10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:               0-22387

DCB Financial Corp

(Exact name of registrant as specified in its charter)

Ohio	31-1469837
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

110 Riverbend Avenue, Lewis Center, Ohio  43035

(Address of principal executive offices) (Zip code)

	(740) 657-7000
(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x      No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x      No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer (Do not check if a smaller reporting company) ¨ Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨      No x

As of November 12, 2015, the latest practicable date, 7,280,290 of the registrant’s common shares, no par value, were issued and outstanding.

DCB Financial Corp

Table of Contents

	Page
Part I – Financial Information	3
Item 1 – Financial Statements	3
Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014	3
Consolidated Statements of Income (unaudited) for the three and nine month periods ended September 30, 2015 and 2014	4
Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine month periods ended September 30, 2015 and 2014	5
Consolidated Statements of Shareholders’ Equity (unaudited) for the three and nine month periods ended September 30, 2015 and 2014	6
Consolidated Statements of Cash Flows (unaudited) for the nine month periods ended September 30, 2015 and 2014	7
Notes to the Consolidated Financial Statements	8
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3 – Quantitative and Qualitative Disclosures about Market Risk	35
Item 4 – Controls and Procedures	35
Part II – Other Information	36
Item 1 – Legal proceedings	36
Item 1A – Risk Factors	36
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3 – Defaults Upon Senior Securities	36
Item 4 – Mine Safety Disclosures	36
Item 5 – Other Information	36
Item 6 – Exhibits	36
Signatures	37

Part I – Financial Information

Item 1. Financial Statements

DCB Financial Corp

Consolidated Balance Sheets

	September 30, 2015			December 31, 2014
	(unaudited)
	(Dollars in thousands, except share and per share data)
Assets:
Cash and due from financial institutions	$	6,883		$	6,247
Interest-bearing deposits		28,148			15,027
Total cash and cash equivalents		35,031			21,274
Securities available-for-sale		82,019			75,909
Loans		380,290			385,444
Less allowance for loan losses		(4,206	)		(4,236	)
Net loans		376,084			381,208
Real estate owned		785			1,111
Investment in FHLB stock		3,250			3,250
Premises and equipment, net		5,178			10,016
Premises and equipment held-for-sale		4,771			—
Bank-owned life insurance		20,598			20,027
Deferred tax asset, net		10,383			—
Accrued interest receivable and other assets		3,635			2,587
Total assets	$	541,734		$	515,382
Liabilities and shareholders’ equity
Liabilities:
Deposits:
Non-interest bearing	$	123,870		$	111,022
Interest bearing		351,037			342,170
Total deposits		474,907			453,192
Borrowings		4,711			11,808
Accrued interest payable and other liabilities		3,420			3,171
Total liabilities		483,038			468,171
Shareholders’ equity:
Preferred shares, no par value, 2,000,000 shares authorized, none issued and outstanding		—			—
Common shares, no par value, 17,500,000 shares authorized, 7,595,087 and 7,500,000 shares issued, and 7,280,290 and 7,233,795 shares outstanding for September 30, 2015 and December 31, 2014, respectively		16,412			16,064
Retained earnings		49,526			38,055
Treasury stock, at cost, 307,650 shares		(7,416	)		(7,416	)
Accumulated other comprehensive income		609			654
Deferred stock-based compensation		(435	)		(146	)
Total shareholders’ equity		58,696			47,211
Total liabilities and shareholders’ equity	$	541,734		$	515,382
See notes to the consolidated financial statements.
Common shares outstanding		7,280,290			7,233,795
Book value per common share	$	8.05		$	6.53

The accompanying notes are an integral part of the consolidated financial statements.

3.

DCB Financial Corp

Consolidated Statements of Income (Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
	(Dollars in thousands, except share and per share data)
Interest income:
Loans	$	3,979		$	3,775		$	11,884		$	11,231
Securities		473			494			1,460			1,582
Federal funds sold and interest bearing deposits		17			9			46			32
Total interest income		4,469			4,278			13,390			12,845
Interest expense:
Deposits:
Savings and money market accounts		153			147			445			416
Time accounts		88			104			272			341
NOW accounts		16			19			49			56
Total		257			270			766			813
FHLB advances		35			36			106			108
Total interest expense		292			306			872			921
Net interest income		4,177			3,972			12,518			11,924
Provision for loan losses		(150	)		—			—			—
Net interest income after provision for loan losses		4,327			3,972			12,518			11,924
Non-interest income:
Service charges		523			485			1,475			1,485
Wealth management fees		438			420			1,217			1,091
Treasury management fees		81			58			203			173
Income from bank-owned life insurance		163			165			571			566
Losses on loans held for sale		—			(189	)		—			(546	)
Net losses on sales of REO		(19	)		(69	)		(20	)		(73	)
Net gains on the sale of securities available-for-sale		—			241			—			101
Gain on sale of branch		—			—			—			438
Other non-interest income		37			29			115			92
Total non-interest income		1,223			1,140			3,561			3,327
Non-interest expense:
Salaries and employee benefits		2,771			2,821			8,302			8,311
Occupancy and equipment		1,010			892			2,996			2,841
Professional services		405			366			1,042			983
Advertising		169			100			418			258
Office supplies, postage and courier		81			72			232			256
FDIC insurance premium		95			180			302			520
State franchise taxes		75			67			225			199
Other non-interest expense		544			564			1,779			1,677
Total non-interest expense		5,150			5,062			15,296			15,045
Income before income tax benefit		400			50			783			206
Income tax benefit		(10,688	)		—			(10,688	)		—
Net income	$	11,088		$	50		$	11,471		$	206
Share and Per Share Data
Basic average common shares outstanding		7,282,365			7,192,350			7,269,222			7,192,350
Diluted average common shares outstanding		7,302,174			7,249,194			7,288,237			7,242,431
Basic and diluted earnings per common share	$	1.52		$	0.01		$	1.58		$	0.03

The accompanying notes are an integral part of the consolidated financial statements.

4.

DCB Financial Corp

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2015		2014			2015			2014
	(In thousands)
Net income	$	11,088	$	50		$	11,471		$	206
Other comprehensive income (loss):
Reclassification adjustment for realized gains included in net income in the three and nine months ended September 30, 2014, net of taxes of $82 and $34,respectively		—		(159	)		—			(67	)
Net unrealized gains (losses) on securities available-for-sale in the three months and nine months ended September 30, 2015 and 2014, net of taxes of $60, $(10), $(22), and $709, respectively		116		(20	)		(45	)		1,377
Reclassification of previously recognized non-credit other than temporary impairment on sale of security in the nine months ended September 30, 2014, net of taxes $(48)		—		—			—			(92	)
Total other comprehensive income (loss)		116		(179	)		(45	)		1,218
Comprehensive income (loss)	$	11,204	$	(129	)	$	11,426		$	1,424

The accompanying notes are an integral part of the consolidated financial statements.

5.

DCB Financial Corp

Consolidated Statements of Shareholders’ Equity (Unaudited)

	Issued and Outstanding Common Shares			Preferred Stock		Common Stock			Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Deferred Stock-Based Compensation			Total
	(Dollars in thousands)
Balance at January 1, 2014		7,192,350		$	—	$	15,771		$	37,682	$	(7,416	)	$	(774	)	$	—		$	45,263
Net income		—			—		—			206		—			—			—			206
Other comprehensive income, net of taxes		—			—		—			—		—			1,218			—			1,218
Balance at September 30, 2014		7,192,350		$	—	$	15,771		$	37,888	$	(7,416	)	$	444		$	—		$	46,687
Balance at January 1, 2015		7,233,795		$	—	$	16,064		$	38,055	$	(7,416	)	$	654		$	(146	)	$	47,211
Net income		—			—		—			11,471		—			—			—			11,471
Other comprehensive loss, net of taxes		—			—		—			—		—			(45	)		—			(45	)
Issuance of restricted stock		55,785			—		407			—		—			—			(407	)		—
Forfeiture of restricted stock		(9,290	)		—		(59	)		—		—			—			59			—
Amortization of restricted stock		—			—		—			—		—			—			59			59
Balance at September 30, 2015		7,280,290		$	—	$	16,412		$	49,526	$	(7,416	)	$	609		$	(435	)	$	58,696

The accompanying notes are an integral part of the consolidated financial statements.

6.

DCB Financial Corp

Consolidated Statements of Cash Flows (Unaudited)

	Nine months ended September 30,
	2015			2014
	(In thousands)
Cash flows from operating activities
Net income	$	11,471		$	206
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		729			813
Deferred taxes, net		(10,688	)		—
Loss on sale of securities available-for-sale		—			(101	)
Loss on loans held-for-sale		—			546
Net loss on sale of real estate owned		20			73
Gain on sale of branch		—			(438	)
Net stock-based compensation expense		132			147
Premium amortization on securities, net		790			823
Earnings on bank owned life insurance		(571	)		(566	)
Net changes in other assets and other liabilities		(545	)		(1,653	)
Net cash provided by (used in) operating activities		1,338			(150	)
Cash flows from investing activities
Purchases of securities available-for-sale		(25,696	)		(16,595	)
Proceeds from maturities, principal payments and calls of securities available-for-sale		18,728			15,842
Proceeds from sales of securities available-for-sale		—			7,140
Net change in loans		5,124			(14,563	)
Proceeds from sale of real estate owned		307			440
Net cash paid with sale of branch		—			(12,464	)
Proceeds from redemption of FHLB stock		—			549
Premises and equipment expenditures		(662	)		(322	)
Proceeds from sale of loans		—			423
Net cash used in investing activities		(2,199	)		(19,550	)
Cash flows from financing activities
Net change in deposits		21,715			15,172
Repayment of borrowings		(7,097	)		(22	)
Net cash provided by financing activities		14,618			15,150
Net change in cash and cash equivalents		13,757			(4,550	)
Cash and cash equivalents at beginning of period		21,274			25,357
Cash and cash equivalents at end of period	$	35,031		$	20,807
Supplemental disclosures of cash flow information
Cash paid during the period for interest on deposits and borrowings	$	834		$	994
Non-cash investing and financing activities:
Transfer of loans to real estate owned	$	—		$	509

The accompanying notes are an integral part of the consolidated financial statements.

7.

Note 1 – Summary of Significant Accounting Policies

Throughout this report, the terms “Company,” “DCB,” “we,” “our” and “us” refers to the consolidated entity of DCB Financial Corp and its wholly owned subsidiaries, The Delaware County Bank and Trust Company (the “Bank”), DCB Title Services LLC, DCB Insurance Services, Inc, and 110 Riverbend, LLC.

The accompanying unaudited financial statements were prepared in accordance with the instructions for Form 10-Q and Regulation S-X and, therefore, do not include information for footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The material under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is written with the presumption that the users of the interim financial statements have read, or have access to, the latest audited financial statements and notes thereto of the Company, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2014, and for the two-year period then ended, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Accordingly, only material changes in the results of operations and financial condition are discussed in the remainder of Part I. Certain amounts from prior year periods are reclassified, when necessary, to conform to the current period presentation.

All adjustments, consisting of only normal recurring items, that in the opinion of management are necessary for a fair presentation of the financial statements have been included in the results of operations for the three and nine months ended September 30, 2015 and 2014. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results anticipated for the year.

To prepare financial statements in conformity with U.S. GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect amounts reported in the financial statements and disclosures provided, and future results could differ. The allowance for loan losses, fair values of financial instruments and status of contingencies are anytime particularly subject to change.

Earnings per share

Earnings per common share is net income divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed including the dilutive effect of additional potential common shares under stock options. Weighted-average shares for basic and diluted earnings per share are presented below.

	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Weighted-average common shares outstanding (basic)		7,282,365		7,192,350		7,269,222		7,192,350
Dilutive effect of assumed exercise of stock options		19,809		56,844		19,015		50,081
Weighted-average common shares outstanding (diluted)		7,302,174		7,249,194		7,288,237		7,242,431

There were 61,339 shares and 124,622 shares included in the computation of common share equivalents for the three and nine months ended September 30, 2015 and 2014, respectively, because the average fair value of the shares was greater than the exercise price.

At September 30, 2015 and 2014, 14,985 and 45,727 of anti-dilutive shares, respectively, were excluded from the diluted weighted average common share calculations.

Stock-Based Compensation

Compensation cost is recognized for restricted stock awards issued to employees and directors based on the fair value of these awards at the date of grant. The market price of the Company’s common shares at the date of grant is used to determine the fair value for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

8.

Note 1 – Summary of Significant Accounting Policies, cont.

Awards for 2,145 restricted shares and 55,785 restricted shares were granted under the Company’s 2014 Restricted Stock Plan during the three months and nine months ended September 30, 2015, respectively. The awards vest ratably over a five-year period. Forfeitures of unvested restricted shares totaled 9,290 shares in the three months and nine months ended September 30, 2015. There were no grants or forfeitures of restricted shares in the nine months ended September 30, 2014. There were 87,940 and 41,445 unvested restricted shares at September 30, 2015 and December 31, 2014, respectively.

The Company’s outstanding stock options may be settled for cash at the recipient’s discretion; therefore, liability accounting applies to the Company’s 2004 Long-Term Stock Incentive Plan under which such stock options were granted. Compensation expense is recognized based on the fair value of these awards at the reporting date. A Black Scholes model is utilized to estimate the fair value of stock options at the date of grant and subsequent re-measurement dates. Compensation cost is recognized over the required service period, generally defined as the vesting period. The Company’s stock option awards contain terms that provide for a graded vesting schedule whereby portions of the award vest in increments over the requisite service period.  Changes in fair value of the options between the vesting date and option expiration date are also recognized in the Consolidated Statement of Income.

Significant Accounting Estimates

The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP and follow general practices within the financial services industry. The application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.

The procedures for assessing the adequacy of the allowance for loan losses reflect the Company’s evaluation of credit risk after careful consideration of all information available to the Company. In developing this assessment, the Company must rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown, such as economic factors, developments affecting companies in specific industries and issues with respect to single borrowers. Depending on changes in circumstances, future assessments of credit risk may yield materially different results, which may require an increase or a decrease in the allowance for loan losses.

The valuation of other assets requires that management utilize a variety of estimates and analysis to determine whether an asset is impaired or other-than-temporarily impaired (“OTTI”). After determining the appropriate methodology for fair value measurement, management then evaluates whether or not declines in fair value below book value are temporary or other-than-temporary impairments. When the Company does not intend to sell a debt security, and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income.

Loans (including Loans Held for Sale)

Loans are classified as held for investment when management has both the intent and ability to hold the loan for the foreseeable future, or until maturity or payoff. Management’s intent and view of the foreseeable future may change based on changes in business strategies, the economic environment, market conditions and the availability of government programs. Loans that are held for investment are reported at the principal balance outstanding, net of unearned interest, unamortized deferred loan fees and costs and the allowance for loan losses. Loans held for sale are carried at the lower of amortized cost or estimated fair value, determined on an aggregate basis for each type of loan. Net unrealized losses are recognized by charges to income.

Interest income is accrued based on the unpaid principal balance and includes amortization of net deferred loan fees and costs over the loan term. Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well secured and in process of collection. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for loans placed on non-accrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

When loans are transferred from held for investment to held for sale, specific reserves and allocated pooled reserves included in the allowance for loan and losses are reclassified to reduce the basis of the loans to the lower of cost or estimated fair value less cost to sell.

9.

Note 1 – Summary of Significant Accounting Policies, cont.

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable but unconfirmed credit losses, increased by the provision for loan losses and decreased by charge-offs net of recoveries. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the required allowance balance based on past loan loss experience, augmented by additional estimates related to the nature and volume of the portfolio, information about specific borrower situations, estimated collateral values, economic conditions and other factors.

The allowance consists of both specific and general components. The specific component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the collateral value or value of expected discounted cash flows of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical charge-off experience and expected loss given default derived from the Bank’s internal risk rating process. Management utilizes an average of a three year historical loss period. Management has the ability to adjust these loss rates by utilizing risk ratings based on current period trends. If current period trends differ either positively or negatively from the given weighted historical loss rates, adjustments can be made. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risking rating data.

Management also utilizes its assessment of general economic conditions, and other localized economic data to more fully support its loan loss estimates. General economic data may include: inflation rates, savings rates and national unemployment rates. Local data may include: unemployment rates, housing starts, real estate valuations, and other economic data specific to the Company’s market area. Though not specific to individual loans, these economic trends can have an impact on portfolio performance as a whole.

Uncollectibility is usually determined based on a pre-determined number of days delinquent in the case of consumer loans, or, in the case of commercial loans, is based on a combination of factors including delinquency, collateral and other legal considerations. Consumer loans are charged-off prior to 120 days of delinquency, but could be charged off earlier, depending on the individual circumstances. Mortgage loans are charged down prior to 180 days of delinquency, but could be charged off sooner, again, depending upon individual circumstance. Typically, loans collateralized by residential real estate are partially charged down to the estimated liquidation value, which is generally based on appraisal less costs to hold and liquidate. Commercial and commercial real estate loans are evaluated for impairment and typically reserved based on the results of the analysis, then subsequently charged down to a recoverable value when loan repayment is deemed to be collateral dependent. Loans can be partially charged down depending on a number of factors including: the remaining strength of the borrower and guarantor; the type and value of the collateral, and the ease of liquidating collateral; and whether or not collateral is brought onto the bank’s balance sheet via repossession. In the case of commercial and commercial real estate loans, charge-offs, partial or whole, take place when management determines that full collectability of principal balance is unlikely to occur. Subsequent recoveries, if any, are credited to the allowance. Management’s policies for determining impairment, reserves and charge-offs are reviewed and approved by the Board of Directors on an annual basis.

Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule.  All modified loans are evaluated to determine whether the loans should be reported as a Troubled Debt Restructuring (“TDR”).  A loan is a TDR when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying or renewing a loan that the Company would not otherwise consider. To make this determination, the Company must determine whether (a) the borrower is experiencing financial difficulties and (b) the Company granted the borrower a concession. This determination requires consideration of all of the facts and circumstances surrounding the modification.  An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties.

10.

Note 1 – Summary of Significant Accounting Policies, cont.

Income Taxes

The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred tax assets are reduced by a valuation allowance, if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment. The Company recognizes interest and penalties on income taxes, if applicable, as a component of income tax expense. The Company files consolidated income tax returns with its subsidiaries.

Note 2 – Securities

The amortized cost and estimated fair values of securities available-for-sale were as follows at the dates indicated (in thousands):

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government and agency obligations	$	16,432	$	64	$	(27	)	$	16,469
Corporate bonds		4,220		34		(8	)		4,246
States and municipal obligations		22,137		437		(93	)		22,481
Collateralized mortgage obligations		22,316		63		(80	)		22,299
Mortgage-backed securities		15,991		547		(14	)		16,524
Total	$	81,096	$	1,145	$	(222	)	$	82,019

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government and agency obligations	$	11,602	$	31	$	(88	)	$	11,545
Corporate bonds		4,975		33		(21	)		4,987
States and municipal obligations		21,303		423		(69	)		21,657
Collateralized mortgage obligations		19,601		85		(106	)		19,580
Mortgage-backed securities		17,438		702		—			18,140
Total	$	74,919	$	1,274	$	(284	)	$	75,909

11.

Note 2 – Securities, cont.

Securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at the dates indicated are as follows (dollars in thousands):

	September 30, 2015
	(Less than 12 months)						(12 months or longer)						Total
Description of securities	Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses
U.S. Government and agency obligations		2	$	896	$	1		2	$	1,970	$	26		4	$	2,866	$	27
Corporate bonds		2		552		3		3		1,405		5		5		1,957		8
State and municipal obligations		6		2,398		64		3		1,308		29		9		3,706		93
Collateralized mortgage obligations		16		10,349		43		4		3,288		37		20		13,637		80
Mortgage-backed  securities and other		3		2,570		14		—		—		—		3		2,570		14
Total temporarily impaired securities		29	$	16,765	$	125		12	$	7,971	$	97		41	$	24,736	$	222

	December 31, 2014
	(Less than 12 months)						(12 months or longer)						Total
Description of securities	Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses
U.S. Government and agency obligations		3	$	2,488	$	9		4	$	4,446	$	79		7	$	6,934	$	88
Corporate bonds		1		503		1		4		1,664		21		5		2,167		21
State and municipal obligations		8		2,699		18		4		1,915		51		12		4,614		69
Collateralized mortgage obligations		9		5,649		21		4		3,649		85		13		9,298		106
Mortgage-backed securities and other		—		—		—		—		—		—		—		—		—
Total temporarily impaired securities		21	$	11,339	$	49		16	$	11,674	$	236		37	$	23,013	$	284

The unrealized losses on the Company’s investments in U.S. Government and agency obligations, state and political subdivision obligations, corporate bonds and mortgage-backed securities were caused primarily by changes in interest rates. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be OTTI at September 30, 2015 or December 31, 2014.

