FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2014

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at December 31, 2014 were as follows:

				Fair Value Measurements at December 31, 2014 Using
	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets
Cash and due from banks	$	70,398		$	70,398		$	-		$	-	$	70,398
Federal funds sold		4,986			4,986			-			-		4,986
Securities available for sale		229,750			-			229,610			140		229,750
Loans held for sale		226			-			-			226		226
Loans, net		869,364			-			-			870,273		870,273
Federal Home Loan Bank stock		2,996			n/a			n/a			n/a		n/a
Interest receivable		3,219			-			625			2,594		3,319

Financial liabilities
Deposits	$	(1,075,243	)	$	(711,118	)	$	(363,481	)	$	-	$	(1,074,599	)
Securities sold under agreements to repurchase		(15,580	)		-			(15,580	)		-		(15,580	)
Other borrowed funds		(11,722	)		-			(11,760	)		-		(11,760	)
Interest payable		(434	)		(6	)		(428	)		-		(434	)

The carrying amounts and estimated fair values of financial instruments at December 31, 2013 were as follows:

				Fair Value Measurements at December 31, 2013 Using
	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets
Cash and due from banks	$	63,984		$	63,984		$	-		$	-	$	63,984
Federal funds sold		12,777			12,777			-			-		12,777
Securities available for sale		218,066			-			217,926			140		218,066
Loans held for sale		77			-			-			77		77
Loans, net		729,743			-			-			725,588		725,588
Federal Home Loan Bank stock		4,183			n/a			n/a			n/a		n/a
Interest receivable		3,132			-			593			2,539		3,132

Financial liabilities
Deposits	$	(924,023	)	$	(592,664	)	$	(332,475	)	$	-	$	(925,139	)
Securities sold under agreements to repurchase		(11,319	)		-			(11,319	)		-		(11,319	)
Other borrowed funds		(13,800	)		-			(13,811	)		-		(13,811	)
Interest payable		(383	)		(5	)		(378	)		-		(383	)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis at December 31, 2014 are summarized below:

			Fair Value Measurements at December 31, 2014 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available for sale
Mortgage-backed securities
U. S. agency MBS - residential	$	52,780	$	-	$	52,780	$	-
U. S. agency CMO’s		144,188		-		144,188		-
Total mortgage-backed securities of government sponsored agencies		196,968		-		196,968		-
U. S. government sponsored agency securities		22,506		-		22,506		-
Obligations of states and political subdivisions		10,276		-		10,136		140
Total securities available for sale	$	229,750	$	-	$	229,610	$	140

Assets and liabilities measured at fair value on a recurring basis at December 31, 2013 are summarized below:

			Fair Value Measurements at December 31, 2013 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available for sale
Mortgage-backed securities
U. S. agency MBS - residential	$	27,823	$	-	$	27,823	$	-
U. S. agency CMO’s		176,722		-		176,722		-
Total mortgage-backed securities of government sponsored agencies		204,545		-		204,545		-
U. S. government sponsored agency securities		6,981		-		6,981		-
Obligations of states and political subdivisions		6,540		-		6,400		140
Total securities available for sale	$	218,066	$	-	$	217,926	$	140

Reconciliation of All Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2014 and 2013:

	Securities Available-for-sale
	Year Ended Dec. 31, 2014		Year Ended Dec. 31, 2013
Balance of recurring Level 3 assets at beginning of period	$	140	$	140
Total gains or losses (realized/unrealized):
Included in earnings – realized		-		-
Included in earnings – unrealized		-		-
Included in other comprehensive income		-		-
Purchases, sales, issuances and settlements, net		-		-
Transfers in and/or out of Level 3		-		-
Balance of recurring Level 3 assets at year-end	$	140	$	140

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2014 are summarized below:

			Fair Value Measurements at December 31, 2014 Using
	Dec 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial Real Estate
Owner Occupied	$	600		-		-	$	600
Non-owner Occupied		630		-		-		630
Commercial and Industrial		341		-		-		341
All Other		4,229		-		-		4,229
Total impaired loans		5,800	$	-	$	-	$	5,800

Other real estate owned:
Commercial Real Estate
Non-owner Occupied		2,003		-		-		2,003
All Other		8,203		-		-		8,203
Total OREO	$	10,206	$	-	$	-	$	10,206

Fair Value Inputs, Assets, Quantitative Information

The significant unobservable inputs related to assets and liabilities measured at fair value on a non-recurring basis at December 31, 2014 are summarized below:

	December 31, 2014		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired loans:
Commercial Real Estate
Owner Occupied		600	sales comparison	adjustment for limited salability of specialized property		44.8%-72.4%(58.9%)
Non-owner Occupied		630	sales comparison	adjustment for differences between the comparable sales		16.9%-54.6%(16.9%)
Commercial and Industrial		341	sales comparison	adjustment for limited salability of specialized property		26.2%-41.2%(27.0%)
All Other		4,229	sales comparison	adjustment for percentage of completion of construction		57.3%-57.3%(57.3%)
Total impaired loans		5,800

Other real estate owned:
Commercial Real Estate
Non-owner Occupied		2,003	sales comparison	adjustment for differences between the comparable sales		17.8%-17.8%(17.8%)
All Other		8,203	sales comparison	adjustment for estimated realizable value		24.6%-50.3%(45.0%)
Total OREO	$	10,206

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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