, loans secured by farmland and loans secured by nonfarm, nonresidential properties.

CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, cash and cash equivalents includes cash and balances due from banks and federal funds sold, all of which mature within 90 days.

INTEREST-BEARING DEPOSITS IN BANKS

INTEREST-BEARING DEPOSITS IN BANKS

Interest-bearing deposits in banks mature within one year and are carried at cost.

SECURITIES

SECURITIES

Certain debt securities that management has the positive intent and ability to hold until maturity are classified as "held-to-maturity" and recorded at amortized cost. Securities not classified as held-to-maturity, including equity securities with readily determinable fair values, are classified as "available-for-sale" and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company employs a systematic methodology that considers available evidence in evaluating potential impairment of its investments. In the event that the cost of an investment exceeds its fair value, the Company evaluates, among other factors, the magnitude and duration of the decline in fair value; the expected cash flows of the securities; the financial health of and business outlook for the issuer; the performance of the underlying assets for interests in securitized assets; and the Company's intent and ability to hold the investment. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in investment income and a new cost basis in the investment is established.

FEDERAL HOME LOAN BANK STOCK

FEDERAL HOME LOAN BANK STOCK

The Company, as a member of the Federal Home Loan Bank of Atlanta (FHLB), is required to maintain an investment in the capital stock of the FHLB. Based on the redemption provisions of the FHLB, the stock has no quoted market value, is carried at cost and is listed as a restricted security. The Company reviews its holdings for impairment based on the ultimate recoverability of the cost basis in the FHLB stock.

LOANS

LOANS

The Company extends loans to individual consumers and commercial customers for various purposes. Most of the Company's loans are secured by real estate, including real estate construction loans and real estate mortgage loans (i.e., residential 1-4 family mortgages, commercial real estate loans, second mortgages and equity lines of credit).  Other loans are secured by collateral that is not real estate, which may include inventory, accounts receivable, equipment or other personal property. A substantial portion of the loan portfolio is represented by real estate mortgage loans throughout Hampton Roads. The ability of the Company's debtors to honor their contracts is dependent in part upon the real estate and general economic conditions in this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for unearned income, the allowance for loan losses and any unamortized deferred fees or costs on originated loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

The accrual of interest on commercial loans (including construction loans and commercial loans secured and not secured by real estate) is generally discontinued at the time the loan is 90 days past due unless the credit is well-secured and in the process of collection. Consumer loans not secured by real estate and consumer real estate secured loans (i.e., residential 1-4 family mortgages, second mortgages and equity lines of credit) are generally placed on nonaccrual status when payments are 120 days past due. Past due status is based on the contractual terms of the loan, and loans are considered past due when a payment of principal and/or interest is due but not paid. Regular payments not received within the payment cycle are considered to be 30, 60, or 90 or more days past due accordingly. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual status or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are generally returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured, or when the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments for at least six months.

ALLOWANCE FOR LOAN LOSSES

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired, such as a loan that is considered a TDR (discussed in detail below). These loans are excluded from pooled loss forecasts and a separate reserve is provided under the accounting guidance for loan impairment. All loans, including consumer loans, whose terms have been modified in a TDR are also individually analyzed for estimated impairment. Impairment is measured on a loan-by-loan basis for construction loans and commercial loans (i.e., commercial mortgage loans on real estate and commercial loans not secured by real estate) by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. For those loans that are classified as impaired, an allowance is established when the discounted value of expected future cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

The general component covers loans that are not classified as impaired. Loans collectively evaluated for impairment are pooled, with a historical loss rate, based on migration analysis, applied to each pool, segmented by risk grade or days past due, depending on the type of loan.  Based on credit risk assessments and management's analysis of qualitative factors, additional loss factors are applied to loan balances. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and consumer loans secured by real estate (i.e., residential 1-4 family mortgages, second mortgages and equity lines of credit) for impairment disclosures, unless the terms of such loans have been modified in a TDR due to financial difficulties of the borrower.

LOAN CHARGE-OFF POLICIES

LOAN CHARGE-OFF POLICIES

Loans are generally fully charged off or partially charged down to the fair value of collateral securing the asset when:

· Management determines the asset to be uncollectible;

· Repayment is deemed to be protracted beyond reasonable time frames;

· The asset has been classified as a loss by either the internal loan review process or external examiners;

· The borrower has filed for bankruptcy protection and the loss becomes evident due to a lack of borrower assets; or

· The loan is 120 days or more past due unless the loan is both well secured and in the process of collection.

TROUBLED DEBT RESTRUCTURINGS

TROUBLED DEBT RESTRUCTURINGS

In situations where, for economic or legal reasons related to a borrower's financial difficulties, management grants a concession for other than an insignificant period of time to the borrower that would not otherwise be considered, the related loan is classified as a TDR. Management strives to identify borrowers in financial difficulty before their loans reach nonaccrual status and works with them to grant appropriate concessions, if necessary, and modify their loans to more affordable terms. These modified terms could include reduction in the interest rate below current market rates for borrowers with similar risk profiles, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal, management measures any impairment on the restructuring as noted above for impaired loans. The Company had $11.9 million and $11.2 million in loans classified as TDRs as of December 31, 2016 and 2015, respectively.

TRANSFERS OF FINANCIAL ASSETS

TRANSFERS OF FINANCIAL ASSETS

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company (i.e., put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership); (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

OTHER REAL ESTATE OWNED (OREO)

OTHER REAL ESTATE OWNED (OREO)

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance (direct write-downs) are included in net expenses from foreclosed assets.

BANK-OWNED LIFE INSURANCE

BANK-OWNED LIFE INSURANCE

The Company owns insurance on the lives of a certain group of key employees. The policies were purchased to help offset the increase in the costs of various benefit plans. The cash surrender value of these policies is included as an asset on the consolidated balance sheets, and the increase in cash surrender value is recorded as noninterest income on the consolidated statements of income. In the event of the death of an insured individual under these policies, the Company would receive a death benefit payment.  Any excess in the amount received over the recorded cash surrender value would be recorded as other income on the consolidated statements of income.

PREMISES AND EQUIPMENT

PREMISES AND EQUIPMENT

Land is carried at cost. Buildings and equipment are stated at cost, less accumulated depreciation and amortization computed on the straight-line method over the estimated useful lives of the assets. Buildings and equipment are depreciated over their estimated useful lives ranging from 3 to 39 years; leasehold improvements are amortized over the lives of the respective leases or the estimated useful life of the leasehold improvement, whichever is less. Software is amortized over its estimated useful life ranging from 3 to 5 years.

OFF-BALANCE SHEET CREDIT RELATED FINANCIAL INSTRUMENTS

OFF-BALANCE SHEET CREDIT RELATED FINANCIAL INSTRUMENTS

In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under commercial letters of credit and lines of credit. Such financial instruments are recorded when they are funded.

PENSION PLAN

PENSION PLAN

The Company has a non-contributory defined benefit pension plan, which was frozen by the Company in 2006. Benefits for participants will remain frozen in the plan until such time as further action occurs. No additional participants will be added to the plan.

The compensation cost of the pension plan is recognized on the projected unit credit method. The aggregate cost method is utilized for funding purposes.

STOCK COMPENSATION PLANS

STOCK COMPENSATION PLANS

Stock compensation accounting guidance (FASB ASC 718, "Compensation -- Stock Compensation") requires that the compensation cost related to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black Scholes model is used to estimate the fair value of the stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock awards.

INCOME TAXES

INCOME TAXES

The Company accounts for income taxes in accordance with income tax accounting guidance (FASB ASC 740, "Income Taxes"). The Company adopted the accounting guidance related to accounting for uncertainty in income taxes, which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions.

Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability or balance sheet method. Under this method, the net deferred tax asset or liability is based on the tax effects of the difference between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more-likely-than-not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more-likely-than-not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management's judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

No uncertain tax positions were recorded in 2016 or 2015.

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and shares to be issued as part of the employee stock purchase plan and are determined using the treasury stock method.

TRUST ASSETS AND INCOME

TRUST ASSETS AND INCOME

Securities and other property held by Trust in a fiduciary or agency capacity are not assets of the Company and are not included in the accompanying Consolidated Financial Statements.

ADVERTISING EXPENSES

ADVERTISING EXPENSES

Advertising expenses are expensed as incurred. Advertising expense for the years ended 2016 and 2015 was $273 thousand and $217 thousand, respectively.

COMPREHENSIVE INCOME

COMPREHENSIVE INCOME

Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available-for-sale, unrealized losses on securities transferred from available-for-sale to held-to-maturity, and unrealized losses related to changes in the funded status of the pension plan which are also recognized as separate components of equity.

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 16. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern".  This update is intended to provide guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. Management is required under the new guidance to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued when preparing financial statements for each interim and annual reporting period. If conditions or events are identified, the ASU specifies the process that must be followed by management and also clarifies the timing and content of going concern footnote disclosures in order to reduce diversity in practice. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Early adoption is permitted.  The Company does not expect the adoption of ASU 2014-15 to have a material impact on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities".  The amendments in ASU 2016-01, among other things: 1) Require equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 3) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). 4) Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently assessing the impact that ASU 2016-01 will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)". Among other things, in the amendments in ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) A lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently assessing the impact that ASU 2016-02 will have on its consolidated financial statements.

During March 2016, the FASB issued ASU No. 2016-05, "Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships". The amendments in this ASU clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria remain intact. The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2016-05 to have a material impact on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-07, "Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting". The amendments in this ASU eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required.  In addition, the amendments in this ASU require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Early Adoption is permitted. The Company does not expect the adoption of ASU 2016-07 to have a material impact on its consolidated financial statements.

During March 2016, the FASB issued ASU No. 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Shares-Based Payment Accounting". The amendments in this ASU simplify several aspects of the accounting for share-based payment award transactions including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is currently assessing the impact that ASU 2016-09 will have on its consolidated financial statements.

During June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments".  The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this ASU are effective for Securities and Exchange Commission (SEC) filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For public companies that are not SEC filers, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company is currently assessing the impact that ASU 2016-13 will have on its consolidated financial statements.

During August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments", to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. If retrospective application is impractical for some of the issues addressed by the update, the amendments for those issues would be applied prospectively as of the earliest date practicable. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements.

During January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current implementation guidance in Topic 805, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a "set") that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs. The amendments in this ASU provide a screen to determine when a set is not a business. If the screen is not met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The ASU provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The amendments in this ASU are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. The Company does not expect the adoption of ASU 2017-01 to have a material impact on its consolidated financial statements.

During January 2017, the FASB issued ASU No. 2017-04, "Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The amendments in this ASU simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Public business entities that are SEC filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Public business entities that are not SEC filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements.

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Securities Portfolio (Tables)

12 Months Ended

Dec. 31, 2016

Securities Portfolio [Abstract]

Amortized Costs and Fair Value of Securities Held-to-Maturity

The Company had no held-to-maturity-securities at December 31, 2016 or December 31, 2015 due to a decision in February of 2016 to transfer the portfolio to available-for-sale to allow for greater liquidity and flexibility in the future. Although the decision was made after December 31, 2015, the transfer was effective dated back to year-end as the primary difference between held-to-maturity and available-for-sale is management's intent to hold the securities to maturity. The transfer in 2016 demonstrated a change in management's intent as of year-end.

Amortized Costs and Fair Value of Securities Available-for-Sale

The amortized cost and fair value, with gross unrealized gains and losses, of securities available-for-sale were:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2016
U.S. Treasury securities	$	20,000	$	0	$	0		$	20,000
Obligations of U.S. Government agencies		9,361		0		(166	)		9,195
Obligations of state and political subdivisions		78,645		358		(1,016	)		77,987
Mortgage-backed securities		85,649		18		(1,973	)		83,694
Money market investments		647		0		0			647
Corporate bonds and other securities		7,598		92		(12	)		7,678
Other marketable equity securities		100		64		0			164
Total	$	202,000	$	532	$	(3,167	)	$	199,365
December 31, 2015
U.S. Treasury securities	$	0	$	0	$	0		$	0
Obligations of  U.S. Government agencies		24,353		1		(114	)		24,240
Obligations of state and political subdivisions		77,223		1,323		(113	)		78,433
Mortgage-backed securities		109,360		0		(1,964	)		107,396
Money market investments		631		0		0			631
Corporate bonds and other securities		3,397		4		(8	)		3,393
Other marketable equity securities		100		0		(1	)		99
Total	$	215,064	$	1,328	$	(2,200	)	$	214,192

Amortized Cost and Fair Value of Securities by Contractual Maturity

The amortized cost and fair value of securities by contractual maturity are shown below.