Substantially all mortgage-backed securities are backed by pools of mortgages that are insured or guaranteed by the Federal National Mortgage Association (“FNMA”), the Government National Mortgage Association (“GNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”).

There were no sales of securities in the nine months ended September 30, 2015. Gross gains on the sale of securities were $241,000 and $242,000 in the three months and nine months ended September 30, 2014. Gross losses on the sale of securities were $141,000 in the nine months ended September 30, 2014.

At September 30, 2015, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of shareholders’ equity.

The amortized cost and estimated fair value of all debt securities at September 30, 2015, by contractual maturity, are shown below (in thousands). Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown separately since they are not due at a single maturity date.

	Amortized Cost		Fair Value
Due in one year or less	$	2,106	$	2,112
Due after one to five years		19,678		19,862
Due after five to ten years		20,990		21,256
Due after ten years		22,331		22,265
Mortgage-backed and related securities		15,991		16,524
Total	$	81,096	$	82,019

Securities with a fair value of $72.4 million at September 30, 2015 were pledged to secure public deposits and other obligations.

12.

Note 3 – Loans

Loans were comprised of the following at the dates indicated (in thousands):

	September 30, 2015		December 31, 2014
Consumer and credit card	$	40,689	$	37,507
Commercial and industrial		99,498		106,222
Commercial real estate		103,891		111,851
Residential real estate and home equity		135,934		129,650
		380,012		385,230
Net deferred loan costs		278		214
Loans	$	380,290	$	385,444

Note 4 – Credit Quality

Allowance for Loan Losses

The Company’s methodology for estimating probable future losses on loans utilizes a combination of probability of loss by loan grade and loss given defaults for its portfolios. The probability of default is based on both market data from a third-party independent source and actual historical default rates within the Company’s portfolio. A loan is impaired when full payment of interest and principal under the original contractual loan terms is not expected. Commercial and industrial loans, commercial real estate, including construction and land development, and multi-family real estate loans are individually evaluated for impairment. If a loan is impaired, the loan amount exceeding fair value, based on the most current information available is reserved. Management has developed a process by which commercial and commercial real estate loan relationships with balances of $250,000 or greater are assigned an internal risk grade based on relevant information about the ability of the borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. Borrower’s receiving an internal risk grade of substandard or doubtful are individually evaluated for impairment through a loan quality review (LQR). The LQR details the various attributes of the relationship and collateral and determines based on the most recent available information if a specific reserve needs to be applied and at what level. The LQR process for all loans meeting the specific review criteria is completed on a quarterly basis. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, such loans are not separately identified for impairment disclosures. This methodology recognizes portfolio behavior while allowing for reasonable loss ratios on which to estimate allowance calculations.

Further, the process for estimating probable loan losses is divided into reviewing impaired loans on an individual basis for probable losses and, as noted above, calculating probable future losses based on historical and market data for homogenous loan portfolios. As the Company’s troubled loan portfolios have been reduced through paydowns, payoffs, credit improvement and charge-offs, the remaining loan portfolios possess better overall credit characteristics, and based on the Company’s methodology require lower rates of reserving than historical levels.

13.

Note 4 – Credit Quality, cont.

The tables below summarize activity in the allowance for loan losses for the periods indicated (in thousands).

	Three months ended September 30, 2015
	Consumer and Credit Card			Commercial and Industrial			Commercial Real Estate			Residential Real Estate and Home Equity		Unallocated			Total
Beginning balance	$	172		$	1,035		$	2,195		$	315	$	447		$	4,164
Charge-offs		(63	)		—			—			—					(63	)
Recoveries		50			157			18			30					255
Net (charge-offs) recoveries		(13	)		157			18			30					192
Provision		—			(63	)		(217	)		156		(26	)		(150	)
Ending balance	$	159		$	1,129		$	1,996		$	501	$	421		$	4,206

	Three months ended September 30, 2014
	Consumer and Credit Card			Commercial and Industrial			Commercial Real Estate			Residential Real Estate and Home Equity			Unallocated		Total
Beginning balance	$	161		$	1,418		$	2,511		$	220		$	258	$	4,568
Charge-offs		(43	)		(197	)		(173	)		(32	)				(445	)
Recoveries		31			4			11			7					53
Net charge-offs		(12	)		(193	)		(162	)		(25	)				(392	)
Provision		28			1			(166	)		88			49		—
Ending balance	$	177		$	1,226		$	2,183		$	283		$	307	$	4,176

	Nine months ended September 30, 2015
	Consumer and Credit Card			Commercial and Industrial			Commercial Real Estate			Residential Real Estate and Home Equity			Unallocated		Total
Beginning balance	$	190		$	1,132		$	2,376		$	268		$	270	$	4,236
Charge-offs		(122	)		(311	)		(64	)		(73	)				(570	)
Recoveries		109			297			37			97					540
Net (charge-offs) recoveries		(13	)		(14	)		(27	)		24					(30	)
Provision		(18	)		11			(353	)		209			151		—
Ending balance	$	159		$	1,129		$	1,996		$	501		$	421	$	4,206

	Nine months ended September 30, 2014
	Consumer and Credit Card			Commercial and Industrial			Commercial Real Estate			Residential Real Estate and Home Equity			Unallocated		Total
Beginning balance	$	301		$	3,231		$	2,973		$	219		$	—	$	6,724
Charge-offs		(111	)		(1,390	)		(1,041	)		(161	)				(2,703	)
Recoveries		90			14			125			23					252
Net charge-offs		(21	)		(1,376	)		(916	)		(138	)				(2,451	)
Provision		(103	)		(629	)		223			202			307		—
Transferred to loans held for sale		—			—			(97	)		—			—		(97	)
Ending balance	$	177		$	1,226		$	2,183		$	283		$	307	$	4,176

14.

Note 4 – Credit Quality, cont.

Impaired Loans

A loan is considered impaired when based on current information and events it is probable the Bank will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include non-performing commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

The following presents by class, information related to the Company’s impaired loans as of the dates indicated (in thousands).

	At September 30, 2015						Period ended September 30, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Three months Average Recorded Investment		Three months Interest Income Recognized		Nine months Average Recorded Investment		Nine months Interest Income Recognized
With no related allowance recorded:
Consumer and credit card	$	467	$	467			$	469	$	7	$	469	$	19
Commercial and industrial		907		907				914		5		1,106		21
Commercial real estate		129		129				451		2		468		2
Residential real estate and home equity		679		679				733		—		552		8
		2,182		2,182				2,567		14		2,595		50
With an allowance recorded:
Commercial and industrial	$	965	$	1,043	$	144	$	1,134	$	13	$	1,016	$	43
Commercial real estate		4,608		4,608		435		6,706		53		7,727		163
		5,573		5,651		579		7,840		66		8,743		206
Total:
Consumer and credit card	$	467	$	467	$	—	$	469	$	7	$	469	$	19
Commercial and industrial		1,872		1,950		144		2,048		18		2,122		64
Commercial real estate		4,737		4,737		435		7,157		55		8,195		165
Residential real estate and home equity		679		679		—		733		—		552		8
Total	$	7,755	$	7,833	$	579	$	10,407	$	80	$	11,338	$	256

	At December 31, 2014						Period ended September 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Three months Average Recorded Investment		Three months Interest Income Recognized		Nine months Average Recorded Investment		Nine months Interest Income Recognized
With no related allowance recorded:
Consumer and credit card	$	455	$	455			$	462	$	4	$	474	$	21
Commercial and industrial		1,288		1,288				1,306		24		1,624		35
Commercial real estate		1,088		1,088				6,372		57		8,373		92
		2,831		2,831				8,140		85		10,471		148
With an allowance recorded:
Commercial and industrial		740		817		256		1,016		23		2,096		33
Commercial real estate		8,602		8,602		1,042		5,369		285		5,127		452
		9,342		9,419		1,298		6,385		308		7,223		485
Total:
Consumer and credit card	$	455	$	455	$	—	$	462	$	4	$	474	$	21
Commercial and industrial		2,028		2,105		256		2,322		47		3,720		68
Commercial real estate		9,690		9,690		1,042		11,741		342		13,500		544
Total	$	12,173	$	12,250	$	1,298	$	14,525	$	393	$	17,694	$	633

15.

Note 4 – Credit Quality, cont.

The allocation of the allowance for loan losses summarized on the basis of the Company’s impairment methodology was as follows at the dates indicated (in thousands):

	Consumer and Credit card		Commercial and Industrial		Commercial Real Estate		Residential Real Estate and Home Equity		Total
September 30, 2015
Individually evaluated for impairment	$	—	$	144	$	435	$	—	$	579
Collectively evaluated for impairment		159		985		1,561		501		3,206
Allocated	$	159	$	1,129	$	1,996	$	501		3,785
Unallocated										421
									$	4,206
December 31, 2014
Individually evaluated for impairment	$	—	$	256	$	1,042	$	—	$	1,298
Collectively evaluated for impairment		190		876		1,334		268		2,668
Allocated	$	190	$	1,132	$	2,376	$	268		3,966
Unallocated										270
									$	4,236

The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology at the dates indicated was as follows (in thousands):

	Consumer and Credit card		Commercial and Industrial		Commercial Real Estate		Residential Real Estate and Home Equity		Total
September 30, 2015
Individually evaluated for impairment	$	467	$	1,872	$	4,737	$	679	$	7,755
Collectively evaluated for impairment		40,222		97,626		99,154		135,255		372,257
Ending balance	$	40,689	$	99,498	$	103,891	$	135,934	$	380,012

	Consumer and Credit card		Commercial and Industrial		Commercial Real Estate		Residential Real Estate and Home Equity		Total
December 31, 2014
Individually evaluated for impairment	$	455	$	2,028	$	9,690	$	-	$	12,173
Collectively evaluated for impairment		37,052		109,823		96,532		129,650		373,057
Ending balance	$	37,507	$	111,851	$	106,222	$	129,650	$	385,230

Loans on non-accrual status were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2015		2014
Consumer and credit card	$	56	$	120
Commercial and industrial		573		632
Commercial real estate		30		298
Residential real estate and home equity		679		334
Total	$	1,338	$	1,384

16.

Note 4 – Credit Quality, cont.

Credit Quality Indicators

The Company uses the following definitions for criticized and classified commercial loans and commercial real estate loans which are consistent with regulatory guidelines:

Special Mention

Loans which possess some credit deficiency or potential weakness which deserves close attention, but which do not yet warrant substandard classification. Such loans pose unwarranted financial risk that, if not corrected, could weaken the loan and increase risk in the future. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk, and (2) weaknesses are considered “potential,” versus “well-defined,” impairments to the primary source of loan repayment.

Substandard

Loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful

Loans that have all the weaknesses inherent in a Substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Specific pending factors may strengthen the credit, therefore deferring a Loss classification.

Loss

Loans are considered uncollectible and of such little value that continuing to carry them as assets on the institution’s financial statements is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

As of the dates indicated and based on the most recent analysis performed, the recorded investment by risk category and class of loans is as of the dates indicated (in thousands):

	September 30, 2015				December 31, 2014
	Commercial and Industrial		Commercial Real Estate		Commercial and Industrial		Commercial Real Estate
Pass	$	95,101	$	94,137	$	100,961	$	96,217
Special mention		933		4,668		823		6,146
Substandard		3,464		5,086		4,438		9,488
Total	$	99,498	$	103,891	$	106,222	$	111,851

For residential real estate and consumer loan classes, the Company evaluates credit quality primarily based upon the aging status of the loan and by payment activity.

The following table presents the recorded investment in residential real estate and consumer loans based on payment activity as of the dates indicated (in thousands):

	September 30, 2015				December 31, 2014
	Consumer and Credit Card		Residential Real Estate and Home Equity		Consumer and Credit Card		Residential Real Estate and Home Equity
Performing	$	40,633	$	135,255	$	37,387	$	128,836
Non-performing		56		679		120		814
Total	$	40,689	$	135,934	$	37,507	$	129,650

17.

Note 4 – Credit Quality, cont.

Age Analysis of Past Due Loans

The following tables present past due loans aged as of the dates indicated (in thousands).

	September 30, 2015
	30-59 Days Past Due		60-89 Days Past  Due		90 Days or more Past Due		Total  Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
Consumer and credit card	$	34	$	30	$	56	$	120	$	40,569	$	40,689	$	—
Commercial and industrial		—		—		—		—		99,498		99,498		—
Commercial real estate		—		—		—		—		103,891		103,891		—
Residential real estate and home equity		29		496		—		525		135,409		135,934		—
Total	$	63	$	526	$	56	$	645	$	379,367	$	380,012	$	—

	December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total  Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
Consumer and credit card	$	66	$	7	$	120	$	193	$	37,314	$	37,507	$	—
Commercial and industrial		68		—		—		68		106,154		106,222		—
Commercial real estate		49		—		306		355		111,496		111,851		—
Residential real estate and home equity		220		30		642		892		128,758		129,650		480
Total	$	403	$	37	$	1,068	$	1,508	$	383,722	$	385,230	$	480

Troubled Debt Restructurings

The following table summarizes troubled debt restructurings that occurred during the periods indicated (dollars in thousands):

	For the three months ended September 30,
	2015				2014
	Number of Contracts		Recorded Investment (as of period end)		Number of Contracts		Recorded Investment (as of period end)
Consumer and credit card		1	$	188		—	$	—
Commercial and industrial		—		—		2		547
Total		1	$	188		2	$	547

	For the nine months ended September 30,
	2015				2014
	Number of Contracts		Recorded Investment (as of period end)		Number of Contracts		Recorded Investment (as of period end)
Consumer and credit card		7	$	279		—	$	—
Commercial and industrial		—		—		2		547
Total		7	$	279		2	$	547

18.

Note 4 – Credit Quality, cont.

The following presents by class loans modified in a TDR that subsequently defaulted within twelve months of the modification (i.e. 60 days or more past due) during the periods indicated (dollars in thousands):

	For the three months ended September 30,
	2015				2014
	Number of Contracts		Recorded Investment (as of period end) (1)		Number of Contracts		Recorded Investment (as of period end) (1)
Commercial real estate		—	$	—		1	$	315
Total		—	$	—		1	$	315

	For the nine months ended September 30,
	2015				2014
	Number of Contracts		Recorded Investment (as of period end) (1)		Number of Contracts		Recorded Investment (as of period end) (1)
Commercial real estate		—	$	—		1	$	315
Total		—	$	—		1	$	315

(1) Period end balances are inclusive of all partial pay downs and charge-offs since the modification date. Loans modified in a TDR that were fully paid down, charged off, or foreclosed upon by period end are not reported.

A modification of a loan constitutes a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company offers various types of concessions when modifying a loan; however, forgiveness of principal is rarely granted. Depending on the financial condition of the borrower, the purpose of the loan and the type of collateral supporting the loan structure; modifications can be either short-term (12 months of less) or long term (greater than one year). Commercial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor may be requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period.

Land loans are also included in the class of commercial real estate loans. Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity. Land loans modified in a TDR typically involve extending the balloon payment by one to three years, changing the monthly payments from interest-only to principal and interest, while leaving the interest rate unchanged.

Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR for the Company may have the financial effect of increasing the specific allowance associated with the loan. The allowance for impaired loans that have been modified in a TDR is measured based on the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent or on the present value of expected future cash flows discounted at the loan’s effective interest rate. Management exercises significant judgment in developing these estimates.

As mentioned above, an individual loan is placed on a non-accruing status if, in the judgment of management, it is unlikely that all principal and interest will be received according to the terms of the note. Loans on non-accrual may be eligible to be returned to an accruing status after six months of compliance with the modified terms. However, there are number of factors that could prevent a loan from returning to accruing status, even after remaining in compliance with loan terms for the aforementioned six month period. For example: deteriorating collateral, negative cash flow changes and inability to reduce debt to income ratios.

19.

Note 5 – Fair Value Measurements

The Company accounts for fair value measurements in accordance with FASB ASC 820, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

The carrying value of certain financial assets and liabilities is impacted by the application of fair value measurements, either directly or indirectly. In certain cases, an asset or liability is measured and reported at fair value on a recurring basis, such as available-for-sale investment securities. In other cases, management must rely on estimates or judgments to determine if an asset or liability not measured at fair value warrants an impairment write-down or whether a valuation reserve should be established. Given the inherent volatility, the use of fair value measurements may have a significant impact on the carrying value of assets or liabilities, or result in material changes to the financial statements, from period to period.

Fair value is defined as the price that would be received to sell an asset or transfer a liability between market participants at the balance sheet date. When possible, the Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to observable market data for similar assets and liabilities. However, certain assets and liabilities are not traded in observable markets and the Company must use other valuation methods to develop a fair value.

The following methods, assumptions, and valuation techniques were used by the Company to measure different financial assets and liabilities at fair value and in estimating its fair value disclosures for financial instruments.

Cash and Cash Equivalents: The carrying amounts reported in the consolidated statements of financial condition for cash and cash equivalents is deemed to approximate fair value and are classified as Level 1 of the fair value hierarchy.

 Available for Sale Investment Securities: Fair values for investment securities are determined by quoted market prices if available (Level 1). For securities where quoted prices are not available, fair values are estimated based on market prices of similar securities. For securities where quoted prices or market prices of similar securities are not available, fair values are estimated using matrix pricing, which is a mathematical technique widely used in the industry to value investment securities without relying exclusively on quoted prices for the specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities (Level 2). Any investment securities not valued based upon the methods above is considered Level 3.

The Company utilizes information provided by a third-party investment securities portfolio manager in analyzing the investment securities portfolio in accordance with the fair value hierarchy of the Fair Value Topic. The portfolio manager’s evaluation of investment security portfolio pricing is performed using a combination of prices and data from other sources, along with internally developed matrix pricing models. The third-party’s month-end pricing process includes a series of quality assurance activities where prices are compared to recent market conditions, previous evaluation prices, and between the various pricing services. These processes produce a series of quality assurance reports on which price exceptions are identified, reviewed and where appropriate, securities are re-priced. In the event of a materially different price, the third party will report the variance and review the pricing methodology in detail. The results of the quality assurance process are incorporated into the selection of pricing providers by the third party.

20.

Note 5 – Fair Value Measurements, cont.

Loans: For fixed rate loans and for variable rate loans with infrequent re-pricing or re-pricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life. Fair values for impaired loans are estimated using discounted cash flow analysis or underlying collateral values. For loans held on balance sheet, the discounted fair value is further reduced by the amount of reserves held against the loan portfolios. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price and due to the significant judgment involved in evaluating credit quality, loans are classified within Level 3 classification.

Federal Home Loan Bank Stock: The carrying amount presented in the consolidated statements of financial condition is deemed to approximate fair value, and is classified as a Level 2 instrument.

Accrued Interest Receivable and Payable: The fair value for accrued interest approximates its carrying amounts due to the short duration before collection. The valuation is a Level 3 classification which is consistent with its underlying asset or liability.

Deposits: The fair values of deposits with no stated maturity, such as money market demand deposits, savings and NOW accounts have been analyzed by management and assigned estimated maturities and cash flows which are then discounted to derive a value. The fair value of fixed-rate certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The Company classifies the estimated fair value of deposit liabilities as Level 2 in the fair value hierarchy.

Advances from the Federal Home Loan Bank: The fair value of these advances is estimated using the rates currently offered for similar advances of similar remaining maturities (Level 2).

Commitments to Extend Credit: For fixed-rate and adjustable-rate loan commitments, the fair value estimate considers the difference between current levels of interest rates and committed rates. At September 30, 2015 and December 31, 2014, the fair value of loan commitments was not material.

Based on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments are as follows at the dates indicated (in thousands):

	September 30, 2015
	Carrying amount		Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	35,031	$	35,031	$	35,031	$	—	$	—
Securities available-for-sale		82,019		82,019		—		82,019		—
Loans (net of allowance)		376,084		374,538		—		—		374,538
FHLB stock		3,250		3,250		—		3,250		—
Accrued interest receivable		1,431		1,431		—		—		1,431
Financial liabilities
Non-interest-bearing deposits	$	123,870	$	123,870	$	—	$	123,870	$	—
Interest-bearing deposits		351,037		351,152		—		351,152		—
Borrowings		4,711		4,711		—		4,711		—
Accrued interest payable		74		74		—		—		74

	December 31, 2014
	Carrying amount		Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	21,274	$	21,274	$	21,274	$	—	$	—
Securities available-for-sale		75,909		75,909		—		75,909		—
Loans (net of allowance)		381,208		381,224		—		—		381,224
FHLB stock		3,250		3,250		—		3,250		—
Accrued interest receivable		1,234		1,234		—		—		1,234
Financial liabilities
Non-interest-bearing deposits	$	111,022	$	111,022	$	—	$	111,022	$	—
Interest-bearing deposits		342,170		342,318		—		342,318		—
Borrowings		11,808		11,808		—		11,808		—
Accrued interest payable		36		36		—		—		36

21.

