FAIR VALUE OF ASSETS AND LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Assets Measured on Recurring Basis

The following table presents the Company’s assets that are measured at fair value on a recurring basis and the level within the hierarchy in which the fair value measurements fell as of March 31, 2015 and December 31, 2014 (in thousands):

March 31, 2015

(Dollars in thousands)			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Obligations of U. S. Government Agencies	$	21,904	$	-	$	21,904	$	-
Municipal securities		101,437		-		101,437		-
Mortgage-backed securities		93,692		-		93,692		-
Corporate obligations		28,840		-		26,024		2,816
Other		969		969		-		-
Total	$	246,842	$	969	$	243,057	$	2,816

December 31, 2014

(Dollars in thousands)			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Obligations of U. S. Government Agencies	$	27,372	$	-	$	27,372	$	-
Municipal securities		104,582		-		104,582		-
Mortgage-backed securities		93,036		-		93,036		-
Corporate obligations		28,784		-		25,983		2,801
Other		972		972		-		-
Total	$	254,746	$	972	$	250,973	$	2,801

Reconciliation of Activity for Assets Measured at Fair Value based on Significant Unobservable (Non-market) Information

The following is a reconciliation of activity for assets measured at fair value based on significant unobservable (non-market) information.

	Bank-Issued
	Trust
	Preferred
	Securities
(Dollars in thousands)	2015		2014
Balance, January 1	$	2,801	$	2,798
Transfers into Level 3		-		-
Transfers out of Level 3		-		-
Other-than-temporary impairment loss included in earnings		-		-
Unrealized gain included in comprehensive income		15		3
Balance at March 31, 2015 and December 31, 2014	$	2,816	$	2,801

Quantitative Information About Recurring Level 3 Fair Value Measurements

The following table presents quantitative information about recurring Level 3 fair value measurements (in thousands):

Trust Preferred
Securities

Fair
Value

Valuation
Technique

Significant
Unobservable
Inputs

Range of
Inputs

March 31, 2015

2,816

Discounted cash flow

Probability of default

.82% - 2.52%

December 31, 2014

2,801

Discounted cash flow

Probability of default

.79% - 2.49%

Fair Value Assets Measured on Nonrecurring Basis

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fell at March 31, 2015 and December 31, 2014.

($ in thousands)

March 31, 2015

			Fair Value Measurements Using
			Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)

Impaired loans	$	8,623	$	-	$	8,623	$	-

Other real estate owned		4,598		-		4,598		-

December 31, 2014

			Fair Value Measurements Using
			Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)

Impaired loans	$	9,560	$	-	$	9,560	$	-

Other real estate owned		4,655		-		4,655		-

Financial Instruments with No Distinguishable Fair Value

Management has determined that these instruments do not have a distinguishable fair value and no fair value has been assigned.

As of March 31, 2015 ($ in thousands)					Fair Value Measurements
	Carrying Amount		Estimated Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Financial Instruments:
Assets:
Cash and cash equivalents	$	94,474	$	94,474	$	94,474	$	-	$	-
Securities available-for-sale		246,842		246,842		969		243,057		2,816
Securities held-to-maturity		7,829		9,385		-		9,385		-
Other securities		7,235		7,235		-		7,235		-
Loans, net		712,088		728,369		-		-		728,369
Bank-owned life insurance		14,569		14,569		-		14,569		-

Liabilities:
Noninterest-bearing deposits	$	203,766	$	203,766	$	-	$	203,766	$	-
Interest-bearing deposits		780,877		780,351		-		780,351		-
Subordinated debentures		10,310		10,310		-		-		10,310
FHLB and other borrowings		49,446		49,446		-		49,446		-

As of December 31, 2014 ($ in thousands)					Fair Value Measurements
	Carrying Amount		Estimated Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Financial Instruments:
Assets:
Cash and cash equivalents	$	44,618	$	44,618	$	44,618	$	-	$	-
Securities available-for-sale		254,746		254,746		972		250,973		2,801
Securities held-to-maturity		8,193		9,994		-		9,994		-
Other securities		7,235		7,235		-		7,235		-
Loans, net		700,539		715,849		-		-		715,849
Bank-owned life insurance		14,463		14,463		-		14,463		-

Liabilities:
Noninterest-bearing deposits	$	201,362	$	201,362	$	-	$	201,362	$	-
Interest-bearing deposits		691,413		691,036		-		691,036		-
Subordinated debentures		10,310		10,310		-		-		10,310
FHLB and other borrowings		89,450		89,450		-		89,450		-

- 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.

+ References+ Details

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes 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 liability.

+ References+ Details