DISCLOSURES ABOUT FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2013

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

			Fair Value Measurements at
			December 31, 2013 Using:
					Significant
			Quoted Prices in		Other		Significant
	Total		Active Markets for		Observable		Unobservable
	December 31,		Identical Assets		Inputs		Inputs
	2013		(Level 1)		(Level 2)		(Level 3)
Assets
Investment securities available-for-sale
U.S. government sponsored entities and agencies	$	120,139	$	-	$	120,139	$	-
U.S. government agency mortgage backed		220,059		-		220,059		-
Corporate		925		-		-		925
Derivatives		1,915		-		1,915		-
Total	$	343,038	$		$	342,113	$	925
Liabilities
Derivatives	$	1,915	$	-	$	1,915	$	-
Total	$	1,915	$	-	$	1,915	$	-

			Fair Value Measurements at
			December 31, 2012 Using:
					Significant
			Quoted Prices in		Other		Significant
	Total		Active Markets for		Observable		Unobservable
	December 31,		Identical Assets		Inputs		Inputs
	2012		(Level 1)		(Level 2)		(Level 3)
Assets
Investment securities available-for-sale
U.S. government sponsored entities and agencies	$	128,477	$	-	$	128,477	$	-
U.S. government agency mortgage backed		184,907		-		184,907		-
Corporate		1,060		-		-		1,060
Derivatives		1,926		-		1,926		-
Total	$	316,370	$	-	$	315,310	$	1,060
Liabilities
Derivatives	$	1,926	$	-	$	1,926	$	-
Total	$	1,926	$	-	$	1,926	$	-

Reconciliation of Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs Level Three

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 period ended December 31 (in thousands):

	Corporate Securities
	12/31/13		12/31/12
Balance of recurring Level 3 assets at January 1	$	1,060	$	1,060
Total gains or losses for the period:
Included in earnings		-		-
Included in other comprehensive income		-		-
Purchases		-		-
Sales		-		-
Issuances		-		-
Settlements		(135)		-
Transfers into Level 3		-		-
Transfers out of Level 3		-		-
Balance of recurring Level 3 assets at December 31	$	925	$	1,060

Quantitative Information About Recurring Level 3 Fair Value Measurements

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2013 (in thousands):

			Valuation
	Fair value		Technique(s)	Unobservable Input(s)	Value
Corporate security	$	925	Discounted cash flow	Probability of default	0	%

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2012 (in thousands):

			Valuation
	Fair value		Technique(s)	Unobservable Input(s)	Value
Corporate security	$	1,060	Discounted cash flow	Probability of default	0	%

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2013 (in thousands):

					Discount Range
		Fair Value	Valuation Technique(s)	Unobservable Input(s)	(Avg discount)
Assets
Impaired Loans:
Commercial	$	2,215	Cost, sales, income approach	Adjustment for comparable properties, market conditions	6-25%
					(11%)
Nonresidential real estate
Owner occupied properties		5,673	Cost, sales, income approach	Adjustment for comparable properties, market conditions	6-76%
					(17%)
Non owner occupied properties		942	Cost, sales, income approach	Adjustment for comparable properties, market conditions	3-66%
					(15%)
Residential real estate
Home equity lines of credit		218	Cost, sales, income approach	Adjustment for comparable properties, market conditions	6-26%
					(8%)
Multifamily properties		1,245	Cost, sales, income approach	Adjustment for comparable properties, market conditions	6%
					(6%)
Other		2,013	Cost, sales, income approach	Adjustment for comparable properties, market conditions	0-100%
					(36%)
Construction		1,875	Cost, sales, income approach	Adjustment for comparable properties, market conditions	6-16%
					(14%)
Other real estate owned
Residential		-	sales approach	Adjustment for comparable properties, market conditions	0-0%
					(0%)
Non-residential		2,772	sales approach	Adjustment for comparable properties, market conditions	0-0%
					(0%)
Total	$	16,953

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2012 (in thousands):

					Discount Range
		Fair Value	Valuation Technique(s)	Unobservable Input(s)	(Avg discount)
Assets
Impaired Loans:
Commercial	$	546	Cost, sales, income approach	Adjustment for comparable propertiesor equipment, market conditions	0-100% (62%)
Nonresidential real estate
Owner occupied properties		6,346	Cost, sales, income approach	Adjustment for comparable properties, market conditions	0-80% (6%)
Non owner occupied properties		2,788	Cost, sales, income approach	Adjustment for comparable properties, market conditions	0-80% (10%)
Residential real estate
Home equity lines of credit		354	Cost, sales, income approach	Adjustment for comparable properties, market conditions	0-100% (27%)
Multifamily properties		1,072	Cost, sales, income approach	Adjustment for comparable properties, market conditions	0% (0%)
Other		4,541	Cost, sales, income approach	Adjustment for comparable properties, market conditions	0-100% (10%)
Construction		2,657	Cost, sales, income approach	Adjustment for comparable properties, market conditions	0-80% (14%)
Other real estate owned
Residential		396	sales approach	Adjustment for comparable properties, market conditions	0-0% (0%)
Non-residential		2,683	sales approach	Adjustment for comparable properties, market conditions	0-0% (0%)
Total	$	21,383