Note 5 – Fair Value Measurements, cont.

The following table presents the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at the dates indicated (in thousands):

	September 30, 2015
			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)
U.S. Government and agency obligations	$	16,469	$	—	$	16,469	$	—
Corporate bonds		4,246		—		4,246		—
State and municipal obligations		22,481		—		22,481		—
Collateralized mortgage obligations		22,299		—		22,299		—
Mortgage-backed securities		16,524		—		16,524		—
Total	$	82,019	$	—	$	82,019	$	—

	December 31, 2014
			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)
U.S. Government and agency obligations	$	11,545	$	—	$	11,545	$	—
Corporate bonds		4,987		—		4,987		—
State and municipal obligations		21,657		—		21,657		—
Collateralized mortgage obligations		19,580		—		19,580		—
Mortgage-backed securities		18,140		—		18,140		—
Total	$	75,909	$	—	$	75,909	$	—

The following is a description of the valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Impaired loans

At September 30, 2015 and December 31, 2014, impaired loans consisted primarily of loans secured by commercial real estate. Management has determined fair value measurements on impaired loans primarily through evaluations of appraisals performed.

Real Estate Owned

Real estate acquired through, or in lieu of, loan foreclosure is held for sale and initially recorded at fair value (based on current appraised value) at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. Management has determined fair value measurements on real estate owned primarily through evaluations of appraisals performed.

22.

Note 5 – Fair Value Measurements, cont.

The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at the dates indicated (in thousands).

	September 30, 2015
	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)
Impaired loans	$	7,755	$	—	$	—	$	7,755
Real estate owned		785		—		—		785

	December 31, 2014
	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)
Impaired loans	$	12,173	$	—	$	—	$	12,173
Real estate owned		1,111		—		—		1,111

Note 6 – Sale of Branch and Assets Held for Sale

In March 2014, the Bank closed the previously announced sale of its Marysville branch (the “Branch”) to Merchants National Bank, a national bank headquartered in Hillsboro, Ohio (“Merchants”). Merchants acquired certain assets and assumed certain liabilities of the Branch, including the assumption of $19.4 million in deposit liabilities and the purchase of $4.8 million in loans related to the Branch.

The amounts related to the sale are as follows (in thousands):

Deposits assumed	$	19,403
Loans sold (at book value)		(4,750	)
Property and Equipment (agreed upon value)		(1,500	)
Cash on hand		(261	)
Premium on deposits		(438	)
Other, net		10
Cash paid to Merchants	$	12,464

At September 30, 2015, the Company classified the $4.8 million carrying amount of its headquarters building as held-for-sale, reflecting the Company’s desire to sell and simultaneously lease back the property.

23.

Note 7 – Federal Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and franchise tax returns in Ohio. Income tax benefit for the dates indicated include the following components (in thousands):

	Three months ended						Nine months ended
	September 30,						September 30,
	2015			2014			2015			2014
Deferred	$	96		$	(92	)	$	96		$	229
Valuation allowance		(10,784	)		92			(10,784	)		(229	)
Total	$	(10,688	)	$	—		$	(10,688	)	$	—

The difference between the financial statement tax provision and amounts computed by applying the statutory federal income tax rate to income before income taxes was as follows (in thousands):

	Three months ended						Nine months ended
	September 30,						September 30,
	2015			2014			2015			2014
Federal income taxes compared at the expected statutory rate	$	136		$	17		$	266		$	70
Increase (decrease) in taxes resulting from:
Nontaxable dividend and interest income		(29	)		(20	)		(70	)		(63	)
Increase in cash surrender value of life insurance -  net		(56	)		(56	)		(194	)		(193	)
Valuation allowance		(10,784	)		92			(10,784	)		(229	)
Other		45			(33	)		94			415
Income tax benefit per financial statements	$	(10,688	)	$	—		$	(10,688	)	$	—

Deferred tax assets and liabilities were comprised of the following at the dates indicated (in thousands):

	September 30, 2015			December 31, 2014
Deferred tax assets:
Allowance for loan losses	$	1,450		$	1,440
Depreciation		-			103
Deferred compensation		292			316
Alternative minimum tax carry forward		153			145
Expenses on foreclosed property		11			10
NOL carry forward		9,081			8,910
Other		57			284
Subtotal		11,044			11,208
Deferred tax liabilities:
FHLB stock dividends		(307	)		(389	)
Unrealized gains on available-for-sale securities		(314	)		(337	)
Other		(40	)		(35	)
Subtotal		(661	)		(761	)
Net deferred tax asset		10,383			10,447
Less: valuation allowance		—			(10,784	)
Total	$	10,383		$	(337	)

At December 31 2014, the Company had a $26.4 million net operating loss carryforward that begins to expire in 2030.

24.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

DCB Financial Corp (the “Company” or “DCB”) is a financial holding company formed under the laws of the State of Ohio. The Company is the parent of The Delaware County Bank & Trust Company (the “Bank”), DCB Title Services LLC, DCB Insurance Services, Inc, and 110 Riverbend, LLC. The Bank is a state-chartered commercial bank, which conducts business from its main offices at 110 Riverbend Avenue in Lewis Center, Ohio, and through its 14 branch offices located in central Ohio and surrounding communities. The Bank provides customary retail and commercial banking services to its customers, including checking and savings accounts, time deposits, IRAs, safe deposit facilities, personal loans, commercial loans, commercial leases, real estate mortgage loans, night depository facilities and trust and personalized wealth management services. The Bank also provides cash management, bond registrar and payment services. The Bank operates a wholly-owned subsidiary, ORECO, Inc., which is engaged in the ownership and disposition of the Bank’s foreclosed real estate.

Forward-Looking Statements

Certain statements in this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to the financial condition and prospects, lending risks, plans for future business development and marketing activities, capital spending and financing sources, capital structure, the effects of regulation and competition, and the prospective business of both the Company and the Bank. Where used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” and similar words and expressions, related to the Company or the Bank or their respective management, identify forward-looking statements. Such forward-looking statements reflect the current views of the Company and are based on information currently available to the management of the Company and the Bank and upon current expectations, estimates, and projections about the Company and its industry, management’s belief with respect thereto, and certain assumptions made by management. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. 

Potential risks and uncertainties include, but are not limited to: (i) significant increases in competitive pressure in the banking and financial services industries; (ii) changes in the interest rate environment which could reduce anticipated or actual margins; (iii) changes in political conditions or the legislative or regulatory environment; (iv) general economic conditions, either nationally or regionally (especially in central Ohio), becoming less favorable than expected resulting in, among other things, a deterioration in credit quality of assets; (v) changes occurring in business conditions and inflation; (vi) changes in technology; (vii) changes in monetary and tax policies; (viii) changes in the securities markets; and (ix) other risks and uncertainties detailed from time to time in the filings of the Company with the Securities and Exchange Commission.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

25.

Overview of the third quarter of 2015

· Total assets were $541.7 million at September 30, 2015, compared with $515.4 million at December 31, 2014.

· Total loans were $380.3 million at September 30, 2015, compared with $385.4 million at December 31, 2014.

· Total deposits were $474.9 million at September 30, 2015, compared with $453.2 million at December 31, 2014.

· Net income was $11.1 million for the three months ended September 30, 2015, compared with $50,000 for the year-ago quarter and $144,000 for the second quarter of 2015. For the nine months ended September 30, 2015, net income was $11.5 million, compared with $206,000 for the first nine months of 2014.

· Net income per diluted share was $1.52 for the three months ended September 30, 2015, compared with $0.01 for the year-ago quarter and $0.02 for the second quarter of 2015. Net income per diluted share was $1.58 for the nine months ended September 30, 2015 compared with $0.03 per share for the same period in 2014.

· The Company reversed a valuation allowance that had previously been recorded against its net deferred tax assets, resulting in a one-time tax benefit in the third quarter of 2015 of $10.7 million or $1.46 per diluted share. Pre-tax income was $400,000 or $0.06 per diluted share for the third quarter of 2015, compared with $50,000 or $0.01 in the year-ago quarter. Pre-tax income was $783,000 or $0.11 per diluted share for the nine months ended September 30, 2015, compared with $206,000 or $0.03 per diluted share in the year-ago period.

· Net interest income was $4.2 million for the three months ended September 30, 2015, compared with $4.0 million for the year-ago quarter and $4.2 million for the second quarter of 2015. Net interest income was $12.5 million for the nine months ended September 30, 2015, compared with $11.9 million for the first nine months of 2014.

· The net interest margin was 3.35% in the third quarter of 2015, compared with 3.40% in both the year-ago quarter and in the second quarter of 2015. The net interest margin was 3.41% in the nine months ended September 30, 2015, compared with 3.45% in the year-ago period.

· The Company recorded a negative provision for loan losses of $150,000 in the third quarter of 2015. The negative provision for loan losses recorded in the third quarter had the effect of offsetting the provision for loan losses of $150,000 that was recorded in the first quarter of 2015, resulting in no provision for loan losses for the nine months ended September 30, 2015. There was no provision for loan losses recorded in the three months and nine months ended September 30, 2014.

· Non-interest income was 22.9% and 22.2% of total revenue in the three months and nine months ended September 30, 2015, respectively, compared to 22.6% and 22.2%, in the three months and nine months ended September 30, 2014, respectively.

· Our efficiency ratio was 95.0% and 94.9% in the three months and nine months ended September 30, 2015, respectively, compared to 98.7% and 98.1% in the three months and nine months ended September 30, 2014, respectively. The efficiency ratio measures non-interest operating expenses as a percentage of total revenue, adjusted for non-recurring items such as the gain or loss on sale of securities or REO.

· Total non-performing assets (including troubled debt restructurings “ TDR’s”) were $8.2 million or 1.52% of total assets at September 30, 2015, compared to $11.8 million or 2.18% of total assets, at June 30, 2015 and $12.6 million, or 2.45% of total assets, at December 31, 2014.

· Total non-performing assets (excluding TDR’s) were $2.1 million or 0.39% of total assets at September 30, 2015, compared to $2.7 million or 0.51% of total assets at June 30, 2015 and $3.0 million or 0.58% at December 31, 2014.

Comparison of Results of Operations

General

Net income was $11.1 million or $1.52 per diluted share for the three months ended September 30, 2015, compared to net income of $50,000 or $0.01 per diluted share for the same period in 2014. We reversed a valuation allowance that had previously been recorded against our net deferred tax assets, resulting in a one-time tax benefit in the third quarter of 2015 of $10.7 million or $1.46 per diluted share. Pre-tax income was $400,000 for the third quarter of 2015, compared with $50,000 in the year-ago quarter.

26.

Net income was $11.5 million or $1.58 per diluted share for the nine months ended September 30, 2015, compared to net income of $206,000 or $0.03 per diluted share for the same period in 2014. Pre-tax income was $783,000 or $0.11 per diluted share for the nine months ended September 30, 2015, compared with $206,000 or $0.03 per diluted share in the year-ago period.

Net Interest Income

Net interest income totaled $4.2 million in the quarter ended September 30, 2015, compared with $4.0 million in the year-ago quarter and $4.2 million in the second quarter of 2015. The net interest margin was 3.35% in the third quarter of 2015, compared to 3.40% in both the year-ago quarter and in the second quarter of 2015. The decline in the net interest margin was due primarily to the reinvestment of loan amortization and payoffs into loans with lower current yields, as well as from the effect of higher interest-bearing cash balances, with yields averaging 0.25%.

Total average interest-earning assets were $496.5 million in the third quarter of 2015, which was an increase of $33.0 million or 7.1% from the year-ago quarter and was an increase of $5.5 million compared with the second quarter of 2015. Average loans outstanding in the third quarter were $21.0 million higher than the year-ago quarter, and were up $5.3 million compared with the second quarter of 2015. The increase in the third quarter’s average loan balances have occurred despite the decline in actual period end loans outstanding at September 30, 2015 as the result of the timing of large commercial loan payoffs that occurred in the third quarter of 2015, along with the effect on average balances throughout 2015 of the $16.2 million of growth in the portfolio that occurred in the fourth quarter of 2014. Total average loans were 77.2% of total average interest-earning assets in the third quarter of 2015, compared with 78.2% in the year-ago quarter and 77.0% in the second quarter of 2015.

Total average interest-bearing depositbalances were $350.4 million in the third quarter of 2015, which was an increase of $11.9 million compared to the year-ago quarter, with an increase of $17.4 million in the average balances of lower-costing interest-bearing demand, savings and money market accounts (transaction accounts) offsetting a decrease in the average balance of time deposits of $5.5 million. Transaction accounts comprised 79.1% of total interest-bearing deposits in the third quarter of 2015, compared to 76.8% in the year-ago quarter and 78.9% in the second quarter of 2015.

Net interest income totaled $12.5 million in the nine months ended September 30, 2015, which was an increase of $594,000 or 5.0% compared with $11.9 million in the year-ago period. The net interest margin was 3.41% for the nine months ended September 30, 2015, compared with 3.45% in the year-ago period.

Average interest-earning assets were $491.7 million in the first nine months of 2015, which was an increase of $30.3 million or 6.6% from the first nine months of 2014. Average loans outstanding in the first nine months of 2015 increased $20.9 million compared to the year-ago period, and totaled 77.4% of total interest-earning assets in the nine months ended September 30, 2015, compared with 78.0% in the nine months ended September 30, 2014.

The average balance of time deposits were $75.0 million in the first nine months of 2015, which was a decrease of $7.1 million compared with the year-ago period, while the average balances in lower-costing interest-bearing demand, savings and money market accounts increased $25.0 million. Transaction accounts comprised 78.8% of total interest-bearing deposits in the first nine months of 2015, compared to 75.6% in the first nine months of 2014.

27.

The following table presents certain information from the Company’s average balance sheet and reflects the average yield on interest-earning assets and the average cost of interest-bearing liabilities (dollars in thousands). Such yields and costs are derived by dividing income or expense by the average balance of interest-earning assets or interest-bearing liabilities. Average balances are derived from daily balances. Interest on tax-exempt securities is reported on a historical basis without tax-equivalent adjustment. Average loan balances include non-accruing loans and loans held for sale. Loan income includes cash received on non-accruing loans. 

	Three months ended September 30,
	2015								2014
	Outstanding balance			Interest Earned/paid		Yield/rate			Outstanding balance			Interest Earned/paid		Yield/rate
Interest earning assets:
Federal funds sold and other short term	$	27,563		$	17		0.26	%	$	18,324		$	9		0.20	%
Taxable securities		82,088			439		2.18			78,692			453		2.30
Tax-exempt securities		3,560			34		3.77			4,228			41		3.82
Loans		383,323			3,979		4.10			362,313			3,775		4.10
Total interest-earning assets		496,534			4,469		3.55			463,557			4,278		3.63
Non-interest-earning assets		39,432								41,264
Total assets	$	535,966							$	504,821
Interest-bearing liabilities:
Interest-bearing demand, savings and money market accounts	$	277,233		$	169		0.24	%	$	259,858		$	166		0.26	%
Certificates of deposit		73,151			88		0.48			78,621			104		0.53
Total deposits		350,384			257		0.29			338,479			270		0.32
Borrowed funds		7,759			35		1.81			6,723			36		2.12
Total interest-bearing liabilities		358,143			292		0.32			345,202			306		0.35
Non-interest-bearing liabilities and shareholders’ equity:
Demand deposits		126,128								109,938
Other liabilities		4,927								3,575
Shareholders’ equity		46,768								46,106
Total liabilities and shareholders’ equity	$	535,966							$	504,821
Net interest income; interest rate spread				$	4,177		3.23	%				$	3,972		3.28	%
Net interest margin (net interest income as a percent of average interest-earning assets)							3.35	%							3.40	%
Average interest-earning assets to average interest-bearing liabilities		138.64	%							134.29	%

28.

	Nine months ended September 30,
	2015								2014
	Outstanding balance			Interest Earned/paid		Yield/rate			Outstanding balance			Interest Earned/paid		Yield/rate
Interest earning assets:
Federal funds sold and other short term	$	26,167		$	46		0.24	%	$	17,867		$	32		0.24	%
Taxable securities		81,172			1,360		2.29			79,188			1,451		2.42
Tax-exempt securities		3,584			100		3.69			4,546			131		3.85
Loans		380,824			11,884		4.30			359,896			11,231		4.17
Total interest-earning assets		491,747			13,390		3.74			461,497			12,845		3.71
Non-interest-earning assets		40,060								40,956
Total assets	$	531,807							$	502,453
Interest-bearing liabilities:
Interest-bearing demand, savings and money market accounts	$	279,714		$	494		0.29	%	$	254,732		$	472		0.25	%
Certificates of deposit		74,972			272		0.49			82,052			341		0.55
Total deposits		354,686			766		0.29			336,784			813		0.32
Borrowed funds		6,304			106		2.25			5,637			108		2.55
Total interest-bearing liabilities		360,990			872		0.32			342,421			921		0.36
Non-interest-bearing liabilities and shareholders’ equity:
Demand deposits		119,593								110,305
Other liabilities		4,491								4,240
Shareholders’ equity		46,733								45,487
Total liabilities and shareholders’ equity	$	531,807							$	502,453
Net interest income; interest rate spread				$	12,518		3.42	%				$	11,924		3.35	%
Net interest margin (net interest income as a percent of average interest-earning assets)							3.41	%							3.45	%
Average interest-earning assets to average interest-bearing liabilities		136.22	%							134.79	%

29.

Asset Quality and Allowance for Loan Losses

Delinquent loans (including non-accrual loans) totaled $1.5 million or 0.40% of total loans at September 30, 2015, compared to $2.4 million or 0.63% of total loans at June 30, 2015 and $2.3 million or 0.58% of total loans at December 31, 2014. Non-accrual loans totaled $1.3 million or 0.35% of total loans at September 30, 2015, compared to $1.5 million or 0.38% of total loans at June 30, 2015 and $1.4 million or 0.36% of total loans at December 31, 2014.

The following tables present past due loans aged as of the dates indicated (dollars in thousands).

Delinquent loans	September 30, 2015					June 30, 2015					December 31, 2014
	$		%(1)			$		%(1)			$		%(1)
30 days past due	$	60		0.02	%	$	460		0.12	%	$	336		0.09	%
60 days past due		129		0.03	%		22		0.01	%		37		0.01	%
90 days past due and still accruing		—		0.00	%		475		0.12	%		480		0.12	%
Non-accrual		1,338		0.35	%		1,457		0.38	%		1,384		0.36	%
Total	$	1,527		0.40	%	$	2,414		0.63	%	$	2,327		0.58	%

(1) As a percentage of total loans, excluding deferred costs

Non-performing assets decreased $3.6 million or 30.4% in the third quarter, and were $8.2 million or 1.52% of total assets at September 30, 2015, compared with $11.8 million or 2.18% of total assets at June 30, 2015 and $12.6 million or 2.45% of total assets at December 31, 2014. TDR’s, which are performing in accordance with the restructured terms and accruing interest, but are included in non-performing assets, were $6.1 million at September 30, 2015, compared to $9.1 million at June 30, 2015, and $9.6 million at December 31, 2014. During the third quarter of 2015 the Company sold two commercial mortgage loans that had been classified as impaired TDR’s, at the aggregate outstanding amount of the loans of $3.2 million.

The following table represents information concerning the aggregate amount of non-performing assets (in thousands):

Non-performing assets	September 30, 2015		June 30, 2015		December 31, 2014
Non-accruing loans:
Consumer loans and credit cards	$	56	$	67	$	120
Commercial and industrial		573		593		632
Commercial real estate		30		31		298
Residential real estate loans and home equity		679		766		334
Total non-accruing loans		1,338		1,457		1,384
Accruing loans delinquent 90 days or more		—		475		480
Total non-performing loans (excluding TDR’s)		1,338		1,932		1,864
Other real estate and repossessed assets		785		807		1,111
Total non-performing assets (excluding TDR’s)	$	2,123	$	2,739	$	2,975
Troubled debt restructurings(1)	$	6,089	$	9,068	$	9,633
Total non-performing loans (including TDR’s)	$	7,427	$	11,000	$	11,497
Total non-performing assets (including TDR’s)	$	8,212	$	11,807	$	12,608

(1) TDR’s that are in compliance with their modified terms and accruing interest.

Net recoveries of previously charged-off loans totaling $192,000 were recorded in the third quarter of 2015, compared to net charge-offs of $392,000 or 0.43% (annualized) of average loans in the year-ago quarter, and net recoveries of $75,000 in the second quarter of 2015.

Net charge-offs were $30,000 or 0.02% (annualized) of average loans in the first nine months of 2015, compared to net charge-offs of $2.5 million or 0.91% (annualized) of average loans in the first nine months of 2014. Three relationships comprised approximately 71% of the gross charge-offs in the first nine months of 2014, which were charged against specific allowance allocations established in the fourth quarter of 2013.

