FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2018

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at September 30, 2018 were as follows:

				Fair Value Measurements at September 30, 2018 Using
	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets
Cash and due from banks	$	107,616		$	107,616		$	-		$	-	$	107,616
Time deposits with other banks		2,086			-			2,075			-		2,075
Federal funds sold		7,589			7,589			-			-		7,589
Securities available for sale		315,225			-			315,225			-		315,225
Loans, net		1,023,583			-			-			1,012,036		1,012,036
Federal Home Loan Bank stock		3,173			n/a			n/a			n/a		n/a
Interest receivable		4,109			-			858			3,251		4,109

Financial liabilities
Deposits	$	(1,319,623	)	$	(979,382	)	$	(333,508	)	$	-	$	(1,312,890	)
Securities sold under agreements to repurchase		(24,728	)		-			(24,728	)		-		(24,728	)
Other borrowed funds		(3,350	)		-			(3,301	)		-		(3,301	)
Subordinated debt		(5,398	)		-			(5,482	)		-		(5,482	)
Interest payable		(497	)		(14	)		(483	)		-		(497	)

The carrying amounts and estimated fair values of financial instruments at December 31, 2017 were as follows:

				Fair Value Measurements at December 31, 2017 Using
	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets
Cash and due from banks	$	78,005		$	78,005		$	-		$	-	$	78,005
Time deposits with other banks		2,582			-			2,581			-		2,581
Federal funds sold		4,658			4,658			-			-		4,658
Securities available for sale		278,466			-			278,466			-		278,466
Loans, net		1,036,948			-			-			1,016,723		1,016,723
Federal Home Loan Bank stock		3,185			n/a			n/a			n/a		n/a
Interest receivable		4,043			-			700			3,343		4,043

Financial liabilities
Deposits	$	(1,272,675	)	$	(929,202	)	$	(338,291	)	$	-	$	(1,267,493	)
Securities sold under agreements to repurchase		(23,310	)		-			(23,310	)		-		(23,310	)
Other borrowed funds		(5,000	)		-			(4,955	)		-		(4,955	)
Subordinated debt		(5,376	)		-			(5,439	)		-		(5,439	)
Interest payable		(393	)		(7	)		(386	)		-		(393	)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements at September 30, 2018 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale
Mortgage-backed securities
U. S. agency MBS - residential	$	222,157	$	-	$	222,157	$	-
U. S. agency CMO’s - residential		71,380		-		71,380		-
Total mortgage-backed securities of government sponsored agencies		293,537		-		293,537		-
U. S. government sponsored agency securities		13,002		-		13,002		-
Obligations of states and political subdivisions		8,686		-		8,686		-
Total securities available for sale	$	315,225	$	-	$	315,225	$	-

			Fair Value Measurements at December 31, 2017 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale
Mortgage-backed securities
U. S. agency MBS - residential	$	196,590	$	-	$	196,590	$	-
U. S. agency CMO’s		51,108		-		51,108		-
Total mortgage-backed securities of government sponsored agencies		247,698		-		247,698		-
U. S. government sponsored agency securities		19,134		-		19,134		-
Obligations of states and political subdivisions		11,634		-		11,634		-
Total securities available for sale	$	278,466	$	-	$	278,466	$	-

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 September 30, 2018 are summarized below:

			Fair Value Measurements at September 30, 2018 Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Multifamily real estate	$	1,900	$	-	$	-	$	1,900
Commercial real estate
Owner occupied		469		-		-		469
Non-owner occupied		3,137		-		-		3,137
Commercial and industrial		144		-		-		144
Construction and land		2,650		-		-		2,650
Total impaired loans	$	8,300	$	-	$	-	$	8,300

Other real estate owned:
Residential real estate	$	281	$	-	$	-	$	281
Commercial real estate
Owner occupied		175		-		-		175
Non-owner occupied		200		-		-		200
Construction and land		150		-		-		150
Total OREO	$	806	$	-	$	-	$	806

Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2017 are summarized below:

			Fair Value Measurements at December 31, 2017 Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Multifamily real estate	$	1,910	$	-	$	-	$	1,910
Commercial real estate
Owner occupied		568		-		-		568
Non-owner occupied		1,984		-		-		1,984
Commercial and industrial		111		-		-		111
Construction and land		3,309		-		-		3,309
Total impaired loans	$	7,882	$	-	$	-	$	7,882

Other real estate owned:
Residential real estate	$	352	$	-	$	-	$	352
Commercial real estate
Owner occupied		175		-		-		175
Non-owner occupied		200		-		-		200
Construction and land		1,914		-		-		1,914
Total OREO	$	2,641	$	-	$	-	$	2,641

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 September 30, 2018 are summarized below:

	September 30, 2018		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired loans:
Multifamily real estate	$	1,900	sales comparison	adjustment for estimated realizable value		46.7%-46.7% (46.7	%)
Commercial real estate
Owner occupied		469	sales comparison	adjustment for estimated realizable value		36.9%-36.9% (36.9	%)
Non-owner occupied		3,137	income approach	adjustment for differences in net operating income expectations		65.9%-93.6% (70.5	%)
Commercial and industrial		144	discounted cash flows	recovery probability		N/A
Construction and land		2,650	sales comparison	adjustment for percentage of completion of construction		42.3%-42.3% (42.3	%)
Total impaired loans	$	8,300

Other real estate owned:
Residential real estate	$	281	sales comparison	adjustment for estimated realizable value		11.0%-19.2% (14.2	%)
Commercial real estate
Owner occupied		175	sales comparison	adjustment for estimated realizable value		21.8%-21.8% (21.8	%)
Non-owner occupied		200	sales comparison	adjustment for estimated realizable value		58.9%-58.9% (58.9	%)
Construction and land		150	sales comparison	adjustment for estimated realizable value		50.3%-50.3% (50.3	%)
Total OREO	$	806

The significant unobservable inputs related to assets and liabilities measured at fair value on a non-recurring basis at December 31, 2017 are summarized below:

	December 31, 2017		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired loans:
Multifamily real estate	$	1,910	sales comparison	adjustment for estimated realizable value		46.0%-46.7% (46.4	%)
Commercial real estate
Owner occupied		568	sales comparison	adjustment for estimated realizable value		23.1%-23.1% (23.1	%)
Non-owner occupied		1,984	income approach	adjustment for differences in net operating income expectations		67.4%-67.4% (67.4	%)
Commercial and industrial		111	sales comparison	adjustment for estimated realizable value		8.0%-71.1% (64.2	%)
Construction and land		3,309	sales comparison	adjustment for percentage of completion of construction		27.7%-27.7% (27.7	%)
Total impaired loans	$	7,882

Other real estate owned:
Residential real estate	$	352	sales comparison	adjustment for estimated realizable value		8.8%-50.2% (20.0	%)
Commercial real estate
Owner occupied		175	sales comparison	adjustment for estimated realizable value		21.8%-21.8% (21.8	%)
Non-owner occupied		200	sales comparison	adjustment for estimated realizable value		58.9%-58.9% (58.9	%)
Construction and land		1,914	sales comparison	adjustment for estimated realizable value		25.2%-69.0% (27.8	%)
Total OREO	$	2,641