	December 31, 2016
	Available-for-Sale
	Amortized Cost			Fair Value
	(in thousands)
Due in one year or less		$	21,801		$	21,800
Due after one year through five years			18,471			18,435
Due after five years through ten years			48,840			48,217
Due after ten years			112,141			110,102
Total debt securities			201,253			198,554
Other securities without stated maturities			747			811
Total securities		$	202,000		$	199,365

Information about Securities Sold

The following table provides information about securities sold in the years ended December 31:

	2016			2015
	(in thousands)
Proceeds from sales		$	107,647		$	23,005
Gross realized gains		$	578		$	76
Gross realized losses		$	56		$	0

Available-for-Sale Securities and Held-to-Maturity Securities, Continuous Unrealized Loss Position

The following table shows the number of securities with unrealized losses, the gross unrealized losses and fair value of the Company's investments with unrealized losses that are deemed to be temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated:

	December 31, 2016
	Less Than Twelve Months						More Than Twelve Months						Total
	Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Number of Securities
	(dollars in thousands)
Securities Available-for-Sale
Obligations of U.S. Government agencies		$	166		$	9,195		$	0		$	0		$	166		$	9,195		6
Obligations of state and political subdivisions			1,016			38,020			0			0			1,016			38,020		56
Mortgage-backed securities			1,973			80,680			0			0			1,973			80,680		23
Corporate bonds and other securities			11			1,787			1			100			12			1,887		13
Total securities available-for-sale		$	3,166		$	129,682		$	1		$	100		$	3,167		$	129,782		98

	December 31, 2015
	Less Than Twelve Months						More Than Twelve Months						Total
	Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Number of Securities
	(dollars in thousands)
Securities Available-for-Sale
Obligations of U. S. Government agencies		$	0		$	0		$	114		$	3,940		$	114		$	3,940		2
Obligations of state and political subdivisions			42			4,177			71			3,545			113			7,722		13
Mortgage-backed securities			848			62,698			1,116			44,698			1,964			107,396		13
Corporate bonds and other securities			6			2,091			2			198			8			2,289		16
Other marketable equity securities			1			99			0			0			1			99		1
Total securities available-for-sale		$	897		$	69,065		$	1,303		$	52,381		$	2,200		$	121,446		45

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Loans and the Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2016

Loans and the Allowance for Loan Losses [Abstract]

Outstanding Loans By Segment Type

The following is a summary of the balances in each class of the Company's loan portfolio as of the dates indicated:

	December 31, 2016			December 31, 2015
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	94,827		$	96,997
Commercial		285,429			277,758
Construction		23,116			19,685
Second mortgages		17,128			15,148
Equity lines of credit		51,024			47,256
Total mortgage loans on real estate		471,524			456,844
Commercial loans		54,434			43,197
Consumer loans		58,907			50,427
Other		19,017			18,007
Total loans		603,882			568,475
Less: Allowance for loan losses		(8,245	)		(7,738	)
Loans, net of allowance and deferred fees (1)	$	595,637		$	560,737
(1) Net deferred loan fees totaled $522 thousand and $407 thousand at December 31, 2016 and December 31, 2015, respectively.

Overdrawn deposit accounts are reclassified as loans and included in the Other category in the table above. Overdrawn deposit accounts totaled $536 thousand and $648 thousand at December 31, 2016 and December 31, 2015, respectively.

Credit Quality Information

The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information As of December 31, 2016
	Pass		OAEM		Substandard		Total
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	92,458	$	1,138	$	1,231	$	94,827
Commercial		260,948		10,014		14,467		285,429
Construction		22,219		162		735		23,116
Second mortgages		16,445		475		208		17,128
Equity lines of credit		50,387		500		137		51,024
Total mortgage loans on real estate		442,457		12,289		16,778		471,524
Commercial loans		49,979		2,278		2,177		54,434
Consumer loans		58,741		0		166		58,907
Other		19,017		0		0		19,017
Total	$	570,194	$	14,567	$	19,121	$	603,882

Credit Quality Information As of December 31, 2015
	Pass		OAEM		Substandard		Total
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	94,576	$	0	$	2,421	$	96,997
Commercial		261,749		7,394		8,615		277,758
Construction		18,931		0		754		19,685
Second mortgages		14,835		0		313		15,148
Equity lines of credit		47,161		0		95		47,256
Total mortgage loans on real estate		437,252		7,394		12,198		456,844
Commercial loans		40,268		467		2,462		43,197
Consumer loans		50,327		0		100		50,427
Other		18,007		0		0		18,007
Total	$	545,854	$	7,861	$	14,760	$	568,475

Past Due Loans

AGE ANALYSIS OF PAST DUE LOANS BY CLASS

All classes of loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging analysis of the recorded investment in past due loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection. Loans in nonaccrual status that are also past due are included in the aging categories in the table below.

Age Analysis of Past Due Loans as of December 31, 2016
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	564	$	0	$	496	$	1,060	$	93,767	$	94,827	$	218
Commercial		2,280		1,625		227		4,132		281,297		285,429		0
Construction		162		0		0		162		22,954		23,116		0
Second mortgages		0		200		188		388		16,740		17,128		58
Equity lines of credit		394		9		86		489		50,535		51,024		0
Total mortgage loans on real estate		3,400		1,834		997		6,231		465,293		471,524		276
Commercial loans		5		0		86		91		54,343		54,434		0
Consumer loans		1,876		713		2,684		5,273		53,634		58,907		2,603
Other		41		12		5		58		18,959		19,017		5
Total	$	5,322	$	2,559	$	3,772	$	11,653	$	592,229	$	603,882	$	2,884

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

In the table above, the consumer category includes student loans with principal and interest amounts that are 97 - 98% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $4.8 million at December 31, 2016.

Age Analysis of Past Due Loans as of December 31, 2015
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	309	$	1,042	$	275	$	1,626	$	95,371	$	96,997	$	0
Commercial		1,266		31		23		1,320		276,438		277,758		23
Construction		161		0		0		161		19,524		19,685		0
Second mortgages		21		39		165		225		14,923		15,148		0
Equity lines of credit		170		0		0		170		47,086		47,256		0
Total mortgage loans on real estate		1,927		1,112		463		3,502		453,342		456,844		23
Commercial loans		500		88		232		820		42,377		43,197		164
Consumer loans		1,673		1,350		3,163		6,186		44,241		50,427		3,163
Other		64		3		6		73		17,934		18,007		6
Total	$	4,164	$	2,553	$	3,864	$	10,581	$	557,894	$	568,475	$	3,356

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

In the table above, the consumer category includes student loans with principal and interest amounts that are 97 - 98% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $5.7 million at December 31, 2015.

Nonaccrual Loans

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

Nonaccrual Loans by Class

	December 31, 2016		December 31, 2015
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	598	$	1,457
Commercial		6,033		2,623
Second mortgages		129		226
Equity lines of credit		87		0
Total mortgage loans on real estate		6,847		4,306
Commercial loans		231		276
Consumer loans		81		0
Total	$	7,159	$	4,582

Interest Income to be Earned under the Original Terms

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Years Ended December 31,
	2016			2015
	(in thousands)
Interest income that would have been recorded under original loan terms		$	318	$	196
Actual interest income recorded for the period			269		141
Reduction in interest income on nonaccrual loans		$	49	$	55

Troubled Debt Restructurings by Class

The following table presents TDRs during the period indicated, by class of loan:

Troubled Debt Restructurings by Class For the Year Ended December 31, 2016
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on December 31, 2016
	(dollars in thousands)
Mortgage loans on real estate:
Residential 1-4 family		6	$	1,061	$	1,061	$	992
Commercial		1		150		150		0
Second mortgages		1		53		53		53
Equity lines of credit		1		93		93		86
Total mortgage loans on real estate		9	$	1,357	$	1,357	$	1,131
Commercial loans		1		152		152		144
Consumer loans		2		8		8		0
Total		12	$	1,517	$	1,517	$	1,275

Troubled Debt Restructurings by Class For the Year Ended December 31, 2015
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on December 31, 2015
	(dollars in thousands)
Mortgage loans on real estate:
Commercial		5	$	2,094	$	2,594	$	2,400
Construction		1		435		435		0
Second mortgages		1		61		61		61
Total		7	$	2,590	$	3,090	$	2,461

Restructurings that Subsequently Defaulted

In the years ended December 31, 2016 and 2015 there were no defaulting TDRs where the default occurred within twelve months of restructuring. The Company considers a TDR in default when any of the following occurs: the loan, as restructured, becomes 90 days or more past due; the loan is moved to nonaccrual status following the restructure; the loan is restructured again under terms that would qualify it as a TDR if it were not already so classified; or any portion of the loan is charged off.

All TDRs are factored into the determination of the allowance for loan losses and included in the impaired loan analysis, as discussed below.

Impaired Loans by Class

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.

Impaired Loans by Class
	As of December 31, 2016												For the Year Ended December 31, 2016
				Recorded Investment
	Unpaid Principal Balance			Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family		$	2,496		$	1,835		$	622		$	75		$	2,741		$	119
Commercial			16,193			11,095			4,274			415			11,885			727
Construction			619			528			96			22			496			43
Second mortgages			526			309			141			17			511			25
Equity lines of credit			87			86			0			0			46			3
Total mortgage loans on real estate		$	19,921		$	13,853		$	5,133		$	529		$	15,679		$	917
Commercial loans			1,077			0			989			271			827			74
Consumer loans			81			81			0			0			68			1
Total		$	21,079		$	13,934		$	6,122		$	800		$	16,574		$	992

Impaired Loans by Class
	As of December 31, 2015												For the Year Ended December 31, 2015
				Recorded Investment
	Unpaid Principal Balance			Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family		$	2,994		$	1,530		$	1,261		$	146		$	2,267		$	132
Commercial			10,203			6,166			3,208			608			9,305			473
Construction			99			0			99			36			465			5
Second mortgages			535			499			0			0			571			21
Total mortgage loans on real estate		$	13,831		$	8,195		$	4,568		$	790		$	12,608		$	631
Commercial loans			330			207			68			8			952			28
Consumer loans			12			12			0			0			13			1
Total		$	14,173		$	8,414		$	4,636		$	798		$	$ 13,573		$	660

Allowance for Loan Losses by Segment

ALLOWANCE FOR LOAN LOSSES BY SEGMENT

The total allowance reflects management's estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $8.2 million adequate to cover loan losses inherent in the loan portfolio at December 31, 2016.

The following table presents, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS
(in thousands)
For the Year Ended December 31, 2016	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	633		$	985		$	5,628		$	279		$	213		$	7,738
Charge-offs		(915	)		0			(504	)		(204	)		(147	)		(1,770	)
Recoveries		79			3			197			28			40			347
Provision for loan losses		1,696			(142	)		(54	)		352			78			1,930
Ending balance		1,493			846			5,267			455			184			8,245
Ending balance individually evaluated for impairment		271			22			507			0			0			800
Ending balance collectively evaluated for impairment		1,222			824			4,760			455			184			7,445
Ending balance		1,493			846			5,267			455			184			8,245
Loan Balances:
Ending balance individually evaluated for impairment		989			624			18,362			81			0			20,056
Ending balance collectively evaluated for impairment		53,445			22,492			430,046			58,826			19,017			583,826
Ending balance	$	54,434		$	23,116		$	448,408		$	58,907		$	19,017		$	603,882
For the Year Ended December 31, 2015	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	595		$	703		$	5,347		$	219		$	211		$	7,075
Charge-offs		(293	)		0			(321	)		(92	)		(191	)		(897	)
Recoveries		50			1			393			39			52			535
Provision for loan losses		281			281			209			113			141			1,025
Ending balance		633			985			5,628			279			213			7,738
Ending balance individually evaluated for impairment		8			36			754			0			0			798
Ending balance collectively evaluated for impairment		625			949			4,874			279			213			6,940
Ending balance		633			985			5,628			279			213			7,738
Loan Balances:
Ending balance individually evaluated for impairment		275			99			12,664			12			0			13,050
Ending balance collectively evaluated for impairment		42,922			19,586			424,495			50,415			18,007			555,425
Ending balance	$	43,197		$	19,685		$	437,159		$	50,427		$	18,007		$	568,475

Change in Allowance Methodology

The following table represents the effect on the loan loss provision as a result of these changes in methodology. It compares the methodology actually used for the year ended December 31, 2016 to that used in prior periods.

	Calculated Provision Based on Current Methodology			Calculated Provision Based on Prior Methodology			Difference
	(in thousands)
Portfolio Segment:
Commercial	$	1,696		$	2,054		$	(358	)
Real estate - construction		(142	)		(858	)		716
Real estate - mortgage		(54	)		73			(127	)
Consumer loans		352			910			(558	)
Other		78			78			0
Total	$	1,930		$	2,257		$	(327	)

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Other Real Estate Owned (OREO) (Tables)

12 Months Ended

Dec. 31, 2016

Other Real Estate Owned (OREO) [Abstract]

Analysis of the Balance in Foreclosed Assets

The Company holds certain parcels of real estate due to completed foreclosure proceedings on defaulted loans or the closing of former branches. An analysis of the balance in OREO is as follows:

	Years Ended December 31,
	2016			2015
	(in thousands)
Balance at beginning of year	$	5,290		$	8,014
Transfers to OREO due to foreclosure		0			553
Other additions to foreclosed properties		52			0
Closed branch locations transferred to OREO		127			0
Properties sold		(3,376	)		(3,277	)
Balance at end of year	$	2,093		$	5,290

Analysis of Valuation Allowance on Foreclosed Assets

OREOs are presented net of a valuation allowance for losses. As the fair values of OREOs change, adjustments are made to the recorded investment in the properties through the valuation allowance to ensure that all properties are recorded at the lower of cost or fair value.  Properties written down in previous periods can be written back up if a current property valuation warrants the change, though never above the original cost of the property. An analysis of the valuation allowance on OREOs is as follows:

	Years Ended December 31,
	2016				2015
	(in thousands)
Balance at beginning of year		$	2,549		$	2,908
Additions and write-downs			60			1,011
Reductions due to sales or increases in value			(1,583	)		(1,370	)
Balance at end of year		$	1,026		$	2,549

Expenses Applicable to Foreclosed Assets

Expenses applicable to OREOs include the following:

	Years Ended December 31,
	2016		2015
	(in thousands)
Net loss (gain) on sales of real estate	$	94	$	(54	)
Provision for losses (net write-downs)		60		1,011
Operating expenses, net of income (1)		160		219
Total Expenses	$	314	$	1,176
(1) Included in other operating income and other operating expense on the Consolidated Statements of Income.