We recorded a negative provision for loan losses of $150,000 in the third quarter of 2015, due primarily to the net recoveries recorded in the quarter and to the favorable impact on the allowance for loan losses of the reduction in non-performing loans during the quarter. The negative provision for loan losses recorded in the third quarter had the effect of offsetting the provision for loan losses of $150,000 that was recorded in the first quarter of 2015, resulting in no provision for loan losses for the nine months ended September 30, 2015. There was no provision for loan losses recorded in the three months and nine months ended September 30, 2014.

30.

The allowance for loan losses was $4.2 million at September 30, 2015 and at June 30, 2015 and December 31, 2014. The ratio of the allowance for loan losses to total loans was 1.12% at September 30, 2015, compared to 1.09% at June 30, 2015, and 1.10% at December 31, 2014. The ratio of the allowance for loan losses to non-performing loans (including TDR’s) was 56.6% at September 30, 2015, compared to 37.8% at June 30, 2015, and 36.8% at December 31, 2014. The ratio of the allowance for loan losses to non-accrual loans was 314% at September 30, 2015, compared to 286% at June 30, 2015, and 306% at December 31, 2014.

We assess a number of quantitative and qualitative factors at the individual portfolio level in determining the adequacy of the allowance for loan losses and the required provision expense each quarter. In addition, we analyze certain broader, non-portfolio specific factors in assessing the adequacy of the allowance for loan losses, such as the allowance as a percentage of total loans, the allowance as a percentage of non-performing loans and the provision expense as a percentage of net charge-offs. This portion of the allowance has been considered “unallocated,” which means it is not based on either quantitative or qualitative factors. At September 30, 2015, $421,000 or 10.0% of the allowance for credit losses was considered to be “unallocated,” compared to $447,000 or 10.8% of the allowance for loan losses, at June 30, 2015 and $270,000 or 6.4% of the allowance for loan losses at December 31, 2014.

The following table summarizes changes in the allowance for loan losses arising from loans charged off, recoveries on loans previously charged off and additions to the allowance, which have been charged to expense (in thousands).

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Allowance for loan losses, beginning of period	$	4,164		$	4,568		$	4,236		$	6,724
Loans charged-off		(63	)		(445	)		(570	)		(2,703	)
Recoveries of loans previously charged-off		255			53			540			252
Net recoveries (charge-offs)		192			(392	)		(30	)		(2,451	)
Allowance related to loans transferred to held-for-sale		—			—			—			(97	)
Provision for loan losses		(150	)		—			—			—
Allowance for loan losses, end of period	$	4,206		$	4,176		$	4,206		$	4,176

Non-interest Income

The following table sets forth certain information on non-interest income for the periods indicated (dollars in thousands):

	Three months ended September 30,												Nine months ended September 30,
	2015			2014			$ Change			% Change			2015			2014			$ Change			% Change
Service charges	$	523		$	485		$	38			7.8	%	$	1,475		$	1,485		$	(10	)		(0.7	)%
Wealth management fees		438			420			18			4.3	%		1,217			1,091			126			11.6	%
Treasury management fees		81			58			23			39.7	%		203			173			30			17.3	%
Income from Bank-owned life insurance		163			165			(2	)		(1.2	)%		571			566			5			0.9	%
Loss on loans held for sale		—			(189	)		189			(100.0	)%		—			(546	)		546			(100.0	)%
Net losses on sale of REO		(19	)		(69	)		50			(72.5	)%		(20	)		(73	)		53			(72.6	)%
Net gains on sale of securities available for sale		—			241			(241	)		(100.0	)%		—			101			(101	)		(100.0	)%
Gain on sale of branch		—			—			—			0.0	%		—			438			(438	)		(100.0	)%
Other non-interest income		37			29			8			27.6	%		115			92			23			25.0	%
Total non-interest income	$	1,223		$	1,140		$	83			7.3	%	$	3,561		$	3,327		$	234			7.0	%

Non-interest income was $1.2 million in the third quarter of 2015, compared to $1.1 million in the third quarter of 2014 and $1.2 million in the second quarter of 2015. Non-interest income for the third quarter of 2014 was impacted by net gains on sales of securities available-for-sale of $241,000 which offset losses on loans held-for-sale of $189,000. Income from wealth management fees and treasury management fees increased $126,000 and $30,000, respectively in the first nine months of 2015 compared to the year-ago period largely from the impact of business development activities.

Non-interest income was $3.6 million in the first nine months of 2015, compared to $3.3 million in the first nine months of 2014.

Non-interest income (net of non-recurring items in the year-ago quarter) accounted for 22.9% of total revenue in the third quarter of 2015, compared with 22.6% in the year-ago quarter and 22.2% in the second quarter of 2015. Non-interest income accounted for 22.2% of total revenue in the nine months ended September 30, 2015 and 2014.

31.

Non-interest Expense

The following table sets forth certain information on non-interest expenses for the periods indicated (dollars in thousands):

	Three months ended September 30,										Nine months ended September 30,
	2015		2014		$ Change			% Change			2015		2014		$ Change			% Change
Salaries and benefits	$	2,771	$	2,821	$	(50	)		(1.8	)%	$	8,302	$	8,311	$	(9	)		(0.1	)%
Occupancy and equipment		1,010		892		118			13.2	%		2,996		2,841		155			5.5	%
Professional services		405		366		39			10.7	%		1,042		983		59			6.0	%
Advertising		169		100		69			69.0	%		418		258		160			62.0	%
Office supplies, postage and courier		81		72		9			12.5	%		232		256		(24	)		(9.4	)%
FDIC insurance premium		95		180		(85	)		(47.2	)%		302		520		(218	)		(41.9	)%
State franchise taxes		75		67		8			11.9	%		225		199		26			13.1	%
Other non-interest expense		544		564		(20	)		(3.6	)%		1,779		1,677		102			6.1	%
Total non-interest expenses	$	5,150	$	5,062	$	88			1.7	%	$	15,296	$	15,045	$	251			1.7	%

Non-interest expenses were $5.2 million for the third quarter of 2015, compared with $5.1 million in the year-ago quarter and $5.2 million for the second quarter of 2015. The Company’s efficiency ratio was 95.0% in the third quarter of 2015, compared with 98.7% in the year-ago quarter, and 97.3% in the second quarter of 2015.

Non-interest expenses were $15.3 million in the first nine months of 2015, compared to $15.0 million in the first nine months of 2014. The Company’s efficiency ratio was 94.9% for the first nine months of 2015, compared to 98.1% in the year-ago period.

FDIC insurance premium decreased $85,000 and $218,000 in the three months and nine months ended September 30, 2015 compared to the year-ago periods due to the improvement in the Bank’s regulatory risk rating, which was effective in the fourth quarter of 2014, and which resulted largely from the substantial improvement in the Bank’s asset quality in 2014.

Income Taxes

We had net deferred tax assets totaling $10.4 million at September 30, 2015 and at December 31, 2014, of which the majority are attributable to net operating loss carry-forwards and timing differences between provision for loan losses and the charge-off of loans.On a quarterly basis, we determine whether a valuation allowance is necessary on our net deferred tax assets. In doing so, we consider all evidence available, both positive and negative, in determining whether it is more likely than not that the net deferred tax assets will be realized. After weighing all available evidence at September 30, 2015, we concluded that it is more likely than not that our net deferred tax assets will be realized. The evidence we considered in our evaluation included, among other things, growth in our core earnings and improvement in our asset quality metrics over the past seven quarters; our current and forecast capital and liquidity positions; internal financial forecasts; and available tax planning strategies. As a result, we reversed the valuation allowance that had been previously been established against our net deferred tax assets, resulting in the recognition of a $10.7 million federal income tax benefit in our net income in the third quarter of 2015.

Comparison of Financial Condition at September 30, 2015 and December 31, 2014

Total assets were $541.7 million at September 30, 2015, compared with $541.6 million at June 30, 2015 and $515.4 million at December 31, 2014. Cash and cash equivalents increased $13.8 million since the end of 2014 due primarily to deposit growth during the period, and net deferred tax assets increased $10.4 million as the result of the reversal of the valuation allowance in the third quarter of 2015.

Securities

Investment securities totaled $82.0 million at September 30, 2015, compared with $75.9 million at December 31, 2014. Our portfolio was comprised primarily of investment grade securities. The breakdown of the securities portfolio at September 30, 2015 was 27.2% collateralized mortgage obligations, 20.1% government-sponsored entity guaranteed mortgage-backed securities, 27.4% municipal securities, 20.1% obligations of U.S. government agencies and 5.2% corporate bonds.

32.

Loans

The following table sets forth the composition of our loan portfolio, at the dates indicated (dollars in thousands):

	September 30, 2015						June 30, 2015						December 31, 2014
	Amount			Percent			Amount			Percent			Amount			Percent
Loan portfolio composition
Consumer and credit card	$	40,689			10.7	%	$	39,403			10.3	%	$	37,507			9.7	%
Commercial and industrial		99,498			26.2	%		102,754			26.9	%		106,222			27.6	%
Commercial real estate		103,891			27.3	%		105,615			27.7	%		111,851			29.0	%
Real estate and home equity		135,934			35.8	%		134,090			35.1	%		129,650			33.7	%
Total loans	$	380,012			100.0	%	$	381,862			100.0	%	$	385,230			100.0	%
Net deferred loan costs		278						302						214
Allowance for loan losses		(4,206	)					(4,164	)					(4,236	)
Net loans	$	376,084					$	378,000					$	381,208

Total loans were $380.3 million at September 30, 2015, compared with $382.2 million at June 30, 2015 and $385.4 million at December 31, 2014. We entered 2015 with a relatively light loan pipeline primarily due to seasonal factors and a large number of commercial loan closings in the fourth quarter of 2014. Growth in our commercial loan portfolios in the fourth quarter of 2014 totaled $9.8 million. In addition significant prepayments in our commercial loan portfolios have negatively impacted loan growth in 2015, including five relationships aggregating $5.7 million that paid off during the first quarter and six relationships aggregating $7.1 million that paid off in the third quarter. Non-performing troubled-debt restructured loans comprised approximately one-third of these large payoffs during 2015.

Deposits

The following table sets forth the composition of our deposit accounts, at the dates indicated (dollars in thousands):

	September 30, 2015					June 30, 2015					December 31, 2014
	Amount		Percent			Amount		Percent			Amount		Percent
Non-interest bearing demand	$	123,870		26.1	%	$	118,114		25.1	%	$	111,022		24.5	%
Interest bearing demand		81,939		17.3	%		79,954		17.0	%		77,534		17.1	%
Total demand		205,809		43.4	%		198,068		42.1	%		188,556		41.6	%
Savings		44,408		9.3	%		43,722		9.3	%		42,634		9.4	%
Money market		151,910		32.0	%		154,344		32.8	%		147,667		32.6	%
Time deposits		72,780		15.3	%		74,391		15.8	%		74,335		16.4	%
Total deposits	$	474,907		100.0	%	$	470,525		100.0	%	$	453,192		100.0	%

Deposits totaled $474.9 million at September 30, 2015, compared with $470.5 million at June 30, 2015 and $453.2 million at December 31, 2014. Much of the growth in deposits during 2015 has been the result of higher balances maintained by existing municipal and business customers.

Liquidity

Liquidity is the ability of the Company to fund loan originations and customers’ needs for borrowing and deposit withdrawals. The purpose of liquidity management is to assure sufficient cash flow to meet all of the financial commitments and to capitalize on opportunities for business expansion. This ability depends on the financial strength, asset quality and types of deposit and investment instruments offered by the Company to its customers. The Company’s principal sources of funds are deposits, loan and security repayments, maturities of securities, sales of securities available for sale and other funds provided by operations. The Bank also has the ability to borrow from the FHLB. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and early loan and mortgage-backed security prepayments are more influenced by interest rates, general economic conditions, and competition. The Company maintains investments in liquid assets based upon management’s assessment of (1) need for funds, (2) expected deposit flows, (3) yields available on short-term liquid assets and (4) objectives of the asset/liability management program.

33.

Cash and cash equivalents totaled $35.0 million at September 30, 2015, compared to $21.3 million at December 31, 2014. Cash and equivalents represented 6.5% of total assets at September 30, 2015 and 4.1% of total assets at December 31, 2014. The Company has the ability to borrow funds from the FHLB and the Federal Reserve Bank should the Company need to supplement its future liquidity. Management believes the Company’s liquidity position is adequate based on its current level of cash, cash equivalents, core deposits, the stability of its other funding sources, and the support provided by its capital base.

Capital Resources

Shareholders’ equity increased $11.5 million in the first nine months of 2015 to $58.7 million at September 30, 2015 due to net income for the period, which was comprised of pre-tax income of $783,000 and the income tax benefit of $10.7 million that resulted from the reversal of the valuation allowance against our net deferred tax assets. Our tangible common equity to tangible assets ratio was 10.8% at September 30, 2015.

The Bank’s Tier 1 leverage ratio was 9.18% and its total risk-based capital ratio was 14.23% at September 30, 2015, both of which were well above the regulatory thresholds required to be classified as a “well-capitalized” institution, which are 5.0% and 10.0%, respectively. The effect of the income tax benefit recorded in the third quarter added approximately 50 basis points to the Bank’s regulatory capital ratios.

Beginning January 1, 2015, the capital requirements for the Company and the Bank changed as a result of the phase-in of certain changes to capital requirements for U.S. banking organizations. On July 2, 2013, the Federal Reserve Board voted to adopt final capital rules implementing Basel III requirements for U.S. banking organizations. The final rules establish an integrated regulatory capital framework to implement in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act. Under the final rule, minimum requirements increased for both the quantity and quality of capital held by banking organizations. Consistent with the international Basel framework, the final rule includes a new minimum ratio of common equity tier 1 capital (Tier 1 Common) to risk-weighted assets and a Tier 1 Common capital conservation buffer of 2.5% of risk-weighted assets that will apply to all supervised financial institutions. The rule also raises the minimum ratio of tier 1 capital to risk-weighted assets and includes a minimum leverage ratio of 4% for all banking organizations. These new minimum capital ratios became effective for us on January 1, 2015, and will be fully phased-in on January 1, 2019. The following table shows the phase-in of the Basel III regulatory capital levels from January 1, 2015 until January 1, 2019:

	January 1,
	2015			2016			2017			2018			2019
Tier 1 Common		4.5	%		5.125	%		5.75	%		6.375	%		7.0	%
Tier 1 risk-based capital ratio		6.0	%		6.625	%		7.25	%		7.875	%		8.5	%
Total risk-based capital ratio		8.0	%		8.625	%		9.25	%		9.875	%		10.5	%

Implementing Basel III is not expected to have a material impact on the Company’s or the Bank’s capital ratios and we expect they both will continue to be well-capitalized. In 2015, an institution will be deemed to be well-capitalized if it has a total risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of 4.5% or greater, and a Tier 1 leverage ratio of 6% or greater and is not subject to a regulatory order, agreement, or directive to meet and maintain a capital level for any capital measure.

The Bank’s actual regulatory capital ratios and the minimum required capital ratios to be classified as well-capitalized are presented below as of September 30, 2015:

	Actual			Minimum ratios to be well-capitalized
Tier 1 leverage ratio		9.18	%		6.00	%
Common equity tier 1 capital ratio		13.09	%		4.50	%
Tier 1 risk-based capital ratio		13.09	%		4.50	%
Total risk-based capital ratio		14.23	%		8.00	%

34.

The following table compares our actual capital amounts and ratios with those needed to qualify for the “well-capitalized” category, which is the highest capital category as defined in the regulations, dollars in thousands:

	Actual					For Capital Adequacy Purposes					To be well-capitalized under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2015
Total risk-based capital
Consolidated	$	53,009		14.43	%	$	29,388		8.0	%		N/A		N/A
Bank	$	52,295		14.23	%	$	29,400		8.0	%	$	36,750		10.0	%
Tier 1 capital
Consolidated	$	48,803		13.28	%	$	14,700		4.0	%		N/A		N/A
Bank	$	48,089		13.09	%	$	14,695		4.0	%	$	22,042		6.0	%
Leverage
Consolidated	$	48,803		9.33	%	$	20,923		4.0	%		N/A		N/A
Bank	$	48,089		9.18	%	$	20,954		4.0	%	$	26,192		5.0	%
As of December 31, 2014
Total risk-based capital
Consolidated	$	50,656		13.88	%	$	29,197		8.0	%		N/A		N/A
Bank	$	49,602		13.56	%	$	29,264		8.0	%	$	36,580		10.0	%
Tier-1 capital
Consolidated	$	46,420		12.72	%	$	14,597		4.0	%		N/A		N/A
Bank	$	45,366		12.40	%	$	14,634		4.0	%	$	21,951		6.0	%
Leverage
Consolidated	$	46,420		9.21	%	$	20,161		4.0	%		N/A		N/A
Bank	$	45,366		9.00	%	$	20,163		4.0	%	$	25,203		5.0	%

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Not required.

Item 4. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of September 30, 2015, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of September 30, 2015.

There was no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended September 30, 2015, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

35.

Part II	Other Information
Item 1.	Legal Proceedings.
	There are no matters required to be reported under this item.
Item 1A.	Risk Factors.
	There has been no material change in the nature of the risk factors set forth in the Company’s Form 10-K for the year ended December 31, 2014.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
	There are no matters required to be reported under this item.
Item 3.	Defaults upon Senior Securities.
	There are no matters required to be reported under this item.
Item 4.	Mine Safety Disclosures.
	There are no matters required to be reported under this item.
Item 5.	Other Information.
	There are no matters required to be reported under this item.
Item 6.	Exhibits.
	Exhibits – The following exhibits are filed as a part of this report:

Exhibit No.	Exhibit
3.1	Amended and Restated Articles of Incorporation of DCB Financial Corp as amended, incorporated by reference to the Company’s Registration Statement on Form S-8 filed with the Commission on November 7, 2014 (File No. 000-22387).
3.2	Second Amended and Restated Code of Regulations of DCB Financial Corp, incorporated by reference to the Company’s  Registration Statement on Form S-8 filed with the Commission on November 7, 2014 (File No. 000-22387).
31.1*	Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification pursuant to 18 U.S.C. 1350, as enacted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification pursuant to 18 U.S.C. 1350, as enacted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following information from DCB Financial Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 formatted in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014;  (ii) the Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2015 and 2014;  (iii) the Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2015 and 2014;  (iv) the Condensed Consolidated Statements of Shareholders’ Equity (unaudited) for the three month periods ended September 30, 2015 and 2014; (v) the Consolidated Statements of Cash Flows (unaudited) for the nine month periods ended September 30, 2015 and 2014; and (vi) the Notes to Consolidated Financial Statements.

* Filed herewith. ** Furnished herewith.

36.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DCB FINANCIAL CORP
	(Registrant)
Dated:  November 13, 2015	/s/ Ronald J. Seiffert
	Ronald J. Seiffert
	President and Chief Executive Officer
	(Principal Executive Officer)
Dated:  November 13, 2015	/s/ J. Daniel Mohr
	J. Daniel Mohr
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

37.

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Ronald J. Seiffert certify that:

1. I have reviewed this quarterly report on Form 10-Q of DCB Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  November 13, 2015	/s/ Ronald J. Seiffert
	Ronald J. Seiffert
	Title:  President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, J. Daniel Mohr, certify that:

1. I have reviewed this quarterly report on Form 10-Q of DCB Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  November 13, 2015	/s/ J. Daniel Mohr
	J. Daniel Mohr
	Title:  Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of DCB Financial Corp (the "Company") on Form 10-Q for the period ending September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ronald J. Seiffert, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 13, 2015

/s/ Ronald J. Seiffert

Ronald J. Seiffert

President and Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of DCB Financial Corp (the "Company") on Form 10-Q for the period ending September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, J. Daniel Mohr, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 13, 2015

/s/ J. Daniel Mohr

J. Daniel Mohr

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

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Credit Quality (Details 8) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2015 USD ($) Number	Sep. 30, 2014 USD ($) Number		Sep. 30, 2015 USD ($) Number	Sep. 30, 2014 USD ($) Number
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	2		7	2
Pre-modification outstanding recorded investment | $	$ 188	$ 547		$ 279	$ 547
Number of Contracts	0	1		0	1
Post-modification outstanding recorded investment | $	$ 0	$ 315	[1]	$ 0	$ 315	[1]
Consumer and credit card [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	0		7	0
Pre-modification outstanding recorded investment | $	$ 188	$ 0		$ 279	$ 0
Commercial and industrial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	2		0	2
Pre-modification outstanding recorded investment | $	$ 0	$ 547		$ 0	$ 547
Commercial real estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	1		0	1
Post-modification outstanding recorded investment | $	$ 0	$ 315	[1]	$ 0	$ 315	[1]

[1] Period end balances are inclusive of all partial pay downs and charge-offs since the modification date. Loans modified in a TDR that were fully paid down, charged off, or foreclosed upon by period end are not reported.

