FAIR VALUE OF ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 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 September 30, 2015 and December 31, 2014 (in thousands):

September 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	$	19,731	$	-	$	19,731	$	-
Municipal securities		94,350		-		94,350		-
Mortgage-backed securities		99,384		-		99,384		-
Corporate obligations		25,201		-		22,554		2,647
Other		965		965		-		-
Total	$	239,631	$	965	$	236,019	$	2,647

December 31, 2014

(Dollars in thousands)			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)

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		(154)		3
Balance at September 30, 2015 and December 31, 2014	$	2,647	$	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

September 30, 2015		2,647	Discounted cash flow	Probability of default	.88% - 2.58%

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 September 30, 2015 and December 31, 2014.

($ in thousands)

September 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

10,832

Other real estate owned

4,104

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 September 30, 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	$	65,233	$	65,233	$	65,233	$	-	$	-
Securities available-for- sale		239,631		239,631		965		236,019		2,647
Securities held- to-maturity		7,233		8,651		-		8,651		-
Other securities		6,249		6,249		-		6,249		-
Loans, net		740,912		758,614		-		-		758,614
Bank-owned life insurance		14,771		14,771		-		14,771		-

Liabilities:
Noninterest- bearing deposits	$	187,542	$	187,542	$	-	$	187,542	$	-
Interest-bearing deposits		776,298		775,760		-		775,760		-
Subordinated debentures		10,310		10,310		-		-		10,310
FHLB and other borrowings		58,986		58,986		-		58,986		-

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		-