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2016

Premises and Equipment [Abstract]

Schedule of Premises and Equipment

Premises and equipment consisted of the following at December 31:

	2016		2015
	(in thousands)
Land	$	7,663	$	7,688
Buildings		37,890		37,848
Construction in process		43		555
Leasehold improvements		852		852
Furniture, fixtures and equipment		19,220		18,303
		65,668		65,246
Less accumulated depreciation and amortization		26,344		23,964
	$	39,324	$	41,282

Minimum Rental Commitment due under Noncancellable Leases

The total approximate minimum rental commitment at December 31, 2016 under noncancellable leases is $632 thousand which is due as follows (in thousands):

2017	$	236
2018		169
2019		150
2020		77
Total	$	632

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Deposits (Tables)

12 Months Ended

Dec. 31, 2016

Deposits [Abstract]

Maturities of Time Deposits

At December 31, 2016 the scheduled maturities of time deposits (in thousands) are as follows:

2017	$	99,128
2018		23,173
2019		29,632
2020		40,737
2021		18,739
Total	$	211,409

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Short Term and Long Term Borrowings (Tables)

12 Months Ended

Dec. 31, 2016

Short Term and Long Term Borrowings [Abstract]

Contractual Maturities of Long-term Debt

Long-term debt as of December 31, 2015 was as follows:

	Fixed				Weighted
	Rate		Total		Avg Rate
	(in thousands)
Due in 2016	$	25,000	$	25,000		4.83	%
Total long-term debt	$	25,000	$	25,000		4.83	%

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Stock Option Plan (Tables)

12 Months Ended

Dec. 31, 2016

Stock Option Plan [Abstract]

Stock Option Plan Activity

Stock option plan activity for the year ended December 31, 2016 is summarized below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding, January 1, 2016		74,960		$	20.05
Granted		0			0.00
Exercised		(1,250	)		20.05
Canceled or expired		(13,105	)		20.05
Options outstanding, December 31, 2016		60,605		$	20.05		0.79		$	300
Options exercisable, December 31, 2016		60,605		$	20.05		0.79		$	300

Information Pertaining to Options Outstanding

Information pertaining to options outstanding at December 31, 2016 is as follows:

			Options Outstanding							Options Exercisable
Range of Exercise Prices			Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price			Number Exercisable		Weighted Average Exercise Price
	$	20.05		60,605		0.79		$	20.05		60,605		$	20.05

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Stockholders' Equity and Earnings per Common Share (Tables)

12 Months Ended

Dec. 31, 2016

Stockholders' Equity and Earnings Per Common Share [Abstract]

Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss), by Category

The following table presents information on amounts reclassified out of accumulated other comprehensive loss, by category, during the periods indicated:

	Years Ended
	December 31,						Affected Line Item on Consolidated Statement of Income
	2016			2015
	(in thousands)
Available-for-sale securities
Realized gains (losses) on sales of securities	$	522		$	76		Gain (loss) on sale of available-for-sale securities, net
Tax effect		177			26		Income tax (benefit) expense
	$	345		$	50
Defined-benefit pension plan
Amortization of actuarial loss (1)	$	(504	)	$	(390	)	Salaries and employee benefits
Tax effect		(171	)		(133	)	Income tax benefit
	$	(333	)	$	(257	)
Total reclassifications for the period	$	12		$	(207	)
(1) This accumulated other comprehensive loss component is included in the computation of net periodic pension cost (see Note 14. Pension Plan and 401(k) Plan for additional details).

Other Comprehensive Income

The following table presents the changes in accumulated other comprehensive loss, by category, net of tax, for the periods indicated:

	Unrealized Gains (Losses) on Available-for-Sale Securities			Unrealized Losses on Securities Transferred from Available-for-Sale to Held-to-Maturity (1)			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
	(in thousands)
Balance at December 31, 2014	$	(78	)	$	(3,386	)	$	(2,429	)	$	(5,893	)
Net change for the year ended December 31, 2015		(498	)		3,386			(157	)		2,731
Balance at December 31, 2015		(576	)		0			(2,586	)		(3,162	)
Net change for the year ended December 31, 2016		(1,163	)		0			117			(1,046	)
Balance at December 31, 2016	$	(1,739	)	$	0		$	(2,469	)	$	(4,208	)
(1) Net change for the year ended December 31, 2015 represents reclassification due to the transfer of securities held-to-maturity to available-for-sale. See Note 3. Securities.

Component of Other Comprehensive Income on a Pre-Tax and After-Tax

The following table presents the change in each component of other comprehensive income (loss) on a pre-tax and after-tax basis for the periods indicated.

	Year Ended December 31, 2016
	Pretax			Tax Effect			Net-of-Tax
	(in thousands)
Unrealized losses on available-for-sale securities:
Unrealized holding losses arising during the period	$	(1,240	)	$	(422	)	$	(818	)
Reclassification adjustment for gains recognized in income		(522	)		(177	)		(345	)
Net unrealized losses on securities		(1,762	)		(599	)		(1,163	)
Defined benefit pension plans:
Net actuarial loss for the period		(327	)		(111	)		(216	)
Amortization of actuarial loss from prior period		504			171			333
Net change		177			60			117
Total change in accumulated other comprehensive loss	$	(1,585	)	$	(539	)	$	(1,046	)

	Year Ended December 31, 2015
	Pretax			Tax Effect			Net-of-Tax
	(in thousands)
Unrealized losses on available-for-sale securities:
Unrealized holding losses arising during the period	$	(679	)	$	(231	)	$	(448	)
Reclassification adjustment for gains recognized in income		(76	)		(26	)		(50	)
Net change		(755	)		(257	)		(498	)
Unrealized losses on securities transferred from available-for-sale to held-to-maturity:
Elimination upon transfer back to available-for-sale		4,197			1,427			2,770
Amortization		934			318			616
Net change		5,131			1,745			3,386
Defined benefit pension plans:
Net actuarial loss for the period		(627	)		(213	)		(414	)
Amortization of actuarial loss from prior period		390			133			257
Net change		(237	)		(80	)		(157	)
Total change in accumulated other comprehensive loss	$	4,139		$	1,408		$	2,731

Computation of Earnings Per Share

Earnings per common share has been computed based on the following:

	Years Ended December 31,
	2016			2015
	(dollars in thousands)
Net income (in thousands)		$	3,797	$	3,634
Average number of common shares outstanding			4,959,173		4,959,009
Effect of dilutive options			1,761		0
Average number of common shares outstanding used to calculate diluted earnings per common share			4,960,934		4,959,009

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Schedule of Annual activity

Annual activity consisted of the following:

	2016			2015
	(in thousands)
Balance, beginning of year	$	4,429		$	5,787
Additions		110			4
Reductions		(185	)		(1,362	)
Balance, end of year	$	4,354		$	4,429

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Taxes [Abstract]

Components of Income Tax Expense

The components of income tax expense for the current and prior year-ends are as follows:

	2016				2015
	(in thousands)
Current income tax expense		$	179		$	281
Deferred income tax benefit			(19	)		(227	)
Reported income tax expense		$	160		$	54

Reconciliation of "Expected" Federal Income Tax Expense

A reconciliation of the expected federal income tax expense on income before income taxes with the reported income tax expense for the same periods follows:

	Years Ended December 31,
	2016			2015
	(in thousands)
Expected tax expense (34%)	$	1,345		$	1,254
Interest expense on tax-exempt assets		15			22
Low-income housing tax credits		(384	)		(274	)
Tax-exempt interest		(608	)		(654	)
Bank-owned life insurance		(270	)		(301	)
Other, net		62			7
Reported income tax expense	$	160		$	54

Components of Net Deferred Tax Asset

The components of the net deferred tax asset, included in other assets, are as follows:

	December 31,
	2016			2015
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	2,803		$	2,631
Interest on nonaccrual loans		71			67
Other real estate owned		349			867
Pension - other comprehensive income		1,272			1,332
Bank owned life insurance benefit		94			88
Charitable contributions carried forward		1			109
Net unrealized loss on securities available-for-sale		896			297
Unexercised nonqualified options		36			36
Alternative minimum tax		1,019			610
Deferred benefits and compensation		256			347
Other		89			78
	$	6,886		$	6,462
Deferred tax liabilities:
Depreciation	$	(822	)	$	(854	)
Accretion of discounts on securities		(1	)		(1	)
Deferred loan fees and costs		(325	)		(293	)
Pension		(740	)		(874	)
		(1,888	)		(2,022	)
Net deferred tax assets	$	4,998		$	4,440

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Pension Plan (Tables)

12 Months Ended

Dec. 31, 2016

Pension Plan [Abstract]

Schedule of Net Funded Status

Information pertaining to the activity in the plan, using a measurement date of December 31, is as follows:

	Years ended December 31,
	2016			2015
	(in thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	7,039		$	7,104
Service cost		0			0
Interest cost		279			260
Benefits paid		(461	)		(294	)
Actuarial (gain) loss		205			(31	)
Benefit obligation at end of year	$	7,062		$	7,039
Change in plan assets
Fair value of plan assets at beginning of year	$	5,691		$	5,268
Actual return on plan assets		269			(283	)
Employer contribution		0			1,000
Benefits paid		(461	)		(294	)
Fair value of plan assets at end of year	$	5,499		$	5,691
Funded Status at end of year	$	(1,563	)	$	(1,348	)

Schedule of Amounts Recognized in Consolidated Balance Sheet and Other Comprehensive Income

	December 31,
	2016			2015
	(in thousands)
Amounts recognized in the consolidated balance sheets
Accrued pension liability	$	(1,563	)	$	(1,348	)
Amounts recognized in other comprehensive income (loss)
Loss	$	3,741		$	3,918
Deferred taxes		(1,272	)		(1,332	)
Net loss	$	2,469		$	2,586
Accumulated benefit obligation	$	7,062		$	7,039

Assumptions Used to Determine Benefit Obligations and Net Periodic Pension Cost

Assumptions used to determine the benefit obligations at December 31,	2016		2015
Discount rate		3.86%		4.03%
	During the years ending December 31,
Weighted-average assumptions used to determine net periodic pension cost	2016		2015
Discount rate		4.03%		3.73%
Expected long-term rate of return on plan assets		7.00%		7.00%

Schedule of Net Periodic Pension Cost and Other Amounts Recognized in Other Comprehensive Income

	Years ended December 31,
	2016			2015
Components of net periodic pension cost	(in thousands)
Interest cost	$	279		$	260
Expected return on plan assets		(391	)		(376	)
Amortization of unrecognized loss		504			390
Net periodic pension cost	$	392		$	274
Components of other amounts recognized in other comprehensive income (loss)
Net actuarial (gain) loss	$	327		$	627
Settlement loss		0			0
Amortization of actuarial loss		(504	)		(390	)
Total recognized in other comprehensive income (loss)	$	(177	)	$	237
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	215		$	511

Fair Value of Pension Plan Assets

Fair value is discussed in detail in Note 16. The fair value of the Company's pension plan assets by asset category are as follows:

Assets at Fair Value as of December 31, 2016
Asset Category	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	2,839	$	0	$	0	$	2,839
Mutual funds		0		0		0		0
Common stock		1,129		0		0		1,129
Corporate bonds		0		1,472		0		1,472
Partnerships		0		59		0		59
Total assets at fair value	$	3,968	$	1,531	$	0	$	5,499

Assets at Fair Value as of December 31, 2015
Asset Category	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	654	$	0	$	0	$	654
Mutual funds		74		0		0		74
Common stock		2,766		0		0		2,766
Corporate bonds		0		2,133		0		2,133
Partnerships		0		64		0		64
Total assets at fair value	$	$3,494	$	$2,197	$	$0	$	$5,691

Estimated Future Benefit Payments

Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows (in thousands):

2017	$	256
2018		273
2019		288
2020		348
2021		351
Thereafter		2,106
Total	$	3,622

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies [Abstract]

Financial Instruments whose Contract Amounts Represent Credit Risk

The following financial instruments whose contract amounts represent credit risk were outstanding at December 31:

	2016		2015
	(in thousands)
Commitments to extend credit:
Home equity lines of credit	$	47,243	$	41,995
Commercial real estate, construction and development loans committed but not funded		15,948		18,113
Other lines of credit (principally commercial)		81,966		73,213
Total	$	145,157	$	133,321
Letters of credit	$	3,597	$	3,473

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value Measurements [Abstract]

Assets Measured at Fair Value on Recurring Basis

The following table presents the balances of certain assets measured at fair value on a recurring basis as of the dates indicated:

			Fair Value Measurements at December 31, 2016 Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description	Balance
	(in thousands)
Available-for-sale securities
U.S. Treasury securities	$	20,000	$	0	$	20,000	$	0
Obligations of  U.S. Government agencies		9,195		0		9,195		0
Obligations of state and political subdivisions		77,987		0		77,987		0
Mortgage-backed securities		83,694		0		83,694		0
Money market investments		647		0		647		0
Corporate bonds		7,678		0		7,678		0
Other marketable equity securities		164		0		164		0
Total available-for-sale securities	$	199,365	$	0	$	199,365	$	0

			Fair Value Measurements at December 31, 2015 Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description	Balance
	(in thousands)
Available-for-sale securities
Obligations of  U.S. Government agencies	$	24,240	$	0	$	24,240	$	0
Obligations of state and political subdivisions		78,433		0		78,433		0
Mortgage-backed securities		107,396		0		107,396		0
Money market investments		631		0		631		0
Corporate bonds		3,393		0		3,393		0
Other marketable equity securities		99		0		99		0
Total available-for-sale securities	$	214,192	$	0	$	214,192	$	0

Assets Measured at Fair Value on Nonrecurring Basis

The following table presents the assets carried on the consolidated balance sheets for which a nonrecurring change in fair value has been recorded. Assets are shown by class of loan and by level in the fair value hierarchy, as of the dates indicated. Certain impaired loans are valued by the present value of the loan's expected future cash flows, discounted at the loan's effective interest rate. These loans are not carried on the consolidated balance sheets at fair value and, as such, are not included in the table below. Former branch sites are carried at the lower of cost or market. Those carried at cost are not included in the table below.