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Federal Income Taxes (Details 2) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Deferred tax assets
Allowance for loan losses	$ 1,450	$ 1,440
Depreciation	0	103
Deferred compensation	292	316
Alternative minimum tax carry forward	153	145
Expenses on foreclosed property	11	10
NOL carry forward	9,081	8,910
Other	57	284
Subtotal	11,044	11,208
Deferred tax liabilities
FHLB stock dividends	(307)	(389)
Unrealized gains on available-for-sale securities	(314)	(337)
Other	(40)	(35)
Subtotal	(661)	(761)
Net deferred tax asset	10,383	10,447
Less: valuation allowance	0	(10,784)
Total	$ 10,383	$ (337)

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Federal Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Investments, Owned, Federal Income Tax Note [Line Items]
Deferred	$ 96	$ (92)	$ 96	$ 229
Valuation allowance	(10,784)	92	(10,784)	(229)
Total	$ (10,688)	$ 0	$ (10,688)	$ 0

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Credit Quality (Details 2) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	$ 4,206	$ 4,236
Allocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	579	1,298
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	3,206	2,668
Financing Receivable, Allowance for Credit Losses	3,785	3,966
Allocated Financing Receivables [Member] | Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	435	1,042
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	1,561	1,334
Financing Receivable, Allowance for Credit Losses	1,996	2,376
Allocated Financing Receivables [Member] | Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	501	268
Financing Receivable, Allowance for Credit Losses	501	268
Allocated Financing Receivables [Member] | Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	144	256
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	985	876
Financing Receivable, Allowance for Credit Losses	1,129	1,132
Allocated Financing Receivables [Member] | Credit Card Receivable [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	159	190
Financing Receivable, Allowance for Credit Losses	159	190
Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	$ 421	$ 270

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Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Summary of Significant Accounting Policies
Consumer Loans Charged Off Delinquency Period		120 days
Mortgage Loans Charge Off Delinquency Period		180 days
Interest Income On Mortgage And Commercial Loans Discontinuation Period		90 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	61,339	61,339	124,622
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		14,985	45,727
Restricted Stock [Member]
Summary of Significant Accounting Policies
Stock Issued During Period, Shares, Restricted Stock Award, Forfeited		9,290
Stock Issued During Period, Shares, Restricted Stock Award, Gross	2,145	55,785
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		5 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 87,940	$ 87,940		$ 41,445

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Fair Value Measurements (Details 1) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair value measurements of assets recurring basis
Securities available-for-sale	$ 82,019	$ 75,909
Collateralized Mortgage Obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	22,299	19,580
U.S. Government and agency obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	16,469	11,545
State and municipal obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	22,481	21,657
Corporate bonds [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	4,246	4,987
Mortgage-backed securities and other [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	16,524	18,140
Quoted Prices in Active Markets for Identical Assets, Level 1 [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | Collateralized Mortgage Obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | U.S. Government and agency obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | State and municipal obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | Corporate bonds [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | Mortgage-backed securities and other [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Significant Other Observable Inputs, Level 2 [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	82,019	75,909
Significant Other Observable Inputs, Level 2 [Member] | Collateralized Mortgage Obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	22,299	19,580
Significant Other Observable Inputs, Level 2 [Member] | U.S. Government and agency obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	16,469	11,545
Significant Other Observable Inputs, Level 2 [Member] | State and municipal obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	22,481	21,657
Significant Other Observable Inputs, Level 2 [Member] | Corporate bonds [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	4,246	4,987
Significant Other Observable Inputs, Level 2 [Member] | Mortgage-backed securities and other [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	16,524	18,140
Significant Unobservable Inputs, Level 3 [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Significant Unobservable Inputs, Level 3 [Member] | Collateralized Mortgage Obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Significant Unobservable Inputs, Level 3 [Member] | U.S. Government and agency obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Significant Unobservable Inputs, Level 3 [Member] | State and municipal obligations [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Significant Unobservable Inputs, Level 3 [Member] | Corporate bonds [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	0	0
Significant Unobservable Inputs, Level 3 [Member] | Mortgage-backed securities and other [Member]
Fair value measurements of assets recurring basis
Securities available-for-sale	$ 0	$ 0

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Credit Quality (Details 6) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Credit Quality Indicators
Consumer risk based on payment activity	$ 380,290	$ 385,444
Consumer and Credit Card [Member]
Credit Quality Indicators
Consumer risk based on payment activity	40,689	37,507
Consumer and Credit Card [Member] | Performing [Member]
Credit Quality Indicators
Consumer risk based on payment activity	40,633	37,387
Consumer and Credit Card [Member] | Non-Performing [Member]
Credit Quality Indicators
Consumer risk based on payment activity	56	120
Residential Real Estate and Home Equity [Member]
Credit Quality Indicators
Consumer risk based on payment activity	135,934	129,650
Residential Real Estate and Home Equity [Member] | Performing [Member]
Credit Quality Indicators
Consumer risk based on payment activity	135,255	128,836
Residential Real Estate and Home Equity [Member] | Non-Performing [Member]
Credit Quality Indicators
Consumer risk based on payment activity	$ 679	$ 814

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Federal Income Taxes (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income taxes (credits) computed at the statutory federal
Federal income taxes compared at the expected statutory rate	$ 136	$ 17	$ 266	$ 70
Increase (decrease) in taxes resulting from:
Nontaxable dividend and interest income	(29)	(20)	(70)	(63)
Increase in cash surrender value of life insurance - net	(56)	(56)	(194)	(193)
Valuation allowance	(10,784)	92	(10,784)	(229)
Other	45	(33)	94	415
Income tax benefit per financial statements	$ (10,688)	$ 0	$ (10,688)	$ 0

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 1 – Summary of Significant Accounting Policies

Throughout this report, the terms “Company,” “DCB,” “we,” “our” and “us” refers to the consolidated entity of DCB Financial Corp and its wholly owned subsidiaries, The Delaware County Bank and Trust Company (the “Bank”), DCB Title Services LLC, DCB Insurance Services, Inc, and 110 Riverbend, LLC.

The accompanying unaudited financial statements were prepared in accordance with the instructions for Form 10-Q and Regulation S-X and, therefore, do not include information for footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The material under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is written with the presumption that the users of the interim financial statements have read, or have access to, the latest audited financial statements and notes thereto of the Company, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2014, and for the two-year period then ended, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Accordingly, only material changes in the results of operations and financial condition are discussed in the remainder of Part I. Certain amounts from prior year periods are reclassified, when necessary, to conform to the current period presentation.

All adjustments, consisting of only normal recurring items, that in the opinion of management are necessary for a fair presentation of the financial statements have been included in the results of operations for the three and nine months ended September 30, 2015 and 2014. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results anticipated for the year.

To prepare financial statements in conformity with U.S. GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect amounts reported in the financial statements and disclosures provided, and future results could differ. The allowance for loan losses, fair values of financial instruments and status of contingencies are anytime particularly subject to change.

Earnings per share

Earnings per common share is net income divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed including the dilutive effect of additional potential common shares under stock options. Weighted-average shares for basic and diluted earnings per share are presented below.

	Three months ended				Nine months ended
	September 30,				September 30,
	2015		2014		2015		2014
Weighted-average common shares outstanding (basic)		7,282,365		7,192,350		7,269,222		7,192,350
Dilutive effect of assumed exercise of stock options		19,809		56,844		19,015		50,081
Weighted-average common shares outstanding (diluted)		7,302,174		7,249,194		7,288,237		7,242,431

There were 61,339 shares and 124,622 shares included in the computation of common share equivalents for the three and nine months ended September 30, 2015 and 2014, respectively, because the average fair value of the shares was greater than the exercise price.

At September 30, 2015 and 2014, 14,985 and 45,727 of anti-dilutive shares, respectively, were excluded from the diluted weighted average common share calculations.

Stock-Based Compensation

Compensation cost is recognized for restricted stock awards issued to employees and directors based on the fair value of these awards at the date of grant. The market price of the Company’s common shares at the date of grant is used to determine the fair value for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Awards for 2,145 restricted shares and 55,785 restricted shares were granted under the Company’s 2014 Restricted Stock Plan during the three months and nine months ended September 30, 2015, respectively. The awards vest ratably over a five-year period. Forfeitures of unvested restricted shares totaled 9,290 shares in the three months and nine months ended September 30, 2015. There were no grants or forfeitures of restricted shares in the nine months ended September 30, 2014. There were 87,940 and 41,445 unvested restricted shares at September 30, 2015 and December 31, 2014, respectively.

The Company’s outstanding stock options may be settled for cash at the recipient’s discretion; therefore, liability accounting applies to the Company’s 2004 Long-Term Stock Incentive Plan under which such stock options were granted. Compensation expense is recognized based on the fair value of these awards at the reporting date. A Black Scholes model is utilized to estimate the fair value of stock options at the date of grant and subsequent re-measurement dates. Compensation cost is recognized over the required service period, generally defined as the vesting period. The Company’s stock option awards contain terms that provide for a graded vesting schedule whereby portions of the award vest in increments over the requisite service period.  Changes in fair value of the options between the vesting date and option expiration date are also recognized in the Consolidated Statement of Income.

Significant Accounting Estimates

The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP and follow general practices within the financial services industry. The application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.

The procedures for assessing the adequacy of the allowance for loan losses reflect the Company’s evaluation of credit risk after careful consideration of all information available to the Company. In developing this assessment, the Company must rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown, such as economic factors, developments affecting companies in specific industries and issues with respect to single borrowers. Depending on changes in circumstances, future assessments of credit risk may yield materially different results, which may require an increase or a decrease in the allowance for loan losses.

The valuation of other assets requires that management utilize a variety of estimates and analysis to determine whether an asset is impaired or other-than-temporarily impaired (“OTTI”). After determining the appropriate methodology for fair value measurement, management then evaluates whether or not declines in fair value below book value are temporary or other-than-temporary impairments. When the Company does not intend to sell a debt security, and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income.

Loans (including Loans Held for Sale)

Loans are classified as held for investment when management has both the intent and ability to hold the loan for the foreseeable future, or until maturity or payoff. Management’s intent and view of the foreseeable future may change based on changes in business strategies, the economic environment, market conditions and the availability of government programs. Loans that are held for investment are reported at the principal balance outstanding, net of unearned interest, unamortized deferred loan fees and costs and the allowance for loan losses. Loans held for sale are carried at the lower of amortized cost or estimated fair value, determined on an aggregate basis for each type of loan. Net unrealized losses are recognized by charges to income.

Interest income is accrued based on the unpaid principal balance and includes amortization of net deferred loan fees and costs over the loan term. Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well secured and in process of collection. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for loans placed on non-accrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

When loans are transferred from held for investment to held for sale, specific reserves and allocated pooled reserves included in the allowance for loan and losses are reclassified to reduce the basis of the loans to the lower of cost or estimated fair value less cost to sell.

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable but unconfirmed credit losses, increased by the provision for loan losses and decreased by charge-offs net of recoveries. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the required allowance balance based on past loan loss experience, augmented by additional estimates related to the nature and volume of the portfolio, information about specific borrower situations, estimated collateral values, economic conditions and other factors.

The allowance consists of both specific and general components. The specific component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the collateral value or value of expected discounted cash flows of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical charge-off experience and expected loss given default derived from the Bank’s internal risk rating process. Management utilizes an average of a three year historical loss period. Management has the ability to adjust these loss rates by utilizing risk ratings based on current period trends. If current period trends differ either positively or negatively from the given weighted historical loss rates, adjustments can be made. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risking rating data.

Management also utilizes its assessment of general economic conditions, and other localized economic data to more fully support its loan loss estimates. General economic data may include: inflation rates, savings rates and national unemployment rates. Local data may include: unemployment rates, housing starts, real estate valuations, and other economic data specific to the Company’s market area. Though not specific to individual loans, these economic trends can have an impact on portfolio performance as a whole.

Uncollectibility is usually determined based on a pre-determined number of days delinquent in the case of consumer loans, or, in the case of commercial loans, is based on a combination of factors including delinquency, collateral and other legal considerations. Consumer loans are charged-off prior to 120 days of delinquency, but could be charged off earlier, depending on the individual circumstances. Mortgage loans are charged down prior to 180 days of delinquency, but could be charged off sooner, again, depending upon individual circumstance. Typically, loans collateralized by residential real estate are partially charged down to the estimated liquidation value, which is generally based on appraisal less costs to hold and liquidate. Commercial and commercial real estate loans are evaluated for impairment and typically reserved based on the results of the analysis, then subsequently charged down to a recoverable value when loan repayment is deemed to be collateral dependent. Loans can be partially charged down depending on a number of factors including: the remaining strength of the borrower and guarantor; the type and value of the collateral, and the ease of liquidating collateral; and whether or not collateral is brought onto the bank’s balance sheet via repossession. In the case of commercial and commercial real estate loans, charge-offs, partial or whole, take place when management determines that full collectability of principal balance is unlikely to occur. Subsequent recoveries, if any, are credited to the allowance. Management’s policies for determining impairment, reserves and charge-offs are reviewed and approved by the Board of Directors on an annual basis.

Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule.  All modified loans are evaluated to determine whether the loans should be reported as a Troubled Debt Restructuring (“TDR”).  A loan is a TDR when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying or renewing a loan that the Company would not otherwise consider. To make this determination, the Company must determine whether (a) the borrower is experiencing financial difficulties and (b) the Company granted the borrower a concession. This determination requires consideration of all of the facts and circumstances surrounding the modification.  An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties.

Income Taxes

The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred tax assets are reduced by a valuation allowance, if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment. The Company recognizes interest and penalties on income taxes, if applicable, as a component of income tax expense. The Company files consolidated income tax returns with its subsidiaries.  

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Fair Value Measurements (Details 2) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Impaired loans [Member]
Fair value measurements of assets nonrecurring basis
Securities held-to-maturity, Fair Value	$ 7,755	$ 12,173
Impaired loans [Member] | Quoted Prices in Active Markets for Identical Assets, Level 1 [Member]
Fair value measurements of assets nonrecurring basis
Securities held-to-maturity, Fair Value	0	0
Impaired loans [Member] | Significant Other Observable Inputs, Level 2 [Member]
Fair value measurements of assets nonrecurring basis
Securities held-to-maturity, Fair Value	0	0
Impaired loans [Member] | Significant Unobservable Inputs, Level 3 [Member]
Fair value measurements of assets nonrecurring basis
Securities held-to-maturity, Fair Value	7,755	12,173
Real estate owned [Member]
Fair value measurements of assets nonrecurring basis
Securities held-to-maturity, Fair Value	785	1,111
Real estate owned [Member] | Quoted Prices in Active Markets for Identical Assets, Level 1 [Member]
Fair value measurements of assets nonrecurring basis
Securities held-to-maturity, Fair Value	0	0
Real estate owned [Member] | Significant Other Observable Inputs, Level 2 [Member]
Fair value measurements of assets nonrecurring basis
Securities held-to-maturity, Fair Value	0	0
Real estate owned [Member] | Significant Unobservable Inputs, Level 3 [Member]
Fair value measurements of assets nonrecurring basis
Securities held-to-maturity, Fair Value	$ 785	$ 1,111

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Securities (Details Textual) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Investment From Same Issuer As Percentage Of Equity Maximum		10.00%
Pledged Assets Separately Reported, Securities Pledged as Collateral, at Fair Value, Total		$ 72,400
Available-for-sale Securities, Gross Unrealized Gain, Total		1,145		$ 1,274
Available-for-sale Securities, Gross Unrealized Loss, Total		$ 222		$ 284
Available-for-sale Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross Unrealized Gain, Total	$ 241,000		$ 242,000
Available-for-sale Securities, Gross Unrealized Loss, Total			$ 141,000

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Securities (Details 2) $ in Thousands	Sep. 30, 2015 USD ($)
Amortized cost and estimated fair value of all debt securities
Available-for-sale, Amortized Cost, Due in one year or less	$ 2,106
Available-for-sale, Amortized Cost, Due after one to five years	19,678
Available-for-sale, Amortized Cost, Due after five to ten years	20,990
Available-for-sale, Amortized Cost, Due after ten years	22,331
Available-for-sale, Amortized Cost, Mortgage-backed and related securities	15,991
Available-for-sale, Amortized Cost, Total	81,096
Available-for-sale, Fair Value, Due in one year or less	2,112
Available-for-sale, Fair Value, Due after one to five years	19,862
Available-for-sale, Fair Value, Due after five to ten years	21,256
Available-for-sale, Fair Value, Fair value, Due after ten years	22,265
Available-for-sale, Fair Value, Mortgage-backed and related securities	16,524
Available-for-sale, Fair Value, Total	$ 82,019

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Sale of Branch and Assets Held for Sale (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Deposits assumed	$ 474,907	$ 453,192
Property and equipment (agreed upon value)	(5,178)	$ (10,016)
Branch Sale [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Deposits assumed	19,403
Loans sold (at book value)	(4,750)
Property and equipment (agreed upon value)	(1,500)
Cash on hand	(261)
Premium on deposits	(438)
Other, net	10
Cash paid to Merchants	$ 12,464

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Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Loans
Consumer and credit card	$ 40,689	$ 37,507
Commercial and industrial	99,498	106,222
Commercial real estate	103,891	111,851
Residential real estate and home equity	135,934	129,650
Subtotal	380,012	385,230
Net deferred loan costs	278	214
Loans	$ 380,290	$ 385,444

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Credit Quality (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Allowance allocated to:
Beginning balance	$ 4,164	$ 4,568	$ 4,236	$ 6,724
Charge-offs	(63)	(445)	(570)	(2,703)
Recoveries	255	53	540	252
Net (charge-offs) recoveries	192	(392)	(30)	(2,451)
Provision	(150)	0	0	0
Transferred to loans held for sale				(97)
Ending balance	4,206	4,176	4,206	4,176
Consumer and Credit Card [Member]
Allowance allocated to:
Beginning balance	172	161	190	301
Charge-offs	(63)	(43)	(122)	(111)
Recoveries	50	31	109	90
Net (charge-offs) recoveries	(13)	(12)	(13)	(21)
Provision	0	28	(18)	(103)
Transferred to loans held for sale				0
Ending balance	159	177	159	177
Commercial and Industrial [Member]
Allowance allocated to:
Beginning balance	1,035	1,418	1,132	3,231
Charge-offs	0	(197)	(311)	(1,390)
Recoveries	157	4	297	14
Net (charge-offs) recoveries	157	(193)	(14)	(1,376)
Provision	(63)	1	11	(629)
Transferred to loans held for sale				0
Ending balance	1,129	1,226	1,129	1,226
Commercial Real Estate [Member]
Allowance allocated to:
Beginning balance	2,195	2,511	2,376	2,973
Charge-offs	0	(173)	(64)	(1,041)
Recoveries	18	11	37	125
Net (charge-offs) recoveries	18	(162)	(27)	(916)
Provision	(217)	(166)	(353)	223
Transferred to loans held for sale				(97)
Ending balance	1,996	2,183	1,996	2,183
Residential Real Estate and Home Equity [Member]
Allowance allocated to:
Beginning balance	315	220	268	219
Charge-offs	0	(32)	(73)	(161)
Recoveries	30	7	97	23
Net (charge-offs) recoveries	30	(25)	24	(138)
Provision	156	88	209	202
Transferred to loans held for sale				0
Ending balance	501	283	501	283
Unallocated Financing Receivables [Member]
Allowance allocated to:
Beginning balance	447	258	270	$ 0
Charge-offs
Recoveries
Net (charge-offs) recoveries
Provision	(26)	49	151	$ 307
Transferred to loans held for sale				0
Ending balance	$ 421	$ 307	$ 421	$ 307

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities
Net income	$ 11,471	$ 206
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	729	813
Deferred taxes, net	(10,688)	0
Loss on sale of securities available-for-sale	0	(101)
Loss on loans held-for-sale	0	546
Net loss on sale of real estate owned	20	73
Gain on sale of branch	0	(438)
Net stock-based compensation expense	132	147
Premium amortization on securities, net	790	823
Earnings on bank owned life insurance	(571)	(566)
Net changes in other assets and other liabilities	(545)	(1,653)
Net cash provided by (used in) operating activities	1,338	(150)
Cash flows from investing activities
Purchases of securities available-for-sale	(25,696)	(16,595)
Proceeds from maturities, principal payments and calls of securities available-for-sale	18,728	15,842
Proceeds from sales of securities available-for-sale	0	7,140
Net change in loans	5,124	(14,563)
Proceeds from sale of real estate owned	307	440
Net cash paid with sale of branch	0	(12,464)
Proceeds from redemption of FHLB stock	0	549
Premises and equipment expenditures	(662)	(322)
Proceeds from sale of loans	0	423
Net cash used in investing activities	(2,199)	(19,550)
Cash flows from financing activities
Net change in deposits	21,715	15,172
Repayment of borrowings	(7,097)	(22)
Net cash provided by financing activities	14,618	15,150
Net change in cash and cash equivalents	13,757	(4,550)
Cash and cash equivalents at beginning of period	21,274	25,357
Cash and cash equivalents at end of period	35,031	20,807
Cash paid during the period for:
Cash paid during the period for interest on deposits and borrowings	834	994
Non-cash investing and financing activities:
Transfer of loans to real estate owned	$ 0	$ 509