Assets And Liabilities Measured At Fair Value On a Non-recurring Basis

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

			Fair Value Measurements at
			December 31, 2013 Using:
					Significant
				Quoted Prices in		Other		Significant
		Total		Active Markets for		Observable		Unobservable
		December 31,		Identical Assets		Inputs		Inputs
		2013		(Level 1)		(Level 2)		(Level 3)
Assets
Impaired loans
Commercial	$	2,215	$	-	$	-	$	2,215
Nonresidential real estate
Owner occupied properties		5,673		-		-		5,673
Non owner occupied properties		942		-		-		942
Residential real estate
Home equity lines of credit		218		-		-		218
Multifamily properties		1,245		-		-		1,245
Other		2,013		-		-		2,013
Construction		1,875		-		-		1,875
Other real estate owned
Residential		-		-		-		-
Non-Residential		2,772		-		-		2,772
Total	$	16,953	$	-	$	-	$	16,953

			Fair Value Measurements at
			December 31, 2012 Using:
						Significant
				Quoted Prices in		Other		Significant
		Total		Active Markets for		Observable		Unobservable
		December 31,		Identical Assets		Inputs		Inputs
		2012		(Level 1)		(Level 2)		(Level 3)
Assets
Impaired loans
Commercial	$	546	$	-	$	-	$	546
Nonresidential real estate		-
Owner occupied properties		6,346		-		-		6,346
Non owner occupied properties		2,788		-		-		2,788
Residential real estate
Home equity lines of credit		354		-		-		354
Multifamily properties		1,072		-		-		1,072
Other		4,541		-		-		4,541
Construction		2,657		-		-		2,657
Other real estate owned
Residential		396		-		-		396
Non-Residential		2,683		-		-		2,683
Total	$	21,383	$	-	$	-	$	21,383

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at December 31, 2013 and December 31, 2012 are as follows (in thousands):

			Fair Value Measurements at December 31, 2013 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	78,621	$	78,621	$	-	$	-	$	78,621
Interest-bearing deposits with banks		252		252		-		-		252
Securities available-for-sale		341,123		-		340,198		925		341,123
Securities held-to-maturity		77,010		-		76,457		-		76,457
Federal Home Loan Bank stock		5,099		N/A		N/A		N/A		N/A
Loans held for sale		3,214		-		3,214		-		3,214
Loans, net		1,233,339		-		-		1,236,112		1,236,112
Accrued interest receivable		4,123		-		1,420		2,703		4,123
Derivative assets		1,915		-		1,915		-		1,915
Financial liabilities
Deposits	$	(1,587,585)	$	(1,286,733)	$	(302,701)	$	-	$	(1,589,434)
Short-term borrowings		(27,643)		-		(27,643)		-		(27,643)
Notes payable		(45,577)		-		(20,083)		(17,414)		(37,497)
Accrued interest payable		(693)		-		(680)		(13)		(693)
Standby letters of credit		(415)		-		-		(415)		(415)
Derivative liabilities		(1,915)		-		(1,915)		-		(1,915)

			Fair Value Measurements at
			December 31, 2012 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	151,832	$	151,832	$	-	$	-	$	151,832
Interest-bearing deposits with banks		250		250		-		-		250
Securities available-for-sale		314,444		-		313,384		1,060		314,444
Securities held-to-maturity		66,843		-		68,504		-		68,504
Federal Home Loan Bank stock		5,099		N/A		N/A		N/A		N/A
Loans held for sale		16,324		-		16,324		-		16,324
Loans, net		1,178,841		-		-		1,182,273		1,182,273
Accrued interest receivable		4,259		-		1,447		2,812		4,259
Derivative assets		1,926		-		1,926		-		1,926
Financial liabilities
Deposits	$	(1,570,007)	$	(1,210,925)	$	(360,671)	$	-	$	(1,571,596)
Short-term borrowings		(41,408)		-		(41,408)		-		(41,408)
Notes payable		(48,721)		-		(22,392)		(17,192)		(39,584)
Accrued interest payable		(1,031)		-		(1,018)		(13)		(1,031)
Standby letters of credit		(271)		-		-		(271)		(271)
Derivative liabilities		(1,926)		-		(1,926)		-		(1,926)