			Carrying Value at December 31, 2016 Using
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	400	$	0	$	0	$	400
Commercial		1,483		0		0		1,483
Construction		74		0		0		74
Total mortgage loans on real estate		1,957		0		0		1,957
Commercial loans		718		0		0		718
Total	$	2,675	$	0	$	0	$	2,675
Other real estate owned
Construction	$	940	$	0	$	0	$	940
Total	$	940	$	0	$	0	$	940

			Carrying Value at December 31, 2015 Using
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	952	$	0	$	0	$	952
Commercial		267		0		0		267
Construction		62		0		0		62
Total	$	1,281	$	0	$	0	$	1,281
Other real estate owned
Residential 1-4 family	$	724	$	0	$	0	$	724
Commercial		927		0		0		927
Construction		1,090		0		0		1,090
Total	$	2,741	$	0	$	0	$	2,741

Fair Value Inputs, Assets, Quantitative Information

The following table displays quantitative information about Level 3 Fair Value Measurements as of the dates indicated:

Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at December 31, 2016 (dollars in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate	$	400	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Commercial real estate		1,483	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Construction		74	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Commercial		718	Market comparables	Selling costs		0.00	%
				Liquidation discount		0.00% - 38.58% (32.40	%)
Other real estate owned
Construction		940	Market comparables	Selling costs		7.25	%
				Liquidation discount		0.00	%

Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at December 31, 2015 (dollars in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate	$	952	Market comparables	Selling costs		7.25	%
				Liquidation discount		0.00% - 4.00% (3.75	%)
Commercial real estate		267	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Construction		62	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00	%
Other real estate owned
Residential 1-4 family		724	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00% - 7.17% (4.79	%)
Commercial		927	Market comparables	Selling costs		7.25	%
				Liquidation discount		4.00% - 24.70% (11.77	%)
Construction		1,090	Market comparables	Selling costs		6.72	%
				Liquidation discount		33.05	%

Estimated Fair Values and Related Carrying or Notional Amounts of Financial Instruments

The estimated fair values, and related carrying or notional amounts, of the Company's financial instruments as of the dates indicated are as follows:

			Fair Value Measurements at December 31, 2016 Using
Description	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Cash and cash equivalents	$	25,854	$	25,854	$	0	$	0
Securities available-for-sale		199,365		0		199,365		0
Restricted securities		970		0		970		0
Loans, net of allowances for loan losses		595,637		0		0		594,190
Bank owned life insurance		25,206		0		25,206		0
Accrued interest receivable		3,189		0		3,189		0
Liabilities
Deposits	$	784,502	$	0	$	783,450	$	0
Overnight repurchase agreements		18,704		0		18,704		0
Accrued interest payable		228		0		228		0

			Fair Value Measurements at December 31, 2015 Using
Description	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Cash and cash equivalents	$	36,990	$	36,990	$	0	$	0
Securities available-for-sale		214,192		0		214,192		0
Restricted securities		2,016		0		2,016		0
Loans, net of allowances for loan losses		560,737		0		0		559,488
Bank owned life insurance		24,411		0		24,411		0
Accrued interest receivable		3,059		0		3,059		0
Liabilities
Deposits	$	746,471	$	0	$	746,740	$	0
Overnight repurchase agreements		25,950		0		25,950		0
Federal Home Loan Bank advances		25,000		0		25,501		0
Accrued interest payable		241		0		241		0

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Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2016

Regulatory Matters [Abstract]

Actual and Required Capital Amounts and Ratios

As of December 31, 2016, the most recent notification from the Comptroller categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, common equity tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Bank's category. The Company's and the Bank's actual capital amounts and ratios as of December 31, 2016 and 2015 are also presented in the table.

	Capital					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
December 31, 2016:
Total Capital to Risk Weighted Assets:
Consolidated	$	106,443		14.51	%	$	63,263		8.625	%		N/A		N/A
Old Point National Bank		98,237		13.47	%		62,909		8.625	%	$	72,938		10.00	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		98,198		13.39	%		48,593		6.625	%		N/A		N/A
Old Point National Bank		89,992		12.34	%		48,321		6.625	%		58,350		8.00	%
Common Equity Tier 1 Capital to Risk Weighted Assets:
Consolidated		98,198		13.39	%		37,591		5.125	%		N/A		N/A
Old Point National Bank		89,992		12.34	%		37,381		5.125	%		47,410		6.50	%
Tier 1 Capital to Average Assets:
Consolidated		98,198		10.68	%		36,768		4.000	%		N/A		N/A
Old Point National Bank		89,992		9.85	%		36,549		4.000	%		45,686		5.00	%
December 31, 2015:
Total Capital to Risk Weighted Assets:
Consolidated	$	104,076		14.89	%	$	55,910		8.00	%		N/A		N/A
Old Point National Bank		96,079		13.83	%		55,589		8.00	%	$	69,486		10.00	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		96,338		13.78	%		41,932		6.00	%		N/A		N/A
Old Point National Bank		88,341		12.71	%		41,692		6.00	%		55,589		8.00	%
Common Equity Tier 1 Capital to Risk Weighted Assets:
Consolidated		96,338		13.78	%		31,449		4.50	%		N/A		N/A
Old Point National Bank		88,341		12.71	%		31,269		4.50	%		45,166		6.50	%
Tier 1 Capital to Average Assets:
Consolidated		96,338		10.93	%		35,260		4.00	%		N/A		N/A
Old Point National Bank		88,341		10.06	%		35,124		4.00	%		43,905		5.00	%

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Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Reconciliation of Assets and Revenues from Segment to Consolidated

Information about reportable segments, and reconciliation of such information to the Consolidated Financial Statements as of and for the years ended December 31 follows:

2016	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
	(in thousands)
Revenues
Interest and dividend income	$	29,765	$	61	$	4,590		$	(4,590	)	$	29,826
Income from fiduciary activities		0		3,560		0			0			3,560
Other income		9,058		910		200			(262	)		9,906
Total operating income		38,823		4,531		4,790			(4,852	)		43,292
Expenses
Interest expense		2,574		0		0			0			2,574
Provision for loan losses		1,930		0		0			0			1,930
Salaries and employee benefits		16,801		2,671		406			0			19,878
Other expenses		13,179		1,041		995			(262	)		14,953
Total operating expenses		34,484		3,712		1,401			(262	)		39,335
Income before taxes		4,339		819		3,389			(4,590	)		3,957
Income tax expense (benefit)		288		280		(408	)		0			160
Net income	$	4,051	$	539	$	3,797		$	(4,590	)	$	3,797
Capital expenditures	$	887	$	4	$	0		$	0		$	891
Total assets	$	897,966	$	5,761	$	93,998		$	(94,759	)	$	902,966

2015	Bank			Trust		Unconsolidated Parent			Eliminations			Consolidated
	(in thousands)
Revenues
Interest and dividend income	$	30,242		$	54	$	4,009		$	(4,010	)	$	30,295
Income from fiduciary activities		0			3,617		0			0			3,617
Other income		8,548			1,032		200			(261	)		9,519
Total operating income		38,790			4,703		4,209			(4,271	)		43,431
Expenses
Interest expense		3,633			0		0			(1	)		3,632
Provision for loan losses		1,025			0		0			0			1,025
Salaries and employee benefits		17,630			2,685		432			0			20,747
Other expenses		13,254			1,010		336			(261	)		14,339
Total operating expenses		35,542			3,695		768			(262	)		39,743
Income before taxes		3,248			1,008		3,441			(4,009	)		3,688
Income tax expense (benefit)		(96	)		343		(193	)		0			54
Net income	$	3,344		$	665	$	3,634		$	(4,009	)	$	3,634
Capital expenditures	$	1,682		$	74	$	0		$	0		$	1,756
Total assets	$	891,877		$	5,694	$	93,191		$	(93,975	)	$	896,787

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Condensed Financial Statements of Parent Company (Tables)

12 Months Ended

Dec. 31, 2016

Condensed Financial Statements of Parent Company [Abstract]

Balance Sheets

Financial information pertaining to Old Point Financial Corporation (parent company only) is as follows:

	December 31,
Balance Sheets	2016			2015
	(in thousands)
Assets
Cash and cash equivalents	$	2,366		$	2,198
Securities available-for-sale		164			99
Investment in common stock of subsidiaries		91,437			90,836
Other assets		31			58
Total assets	$	93,998		$	93,191
Liabilities and Stockholders' Equity
Note payable - subsidiary	$	8		$	15
Common stock		24,806			24,795
Additional paid-in capital		16,427			16,392
Retained earnings		56,965			55,151
Accumulated other comprehensive loss		(4,208	)		(3,162	)
Total liabilities and stockholders' equity	$	93,998		$	93,191

Statements of Income

	Years Ended December 31,
Statements of Income	2016			2015
	(in thousands)
Income:
Dividends from subsidiaries	$	2,900		$	2,900
Other income		200			200
Total income		3,100			3,100
Expenses:
Salaries and benefits		406			432
Legal expenses		774			180
Service fees		166			137
Other operating expenses		55			19
Total expenses		1,401			768
Income before income taxes and equity in undistributed net income of subsidiaries		1,699			2,332
Income tax benefit		(408	)		(193	)
		2,107			2,525
Equity in undistributed net income of subsidiaries		1,690			1,109
Net income	$	3,797		$	3,634

Statements of Cash Flows

	Years Ended December 31,
Statements of Cash Flows	2016			2015
	(in thousands)
Cash flows from operating activities:
Net income	$	3,797		$	3,634
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of subsidiaries		(1,690	)		(1,109	)
(Increase) decrease in other assets		5			(5	)
Increase (decrease) in other liabilities		(7	)		15
Net cash provided by operating activities		2,105			2,535
Cash flows from investing activities:		0			0
Cash flows from financing activities:
Proceeds from sale of stock		46			0
Cash dividends paid on common stock		(1,983	)		(1,686	)
Net cash used in financing activities		(1,937	)		(1,686	)
Net increase in cash and cash equivalents		168			849
Cash and cash equivalents at beginning of year		2,198			1,349
Cash and cash equivalents at end of year	$	2,366		$	2,198
Supplemental schedule of noncash transactions:
Unrealized gain (loss) on securities available-for-sale	$	64		$	(1	)

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Significant Accounting Policies (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) Subsidiary Branch Entity	Dec. 31, 2015 USD ($)
NATURE OF OPERATIONS [Abstract]
Number of subsidiaries | Subsidiary	2
Number of branch offices | Branch	18
VARIABLE INTEREST ENTITIES [Abstract]
Number of consolidated variable interest entities | Entity	0
Number of variable interest entities not primary beneficiary | Entity	1
Concentration Risk [Line Items]
Total Loans	$ 603,882	$ 568,475
Percentage of total loans	51.09%	52.32%
CASH AND CASH EQUIVALENTS [Abstract]
Maturity period of cash equivalents	90 days
INTEREST-BEARING DEPOSITS IN BANKS [Abstract]
Maturity period of interest bearing deposits	1 year
TROUBLED DEBT RESTRUCTURINGS [Abstract]
Loans classified as TDRs	$ 11,856	$ 11,188
INCOME TAXES [Abstract]
More likely than not percentage limit	50.00%
Tax benefit realization likelihood	50.00%
Advertising Expense	$ 273	217
Buildings and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Buildings and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	39 years
Software [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Software [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Commercial Real Estate [Member]
Concentration Risk [Line Items]
Total Loans	$ 308,545	$ 297,443

XML

Restrictions on Cash and Amounts Due from Banks (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Restrictions on Cash and Amounts Due from Banks [Abstract]
Required reserve balances	$ 0	$ 0
Amount of deposits at financial institutions in excess of cash FDIC insured amount	$ 9,910	$ 25,161