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Credit Quality (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Impaired Loans
Recorded Investment	$ 7,755		$ 7,755		$ 12,173
Unpaid Principal Balance	7,833		7,833		12,250
Related Allowance	579		579		1,298
Average Recorded Investment	10,407	$ 14,525	11,338	$ 17,694
Interest Income Recognized	80	393	256	633
Consumer and credit card [Member]
Impaired Loans
Recorded Investment	467		467
Unpaid Principal Balance	467		467
Related Allowance	0		0
Average Recorded Investment	469		469
Interest Income Recognized	7		19
Commercial and industrial [Member]
Impaired Loans
Recorded Investment	1,872		1,872		2,028
Unpaid Principal Balance	1,950		1,950		2,105
Related Allowance	144		144		256
Average Recorded Investment	2,048	2,322	2,122	3,720
Interest Income Recognized	18	47	64	68
Commercial real estate [Member]
Impaired Loans
Recorded Investment	4,737		4,737		9,690
Unpaid Principal Balance	4,737		4,737		9,690
Related Allowance	435		435		1,042
Average Recorded Investment	7,157	11,741	8,195	13,500
Interest Income Recognized	55	342	165	544
Residential real estate and home equity [member]
Impaired Loans
Recorded Investment	679		679
Unpaid Principal Balance	679		679
Related Allowance	0		0
Average Recorded Investment	733		552
Interest Income Recognized	0		8
With no related allowance recorded [Member]
Impaired Loans
Recorded Investment	2,182		2,182		2,831
Unpaid Principal Balance	2,182		2,182		2,831
Average Recorded Investment	2,567	8,140	2,595	10,471
Interest Income Recognized	14	85	50	148
With no related allowance recorded [Member] | Consumer and credit card [Member]
Impaired Loans
Recorded Investment	467		467		455
Unpaid Principal Balance	467		467		$ 455
Related Allowance
Average Recorded Investment	469	462	469	474
Interest Income Recognized	7	4	19	21
With no related allowance recorded [Member] | Commercial and industrial [Member]
Impaired Loans
Recorded Investment	907		907		$ 1,288
Unpaid Principal Balance	907		907		$ 1,288
Related Allowance
Average Recorded Investment	914	1,306	1,106	1,624
Interest Income Recognized	5	24	21	35
With no related allowance recorded [Member] | Commercial real estate [Member]
Impaired Loans
Recorded Investment	129		129		$ 1,088
Unpaid Principal Balance	129		129		$ 1,088
Related Allowance
Average Recorded Investment	451	6,372	468	8,373
Interest Income Recognized	2	57	2	92
With no related allowance recorded [Member] | Residential real estate and home equity [member]
Impaired Loans
Recorded Investment	679		679
Unpaid Principal Balance	679		679
Average Recorded Investment	$ 733		552
Interest Income Recognized			8
With allowance recorded [Member]
Impaired Loans
Recorded Investment	$ 5,573		5,573		$ 9,342
Unpaid Principal Balance	5,651		5,651		9,419
Related Allowance	579		579		1,298
Average Recorded Investment	7,840	6,385	8,743	7,223
Interest Income Recognized	66	308	206	485
With allowance recorded [Member] | Consumer and credit card [Member]
Impaired Loans
Recorded Investment					455
Unpaid Principal Balance					455
Related Allowance					0
Average Recorded Investment		462		474
Interest Income Recognized		4		21
With allowance recorded [Member] | Commercial and industrial [Member]
Impaired Loans
Recorded Investment	965		965		740
Unpaid Principal Balance	1,043		1,043		817
Related Allowance	144		144		256
Average Recorded Investment	1,134	1,016	1,016	2,096
Interest Income Recognized	13	23	43	33
With allowance recorded [Member] | Commercial real estate [Member]
Impaired Loans
Recorded Investment	4,608		4,608		8,602
Unpaid Principal Balance	4,608		4,608		8,602
Related Allowance	435		435		$ 1,042
Average Recorded Investment	6,706	5,369	7,727	5,127
Interest Income Recognized	$ 53	$ 285	$ 163	$ 452

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Credit Quality (Details Textual)	Sep. 30, 2015 USD ($)
Financing Receivable, Modifications [Line Items]
Commercial And Commercial Real Estate Loan Relationships Internal Risk Grade Based Limit	$ 250,000

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets:
Cash and due from financial institutions	$ 6,883	$ 6,247
Interest-bearing deposits	28,148	15,027
Total cash and cash equivalents	35,031	21,274
Securities available-for-sale	82,019	75,909
Loans	380,290	385,444
Less allowance for loan losses	(4,206)	(4,236)
Net loans	376,084	381,208
Real estate owned	785	1,111
Investment in FHLB stock	3,250	3,250
Premises and equipment, net	5,178	10,016
Premises and equipment held-for-sale	4,771	0
Bank-owned life insurance	20,598	20,027
Deferred tax asset, net	10,383	0
Accrued interest receivable and other assets	3,635	2,587
Total assets	541,734	515,382
Deposits:
Non-interest bearing	123,870	111,022
Interest bearing	351,037	342,170
Total deposits	474,907	453,192
Borrowings	4,711	11,808
Accrued interest payable and other liabilities	3,420	3,171
Total liabilities	483,038	468,171
Shareholders’ equity:
Preferred shares, no par value, 2,000,000 shares authorized, none issued and outstanding	0	0
Common shares, no par value, 17,500,000 shares authorized, 7,595,087 and 7,500,000 shares issued, and 7,280,290 and 7,233,795 shares outstanding for September 30, 2015 and December 31, 2014, respectively	16,412	16,064
Retained earnings	49,526	38,055
Treasury stock, at cost, 307,650 shares	(7,416)	(7,416)
Accumulated other comprehensive income	609	654
Deferred stock-based compensation	(435)	(146)
Total shareholders’ equity	58,696	47,211
Total liabilities and shareholders’ equity	$ 541,734	$ 515,382
Common shares outstanding	7,280,290	7,233,795
Book value per common share	$ 8.05	$ 6.53

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Sale of Branch and Assets Held for Sale (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Mar. 31, 2014
Long Lived Assets Held-for-sale [Line Items]
Deposits Liabilities			$ 19,400
Loans Purchase			$ 4,800
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment, Noncurrent	$ 4,771	$ 0

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Consolidated Statements of Comprehensive Income (Loss) [Parenthetical] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Other Than Temporary Impairment Losses Investment Reclassification Adjustment Of Previously Recognized Sale Of Security Tax		$ 82		$ 34
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Loss, Tax, Portion Attributable to Parent, Held-to-maturity Securities	$ 60	$ (22)	$ (10)	$ 709
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Loss, Tax, Portion Attributable to Parent, Available-for-sale Securities			$ (48)

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Credit Quality (Details 4) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans on nonaccrual status	$ 1,338	$ 1,384
Consumer and credit card [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans on nonaccrual status	56	120
Commercial and industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans on nonaccrual status	573	632
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans on nonaccrual status	30	298
Residential real estate and home equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans on nonaccrual status	$ 679	$ 334

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Sale of Branch and Assets Held for Sale (Tables)

9 Months Ended

Sep. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

The amounts related to the sale are as follows (in thousands):

Deposits assumed	$	19,403
Loans sold (at book value)		(4,750)
Property and Equipment (agreed upon value)		(1,500)
Cash on hand		(261)
Premium on deposits		(438)
Other, net		10
Cash paid to Merchants	$	12,464

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Credit Quality (Details 5) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Credit Quality Indicators
Loans	$ 380,290	$ 385,444
Commercial and Industrial [Member]
Credit Quality Indicators
Loans	99,498	106,222
Commercial and Industrial [Member] | Pass [Member]
Credit Quality Indicators
Loans	95,101	100,961
Commercial and Industrial [Member] | Special Mention [Member]
Credit Quality Indicators
Loans	933	823
Commercial and Industrial [Member] | Substandard [Member]
Credit Quality Indicators
Loans	3,464	4,438
Commercial Real Estate [Member]
Credit Quality Indicators
Loans	103,891	111,851
Commercial Real Estate [Member] | Pass [Member]
Credit Quality Indicators
Loans	94,137	96,217
Commercial Real Estate [Member] | Special Mention [Member]
Credit Quality Indicators
Loans	4,668	6,146
Commercial Real Estate [Member] | Substandard [Member]
Credit Quality Indicators
Loans	$ 5,086	$ 9,488

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Summary of Significant Accounting Policies (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Weighted-average shares for basic and diluted earnings per share
Weighted-average common shares outstanding (basic)	7,282,365	7,192,350	7,269,222	7,192,350
Dilutive effect of assumed exercise of stock options	19,809	56,844	19,015	50,081
Weighted-average common shares outstanding (diluted)	7,302,174	7,249,194	7,288,237	7,242,431

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Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Preferred Stock [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Deferred Stock-Based Compensation [Member]
Balance at Dec. 31, 2013	$ 45,263	$ 15,771	$ 0	$ 37,682	$ (7,416)	$ (774)	$ 0
Balance (in shares) at Dec. 31, 2013		7,192,350
Net income	206	$ 0	0	206	0	0	0
Other comprehensive loss, net of taxes	1,218	0	0	0	0	1,218	0
Balance at Sep. 30, 2014	46,687	$ 15,771	0	37,888	(7,416)	444	0
Balance (in shares) at Sep. 30, 2014		7,192,350
Balance at Dec. 31, 2014	47,211	$ 16,064	0	38,055	(7,416)	654	(146)
Balance (in shares) at Dec. 31, 2014		7,233,795
Net income	11,471	$ 0	0	11,471	0	0	0
Other comprehensive loss, net of taxes	(45)	0	0	0	0	(45)	0
Issuance of restricted stock	0	$ 407	0	0	0	0	(407)
Issuance of restricted stock (in shares)		55,785
Forfeiture of restricted stock	0	$ (59)	0	0	0	0	59
Forfeiture of restricted stock (in shares)		(9,290)
Amortization of restricted stock	59	$ 0	0	0	0	0	59
Balance at Sep. 30, 2015	$ 58,696	$ 16,412	$ 0	$ 49,526	$ (7,416)	$ 609	$ (435)
Balance (in shares) at Sep. 30, 2015		7,280,290

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Consolidated Balance Sheets [Parenthetical] - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Preferred Stock, Par or Stated Value Per Share	$ 0	$ 0
Preferred Stock, Shares Authorized	2,000,000	2,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common stock, shares authorized	17,500,000	17,500,000
Common stock, shares issued	7,595,087	7,500,000
Common Stock, Shares, Outstanding	7,280,290	7,233,795
Treasury stock, shares	307,650	307,650

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Weighted-average shares for basic and diluted earnings per share [Table Text Block]

Weighted-average shares for basic and diluted earnings per share are presented below.

	Three months ended				Nine months ended
	September 30,				September 30,
	2015		2014		2015		2014
Weighted-average common shares outstanding (basic)		7,282,365		7,192,350		7,269,222		7,192,350
Dilutive effect of assumed exercise of stock options		19,809		56,844		19,015		50,081
Weighted-average common shares outstanding (diluted)		7,302,174		7,249,194		7,288,237		7,242,431

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 12, 2015
Document Information [Line Items]
Entity Registrant Name	DCB FINANCIAL CORP
Entity Central Index Key	0001025877
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	DCBF
Entity Common Stock, Shares Outstanding		7,280,290
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2015

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Securities (Tables)

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

The amortized cost and estimated fair values of securities available-for-sale were as follows at the dates indicated (in thousands):

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
U.S. Government and agency obligations	$	16,432	$	64	$	(27)	$	16,469
Corporate bonds		4,220		34		(8)		4,246
States and municipal obligations		22,137		437		(93)		22,481
Collateralized mortgage obligations		22,316		63		(80)		22,299
Mortgage-backed securities		15,991		547		(14)		16,524
Total	$	81,096	$	1,145	$	(222)	$	82,019

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government and agency obligations	$	11,602	$	31	$	(88)	$	11,545
Corporate bonds		4,975		33		(21)		4,987
States and municipal obligations		21,303		423		(69)		21,657
Collateralized mortgage obligations		19,601		85		(106)		19,580
Mortgage-backed securities		17,438		702		—		18,140
Total	$	74,919	$	1,274	$	(284)	$	75,909

Schedule of Temporary Impairment Losses, Investments [Table Text Block]

Securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at the dates indicated are as follows (dollars in thousands):

	September 30, 2015
	(Less than 12 months)						(12 months or longer)						Total
Description of securities	Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses
U.S. Government and agency obligations		2	$	896	$	1		2	$	1,970	$	26		4	$	2,866	$	27
Corporate bonds		2		552		3		3		1,405		5		5		1,957		8
State and municipal obligations		6		2,398		64		3		1,308		29		9		3,706		93
Collateralized mortgage obligations		16		10,349		43		4		3,288		37		20		13,637		80
Mortgage-backed securities and other		3		2,570		14		—		—		—		3		2,570		14
Total temporarily impaired securities		29	$	16,765	$	125		12	$	7,971	$	97		41	$	24,736	$	222

	December 31, 2014
	(Less than 12 months)						(12 months or longer)						Total
Description of securities	Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses
U.S. Government and agency obligations		3	$	2,488	$	9		4	$	4,446	$	79		7	$	6,934	$	88
Corporate bonds		1		503		1		4		1,664		21		5		2,167		21
State and municipal obligations		8		2,699		18		4		1,915		51		12		4,614		69
Collateralized mortgage obligations		9		5,649		21		4		3,649		85		13		9,298		106
Mortgage-backed securities and other		—		—		—		—		—		—		—		—		—
Total temporarily impaired securities		21	$	11,339	$	49		16	$	11,674	$	236		37	$	23,013	$	284

Investments Classified by Contractual Maturity Date [Table Text Block]

Mortgage-backed securities are shown separately since they are not due at a single maturity date.

	Amortized Cost		Fair Value
Due in one year or less	$	2,106	$	2,112
Due after one to five years		19,678		19,862
Due after five to ten years		20,990		21,256
Due after ten years		22,331		22,265
Mortgage-backed and related securities		15,991		16,524
Total	$	81,096	$	82,019

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Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest income:
Loans	$ 3,979	$ 3,775	$ 11,884	$ 11,231
Securities	473	494	1,460	1,582
Federal funds sold and interest bearing deposits	17	9	46	32
Total interest income	4,469	4,278	13,390	12,845
Interest expense:
Savings and money market accounts	153	147	445	416
Time accounts	88	104	272	341
NOW accounts	16	19	49	56
Total	257	270	766	813
FHLB advances	35	36	106	108
Total interest expense	292	306	872	921
Net interest income	4,177	3,972	12,518	11,924
Provision for loan losses	(150)	0	0	0
Net interest income after provision for loan losses	4,327	3,972	12,518	11,924
Non-interest income:
Service charges	523	485	1,475	1,485
Wealth management fees	438	420	1,217	1,091
Treasury management fees	81	58	203	173
Income from bank-owned life insurance	163	165	571	566
Losses on loans held for sale	0	(189)	0	(546)
Net losses on sales of REO	(19)	(69)	(20)	(73)
Net gains on the sale of securities available-for-sale	0	241	0	101
Gain on sale of branch	0	0	0	438
Other non-interest income	37	29	115	92
Total non-interest income	1,223	1,140	3,561	3,327
Non-interest expense:
Salaries and employee benefits	2,771	2,821	8,302	8,311
Occupancy and equipment	1,010	892	2,996	2,841
Professional services	405	366	1,042	983
Advertising	169	100	418	258
Office supplies, postage and courier	81	72	232	256
FDIC insurance premium	95	180	302	520
State franchise taxes	75	67	225	199
Other non-interest expense	544	564	1,779	1,677
Total non-interest expense	5,150	5,062	15,296	15,045
Income before income tax benefit	400	50	783	206
Income tax benefit	(10,688)	0	(10,688)	0
Net income	$ 11,088	$ 50	$ 11,471	$ 206
Share and Per Share Data
Basic average common shares outstanding (in shares)	7,282,365	7,192,350	7,269,222	7,192,350
Diluted average common shares outstanding (in shares)	7,302,174	7,249,194	7,288,237	7,242,431
Basic and diluted earnings per common share (in dollars per share)	$ 1.52	$ 0.01	$ 1.58	$ 0.03

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Credit Quality

9 Months Ended

Sep. 30, 2015

Credit Quality [Abstract]

Credit Quality Disclosure [Text Block]

Note 4 – Credit Quality

Allowance for Loan Losses

The Company’s methodology for estimating probable future losses on loans utilizes a combination of probability of loss by loan grade and loss given defaults for its portfolios. The probability of default is based on both market data from a third-party independent source and actual historical default rates within the Company’s portfolio. A loan is impaired when full payment of interest and principal under the original contractual loan terms is not expected. Commercial and industrial loans, commercial real estate, including construction and land development, and multi-family real estate loans are individually evaluated for impairment. If a loan is impaired, the loan amount exceeding fair value, based on the most current information available is reserved. Management has developed a process by which commercial and commercial real estate loan relationships with balances of $250,000 or greater are assigned an internal risk grade based on relevant information about the ability of the borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. Borrower’s receiving an internal risk grade of substandard or doubtful are individually evaluated for impairment through a loan quality review (LQR). The LQR details the various attributes of the relationship and collateral and determines based on the most recent available information if a specific reserve needs to be applied and at what level. The LQR process for all loans meeting the specific review criteria is completed on a quarterly basis. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, such loans are not separately identified for impairment disclosures. This methodology recognizes portfolio behavior while allowing for reasonable loss ratios on which to estimate allowance calculations.

Further, the process for estimating probable loan losses is divided into reviewing impaired loans on an individual basis for probable losses and, as noted above, calculating probable future losses based on historical and market data for homogenous loan portfolios. As the Company’s troubled loan portfolios have been reduced through paydowns, payoffs, credit improvement and charge-offs, the remaining loan portfolios possess better overall credit characteristics, and based on the Company’s methodology require lower rates of reserving than historical levels.

The tables below summarize activity in the allowance for loan losses for the periods indicated (in thousands).

	Three months ended September 30, 2015
	Consumer						Residential
	and		Commercial				Real Estate
	Credit		and		Commercial		and Home
	Card		Industrial		Real Estate		Equity		Unallocated		Total
Beginning balance	$	172	$	1,035	$	2,195	$	315	$	447	$	4,164
Charge-offs		(63)		—		—		—				(63)
Recoveries		50		157		18		30				255
Net (charge-offs) recoveries		(13)		157		18		30				192
Provision		—		(63)		(217)		156		(26)		(150)
Ending balance	$	159	$	1,129	$	1,996	$	501	$	421	$	4,206

	Three months ended September 30, 2014
	Consumer						Residential
	and		Commercial				Real Estate
	Credit		and		Commercial		and Home
	Card		Industrial		Real Estate		Equity		Unallocated		Total
Beginning balance	$	161	$	1,418	$	2,511	$	220	$	258	$	4,568
Charge-offs		(43)		(197)		(173)		(32)				(445)
Recoveries		31		4		11		7				53
Net charge-offs		(12)		(193)		(162)		(25)				(392)
Provision		28		1		(166)		88		49		—
Ending balance	$	177	$	1,226	$	2,183	$	283	$	307	$	4,176

	Nine months ended September 30, 2015
	Consumer						Residential
	and		Commercial				Real Estate
	Credit		and		Commercial		and Home
	Card		Industrial		Real Estate		Equity		Unallocated		Total
Beginning balance	$	190	$	1,132	$	2,376	$	268	$	270	$	4,236
Charge-offs		(122)		(311)		(64)		(73)				(570)
Recoveries		109		297		37		97				540
Net (charge-offs) recoveries		(13)		(14)		(27)		24				(30)
Provision		(18)		11		(353)		209		151		—
Ending balance	$	159	$	1,129	$	1,996	$	501	$	421	$	4,206

	Nine months ended September 30, 2014
	Consumer						Residential
	and		Commercial				Real Estate
	Credit		and		Commercial		and Home
	Card		Industrial		Real Estate		Equity		Unallocated		Total
Beginning balance	$	301	$	3,231	$	2,973	$	219	$	—	$	6,724
Charge-offs		(111)		(1,390)		(1,041)		(161)				(2,703)
Recoveries		90		14		125		23				252
Net charge-offs		(21)		(1,376)		(916)		(138)				(2,451)
Provision		(103)		(629)		223		202		307		—
Transferred to loans held for sale		—		—		(97)		—		—		(97)
Ending balance	$	177	$	1,226	$	2,183	$	283	$	307	$	4,176

Impaired Loans

A loan is considered impaired when based on current information and events it is probable the Bank will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include non-performing commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

The following presents by class, information related to the Company’s impaired loans as of the dates indicated (in thousands).

