FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2016

FAIR VALUE [Abstract]

Carrying amounts and fair values of financial instruments

The following table presents the carrying amounts and fair values of the Company’s financial instruments (in thousands).

	Level in	September 30, 2016				December 31, 2015
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Assets:
Cash and due from banks	Level 1	$	181,929	$	181,929	$	98,086	$	98,086
Federal Reserve and Federal Home Loan Bank stock and other investments	Level 2		4,528		4,528		10,756		10,756
Investment securities held to maturity	Level 2		18,896		19,633		61,309		63,272
Investment securities available for sale	Level 2		194,273		194,273		247,099		247,099
Loans held for sale	Level 2		1,504		1,504		1,666		1,666
Loans, net of allowance	Level 2, 3 (1)		1,690,321		1,687,501		1,645,762		1,628,169
Accrued interest and loan fees receivable	Level 2		5,840		5,840		5,859		5,859
Financial Liabilities:
Non-maturity deposits	Level 2		1,724,968		1,724,968		1,555,980		1,555,980
Time deposits	Level 2		219,232		219,146		224,643		224,408
Borrowings	Level 2		15,000		15,224		165,000		164,827
Accrued interest payable	Level 2		156		156		198		198
Derivatives	Level 3		752		752		752		752

(1) Impaired loans are generally classified within Level 3 of the fair value hierarchy.

Assets measured at fair value on a non-recurring basis

Assets measured at fair value on a non-recurring basis are as follows (in thousands):

Assets:	September 30, 2016		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Impaired loans	$	1,877	$	1,877
OREO		650		650
Total	$	2,527	$	2,527

Assets:	December 31, 2015		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Impaired loans	$	2,715	$	2,715
Total	$	2,715	$	2,715

Fair value inputs, quantitative information

The following presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis (dollars in thousands):

	Fair Value at
Assets:	September 30, 2016		December 31, 2015		Valuation Technique	Unobservable Inputs	Discount
Impaired loans:
Residential mortgages	$	1,591	$	2,311	Third party appraisal	Discount to appraised value		25	%(1)
Home equity		218		280	Third party appraisal	Discount to appraised value		25	%(1)
Consumer		68		124	Third party appraisal	Discount to appraised value		25	%(2)
Total	$	1,877	$	2,715
OREO	$	650	$	-	Third party appraisal	Estimated holding/selling costs		11	%

(1) Of which estimated selling costs are approximately 9% - 15% of the total discount.

(2) Of which estimated selling costs are approximately 10% - 12% of the total discount.

Valuation of financial instruments measured at fair value on recurring basis

The following presents fair value measurements on a recurring basis at September 30, 2016 and December 31, 2015 (in thousands):

			Fair Value Measurements Using
Assets:	September 30, 2016		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Obligations of states and political subdivisions	$	71,958	$	71,958	$	-
Collateralized mortgage obligations		18,396		18,396		-
Mortgage-backed securities		95,294		95,294		-
Corporate bonds		8,625		8,625		-
Total	$	194,273	$	194,273	$	-
Liabilities:
Derivatives	$	752	$	-	$	752
Total	$	752	$	-	$	752

			Fair Value Measurements Using
Assets:	December 31, 2015		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. Government agency securities	$	28,516	$	28,516	$	-
Obligations of states and political subdivisions		104,682		104,682		-
Collateralized mortgage obligations		15,549		15,549		-
Mortgage-backed securities		92,442		92,442		-
Corporate bonds		5,910		5,910		-
Total	$	247,099	$	247,099	$	-
Liabilities:
Derivatives	$	752	$	-	$	752
Total	$	752	$	-	$	752

Changes in Level 3 assets and liabilities measured at fair value on a recurring basis

Reconciliations for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) follow (in thousands).

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	Liabilities Derivatives		Liabilities Derivatives		Liabilities Derivatives		Liabilities Derivatives
Beginning balance	$	752	$	752	$	752	$	752
Net change		-		-		-		-
Ending balance	$	752	$	752	$	752	$	752