XML

Securities Portfolio (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) Security	Dec. 31, 2015 USD ($) Security
Amortized cost and fair value of securities held-to-maturity [Abstract]
Carrying value	$ 0	$ 0
Unamortized unrealized transfer losses		0
Amortized cost		0
Gross unrealized gains		0
Gross unrealized losses		0
Fair Value	0	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Losses [Abstract]
Total		0
Available-for-sale Securities and Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less Than Twelve Months	3,166	897
More Than Twelve Months	1	1,303
Total	3,167	2,200
Available-for-sale Securities and Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months	129,682	69,065
More Than Twelve Months	100	52,381
Total	$ 129,782	$ 121,446
Available-for-sale Securities and Held-to-maturity Securities, Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract]
Number of available-for-sale and held-to-maturity securities | Security	98	45
Unamortized market adjustment on securities transferred to held-to-maturity and subsequently returned to available-for-sale	$ 0	$ 4,197
Unamortized market adjustment on securities transferred to held-to-maturity and subsequently returned to available-for-sale, tax	0	1,427
Unamortized market adjustment on securities transferred to held-to-maturity and subsequently returned to available-for-sale, net of tax	0	2,770
Carrying value of securities transferred from held-to-maturity to available-for-sale	0	85,555
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized cost	202,000	215,064
Gross unrealized gains	532	1,328
Gross unrealized losses	(3,167)	(2,200)
Fair value	199,365	214,192
Securities pledged as collateral	72,908	119,790
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	3,166	897
More Than Twelve Months	1	1,303
Total	3,167	2,200
Securities Available-for-Sale, Fair Value [Abstract]
Less Than Twelve Months	129,682	69,065
More Than Twelve Months	100	52,381
Total	$ 129,782	$ 121,446
Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract]
Number of securities available-for-sale | Security	98	45
Available-for-Sale, Amortized Cost [Abstract]
Due in one year or less	$ 21,801
Due after one year through five years	18,471
Due after five years through ten years	48,840
Due after ten years	112,141
Total debt securities	201,253
Other securities without stated maturities	747
Total securities	202,000
Available-for-Sale, Fair Value [Abstract]
Due in one year or less	21,800
Due after one year through five years	18,435
Due after five years through ten years	48,217
Due after ten years	110,102
Total debt securities	198,554
Other securities without stated maturities	811
Fair Value	199,365
Information about securities sold [Abstract]
Proceeds from sales	107,647	$ 23,005
Gross realized gains	578	76
Gross realized losses	56	0
U.S. Treasury Securities [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized cost	20,000	0
Gross unrealized gains	0	0
Gross unrealized losses	0	0
Fair value	20,000	0
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	0	0
More Than Twelve Months	0	0
Total	0	0
Securities Available-for-Sale, Fair Value [Abstract]
Less Than Twelve Months	0	0
More Than Twelve Months	0	0
Total	$ 0	$ 0
Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract]
Number of securities available-for-sale | Security	0	0
Obligations of US Government Agencies [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized cost	$ 9,361	$ 24,353
Gross unrealized gains	0	1
Gross unrealized losses	(166)	(114)
Fair value	9,195	24,240
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	166	0
More Than Twelve Months	0	114
Total	166	114
Securities Available-for-Sale, Fair Value [Abstract]
Less Than Twelve Months	9,195	0
More Than Twelve Months	0	3,940
Total	$ 9,195	$ 3,940
Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract]
Number of securities available-for-sale | Security	6	2
Obligations of States and Political Subdivisions [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized cost	$ 78,645	$ 77,223
Gross unrealized gains	358	1,323
Gross unrealized losses	(1,016)	(113)
Fair value	77,987	78,433
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	1,016	42
More Than Twelve Months	0	71
Total	1,016	113
Securities Available-for-Sale, Fair Value [Abstract]
Less Than Twelve Months	38,020	4,177
More Than Twelve Months	0	3,545
Total	$ 38,020	$ 7,722
Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract]
Number of securities available-for-sale | Security	56	13
Mortgage-backed Securities [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized cost	$ 85,649	$ 109,360
Gross unrealized gains	18	0
Gross unrealized losses	(1,973)	(1,964)
Fair value	83,694	107,396
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	1,973	848
More Than Twelve Months	0	1,116
Total	1,973	1,964
Securities Available-for-Sale, Fair Value [Abstract]
Less Than Twelve Months	80,680	62,698
More Than Twelve Months	0	44,698
Total	$ 80,680	$ 107,396
Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract]
Number of securities available-for-sale | Security	23	13
Money Market Investments [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized cost	$ 647	$ 631
Gross unrealized gains	0	0
Gross unrealized losses	0	0
Fair value	647	631
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Total	0	0
Corporate Bonds and Other Securities [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized cost	7,598	3,397
Gross unrealized gains	92	4
Gross unrealized losses	(12)	(8)
Fair value	7,678	3,393
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	11	6
More Than Twelve Months	1	2
Total	12	8
Securities Available-for-Sale, Fair Value [Abstract]
Less Than Twelve Months	1,787	2,091
More Than Twelve Months	100	198
Total	$ 1,887	$ 2,289
Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract]
Number of securities available-for-sale | Security	13	16
Other Marketable Equity Securities [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized cost	$ 100	$ 100
Gross unrealized gains	64	0
Gross unrealized losses	0	(1)
Fair value	164	99
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	0	1
More Than Twelve Months	0	0
Total	0	1
Securities Available-for-Sale, Fair Value [Abstract]
Less Than Twelve Months	0	99
More Than Twelve Months	0	0
Total	$ 0	$ 99
Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract]
Number of securities available-for-sale | Security	0	1
Obligations of US Government Agencies [Member]
Amortized cost and fair value of securities held-to-maturity [Abstract]
Carrying value		$ 0
Unamortized unrealized transfer losses		0
Amortized cost		0
Gross unrealized gains		0
Gross unrealized losses		0
Fair Value		0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Losses [Abstract]
Total		0
Obligations of States and Political Subdivisions [Member]
Amortized cost and fair value of securities held-to-maturity [Abstract]
Carrying value		0
Unamortized unrealized transfer losses		0
Amortized cost		0
Gross unrealized gains		0
Gross unrealized losses		0
Fair Value		0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Losses [Abstract]
Total		0
Mortgage-backed Securities [Member]
Amortized cost and fair value of securities held-to-maturity [Abstract]
Carrying value		0
Unamortized unrealized transfer losses		0
Amortized cost		0
Gross unrealized gains		0
Gross unrealized losses		0
Fair Value		0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Losses [Abstract]
Total		$ 0

XML

Loans and the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 603,882	$ 568,475
Less: Allowance for loan losses	(8,245)	(7,738)
Loans, net of allowance for loan losses	595,637	560,737
Bank overdrafts	536	648
Loans and Leases Receivable, Deferred Income, Total	522	407
Total Mortgage Loans on Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	471,524	456,844
Residential 1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	94,827	96,997
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	285,429	277,758
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	23,116	19,685
Second Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	17,128	15,148
Equity Line of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	51,024	47,256
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	54,434	43,197
Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	58,907	50,427
Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 19,017	$ 18,007

XML

Loans and the Allowance for Loan Losses, Credit Quality (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	$ 603,882	$ 568,475
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	570,194	545,854
OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	14,567	7,861
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	19,121	14,760
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Total Mortgage Loans on Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	471,524	456,844
Total Mortgage Loans on Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	442,457	437,252
Total Mortgage Loans on Real Estate [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	12,289	7,394
Total Mortgage Loans on Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	16,778	12,198
Total Mortgage Loans on Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Residential 1-4 Family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	94,827	96,997
Residential 1-4 Family [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	92,458	94,576
Residential 1-4 Family [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	1,138	0
Residential 1-4 Family [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	1,231	2,421
Residential 1-4 Family [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	285,429	277,758
Commercial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	260,948	261,749
Commercial [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	10,014	7,394
Commercial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	14,467	8,615
Commercial [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	23,116	19,685
Construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	22,219	18,931
Construction [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	162	0
Construction [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	735	754
Construction [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Second Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	17,128	15,148
Second Mortgages [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	16,445	14,835
Second Mortgages [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	475	0
Second Mortgages [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	208	313
Second Mortgages [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Equity Line of Credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	51,024	47,256
Equity Line of Credit [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	50,387	47,161
Equity Line of Credit [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	500	0
Equity Line of Credit [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	137	95
Equity Line of Credit [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Commercial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	54,434	43,197
Commercial Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	49,979	40,268
Commercial Loans [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	2,278	467
Commercial Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	2,177	2,462
Commercial Loans [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount		0
Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	58,907	50,427
Consumer Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	58,741	50,327
Consumer Loans [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Consumer Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	166	100
Consumer Loans [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount		0
Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	19,017	18,007
Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	19,017	18,007
Other [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Other [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	$ 0	0
Other [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount		$ 0

XML

Loans and the Allowance for Loan Losses, Past Due (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015
Loans, Aging [Abstract]
Total Past Due		$ 11,653	$ 10,581
Total Current Loans	[1]	592,229	557,894
Ending balance		603,882	568,475
Recorded Investment > 90 Days Past Due and Accruing		2,884	3,356
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status		7,159	4,582
Interest income that would have been recorded under original loan terms [Abstract]
Interest income that would have been recorded under original loan terms		318	196
Actual interest income recorded for the period		269	141
Reduction in interest income on non accrual loans		49	55
Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		5,322	4,164
Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		2,559	2,553
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		3,772	3,864
Total Mortgage Loans on Real Estate [Member]
Loans, Aging [Abstract]
Total Past Due		6,231	3,502
Total Current Loans	[1]	465,293	453,342
Ending balance		471,524	456,844
Recorded Investment > 90 Days Past Due and Accruing		276	23
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status		6,847	4,306
Total Mortgage Loans on Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		3,400	1,927
Total Mortgage Loans on Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		1,834	1,112
Total Mortgage Loans on Real Estate [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		997	463
Residential 1-4 Family [Member]
Loans, Aging [Abstract]
Total Past Due		1,060	1,626
Total Current Loans	[1]	93,767	95,371
Ending balance		94,827	96,997
Recorded Investment > 90 Days Past Due and Accruing		218	0
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status		598	1,457
Residential 1-4 Family [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		564	309
Residential 1-4 Family [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		0	1,042
Residential 1-4 Family [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		496	275
Commercial [Member]
Loans, Aging [Abstract]
Total Past Due		4,132	1,320
Total Current Loans	[1]	281,297	276,438
Ending balance		285,429	277,758
Recorded Investment > 90 Days Past Due and Accruing		0	23
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status		6,033	2,623
Commercial [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		2,280	1,266
Commercial [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		1,625	31
Commercial [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		227	23
Construction [Member]
Loans, Aging [Abstract]
Total Past Due		162	161
Total Current Loans	[1]	22,954	19,524
Ending balance		23,116	19,685
Recorded Investment > 90 Days Past Due and Accruing		0	0
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status		0	0
Construction [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		162	161
Construction [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		0	0
Construction [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		0	0
Second Mortgages [Member]
Loans, Aging [Abstract]
Total Past Due		388	225
Total Current Loans	[1]	16,740	14,923
Ending balance		17,128	15,148
Recorded Investment > 90 Days Past Due and Accruing		58	0
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status		129	226
Second Mortgages [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		0	21
Second Mortgages [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		200	39
Second Mortgages [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		188	165
Equity Line of Credit [Member]
Loans, Aging [Abstract]
Total Past Due		489	170
Total Current Loans	[1]	50,535	47,086
Ending balance		51,024	47,256
Recorded Investment > 90 Days Past Due and Accruing		0	0
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status		87	0
Equity Line of Credit [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		394	170
Equity Line of Credit [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		9	0
Equity Line of Credit [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		86	0
Commercial Loans [Member]
Loans, Aging [Abstract]
Total Past Due		91	820
Total Current Loans	[1]	54,343	42,377
Ending balance		54,434	43,197
Recorded Investment > 90 Days Past Due and Accruing		0	164
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status		231	276
Commercial Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		5	500
Commercial Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		0	88
Commercial Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		86	232
Consumer Loans [Member]
Loans, Aging [Abstract]
Total Past Due		5,273	6,186
Total Current Loans	[1]	53,634	44,241
Ending balance		58,907	50,427
Recorded Investment > 90 Days Past Due and Accruing		2,603	3,163
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status		81	0
Consumer Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		1,876	1,673
Consumer Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		713	1,350
Consumer Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		2,684	3,163
Other [Member]
Loans, Aging [Abstract]
Total Past Due		58	73
Total Current Loans	[1]	18,959	17,934
Ending balance		19,017	18,007
Recorded Investment > 90 Days Past Due and Accruing		5	6
Other [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		41	64
Other [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		12	3
Other [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, Aging [Abstract]
Total Past Due		5	6
Guaranteed Student Loans [Member]
Loans, Aging [Abstract]
Total Past Due		$ 4,840	$ 5,662

[1] For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

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Loans and the Allowance for Loan Losses, Troubled Debt Restructuring (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)	Dec. 31, 2016 USD ($) Modification	Dec. 31, 2016 USD ($) Contract	Dec. 31, 2015 USD ($)	Dec. 31, 2015 USD ($) Modification	Dec. 31, 2015 USD ($) Contract
Financing Receivable, Modifications [Line Items]
Number of Modifications		12	12		7	7
Recorded Investment Prior to Modification	$ 1,517			$ 2,590
Recorded Investment After Modification	1,517			3,090
Current Investment	1,275	$ 1,275	$ 1,275	2,461	$ 2,461	$ 2,461
Principal forgiveness on all loans	0			0
Unfunded Commitments on TDRs	0	0	0	0	0	0
Mortgage Loans in Process of Foreclosure, Amount	10	$ 10	$ 10	53	$ 53	$ 53
Interest Rate Below Market Reduction [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Contract			12			5
Principal Forgiveness [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Contract			0			0
Extended Maturity [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Contract			0			0
Payment Deferral [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Contract			0			0
Principal Forgiveness and Interest Rate Below Market Reduction [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Contract			0			0
Nonstandard Terms [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Contract			0			2
Total Mortgage Loans on Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Modification		9
Recorded Investment Prior to Modification	1,357
Recorded Investment After Modification	1,357
Current Investment	1,131	$ 1,131	$ 1,131
Residential 1-4 Family [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Modification		6
Recorded Investment Prior to Modification	1,061
Recorded Investment After Modification	1,061
Current Investment	992	$ 992	992
Recorded investment in defaulting TDRs	0			0
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Modification		1			5
Recorded Investment Prior to Modification	150			2,094
Recorded Investment After Modification	150			2,594
Current Investment	0	$ 0	0	2,400	$ 2,400	$ 2,400
Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Modification		0			1
Recorded Investment Prior to Modification	0			435
Recorded Investment After Modification	0			435
Current Investment	0	$ 0	0	0	$ 0	0
Second Mortgage [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Modification		1			1
Recorded Investment Prior to Modification	53			61
Recorded Investment After Modification	53			61
Current Investment	53	$ 53	53	$ 61	$ 61	$ 61
Equity Line of Credit [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Modification		1
Recorded Investment Prior to Modification	93
Recorded Investment After Modification	93
Current Investment	86	$ 86	86
Commercial Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Modification		1
Recorded Investment Prior to Modification	152
Recorded Investment After Modification	152
Current Investment	144	$ 144	144
Consumer Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | Modification		2
Recorded Investment Prior to Modification	8
Recorded Investment After Modification	8
Current Investment	$ 0	$ 0	$ 0

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Loans and the Allowance for Loan Losses, Impaired Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 21,079	$ 14,173
Recorded Investment, Without Valuation Allowance	13,934	8,414
Recorded Investment, With Valuation Allowance	6,122	4,636
Associated Allowance	800	798
Average Recorded Investment	16,574	13,573
Interest Income Recognized	992	660
Total Mortgage Loans on Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	19,921	13,831
Recorded Investment, Without Valuation Allowance	13,853	8,195
Recorded Investment, With Valuation Allowance	5,133	4,568
Associated Allowance	529	790
Average Recorded Investment	15,679	12,608
Interest Income Recognized	917	631
Residential 1-4 Family [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	2,496	2,994
Recorded Investment, Without Valuation Allowance	1,835	1,530
Recorded Investment, With Valuation Allowance	622	1,261
Associated Allowance	75	146
Average Recorded Investment	2,741	2,267
Interest Income Recognized	119	132
Commercial [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	16,193	10,203
Recorded Investment, Without Valuation Allowance	11,095	6,166
Recorded Investment, With Valuation Allowance	4,274	3,208
Associated Allowance	415	608
Average Recorded Investment	11,885	9,305
Interest Income Recognized	727	473
Construction [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	619	99
Recorded Investment, Without Valuation Allowance	528	0
Recorded Investment, With Valuation Allowance	96	99
Associated Allowance	22	36
Average Recorded Investment	496	465
Interest Income Recognized	43	5
Second Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	526	535
Recorded Investment, Without Valuation Allowance	309	499
Recorded Investment, With Valuation Allowance	141	0
Associated Allowance	17	0
Average Recorded Investment	511	571
Interest Income Recognized	25	21
Equity Line of Credit [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	87	0
Recorded Investment, Without Valuation Allowance	86	0
Recorded Investment, With Valuation Allowance	0	0
Associated Allowance	0	0
Average Recorded Investment	46	0
Interest Income Recognized	3	0
Commercial Loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,077	330
Recorded Investment, Without Valuation Allowance	0	207
Recorded Investment, With Valuation Allowance	989	68
Associated Allowance	271	8
Average Recorded Investment	827	952
Interest Income Recognized	74	28
Consumer Loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	81	12
Recorded Investment, Without Valuation Allowance	81	12
Recorded Investment, With Valuation Allowance	0	0
Associated Allowance	0	0
Average Recorded Investment	68	13
Interest Income Recognized	$ 1	$ 1