	At September 30, 2015						Period ended September 30, 2015
							Three		Three		Nine
							months		months		months		Nine months
			Unpaid				Average		Interest		Average		Interest
	Recorded		Principal		Related		Recorded		Income		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Consumer and credit card	$	467	$	467			$	469	$	7	$	469	$	19
Commercial and industrial		907		907				914		5		1,106		21
Commercial real estate		129		129				451		2		468		2
Residential real estate and home equity		679		679				733		—		552		8
		2,182		2,182				2,567		14		2,595		50
With an allowance recorded:
Commercial and industrial	$	965	$	1,043	$	144	$	1,134	$	13	$	1,016	$	43
Commercial real estate		4,608		4,608		435		6,706		53		7,727		163
		5,573		5,651		579		7,840		66		8,743		206
Total:
Consumer and credit card	$	467	$	467	$	—	$	469	$	7	$	469	$	19
Commercial and industrial		1,872		1,950		144		2,048		18		2,122		64
Commercial real estate		4,737		4,737		435		7,157		55		8,195		165
Residential real estate and home equity		679		679		—		733		—		552		8
Total	$	7,755	$	7,833	$	579	$	10,407	$	80	$	11,338	$	256

	At December 31, 2014						Period ended September 30, 2014
							Three		Three		Nine
							months		months		months		Nine months
			Unpaid				Average		Interest		Average		Interest
	Recorded		Principal		Related		Recorded		Income		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Consumer and credit card	$	455	$	455			$	462	$	4	$	474	$	21
Commercial and industrial		1,288		1,288				1,306		24		1,624		35
Commercial real estate		1,088		1,088				6,372		57		8,373		92
		2,831		2,831				8,140		85		10,471		148
With an allowance recorded:
Commercial and industrial		740		817		256		1,016		23		2,096		33
Commercial real estate		8,602		8,602		1,042		5,369		285		5,127		452
		9,342		9,419		1,298		6,385		308		7,223		485
Total:
Consumer and credit card	$	455	$	455	$	—	$	462	$	4	$	474	$	21
Commercial and industrial		2,028		2,105		256		2,322		47		3,720		68
Commercial real estate		9,690		9,690		1,042		11,741		342		13,500		544
Total	$	12,173	$	12,250	$	1,298	$	14,525	$	393	$	17,694	$	633

The allocation of the allowance for loan losses summarized on the basis of the Company’s impairment methodology was as follows at the dates indicated (in thousands):

							Residential
	Consumer		Commercial				Real Estate
	and Credit		and		Commercial		and Home
	card		Industrial		Real Estate		Equity		Total
September 30, 2015
Individually evaluated for impairment	$	—	$	144	$	435	$	—	$	579
Collectively evaluated for impairment		159		985		1,561		501		3,206
Allocated	$	159	$	1,129	$	1,996	$	501		3,785
Unallocated										421
									$	4,206
December 31, 2014
Individually evaluated for impairment	$	—	$	256	$	1,042	$	—	$	1,298
Collectively evaluated for impairment		190		876		1,334		268		2,668
Allocated	$	190	$	1,132	$	2,376	$	268		3,966
Unallocated										270
									$	4,236

The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology at the dates indicated was as follows (in thousands):

	Consumer and Credit card		Commercial and Industrial		Commercial Real Estate		Residential Real Estate and Home Equity		Total
September 30, 2015
Individually evaluated for impairment	$	467	$	1,872	$	4,737	$	679	$	7,755
Collectively evaluated for impairment		40,222		97,626		99,154		135,255		372,257
Ending balance	$	40,689	$	99,498	$	103,891	$	135,934	$	380,012

	Consumer and Credit card		Commercial and Industrial		Commercial Real Estate		Residential Real Estate and Home Equity		Total
December 31, 2014
Individually evaluated for impairment	$	455	$	2,028	$	9,690	$	-	$	12,173
Collectively evaluated for impairment		37,052		109,823		96,532		129,650		373,057
Ending balance	$	37,507	$	111,851	$	106,222	$	129,650	$	385,230

Loans on non-accrual status were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2015		2014
Consumer and credit card	$	56	$	120
Commercial and industrial		573		632
Commercial real estate		30		298
Residential real estate and home equity		679		334
Total	$	1,338	$	1,384

Credit Quality Indicators

The Company uses the following definitions for criticized and classified commercial loans and commercial real estate loans which are consistent with regulatory guidelines:

Special Mention

Loans which possess some credit deficiency or potential weakness which deserves close attention, but which do not yet warrant substandard classification. Such loans pose unwarranted financial risk that, if not corrected, could weaken the loan and increase risk in the future. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk, and (2) weaknesses are considered “potential,” versus “well-defined,” impairments to the primary source of loan repayment.

Substandard

Loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful

Loans that have all the weaknesses inherent in a Substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Specific pending factors may strengthen the credit, therefore deferring a Loss classification.

Loss

Loans are considered uncollectible and of such little value that continuing to carry them as assets on the institution’s financial statements is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

As of the dates indicated and based on the most recent analysis performed, the recorded investment by risk category and class of loans is as of the dates indicated (in thousands):

	September 30, 2015				December 31, 2014
	Commercial and Industrial		Commercial Real Estate		Commercial and Industrial		Commercial Real Estate
Pass	$	95,101	$	94,137	$	100,961	$	96,217
Special mention		933		4,668		823		6,146
Substandard		3,464		5,086		4,438		9,488
Total	$	99,498	$	103,891	$	106,222	$	111,851

For residential real estate and consumer loan classes, the Company evaluates credit quality primarily based upon the aging status of the loan and by payment activity.

The following table presents the recorded investment in residential real estate and consumer loans based on payment activity as of the dates indicated (in thousands):

	September 30, 2015				December 31, 2014
	Consumer and Credit Card		Residential Real Estate and Home Equity		Consumer and Credit Card		Residential Real Estate and Home Equity
Performing	$	40,633	$	135,255	$	37,387	$	128,836
Non-performing		56		679		120		814
Total	$	40,689	$	135,934	$	37,507	$	129,650

Age Analysis of Past Due Loans

The following tables present past due loans aged as of the dates indicated (in thousands).

	September 30, 2015
			60-89										Recorded
			Days		90 Days or								Investment >
	30-59 Days		Past		more Past		Total						90 days and
	Past Due		Due		Due		Past Due		Current		Total Loans		Accruing
Consumer and credit card	$	34	$	30	$	56	$	120	$	40,569	$	40,689	$	—
Commercial and industrial		—		—		—		—		99,498		99,498		—
Commercial real estate		—		—		—		—		103,891		103,891		—
Residential real estate and home equity		29		496		—		525		135,409		135,934		—
Total	$	63	$	526	$	56	$	645	$	379,367	$	380,012	$	—

	December 31, 2014
					Greater								Recorded
					than 90								Investment >
	30-59 Days		60-89 Days		Days Past		Total				Total		90 days and
	Past Due		Past Due		Due		Past Due		Current		Loans		Accruing
Consumer and credit card	$	66	$	7	$	120	$	193	$	37,314	$	37,507	$	—
Commercial and industrial		68		—		—		68		106,154		106,222		—
Commercial real estate		49		—		306		355		111,496		111,851		—
Residential real estate and home equity		220		30		642		892		128,758		129,650		480
Total	$	403	$	37	$	1,068	$	1,508	$	383,722	$	385,230	$	480

Troubled Debt Restructurings

The following table summarizes troubled debt restructurings that occurred during the periods indicated (dollars in thousands):

	For the three months ended September 30,
	2015					2014
	Number of		Recorded Investment		Number of			Recorded Investment
	Contracts		(as of period end)		Contracts			(as of period end)
Consumer and credit card		1	$	188			—	$	—
Commercial and industrial		—		—			2		547
Total		1	$	188			2	$	547

	For the nine months ended September 30,
	2015				2014
	Number of		Recorded Investment		Number of		Recorded Investment
	Contracts		(as of period end)		Contracts		(as of period end)
Consumer and credit card		7	$	279		—	$	—
Commercial and industrial		—		—		2		547
Total		7	$	279		2	$	547

The following presents by class loans modified in a TDR that subsequently defaulted within twelve months of the modification (i.e. 60 days or more past due) during the periods indicated (dollars in thousands):

	For the three months ended September 30,
	2015				2014
	Number of		Recorded Investment		Number of		Recorded Investment
	Contracts		(as of period end) (1)		Contracts		(as of period end) (1)
Commercial real estate		—	$	—		1	$	315
Total		—	$	—		1	$	315

	For the nine months ended September 30,
	2015				2014
	Number of		Recorded Investment		Number of		Recorded Investment
	Contracts		(as of period end) (1)		Contracts		(as of period end) (1)
Commercial real estate		—	$	—		1	$	315
Total		—	$	—		1	$	315

(1) Period end balances are inclusive of all partial pay downs and charge-offs since the modification date. Loans modified in a TDR that were fully paid down, charged off, or foreclosed upon by period end are not reported.

A modification of a loan constitutes a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company offers various types of concessions when modifying a loan; however, forgiveness of principal is rarely granted. Depending on the financial condition of the borrower, the purpose of the loan and the type of collateral supporting the loan structure; modifications can be either short-term (12 months of less) or long term (greater than one year). Commercial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor may be requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period.

Land loans are also included in the class of commercial real estate loans. Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity. Land loans modified in a TDR typically involve extending the balloon payment by one to three years, changing the monthly payments from interest-only to principal and interest, while leaving the interest rate unchanged.

Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR for the Company may have the financial effect of increasing the specific allowance associated with the loan. The allowance for impaired loans that have been modified in a TDR is measured based on the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent or on the present value of expected future cash flows discounted at the loan’s effective interest rate. Management exercises significant judgment in developing these estimates.

As mentioned above, an individual loan is placed on a non-accruing status if, in the judgment of management, it is unlikely that all principal and interest will be received according to the terms of the note. Loans on non-accrual may be eligible to be returned to an accruing status after six months of compliance with the modified terms. However, there are number of factors that could prevent a loan from returning to accruing status, even after remaining in compliance with loan terms for the aforementioned six month period. For example: deteriorating collateral, negative cash flow changes and inability to reduce debt to income ratios.

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Loans

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 3 – Loans

Loans were comprised of the following at the dates indicated (in thousands):

	September 30,		December 31,
	2015		2014
Consumer and credit card	$	40,689	$	37,507
Commercial and industrial		99,498		106,222
Commercial real estate		103,891		111,851
Residential real estate and home equity		135,934		129,650
		380,012		385,230
Net deferred loan costs		278		214
Loans	$	380,290	$	385,444

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Federal Income Taxes (Tables)

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The Company files income tax returns in the U.S. federal jurisdiction and franchise tax returns in Ohio. Income tax benefit for the dates indicated include the following components (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2015		2014		2015		2014
Deferred	$	96	$	(92)	$	96	$	229
Valuation allowance		(10,784)		92		(10,784)		(229)
Total	$	(10,688)	$	—	$	(10,688)	$	—

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The difference between the financial statement tax provision and amounts computed by applying the statutory federal income tax rate to income before income taxes was as follows (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2015		2014		2015		2014
Federal income taxes compared at the expected statutory rate	$	136	$	17	$	266	$	70
Increase (decrease) in taxes resulting from:
Nontaxable dividend and interest income		(29)		(20)		(70)		(63)
Increase in cash surrender value of life insurance - net		(56)		(56)		(194)		(193)
Valuation allowance		(10,784)		92		(10,784)		(229)
Other		45		(33)		94		415
Income tax benefit per financial statements	$	(10,688)	$	—	$	(10,688)	$	—

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

Deferred tax assets and liabilities were comprised of the following at the dates indicated (in thousands):

	September 30, 2015		December 31, 2014
Deferred tax assets:
Allowance for loan losses	$	1,450	$	1,440
Depreciation		-		103
Deferred compensation		292		316
Alternative minimum tax carry forward		153		145
Expenses on foreclosed property		11		10
NOL carry forward		9,081		8,910
Other		57		284
Subtotal		11,044		11,208
Deferred tax liabilities:
FHLB stock dividends		(307)		(389)
Unrealized gains on available-for-sale securities		(314)		(337)
Other		(40)		(35)
Subtotal		(661)		(761)
Net deferred tax asset		10,383		10,447
Less: valuation allowance		—		(10,784)
Total	$	10,383	$	(337)

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Loans (Tables)

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loans were comprised of the following at the dates indicated (in thousands):

	September 30,		December 31,
	2015		2014
Consumer and credit card	$	40,689	$	37,507
Commercial and industrial		99,498		106,222
Commercial real estate		103,891		111,851
Residential real estate and home equity		135,934		129,650
		380,012		385,230
Net deferred loan costs		278		214
Loans	$	380,290	$	385,444

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Federal Income Taxes

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 7 – Federal Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and franchise tax returns in Ohio. Income tax benefit for the dates indicated include the following components (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2015		2014		2015		2014
Deferred	$	96	$	(92)	$	96	$	229
Valuation allowance		(10,784)		92		(10,784)		(229)
Total	$	(10,688)	$	—	$	(10,688)	$	—

The difference between the financial statement tax provision and amounts computed by applying the statutory federal income tax rate to income before income taxes was as follows (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2015		2014		2015		2014
Federal income taxes compared at the expected statutory rate	$	136	$	17	$	266	$	70
Increase (decrease) in taxes resulting from:
Nontaxable dividend and interest income		(29)		(20)		(70)		(63)
Increase in cash surrender value of life insurance - net		(56)		(56)		(194)		(193)
Valuation allowance		(10,784)		92		(10,784)		(229)
Other		45		(33)		94		415
Income tax benefit per financial statements	$	(10,688)	$	—	$	(10,688)	$	—

Deferred tax assets and liabilities were comprised of the following at the dates indicated (in thousands):

	September 30, 2015		December 31, 2014
Deferred tax assets:
Allowance for loan losses	$	1,450	$	1,440
Depreciation		-		103
Deferred compensation		292		316
Alternative minimum tax carry forward		153		145
Expenses on foreclosed property		11		10
NOL carry forward		9,081		8,910
Other		57		284
Subtotal		11,044		11,208
Deferred tax liabilities:
FHLB stock dividends		(307)		(389)
Unrealized gains on available-for-sale securities		(314)		(337)
Other		(40)		(35)
Subtotal		(661)		(761)
Net deferred tax asset		10,383		10,447
Less: valuation allowance		—		(10,784)
Total	$	10,383	$	(337)

At December 31 2014, the Company had a $26.4 million net operating loss carryforward that begins to expire in 2030.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Note 5 – Fair Value Measurements

The Company accounts for fair value measurements in accordance with FASB ASC 820, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

The carrying value of certain financial assets and liabilities is impacted by the application of fair value measurements, either directly or indirectly. In certain cases, an asset or liability is measured and reported at fair value on a recurring basis, such as available-for-sale investment securities. In other cases, management must rely on estimates or judgments to determine if an asset or liability not measured at fair value warrants an impairment write-down or whether a valuation reserve should be established. Given the inherent volatility, the use of fair value measurements may have a significant impact on the carrying value of assets or liabilities, or result in material changes to the financial statements, from period to period.

Fair value is defined as the price that would be received to sell an asset or transfer a liability between market participants at the balance sheet date. When possible, the Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to observable market data for similar assets and liabilities. However, certain assets and liabilities are not traded in observable markets and the Company must use other valuation methods to develop a fair value.

The following methods, assumptions, and valuation techniques were used by the Company to measure different financial assets and liabilities at fair value and in estimating its fair value disclosures for financial instruments.

Cash and Cash Equivalents: The carrying amounts reported in the consolidated statements of financial condition for cash and cash equivalents is deemed to approximate fair value and are classified as Level 1 of the fair value hierarchy.

Available for Sale Investment Securities: Fair values for investment securities are determined by quoted market prices if available (Level 1). For securities where quoted prices are not available, fair values are estimated based on market prices of similar securities. For securities where quoted prices or market prices of similar securities are not available, fair values are estimated using matrix pricing, which is a mathematical technique widely used in the industry to value investment securities without relying exclusively on quoted prices for the specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities (Level 2). Any investment securities not valued based upon the methods above is considered Level 3.

The Company utilizes information provided by a third-party investment securities portfolio manager in analyzing the investment securities portfolio in accordance with the fair value hierarchy of the Fair Value Topic. The portfolio manager’s evaluation of investment security portfolio pricing is performed using a combination of prices and data from other sources, along with internally developed matrix pricing models. The third-party’s month-end pricing process includes a series of quality assurance activities where prices are compared to recent market conditions, previous evaluation prices, and between the various pricing services. These processes produce a series of quality assurance reports on which price exceptions are identified, reviewed and where appropriate, securities are re-priced. In the event of a materially different price, the third party will report the variance and review the pricing methodology in detail. The results of the quality assurance process are incorporated into the selection of pricing providers by the third party.

Loans: For fixed rate loans and for variable rate loans with infrequent re-pricing or re-pricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life. Fair values for impaired loans are estimated using discounted cash flow analysis or underlying collateral values. For loans held on balance sheet, the discounted fair value is further reduced by the amount of reserves held against the loan portfolios. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price and due to the significant judgment involved in evaluating credit quality, loans are classified within Level 3 classification.

Federal Home Loan Bank Stock: The carrying amount presented in the consolidated statements of financial condition is deemed to approximate fair value, and is classified as a Level 2 instrument.

Accrued Interest Receivable and Payable: The fair value for accrued interest approximates its carrying amounts due to the short duration before collection. The valuation is a Level 3 classification which is consistent with its underlying asset or liability.

Deposits: The fair values of deposits with no stated maturity, such as money market demand deposits, savings and NOW accounts have been analyzed by management and assigned estimated maturities and cash flows which are then discounted to derive a value. The fair value of fixed-rate certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The Company classifies the estimated fair value of deposit liabilities as Level 2 in the fair value hierarchy.

Advances from the Federal Home Loan Bank: The fair value of these advances is estimated using the rates currently offered for similar advances of similar remaining maturities (Level 2).

Commitments to Extend Credit: For fixed-rate and adjustable-rate loan commitments, the fair value estimate considers the difference between current levels of interest rates and committed rates. At September 30, 2015 and December 31, 2014, the fair value of loan commitments was not material.

Based on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments are as follows at the dates indicated (in thousands):

	September 30, 2015
	Carrying		Fair
	amount		Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	35,031	$	35,031	$	35,031	$	—	$	—
Securities available-for-sale		82,019		82,019		—		82,019		—
Loans (net of allowance)		376,084		374,538		—		—		374,538
FHLB stock		3,250		3,250		—		3,250		—
Accrued interest receivable		1,431		1,431		—		—		1,431
Financial liabilities
Non-interest-bearing deposits	$	123,870	$	123,870	$	—	$	123,870	$	—
Interest-bearing deposits		351,037		351,152		—		351,152		—
Borrowings		4,711		4,711		—		4,711		—
Accrued interest payable		74		74		—		—		74

	December 31, 2014
	Carrying		Fair
	amount		Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	21,274	$	21,274	$	21,274	$	—	$	—
Securities available-for-sale		75,909		75,909		—		75,909		—
Loans (net of allowance)		381,208		381,224		—		—		381,224
FHLB stock		3,250		3,250		—		3,250		—
Accrued interest receivable		1,234		1,234		—		—		1,234
Financial liabilities
Non-interest-bearing deposits	$	111,022	$	111,022	$	—	$	111,022	$	—
Interest-bearing deposits		342,170		342,318		—		342,318		—
Borrowings		11,808		11,808		—		11,808		—
Accrued interest payable		36		36		—		—		36

The following table presents the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at the dates indicated (in thousands):

	September 30, 2015
			Fair Value Measurements Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
U.S. Government and agency obligations	$	16,469	$	—	$	16,469	$	—
Corporate bonds		4,246		—		4,246		—
State and municipal obligations		22,481		—		22,481		—
Collateralized mortgage obligations		22,299		—		22,299		—
Mortgage-backed securities		16,524		—		16,524		—
Total	$	82,019	$	—	$	82,019	$	—

	December 31, 2014
			Fair Value Measurements Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
U.S. Government and agency obligations	$	11,545	$	—	$	11,545	$	—
Corporate bonds		4,987		—		4,987		—
State and municipal obligations		21,657		—		21,657		—
Collateralized mortgage obligations		19,580		—		19,580		—
Mortgage-backed securities		18,140		—		18,140		—
Total	$	75,909	$	—	$	75,909	$	—

The following is a description of the valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Impaired loans

At September 30, 2015 and December 31, 2014, impaired loans consisted primarily of loans secured by commercial real estate. Management has determined fair value measurements on impaired loans primarily through evaluations of appraisals performed.

