FAIR VALUE OF ASSETS AND LIABILITIES (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2015 and December 31, 2014 (in thousands):

June 30, 2015

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

Obligations of U. S. Government Agencies	$	20,149	$	-	$	20,149	$	-
Municipal securities		95,923		-		95,923		-
Mortgage-backed securities		93,623		-		93,623		-
Corporate obligations		25,812		-		23,119		2,693
Other		969		969		-		-
Total	$	236,476	$	969	$	232,814	$	2,693

December 31, 2014

(Dollars in thousands)			Fair Value Measurements Using
			Quoted Prices
			in
			Active
			Markets		Significant
			For		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(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
(Dollars in thousands)	Securities
	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 (loss)		-		-
Unrealized gain (loss) included in comprehensive income		(108)		3
Balance at June 30, 2015 and December 31, 2014	$	2,693	$	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):

				Significant
Trust Preferred	Fair		Valuation	Unobservable	Range of
Securities	Value		Technique	Inputs	Inputs
June 30, 2015		2,693	Discounted cash flow	Probability of default		.83% - 2.53%

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 June 30, 2015 and December 31, 2014.

($ in thousands)

June 30, 2015

Fair Value Measurements Using

Quoted

Prices in

Active

Markets

Significant

For

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

Fair Value

(Level 1)

(Level 2)

(Level 3)

Impaired loans

9,121

Other real estate owned

4,116

December 31, 2014

Fair Value Measurements Using

Quoted

Prices in

Active

Markets

Significant

For

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

Fair Value

(Level 1)

(Level 2)

(Level 3)

Impaired loans

9,560

Other real estate owned

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 June 30, 2015 ($ in thousands)					Fair Value Measurements
							Significant
							Other		Significant
			Estimated		Quoted		Observable		Unobservable
	Carrying		Fair		Prices		Inputs		Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)

Financial Instruments:
Assets:
Cash and cash equivalents	$	62,021	$	62,021	$	62,021	$	-	$	-
Securities available-for- sale		236,476		236,476		969		232,814		2,693
Securities held- to-maturity		7,651		8,971		-		8,971		-
Other securities		5,787		5,787		-		5,787		-
Loans, net		726,482		742,532		-		-		742,532
Bank-owned life insurance		14,670		14,670		-		14,670		-

Liabilities:
Noninterest-bearing deposits	$	193,810	$	193,810	$	-	$	193,810	$	-
Interest-bearing deposits		768,289		767,826		-		767,826		-
Subordinated debentures		10,310		10,310		-		-		10,310
FHLB and other borrowings		43,991		43,991		-		43,991		-

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