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Loans and the Allowance for Loan Losses, Activity In Period (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) Period	Dec. 31, 2015 USD ($) Period
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	$ 7,738	$ 7,075
Charges-offs	(1,770)	(897)
Recoveries	347	535
Provision for loan losses	1,930	1,025
Ending balance	8,245	7,738
Ending balances individually evaluated for impairment	800	798
Ending balances collectively evaluated for impairment	7,445	6,940
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	20,056	13,050
Ending balance collectively evaluated for impairment	583,826	555,425
Ending balance	603,882	$ 568,475
Changes in Accounting Methodology [Abstract]
Calculated provision based on current methodology	1,930
Calculated provision based on prior methodology	2,257
Changes for allowance for loan losses	$ (327)
Loan Rates, Migration Analysis Period | Period	4	1
Allowance for Loan and Lease Losses, Period Increase (Decrease)	$ 77
Allowance for Loan and Lease Losses Loans Percentage	1.37%	1.36%
Commercial [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	$ 633	$ 595
Charges-offs	(915)	(293)
Recoveries	79	50
Provision for loan losses	1,696	281
Ending balance	1,493	633
Ending balances individually evaluated for impairment	271	8
Ending balances collectively evaluated for impairment	1,222	625
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	989	275
Ending balance collectively evaluated for impairment	53,445	42,922
Ending balance	54,434	43,197
Changes in Accounting Methodology [Abstract]
Calculated provision based on current methodology	1,696
Calculated provision based on prior methodology	2,054
Changes for allowance for loan losses	(358)
Real Estate - Construction [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	985	703
Charges-offs	0	0
Recoveries	3	1
Provision for loan losses	(142)	281
Ending balance	846	985
Ending balances individually evaluated for impairment	22	36
Ending balances collectively evaluated for impairment	824	949
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	624	99
Ending balance collectively evaluated for impairment	22,492	19,586
Ending balance	23,116	19,685
Changes in Accounting Methodology [Abstract]
Calculated provision based on current methodology	(142)
Calculated provision based on prior methodology	(858)
Changes for allowance for loan losses	716
Real Estate - Mortgage [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	5,628	5,347
Charges-offs	(504)	(321)
Recoveries	197	393
Provision for loan losses	(54)	209
Ending balance	5,267	5,628
Ending balances individually evaluated for impairment	507	754
Ending balances collectively evaluated for impairment	4,760	4,874
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	18,362	12,664
Ending balance collectively evaluated for impairment	430,046	424,495
Ending balance	448,408	437,159
Changes in Accounting Methodology [Abstract]
Calculated provision based on current methodology	(54)
Calculated provision based on prior methodology	73
Changes for allowance for loan losses	(127)
Consumer [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	279	219
Charges-offs	(204)	(92)
Recoveries	28	39
Provision for loan losses	352	113
Ending balance	455	279
Ending balances individually evaluated for impairment	0	0
Ending balances collectively evaluated for impairment	455	279
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	81	12
Ending balance collectively evaluated for impairment	58,826	50,415
Ending balance	58,907	50,427
Changes in Accounting Methodology [Abstract]
Calculated provision based on current methodology	352
Calculated provision based on prior methodology	910
Changes for allowance for loan losses	(558)
Other [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	213	211
Charges-offs	(147)	(191)
Recoveries	40	52
Provision for loan losses	78	141
Ending balance	184	213
Ending balances individually evaluated for impairment	0	0
Ending balances collectively evaluated for impairment	184	213
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	0	0
Ending balance collectively evaluated for impairment	19,017	18,007
Ending balance	19,017	$ 18,007
Changes in Accounting Methodology [Abstract]
Calculated provision based on current methodology	78
Calculated provision based on prior methodology	78
Changes for allowance for loan losses	0
Commercial Loan, Sub-segment [Member]
Changes in Accounting Methodology [Abstract]
Allowance for Loan and Lease Losses, Period Increase (Decrease)	(366)
Student Loans [Member]
Changes in Accounting Methodology [Abstract]
Allowance for Loan and Lease Losses, Period Increase (Decrease)	$ (38)

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Other Real Estate Owned (OREO) (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015
Analysis of Balance in OREO [Abstract]
Balance at beginning of year		$ 5,290	$ 8,014
Transfers to OREO due to foreclosure		0	553
Other additions to foreclosed properties		52	0
Real Estate Transferred to Other Real Estate		127	0
Properties sold		(3,376)	(3,277)
Balance at end of year		2,093	5,290
Analysis of Valuation Allowance on OREO [Roll Forward]
Balance at beginning of year		2,549	2,908
Additions and write-downs		60	1,011
Reductions due to sales or increases in value		(1,583)	(1,370)
Balance at end of year		1,026	2,549
Expenses applicable to OREOs [Abstract]
Net loss (gain) on sales of real estate		94	(54)
Provision for losses (direct writedowns)		60	1,011
Operating expenses, net of income	[1]	160	219
Total Expenses		$ 314	$ 1,176

[1] included in other operating income and other operating expense.

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Premises and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Premises and equipment consisted of [Abstract]
Premises and equipment, gross	$ 65,668	$ 65,246
Less accumulated depreciation and amortization	26,344	23,964
Premises and equipment, net	39,324	41,282
Depreciation expense	2,725	2,543
Minimum rental commitment due under noncancellable leases [Abstract]
2016	236
2017	169
2018	150
2019	77
2020	0
Total	632
Rental expense of premises and equipment	239	270
Land [Member]
Premises and equipment consisted of [Abstract]
Premises and equipment, gross	7,663	7,688
Buildings [Member]
Premises and equipment consisted of [Abstract]
Premises and equipment, gross	37,890	37,848
Construction in Progress [Member]
Premises and equipment consisted of [Abstract]
Premises and equipment, gross	43	555
Leasehold Improvements [Member]
Premises and equipment consisted of [Abstract]
Premises and equipment, gross	852	852
Furniture, Fixtures and Equipment [Member]
Premises and equipment consisted of [Abstract]
Premises and equipment, gross	$ 19,220	$ 18,303

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Low-Income Housing Tax Credits (Details)	12 Months Ended
	Dec. 31, 2016 USD ($) Fund	Dec. 31, 2015 USD ($) Fund
Low-Income Housing Tax Credits [Abstract]
Number of housing equity funds | Fund	4	4
$3.9 million	$ 3,885	$ 4,185
Additional committed capital calls expected	$ 2,542	2,961
Expected expiration of investment term	2032
Amortization Method Qualified Affordable Housing Project Investments, Amortization	$ 300,000	219,000
Tax credits received	384
Tax credits and other tax benefits recognized	$ 486	$ 365

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Deposits (Details) $ in Thousands	Dec. 31, 2016 USD ($) Customer	Dec. 31, 2015 USD ($)
Deposits [Abstract]
Aggregate amount of time deposits in denominations of $250 thousand or more	$ 38,136	$ 36,368
Number of single customer relationships that exceeded deposit limit | Customer	0
Percentage of total deposits	5.00%
Maturities of time deposits [Abstract]
Time Deposits Maturity in 1 Year	$ 99,128
Time Deposits Maturity in 2 Years	23,173
Time Deposits Maturity in 3 Years	29,632
Time Deposits Maturity in 4 Years	40,737
Time Deposits Maturity in 5 Years	18,739
Time Deposits Maturities, after Year Five	0
Time deposits	$ 211,409	$ 210,011

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Short Term and Long Term Borrowings (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) Customer	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Federal funds purchased	$ 0	$ 0
Available federal fund lines	55,000
Overnight repurchase agreements	$ 18,704	25,950
Number of customer relationships | Customer	4
Major customer relationship repurchase agreements maximum percentage	5.00%
Outstanding balance	$ 15,679
Percentage of repurchase agreements	83.83%
1 - 4 family residential real estate pledged loans	$ 90,317
Available credit with FHLB	270,048
Fixed Rate [Abstract]
Due in one year or less	0	0
Due after one year through five years	0	25,000
Total long-term debt	0	25,000
Total [Abstract]
Due in one year or less	0	0
Due after one year through five years	0	25,000
Total long-term debt	$ 0	$ 25,000
Maximum [Member]
Debt Instrument [Line Items]
Overnight repurchase agreements maturity period	4 days
Minimum [Member]
Debt Instrument [Line Items]
Overnight repurchase agreements maturity period	1 day
Weighted Average [Member]
Weighted Avg Rate [Abstract]
Due in one year or less	0.00%	0.00%
Due after one year through five years	0.00%	4.83%
Total long-term debt	0.00%	4.83%

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Stock Option Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Stock Option Plan [Abstract]
Options maximum term period	10 years
Shares [Roll Forward]
Options outstanding, beginning of period (in shares)	74,960
Granted (in shares)	0	0
Exercised (in shares)	(1,250)
Canceled or expired (in shares)	(13,105)
Options outstanding, end of period (in shares)	60,605	74,960
Options exercisable, end of period (in shares)	60,605
Weighted Average Exercise Price [Roll Forward]
Options outstanding, beginning of period (in dollars per share)	$ 20.05
Granted (in dollars per share)	0
Exercised (in dollars per share)	20.05
Canceled or expired (in dollars per share)	20.05
Options outstanding, end of period (in dollars per share)	20.05	$ 20.05
Options exercisable, end of period (in dollars per share)	$ 20.05
Weighted Average Remaining Contractual Life (in years) [Abstract]
Options outstanding, end of period	9 months 14 days
Options exercisable, end of period	9 months 14 days
Aggregate Intrinsic Value [Abstract]
Options outstanding, end of period	$ 300
Options exercisable, end of period	300
Cash Received From Exercise of Stock Options	$ 25	$ 0
Common Stock, Capital Shares Reserved for Future Issuance	249,001	0
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period	999	0
Share-based Compensation Arrangement by Share-based Payment Award, Discount from Market Price, Purchase Date	5.00%	0.00%
20.05 [Member]
Information pertaining to options outstanding [Abstract]
Range of Exercise Prices (in dollars per share)	$ 20.05
Options Outstanding, Number Outstanding (in shares)	60,605
Options Outstanding, Weighted Average Remaining Contractual Life	9 months 14 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 20.05
Options Exercisable, Number Exercisable (in shares)	60,605
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 20.05

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Stockholders' Equity and Earnings per Common Share, Amounts Reclassified Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015
Available-for-sale securities [Abstract]
Gain (loss) on sale of available-for-sale securities, net		$ 522	$ 76
Reclassification adjustment for gains (losses) recognized in income, tax effect		177	26
Total		345	50
Defined-benefit pension plan [Abstract]
Salaries and employee benefits		(504)	(390)
Income tax benefit		(171)	(133)
Total		(333)	(257)
Reclassification out of Accumulated Other Comprehensive Income [Member]
Available-for-sale securities [Abstract]
Gain (loss) on sale of available-for-sale securities, net		522	76
Reclassification adjustment for gains (losses) recognized in income, tax effect		177	26
Total		345	50
Defined-benefit pension plan [Abstract]
Salaries and employee benefits	[1]	(504)	(390)
Income tax benefit		(171)	(133)
Total		(333)	(257)
Total reclassification for the period		$ 12	$ (207)

[1] This accumulated other comprehensive loss component is included in the computation of net periodic pension cost (see NOTE 14, Pension Plan for additional details).

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Stockholders' Equity and Earnings per Common Share, Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance		$ 93,176	$ 88,497
Ending Balance		93,990	93,176
Other comprehensive income, pretax [Abstract]
Unrealized holding gains (losses) arising during the period, pretax		(1,240)	(679)
Reclassification adjustment for gains (loss) recognized in income, pretax		(522)	(76)
Net unrealized losses on securities, pretax		(1,762)	(755)
Elimination upon transfer back to available-for-sale, pretax		0	4,197
Amortization, pretax		0	934
Net change, pretax		0	5,131
Net actuarial income (loss) for the period, pretax		(327)	(627)
Amortization of actuarial gain (loss) from prior period, pretax		504	390
Net change, pretax		177	(237)
Total change in accumulated other comprehensive income or (loss), pretax		(1,585)	4,139
Other Comprehensive Income Tax Effect [Abstract]
Unrealized holding gains (losses) arising during the period, tax effect		(422)	(231)
Reclassification adjustment for gains (losses) recognized in income, tax effect		(177)	(26)
Net unrealized losses on securities, tax effect		(599)	(257)
Elimination upon transfer back to available-for-sale, tax effect		0	1,427
Amortization, tax effect		0	318
Net change, tax effect		0	1,745
Net actuarial loss for the period, tax effect		(111)	(213)
Amortization of actuarial gain (loss) from prior period, tax effect		171	133
Net change, tax effect		60	(80)
Total change in other comprehensive income or (loss), tax effect		(539)	1,408
Other Comprehensive Income, Net of Tax [Abstract]
Unrealized holding gains (losses) arising during the period, net of tax		(818)	(448)
Reclassification adjustment for gains (losses) recognized in income, net of tax		(345)	(50)
Net unrealized losses on securities, net of tax		(1,163)	(498)
Elimination upon transfer back to available-for-sale, net of tax		0	2,770
Amortization, net of tax		0	616
Net change, net of tax		0	3,386
Net actuarial loss for the period, net of tax		(216)	(414)
Amortization of actuarial gain (loss) from prior period, net of tax		333	257
Net change, net of tax		117	(157)
Total change in other comprehensive income or (loss), net of tax		(1,046)	2,731
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance		(576)	(78)
Net change for the year		(1,163)	(498)
Ending Balance		(1,739)	(576)
Unrealized Losses on Securities Transferred from Available-for-Sale to Held-to-Maturity [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	[1]	0	(3,386)
Net change for the year	[1]	0	3,386
Ending Balance	[1]	0	0
Defined Benefit Pension Plans [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance		(2,586)	(2,429)
Net change for the year		117	(157)
Ending Balance		(2,469)	(2,586)
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance		(3,162)	(5,893)
Net change for the year		(1,046)	2,731
Ending Balance		(4,208)	(3,162)
Other Comprehensive Income, Net of Tax [Abstract]
Total change in other comprehensive income or (loss), net of tax		$ (1,046)	$ 2,731

[1] Net change for the year ended December 31, 2015 represents reclassification due to the transfer of securities held-to-maturity to available-for-sale. See Note 3. Securities.

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Stockholders' Equity and Earnings per Common Share, OCI by Component, Anti-Dilutive Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Computation of earnings per share [Abstract]
Net Income	$ 3,797	$ 3,634
Average number of common shares outstanding (in shares)	4,959,173	4,959,009
Effect of dilutive options (in shares)	1,761	0
Average number of common share outstanding used to calculate diluted earnings per common share (in shares)	4,960,934	4,959,009
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	52,000	76,000

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Related Party Transactions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Related Party Transactions [Abstract]
Direct or indirect loans to Principal Shareholders, Executive Officers or Directors, Maximum (in hundredths)	10.00%
Schedule of Annual activity [Roll Forward]
Balance, beginning of year	$ 4,429	$ 5,787
Additions	110	4
Reductions	(185)	(1,362)
Balance, end of year	4,354	4,429
Deposits from related parties held by entity	$ 13,793	$ 14,394

XML

Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Components of income tax expense [Abstract]
Current income tax expense (benefit)	$ 179	$ 281
Deferred income tax expense (benefit)	(19)	(227)
Reported tax expense	160	54
Reconciliation of "expected" Federal income tax expense [Abstract]
Expected tax expense (34%)	1,345	1,254
Interest expense on tax-exempt assets	15	22
Low-income housing tax credits	(384)	(274)
Tax-exempt interest	(608)	(654)
Bank-owned life insurance	(270)	(301)
Other, net	62	7
Reported tax expense	$ 160	$ 54
Expected tax expense rate	34.00%
Effective tax rate	4.04%	1.46%
Deferred tax assets [Abstract]
Allowance for loan losses	$ 2,803	$ 2,631
Interest on nonaccrual loans	71	67
Other real estate owned	349	867
Pension - other comprehensive income	1,272	1,332
Bank owned life insurance benefit	94	88
Charitable contributions carried forward	1	109
Net unrealized loss on securities available-for-sale	896	297
Unexercised nonqualified options	36	36
Alternative minimum tax	1,019	610
Deferred benefits and compensation	256	347
Other	89	78
Total	6,886	6,462
Deferred tax liabilities [Abstract]
Depreciation	(822)	(854)
Accretion of discounts on securities	(1)	(1)
Deferred loan fees and costs	(325)	(293)
Pension	(740)	(874)
Total	(1,888)	(2,022)
Net deferred tax assets	$ 4,998	$ 4,440

XML

Pension Plan (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Change in benefit obligation [Roll Forward]
Benefit obligation at beginning of year	$ 7,039	$ 7,104
Service cost	0	0
Interest cost	279	260
Benefits paid	(461)	(294)
Actuarial (gain) loss	205	(31)
Benefit obligation at end of year	7,062	7,039
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	5,691	5,268
Actual return on plan assets	269	(283)
Employer contribution	0	1,000
Benefits paid	(461)	(294)
Fair value of plan assets at end of year	5,499	5,691
Funded Status at end of year	(1,563)	(1,348)
Amounts recognized in the consolidated balance sheets at December 31 [Abstract]
Accrued pension liability			$ (1,563)	$ (1,348)
Amounts recognized in other comprehensive income (loss) [Abstract]
Loss	3,741	3,918
Deferred taxes	(1,272)	(1,332)
Net loss	$ 2,469	$ 2,586
Accumulated benefit obligation			$ 7,062	$ 7,039
Assumptions used to determine the benefit obligations at December 31 [Abstract]
Discount rate			3.86%	4.03%
Weighted-average assumptions used to determine net periodic pension cost [Abstract]
Discount rate	4.03%	3.73%
Expected long-term rate of return on plan assets	7.00%	7.00%
Components of net periodic pension cost [Abstract]
Interest cost	$ 279	$ 260
Expected return on plan assets	(391)	(376)
Amortization of unrecognized loss	504	390
Settlement loss	0	0
Net periodic pension plan cost	392	274
Components of other amounts recognized in other comprehensive income (loss) [Abstract]
Net actuarial loss for the period	327	627
Settlement loss	0	0
Amortization of actuarial loss	(504)	(390)
Total recognized in other comprehensive income	(177)	237
Total recognized in net periodic benefit cost and other comprehensive income (loss)	215	511
Estimated net loss for the pension plan that will be amortized next year	490
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Defined Benefit Plan, Contributions by Employer	0	1,000
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	$ 5,691	5,691	$ 5,499	$ 5,691
Estimated future benefit payments, which reflect expected future service [Abstract]
Next 12 Months			256
2 Years			273
3 Years			288
4 Years			348
5 Years			351
Thereafter			2,106
Total			3,622
401(K) PLAN [Abstract]
Employer matching contribution	100.00%
Employee contribution	4.00%
Profit sharing contributions vesting period	6 years
Profit sharing contributions	$ 523	519
Equities [Member]
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage	55.00%
Fixed income [Member]
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage	40.00%
Cash [Member]
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage	5.00%
Equity Mutual Funds [Member]
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage	1.00%
Money Market Funds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	$ 654
Fair value of plan assets at end of year	2,839	654
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	654	654	2,839	654
Mutual Funds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	74
Fair value of plan assets at end of year	0	74
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	74	0	74
Common Stock [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	2,766
Fair value of plan assets at end of year	1,129	2,766
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	$ 1,129	2,766	1,129	2,766
Commodities Investment [Member]
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage	1.00%
Corporate Bonds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	$ 2,133
Fair value of plan assets at end of year	1,472	2,133
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	2,133	2,133	1,472	2,133
Partnership Investment [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	64
Fair value of plan assets at end of year	59	64
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	59	64	59	64
Level 1 [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	3,494
Fair value of plan assets at end of year	3,968	3,494
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	3,968	3,494	3,968	3,494
Level 1 [Member] | Money Market Funds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	654
Fair value of plan assets at end of year	2,839	654
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	654	654	2,839	654
Level 1 [Member] | Mutual Funds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	74
Fair value of plan assets at end of year	0	74
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	74	74	0	74
Level 1 [Member] | Common Stock [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	2,766
Fair value of plan assets at end of year	1,129	2,766
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	2,766	2,766	1,129	2,766
Level 1 [Member] | Corporate Bonds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 1 [Member] | Partnership Investment [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 2 [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	2,197
Fair value of plan assets at end of year	1,531	2,197
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	1,531	2,197	1,531	2,197
Level 2 [Member] | Money Market Funds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 2 [Member] | Mutual Funds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 2 [Member] | Common Stock [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 2 [Member] | Corporate Bonds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	2,133
Fair value of plan assets at end of year	1,472	2,133
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	1,472	2,133	1,472	2,133
Level 2 [Member] | Partnership Investment [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	64
Fair value of plan assets at end of year	59	64
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	59	64	59	64
Level 3 [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 3 [Member] | Money Market Funds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 3 [Member] | Mutual Funds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 3 [Member] | Common Stock [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 3 [Member] | Corporate Bonds [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	0	0	0	0
Level 3 [Member] | Partnership Investment [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0
Fair value of plan assets at end of year	0	0
Fair value of pension plan assets by asset category [Abstract]
Fair Value of pension plan assets	$ 0	$ 0	$ 0	$ 0

XML

Commitments and Contingencies (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit	$ 145,157	$ 133,321
Home Equity Lines of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit	47,243	41,995
Commercial Real Estate, Construction and Development Loans Committed but not Funded [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit	15,948	18,113
Other Lines of Credit (Principally Commercial) [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit	81,966	73,213
Letters of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit	$ 3,597	$ 3,473

XML

Fair Value Measurements, Recurring and Nonrecurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	$ 199,365	$ 214,192
U.S. Treasury Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	20,000	0
Obligations of US Government Agencies [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	9,195	24,240
Obligations of States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	77,987	78,433
Mortgage-backed Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	83,694	107,396
Money Market Investments [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	647	631
Other Marketable Equity Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	164	99
Recurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	199,365	214,192
Recurring [Member] | U.S. Treasury Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	20,000
Recurring [Member] | Obligations of US Government Agencies [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	9,195	24,240
Recurring [Member] | Obligations of States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	77,987	78,433
Recurring [Member] | Mortgage-backed Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	83,694	107,396
Recurring [Member] | Money Market Investments [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	647	631
Recurring [Member] | Corporate Bonds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	7,678	3,393
Recurring [Member] | Other Marketable Equity Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	164	99
Nonrecurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	2,675
Other assets, fair value disclosure	940	2,741
Nonrecurring [Member] | Foreclosed Assets, Residential 1 to 4 Family [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure		724
Nonrecurring [Member] | Foreclosed Assets, Commercial [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure		927
Nonrecurring [Member] | Foreclosed Assets, Construction [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure	940	1,090
Nonrecurring [Member] | Total Mortgage Loans on real estate [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	1,957	1,281
Nonrecurring [Member] | Residential 1-4 Family [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	400	952
Nonrecurring [Member] | Commercial Real Estate [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	1,483	267
Nonrecurring [Member] | Construction Loans [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	74	62
Nonrecurring [Member] | Other [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	718
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Loans, net of allowances for loan losses	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member] | U.S. Treasury Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member] | Obligations of US Government Agencies [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member] | Obligations of States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member] | Mortgage-backed Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member] | Money Market Investments [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member] | Corporate Bonds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member] | Other Marketable Equity Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0
Other assets, fair value disclosure	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member] | Foreclosed Assets, Residential 1 to 4 Family [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure		0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member] | Foreclosed Assets, Commercial [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure		0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member] | Foreclosed Assets, Construction [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member] | Total Mortgage Loans on real estate [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member] | Residential 1-4 Family [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member] | Commercial Real Estate [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member] | Construction Loans [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member] | Commercial Loan [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	199,365	214,192
Loans, net of allowances for loan losses	0	0
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	199,365	214,192
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member] | U.S. Treasury Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	20,000
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member] | Obligations of US Government Agencies [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	9,195	24,240
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member] | Obligations of States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	77,987	78,433
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member] | Mortgage-backed Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	83,694	107,396
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member] | Money Market Investments [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	647	631
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member] | Corporate Bonds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	7,678	3,393
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member] | Other Marketable Equity Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	164	99
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0
Other assets, fair value disclosure	0	0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member] | Foreclosed Assets, Residential 1 to 4 Family [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure		0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member] | Foreclosed Assets, Commercial [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure		0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member] | Foreclosed Assets, Construction [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure	0	0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member] | Total Mortgage Loans on real estate [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0	0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member] | Residential 1-4 Family [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0	0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member] | Commercial Real Estate [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0	0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member] | Construction Loans [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0	0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member] | Commercial Loan [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	0
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Loans, net of allowances for loan losses	594,190	559,488
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member] | U.S. Treasury Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member] | Obligations of US Government Agencies [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member] | Obligations of States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member] | Mortgage-backed Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member] | Money Market Investments [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member] | Corporate Bonds [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member] | Other Marketable Equity Securities [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Securities available-for-sale	0	0
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	2,675
Other assets, fair value disclosure	940	2,741
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member] | Foreclosed Assets, Residential 1 to 4 Family [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure		724
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member] | Foreclosed Assets, Commercial [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure		927
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member] | Foreclosed Assets, Construction [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Other assets, fair value disclosure	940	1,090
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member] | Total Mortgage Loans on real estate [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	1,957	1,281
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member] | Residential 1-4 Family [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	400	952
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member] | Commercial Real Estate [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	1,483	267
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member] | Construction Loans [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	74	$ 62
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member] | Commercial Loan [Member]
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract]
Loans, net of allowances for loan losses	$ 718

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Fair Value Measurements, Quantitative Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Assets [Abstract]
Securities available-for-sale	$ 199,365	$ 214,192
Securities held-to-maturity	$ 0	0
Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Liquidation Discount	4.00%
Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Liquidation Discount	4.00%
Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Liquidation Discount	4.00%
Residential 1-4 Family [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 400	$ 952
Residential 1-4 Family [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	7.25%
Liquidation Discount		0.00%
Residential 1-4 Family [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	7.25%
Liquidation Discount		4.00%
Residential 1-4 Family [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	7.25%
Liquidation Discount		3.75%
Commercial Real Estate [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 1,483	$ 267
Commercial Real Estate [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	7.25%
Liquidation Discount	4.00%	4.00%
Commercial Real Estate [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	7.25%
Liquidation Discount	4.00%	4.00%
Commercial Real Estate [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	7.25%
Liquidation Discount	4.00%	4.00%
Construction Loans [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 74	$ 62
Construction Loans [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	7.25%
Liquidation Discount	4.00%	4.00%
Construction Loans [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	7.25%
Liquidation Discount	4.00%	4.00%
Construction Loans [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	7.25%
Liquidation Discount	4.00%	4.00%
Commercial Loan [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 718
Selling costs	0.00%
Commercial Loan [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Liquidation Discount	0.00%
Commercial Loan [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Liquidation Discount	38.58%
Commercial Loan [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Liquidation Discount	32.40%
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
Cash and cash equivalents	$ 25,854	$ 36,990
Securities available-for-sale	0	0
Restricted securities	0	0
Loans, net of allowances for loan losses	0	0
Bank owned life insurance	0	0
Accrued interest receivable	0	0
Liabilities [Abstract]
Deposits	0	0
Overnight repurchase agreements	0	0
Federal Home Loan Bank advances		0
Accrued interest payable	0	0
Significant Other Observable Inputs (Level 2) [Member]
Assets [Abstract]
Cash and cash equivalents	0	0
Securities available-for-sale	199,365	214,192
Restricted securities	970	2,016
Loans, net of allowances for loan losses	0	0
Bank owned life insurance	25,206	24,411
Accrued interest receivable	3,189	3,059
Liabilities [Abstract]
Deposits	783,450	746,740
Overnight repurchase agreements	18,704	25,950
Federal Home Loan Bank advances		25,501
Accrued interest payable	228	241
Significant Unobservable Inputs (Level 3) [Member]
Assets [Abstract]
Cash and cash equivalents	0	0
Securities available-for-sale	0	0
Restricted securities	0	0
Loans, net of allowances for loan losses	594,190	559,488
Bank owned life insurance	0	0
Accrued interest receivable	0	0
Liabilities [Abstract]
Deposits	0	0
Overnight repurchase agreements	0	0
Federal Home Loan Bank advances		0
Accrued interest payable	0	0
Carrying Value [Member]
Assets [Abstract]
Cash and cash equivalents	25,854	36,990
Securities available-for-sale	199,365	214,192
Restricted securities	970	2,016
Loans, net of allowances for loan losses	595,637	560,737
Bank owned life insurance	25,206	24,411
Accrued interest receivable	3,189	3,059
Liabilities [Abstract]
Deposits	784,502	746,471
Overnight repurchase agreements	18,704	25,950
Federal Home Loan Bank advances		25,000
Accrued interest payable	228	241
Foreclosed Assets, Residential 1-4 Family [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value		$ 724
Foreclosed Assets, Residential 1-4 Family [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs		7.25%
Liquidation Discount		4.00%
Foreclosed Assets, Residential 1-4 Family [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs		7.25%
Liquidation Discount		7.17%
Foreclosed Assets, Residential 1-4 Family [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs		7.25%
Liquidation Discount		4.79%
Foreclosed Assets, Commercial [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value		$ 927
Foreclosed Assets, Commercial [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs		7.25%
Liquidation Discount		4.00%
Foreclosed Assets, Commercial [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs		7.25%
Liquidation Discount		24.70%
Foreclosed Assets, Commercial [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs		7.25%
Liquidation Discount		11.77%
Foreclosed Assets, Construction [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 940	$ 1,090
Foreclosed Assets, Construction [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	6.72%
Liquidation Discount	0.00%	33.05%
Foreclosed Assets, Construction [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	6.72%
Liquidation Discount	0.00%	33.05%
Foreclosed Assets, Construction [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs	7.25%	6.72%
Liquidation Discount	0.00%	33.05%

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Regulatory Matters (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Total Capital to Risk Weighted Assets, Amount [Abstract]
Capital Amount	$ 106,443	$ 104,076
Minimum Capital Requirement	$ 63,263	$ 55,910
Total Capital to Risk Weighted Assets, Ratio [Abstract]
Capital Ratio	14.51%	14.89%
Minimum Capital Requirement	8.625%	8.00%
Tier 1 Capital to Risk Weighted Assets, Amount [Abstract]
Capital Amount	$ 98,198	$ 96,338
Minimum Capital Requirement	$ 48,593	$ 41,932
Tier 1 Capital to Risk Weighted Assets, Ratio [Abstract]
Capital Ratio	13.39%	13.78%
Minimum Capital Requirement	6.625%	6.00%
Common Equity Tier 1 Capital to Risk Weighted Assets, Amount [Abstract]
Capital Amount	$ 98,198	$ 96,338
Common Equity Tier One Capital Required for Capital Adequacy	$ 37,591	$ 31,449
Common Equity Tier 1 Capital to Risk Weighted Assets, Ratio [Abstract]
Capital Ratio	13.39%	13.78%
Minimum Capital Requirement	5.125%	4.50%
Tier 1 Capital to Average Assets, Amount [Abstract]
Capital Amount	$ 98,198	$ 96,338
Minimum Capital Requirement	$ 36,768	$ 35,260
Tier 1 Capital to Average Assets, Ratio [Abstract]
Capital Ratio	10.68%	10.93%
Minimum Capital Requirement	4.00%	4.00%
Amount available for dividend distribution without prior approval from regulatory agency	$ 2,799
Old Point National Bank [Member]
Total Capital to Risk Weighted Assets, Amount [Abstract]
Capital Amount	98,237	$ 96,079
Minimum Capital Requirement	62,909	55,589
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions	$ 72,938	$ 69,486
Total Capital to Risk Weighted Assets, Ratio [Abstract]
Capital Ratio	13.47%	13.83%
Minimum Capital Requirement	8.625%	8.00%
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions	10.00%	10.00%
Tier 1 Capital to Risk Weighted Assets, Amount [Abstract]
Capital Amount	$ 89,992	$ 88,341
Minimum Capital Requirement	48,321	41,692
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions	$ 58,350	$ 55,589
Tier 1 Capital to Risk Weighted Assets, Ratio [Abstract]
Capital Ratio	12.34%	12.71%
Minimum Capital Requirement	6.625%	6.00%
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions	8.00%	8.00%
Common Equity Tier 1 Capital to Risk Weighted Assets, Amount [Abstract]
Capital Amount	$ 89,992	$ 88,341
Common Equity Tier One Capital Required for Capital Adequacy	37,381	31,269
Common Equity Tier One Capital Required to be Well Capitalized	$ 47,410	$ 45,166
Common Equity Tier 1 Capital to Risk Weighted Assets, Ratio [Abstract]
Capital Ratio	12.34%	12.71%
Minimum Capital Requirement	5.125%	4.50%
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions	6.50%	6.50%
Tier 1 Capital to Average Assets, Amount [Abstract]
Capital Amount	$ 89,992	$ 88,341
Minimum Capital Requirement	36,549	35,124
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions	$ 45,686	$ 43,905
Tier 1 Capital to Average Assets, Ratio [Abstract]
Capital Ratio	9.85%	10.06%
Minimum Capital Requirement	4.00%	4.00%
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions	5.00%	5.00%

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Segment Reporting (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) Segment	Dec. 31, 2015 USD ($)
Segment Reporting [Abstract]
Description of operating segments	The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each segment appeals to different markets and, accordingly, requires different technologies and marketing strategies.
Revenues
Interest and dividend income	$ 29,826	$ 30,295
Income from fiduciary activities	3,560	3,617
Other income	9,906	9,519
Total operating income	43,292	43,431
Expenses
Interest expense	2,574	3,632
Provision for loan losses	1,930	1,025
Salaries and employee benefits	19,878	20,747
Other expenses	14,953	14,339
Total operating expenses	39,335	39,743
Income before income taxes	3,957	3,688
Income tax expense (benefit)	160	54
Net income	3,797	3,634
Property, Plant and Equipment, Additions	891	1,756
Total assets	$ 902,966	896,787
Intersegment loan [Abstract]
Number of geographical area in which an entity operates | Segment	1
Revenue benchmark no single customer equals or exceeds	10.00%
Operating Segments [Member] | Bank [Member]
Revenues
Interest and dividend income	$ 29,765	30,242
Income from fiduciary activities	0	0
Other income	9,058	8,548
Total operating income	38,823	38,790
Expenses
Interest expense	2,574	3,633
Provision for loan losses	1,930	1,025
Salaries and employee benefits	16,801	17,630
Other expenses	13,179	13,254
Total operating expenses	34,484	35,542
Income before income taxes	4,339	3,248
Income tax expense (benefit)	288	(96)
Net income	4,051	3,344
Property, Plant and Equipment, Additions	887	1,682
Total assets	897,966	891,877
Operating Segments [Member] | Trust [Member]
Revenues
Interest and dividend income	61	54
Income from fiduciary activities	3,560	3,617
Other income	910	1,032
Total operating income	4,531	4,703
Expenses
Interest expense	0	0
Provision for loan losses	0	0
Salaries and employee benefits	2,671	2,685
Other expenses	1,041	1,010
Total operating expenses	3,712	3,695
Income before income taxes	819	1,008
Income tax expense (benefit)	280	343
Net income	539	665
Property, Plant and Equipment, Additions	4	74
Total assets	5,761	5,694
Operating Segments [Member] | Unconsolidated Parent [Member]
Revenues
Interest and dividend income	4,590	4,009
Income from fiduciary activities	0	0
Other income	200	200
Total operating income	4,790	4,209
Expenses
Interest expense	0	0
Provision for loan losses	0	0
Salaries and employee benefits	406	432
Other expenses	995	336
Total operating expenses	1,401	768
Income before income taxes	3,389	3,441
Income tax expense (benefit)	(408)	(193)
Net income	3,797	3,634
Property, Plant and Equipment, Additions	0	0
Total assets	93,998	93,191
Eliminations [Member]
Revenues
Interest and dividend income	(4,590)	(4,010)
Income from fiduciary activities	0	0
Other income	(262)	(261)
Total operating income	(4,852)	(4,271)
Expenses
Interest expense	0	(1)
Provision for loan losses	0	0
Salaries and employee benefits	0	0
Other expenses	(262)	(261)
Total operating expenses	(262)	(262)
Income before income taxes	(4,590)	(4,009)
Income tax expense (benefit)	0	0
Net income	(4,590)	(4,009)
Property, Plant and Equipment, Additions	0	0
Total assets	$ (94,759)	$ (93,975)

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Condensed Financial Statements of Parent Company (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Assets [Abstract]
Cash and cash equivalents	$ 36,990	$ 36,990	$ 25,854	$ 36,990
Securities available-for-sale			199,365	214,192
Other assets			15,543	14,418
Total Assets			902,966	896,787
Liabilities & Stockholders' Equity [Abstract]
Common stock			24,806	24,795
Additional paid-in capital			16,427	16,392
Retained earnings			56,965	55,151
Accumulated other comprehensive loss			(4,208)	(3,162)
Total liabilities and stockholders' equity			902,966	896,787
Income: [Abstract]
Other income	113	133
Total interest and dividend income	29,826	30,295
Expenses: [Abstract]
Salaries and benefits	19,878	20,747
Legal expenses	1,315	720
Service fees	807	693
Other operating expenses	2,355	2,362
Total noninterest expense	34,831	35,086
Income before income taxes	3,957	3,688
Income tax expense	160	54
Net income	3,797	3,634
Cash flows from operating activities: [Abstract]
Net income	3,797	3,634
Adjustments to reconcile net income to net cash provided by operating activities:
Increase in other assets	(567)	(3,969)
Increase (decrease) in other liabilities	(243)	3,637
Net cash provided by operating activities	8,653	7,833
Cash flows from investing activities: [Abstract]
Proceeds from maturity of investment securities	0	300
Net cash flows from investing activities	(23,637)	(15,413)
Cash flows from financing activities: [Abstract]
Cash dividends paid on common stock	(1,983)	(1,686)
Net cash provided by financing activities	3,848	11,265
Net increase (decrease) in cash and cash equivalents	(11,136)	3,685
Cash and cash equivalents at beginning of period	36,990	33,305
Cash and cash equivalents at end of period	25,854	36,990
Supplemental schedule of noncash transactions: [Abstract]
Unrealized gain (loss) on securities available-for-sale	(1,762)	(755)
Parent Company [Member]
Assets [Abstract]
Cash and cash equivalents	2,366	2,198	2,366	2,198
Securities available-for-sale			164	99
Investment in common stock of subsidiaries			91,437	90,836
Other assets			31	58
Total Assets			93,998	93,191
Liabilities & Stockholders' Equity [Abstract]
Note payable - subsidiary			8	15
Common stock			24,806	24,795
Additional paid-in capital			16,427	16,392
Retained earnings			56,965	55,151
Accumulated other comprehensive loss			(4,208)	(3,162)
Total liabilities and stockholders' equity			$ 93,998	$ 93,191
Income: [Abstract]
Dividends from subsidiary	2,900	2,900
Other income	200	200
Total interest and dividend income	3,100	3,100
Expenses: [Abstract]
Salaries and benefits	406	432
Legal expenses	774	180
Service fees	166	137
Other operating expenses	55	19
Total noninterest expense	1,401	768
Income before income taxes	1,699	2,332
Income tax expense	(408)	(193)
Net income before equity in undistributed net income of subsidiaries	2,107	2,525
Equity in undistributed net income of subsidiaries	1,690	1,109
Net income	3,797	3,634
Cash flows from operating activities: [Abstract]
Net income	3,797	3,634
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of subsidiaries	(1,690)	(1,109)
Increase in other assets	5	(5)
Increase (decrease) in other liabilities	(7)	15
Net cash provided by operating activities	2,105	2,535
Cash flows from investing activities: [Abstract]
Net cash flows from investing activities	0	0
Cash flows from financing activities: [Abstract]
Proceeds from sale of stock	46	0
Cash dividends paid on common stock	(1,983)	(1,686)
Net cash provided by financing activities	(1,937)	(1,686)
Net increase (decrease) in cash and cash equivalents	168	849
Cash and cash equivalents at beginning of period	2,198	1,349
Cash and cash equivalents at end of period	2,366	2,198
Supplemental schedule of noncash transactions: [Abstract]
Unrealized gain (loss) on securities available-for-sale	$ 64	$ (1)