Real Estate Owned

Real estate acquired through, or in lieu of, loan foreclosure is held for sale and initially recorded at fair value (based on current appraised value) at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. Management has determined fair value measurements on real estate owned primarily through evaluations of appraisals performed.

The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at the dates indicated (in thousands).      

	September 30, 2015
	Fair Value Measurements Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2 )		(Level 3)
Impaired loans	$	7,755	$	—	$	—	$	7,755
Real estate owned		785		—		—		785

	December 31, 2014
	Fair Value Measurements Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2 )		(Level 3)
Impaired loans	$	12,173	$	—	$	—	$	12,173
Real estate owned		1,111		—		—		1,111

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Sale of Branch and Assets Held for Sale

9 Months Ended

Sep. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 6 – Sale of Branch and Assets Held for Sale

In March 2014, the Bank closed the previously announced sale of its Marysville branch (the “Branch”) to Merchants National Bank, a national bank headquartered in Hillsboro, Ohio (“Merchants”). Merchants acquired certain assets and assumed certain liabilities of the Branch, including the assumption of $19.4 million in deposit liabilities and the purchase of $4.8 million in loans related to the Branch.

The amounts related to the sale are as follows (in thousands):

Deposits assumed	$	19,403
Loans sold (at book value)		(4,750)
Property and Equipment (agreed upon value)		(1,500)
Cash on hand		(261)
Premium on deposits		(438)
Other, net		10
Cash paid to Merchants	$	12,464

At September 30, 2015, the Company classified the $4.8 million carrying amount of its headquarters building as held-for-sale, reflecting the Company’s desire to sell and simultaneously lease back the property.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Earnings Per Share, Policy [Policy Text Block]

Earnings per share

Earnings per common share is net income divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed including the dilutive effect of additional potential common shares under stock options. Weighted-average shares for basic and diluted earnings per share are presented below.

	Three months ended				Nine months ended
	September 30,				September 30,
	2015		2014		2015		2014
Weighted-average common shares outstanding (basic)		7,282,365		7,192,350		7,269,222		7,192,350
Dilutive effect of assumed exercise of stock options		19,809		56,844		19,015		50,081
Weighted-average common shares outstanding (diluted)		7,302,174		7,249,194		7,288,237		7,242,431

There were 61,339 shares and 124,622 shares included in the computation of common share equivalents for the three and nine months ended September 30, 2015 and 2014, respectively, because the average fair value of the shares was greater than the exercise price.

At September 30, 2015 and 2014, 14,985 and 45,727 of anti-dilutive shares, respectively, were excluded from the diluted weighted average common share calculations.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

Compensation cost is recognized for restricted stock awards issued to employees and directors based on the fair value of these awards at the date of grant. The market price of the Company’s common shares at the date of grant is used to determine the fair value for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Awards for 2,145 restricted shares and 55,785 restricted shares were granted under the Company’s 2014 Restricted Stock Plan during the three months and nine months ended September 30, 2015, respectively. The awards vest ratably over a five-year period. Forfeitures of unvested restricted shares totaled 9,290 shares in the three months and nine months ended September 30, 2015. There were no grants or forfeitures of restricted shares in the nine months ended September 30, 2014. There were 87,940 and 41,445 unvested restricted shares at September 30, 2015 and December 31, 2014, respectively.

The Company’s outstanding stock options may be settled for cash at the recipient’s discretion; therefore, liability accounting applies to the Company’s 2004 Long-Term Stock Incentive Plan under which such stock options were granted. Compensation expense is recognized based on the fair value of these awards at the reporting date. A Black Scholes model is utilized to estimate the fair value of stock options at the date of grant and subsequent re-measurement dates. Compensation cost is recognized over the required service period, generally defined as the vesting period. The Company’s stock option awards contain terms that provide for a graded vesting schedule whereby portions of the award vest in increments over the requisite service period.  Changes in fair value of the options between the vesting date and option expiration date are also recognized in the Consolidated Statement of Income.

Application Of Critical Accounting Policies [Policy Text Block]

Significant Accounting Estimates

The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP and follow general practices within the financial services industry. The application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.

The procedures for assessing the adequacy of the allowance for loan losses reflect the Company’s evaluation of credit risk after careful consideration of all information available to the Company. In developing this assessment, the Company must rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown, such as economic factors, developments affecting companies in specific industries and issues with respect to single borrowers. Depending on changes in circumstances, future assessments of credit risk may yield materially different results, which may require an increase or a decrease in the allowance for loan losses.

The valuation of other assets requires that management utilize a variety of estimates and analysis to determine whether an asset is impaired or other-than-temporarily impaired (“OTTI”). After determining the appropriate methodology for fair value measurement, management then evaluates whether or not declines in fair value below book value are temporary or other-than-temporary impairments. When the Company does not intend to sell a debt security, and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income.

Loans and Leases Receivable, Real Estate Acquired Through Foreclosure, Policy [Policy Text Block]

Loans (including Loans Held for Sale)

Loans are classified as held for investment when management has both the intent and ability to hold the loan for the foreseeable future, or until maturity or payoff. Management’s intent and view of the foreseeable future may change based on changes in business strategies, the economic environment, market conditions and the availability of government programs. Loans that are held for investment are reported at the principal balance outstanding, net of unearned interest, unamortized deferred loan fees and costs and the allowance for loan losses. Loans held for sale are carried at the lower of amortized cost or estimated fair value, determined on an aggregate basis for each type of loan. Net unrealized losses are recognized by charges to income.

Interest income is accrued based on the unpaid principal balance and includes amortization of net deferred loan fees and costs over the loan term. Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well secured and in process of collection. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for loans placed on non-accrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

When loans are transferred from held for investment to held for sale, specific reserves and allocated pooled reserves included in the allowance for loan and losses are reclassified to reduce the basis of the loans to the lower of cost or estimated fair value less cost to sell.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable but unconfirmed credit losses, increased by the provision for loan losses and decreased by charge-offs net of recoveries. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the required allowance balance based on past loan loss experience, augmented by additional estimates related to the nature and volume of the portfolio, information about specific borrower situations, estimated collateral values, economic conditions and other factors.

The allowance consists of both specific and general components. The specific component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the collateral value or value of expected discounted cash flows of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical charge-off experience and expected loss given default derived from the Bank’s internal risk rating process. Management utilizes an average of a three year historical loss period. Management has the ability to adjust these loss rates by utilizing risk ratings based on current period trends. If current period trends differ either positively or negatively from the given weighted historical loss rates, adjustments can be made. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risking rating data.

Management also utilizes its assessment of general economic conditions, and other localized economic data to more fully support its loan loss estimates. General economic data may include: inflation rates, savings rates and national unemployment rates. Local data may include: unemployment rates, housing starts, real estate valuations, and other economic data specific to the Company’s market area. Though not specific to individual loans, these economic trends can have an impact on portfolio performance as a whole.

Uncollectibility is usually determined based on a pre-determined number of days delinquent in the case of consumer loans, or, in the case of commercial loans, is based on a combination of factors including delinquency, collateral and other legal considerations. Consumer loans are charged-off prior to 120 days of delinquency, but could be charged off earlier, depending on the individual circumstances. Mortgage loans are charged down prior to 180 days of delinquency, but could be charged off sooner, again, depending upon individual circumstance. Typically, loans collateralized by residential real estate are partially charged down to the estimated liquidation value, which is generally based on appraisal less costs to hold and liquidate. Commercial and commercial real estate loans are evaluated for impairment and typically reserved based on the results of the analysis, then subsequently charged down to a recoverable value when loan repayment is deemed to be collateral dependent. Loans can be partially charged down depending on a number of factors including: the remaining strength of the borrower and guarantor; the type and value of the collateral, and the ease of liquidating collateral; and whether or not collateral is brought onto the bank’s balance sheet via repossession. In the case of commercial and commercial real estate loans, charge-offs, partial or whole, take place when management determines that full collectability of principal balance is unlikely to occur. Subsequent recoveries, if any, are credited to the allowance. Management’s policies for determining impairment, reserves and charge-offs are reviewed and approved by the Board of Directors on an annual basis.

Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule.  All modified loans are evaluated to determine whether the loans should be reported as a Troubled Debt Restructuring (“TDR”).  A loan is a TDR when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying or renewing a loan that the Company would not otherwise consider. To make this determination, the Company must determine whether (a) the borrower is experiencing financial difficulties and (b) the Company granted the borrower a concession. This determination requires consideration of all of the facts and circumstances surrounding the modification.  An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred tax assets are reduced by a valuation allowance, if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment. The Company recognizes interest and penalties on income taxes, if applicable, as a component of income tax expense. The Company files consolidated income tax returns with its subsidiaries.  

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Credit Quality (Details 3) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Individually Evaluated for Impairment	$ 7,755	$ 12,173
Financing Receivable, Collectively Evaluated for Impairment	372,257	373,057
Financing Receivable, Net	380,012	385,230
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Individually Evaluated for Impairment	4,737	9,690
Financing Receivable, Collectively Evaluated for Impairment	99,154	96,532
Financing Receivable, Net	103,891	106,222
Residential Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Individually Evaluated for Impairment	679	0
Financing Receivable, Collectively Evaluated for Impairment	135,255	129,650
Financing Receivable, Net	135,934	129,650
Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Individually Evaluated for Impairment	1,872	2,028
Financing Receivable, Collectively Evaluated for Impairment	97,626	109,823
Financing Receivable, Net	99,498	111,851
Credit Card Receivable [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Individually Evaluated for Impairment	467	455
Financing Receivable, Collectively Evaluated for Impairment	40,222	37,052
Financing Receivable, Net	$ 40,689	$ 37,507

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

Based on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments are as follows at the dates indicated (in thousands):

	September 30, 2015
	Carrying		Fair
	amount		Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	35,031	$	35,031	$	35,031	$	—	$	—
Securities available-for-sale		82,019		82,019		—		82,019		—
Loans (net of allowance)		376,084		374,538		—		—		374,538
FHLB stock		3,250		3,250		—		3,250		—
Accrued interest receivable		1,431		1,431		—		—		1,431
Financial liabilities
Non-interest-bearing deposits	$	123,870	$	123,870	$	—	$	123,870	$	—
Interest-bearing deposits		351,037		351,152		—		351,152		—
Borrowings		4,711		4,711		—		4,711		—
Accrued interest payable		74		74		—		—		74

	December 31, 2014
	Carrying		Fair
	amount		Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	21,274	$	21,274	$	21,274	$	—	$	—
Securities available-for-sale		75,909		75,909		—		75,909		—
Loans (net of allowance)		381,208		381,224		—		—		381,224
FHLB stock		3,250		3,250		—		3,250		—
Accrued interest receivable		1,234		1,234		—		—		1,234
Financial liabilities
Non-interest-bearing deposits	$	111,022	$	111,022	$	—	$	111,022	$	—
Interest-bearing deposits		342,170		342,318		—		342,318		—
Borrowings		11,808		11,808		—		11,808		—
Accrued interest payable		36		36		—		—		36

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The following table presents the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at the dates indicated (in thousands):

	September 30, 2015
			Fair Value Measurements Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
U.S. Government and agency obligations	$	16,469	$	—	$	16,469	$	—
Corporate bonds		4,246		—		4,246		—
State and municipal obligations		22,481		—		22,481		—
Collateralized mortgage obligations		22,299		—		22,299		—
Mortgage-backed securities		16,524		—		16,524		—
Total	$	82,019	$	—	$	82,019	$	—

	December 31, 2014
			Fair Value Measurements Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
U.S. Government and agency obligations	$	11,545	$	—	$	11,545	$	—
Corporate bonds		4,987		—		4,987		—
State and municipal obligations		21,657		—		21,657		—
Collateralized mortgage obligations		19,580		—		19,580		—
Mortgage-backed securities		18,140		—		18,140		—
Total	$	75,909	$	—	$	75,909	$	—

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at the dates indicated (in thousands).      

	September 30, 2015
	Fair Value Measurements Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2 )		(Level 3)
Impaired loans	$	7,755	$	—	$	—	$	7,755
Real estate owned		785		—		—		785

	December 31, 2014
	Fair Value Measurements Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2 )		(Level 3)
Impaired loans	$	12,173	$	—	$	—	$	12,173
Real estate owned		1,111		—		—		1,111

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Securities (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Fair values of securities available-for-sale
Amortized Cost	$ 81,096	$ 74,919
Gross Unrealized Gains	1,145	1,274
Gross Unrealized Losses	(222)	(284)
Fair Value	82,019	75,909
Collateralized mortgage obligations [Member]
Fair values of securities available-for-sale
Amortized Cost	22,316	19,601
Gross Unrealized Gains	63	85
Gross Unrealized Losses	(80)	(106)
Fair Value	22,299	19,580
U.S. Government and agency obligations [Member]
Fair values of securities available-for-sale
Amortized Cost	16,432	11,602
Gross Unrealized Gains	64	31
Gross Unrealized Losses	(27)	(88)
Fair Value	16,469	11,545
Corporate bonds [Member]
Fair values of securities available-for-sale
Amortized Cost	4,220	4,975
Gross Unrealized Gains	34	33
Gross Unrealized Losses	(8)	(21)
Fair Value	4,246	4,987
States and municipal obligations [Member]
Fair values of securities available-for-sale
Amortized Cost	22,137	21,303
Gross Unrealized Gains	437	423
Gross Unrealized Losses	(93)	(69)
Fair Value	22,481	21,657
Mortgage-backed securities [Member]
Fair values of securities available-for-sale
Amortized Cost	15,991	17,438
Gross Unrealized Gains	547	702
Gross Unrealized Losses	(14)	0
Fair Value	$ 16,524	$ 18,140

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Federal Income Taxes (Details Textual) $ in Millions	12 Months Ended
	Dec. 31, 2014 USD ($)
Investments, Owned, Federal Income Tax Note [Line Items]
Net operating loss carry forward	$ 26.4
Net operating loss carry forward, expiration starting period	2030

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Financial assets
Cash and cash equivalents, Carrying amount	$ 35,031	$ 21,274	$ 20,807	$ 25,357
Securities available-for-sale, Carrying amount	82,019	75,909
Loans (net of allowance), Carrying amount	376,084	381,208
FHLB stock, Carrying amount	3,250	3,250
Financial liabilities
Noninterest-bearing deposits, Carrying amount	123,870	111,022
Interest-bearing deposits, Carrying amount	351,037	342,170
Level 1 [Member]
Financial assets
Cash and cash equivalents, Fair value	35,031	21,274
Securities available-for-sale, Carrying amount	0	0
Securities available-for-sale, Fair value	0	0
Loans (net of allowance), Fair value	0	0
FHLB stock, Fair value	0
Accrued interest receivable, Fair value	0	0
Financial liabilities
Noninterest-bearing deposits, Fair value	0	0
Interest-bearing deposits, Fair value	0	0
FHLB stock, Fair value	0	0
Accrued interest payable, Fair value	0	0
Level 2 [Member]
Financial assets
Cash and cash equivalents, Fair value	0	0
Securities available-for-sale, Carrying amount	82,019	75,909
Securities available-for-sale, Fair value	82,019	75,909
Loans (net of allowance), Fair value	0	0
FHLB stock, Fair value	3,250	3,250
Accrued interest receivable, Fair value	0	0
Financial liabilities
Noninterest-bearing deposits, Fair value	123,870	111,022
Interest-bearing deposits, Fair value	351,152	342,318
FHLB stock, Fair value	4,711	11,808
Accrued interest payable, Fair value	0	0
Level 3 [Member]
Financial assets
Cash and cash equivalents, Fair value	0	0
Securities available-for-sale, Carrying amount	0	0
Securities available-for-sale, Fair value	0	0
Loans (net of allowance), Fair value	374,538	381,224
FHLB stock, Fair value	0	0
Accrued interest receivable, Fair value	1,431	1,234
Financial liabilities
Noninterest-bearing deposits, Fair value	0	0
Interest-bearing deposits, Fair value	0	0
FHLB stock, Fair value	0	0
Accrued interest payable, Fair value	74	36
Carrying amount [Member]
Financial assets
Cash and cash equivalents, Carrying amount	35,031	21,274
Securities available-for-sale, Carrying amount	82,019	75,909
Loans (net of allowance), Carrying amount	376,084	381,208
FHLB stock, Carrying amount	3,250	3,250
Accrued interest receivable, Carrying amount	1,431	1,234
Financial liabilities
Noninterest-bearing deposits, Carrying amount	123,870	111,022
Interest-bearing deposits, Carrying amount	351,037	342,170
FHLB stock, Carrying amount	4,711	11,808
Accrued interest payable, Carrying Amount	74	36
Fair value [Member]
Financial assets
Cash and cash equivalents, Fair value	35,031	21,274
Securities available-for-sale, Fair value	82,019	75,909
Loans (net of allowance), Fair value	374,538	381,224
FHLB stock, Fair value	3,250	3,250
Accrued interest receivable, Fair value	1,431	1,234
Financial liabilities
Noninterest-bearing deposits, Fair value	123,870	111,022
Interest-bearing deposits, Fair value	351,152	342,318
FHLB stock, Fair value	4,711	11,808
Accrued interest payable, Fair value	$ 74	$ 36

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net income	$ 11,088	$ 50	$ 11,471	$ 206
Other comprehensive income (loss):
Reclassification adjustment for realized gains included in net income in the three and nine months ended September 30, 2014, net of taxes of $82 and $34, respectively	0	(159)	0	(67)
Net unrealized gains (losses) on securities available-for-sale in the three months and nine months ended September 30, 2015 and 2014, net of taxes of $60, $(10), $(22), and $709, respectively	116	(20)	(45)	1,377
Reclassification of previously recognized non-credit other than temporary impairment on sale of security in the nine months ended September 30, 2014, net of taxes $(48)	0	0	0	(92)
Total other comprehensive income (loss)	116	(179)	(45)	1,218
Comprehensive income (loss)	$ 11,204	$ (129)	$ 11,426	$ 1,424

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Securities

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 2 – Securities

The amortized cost and estimated fair values of securities available-for-sale were as follows at the dates indicated (in thousands):

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
U.S. Government and agency obligations	$	16,432	$	64	$	(27)	$	16,469
Corporate bonds		4,220		34		(8)		4,246
States and municipal obligations		22,137		437		(93)		22,481
Collateralized mortgage obligations		22,316		63		(80)		22,299
Mortgage-backed securities		15,991		547		(14)		16,524
Total	$	81,096	$	1,145	$	(222)	$	82,019

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government and agency obligations	$	11,602	$	31	$	(88)	$	11,545
Corporate bonds		4,975		33		(21)		4,987
States and municipal obligations		21,303		423		(69)		21,657
Collateralized mortgage obligations		19,601		85		(106)		19,580
Mortgage-backed securities		17,438		702		—		18,140
Total	$	74,919	$	1,274	$	(284)	$	75,909

Securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at the dates indicated are as follows (dollars in thousands):

	September 30, 2015
	(Less than 12 months)						(12 months or longer)						Total
Description of securities	Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses
U.S. Government and agency obligations		2	$	896	$	1		2	$	1,970	$	26		4	$	2,866	$	27
Corporate bonds		2		552		3		3		1,405		5		5		1,957		8
State and municipal obligations		6		2,398		64		3		1,308		29		9		3,706		93
Collateralized mortgage obligations		16		10,349		43		4		3,288		37		20		13,637		80
Mortgage-backed securities and other		3		2,570		14		—		—		—		3		2,570		14
Total temporarily impaired securities		29	$	16,765	$	125		12	$	7,971	$	97		41	$	24,736	$	222

	December 31, 2014
	(Less than 12 months)						(12 months or longer)						Total
Description of securities	Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses
U.S. Government and agency obligations		3	$	2,488	$	9		4	$	4,446	$	79		7	$	6,934	$	88
Corporate bonds		1		503		1		4		1,664		21		5		2,167		21
State and municipal obligations		8		2,699		18		4		1,915		51		12		4,614		69
Collateralized mortgage obligations		9		5,649		21		4		3,649		85		13		9,298		106
Mortgage-backed securities and other		—		—		—		—		—		—		—		—		—
Total temporarily impaired securities		21	$	11,339	$	49		16	$	11,674	$	236		37	$	23,013	$	284

The unrealized losses on the Company’s investments in U.S. Government and agency obligations, state and political subdivision obligations, corporate bonds and mortgage-backed securities were caused primarily by changes in interest rates. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be OTTI at September 30, 2015 or December 31, 2014.

Substantially all mortgage-backed securities are backed by pools of mortgages that are insured or guaranteed by the Federal National Mortgage Association (“FNMA”), the Government National Mortgage Association (“GNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”).

There were no sales of securities in the nine months ended September 30, 2015. Gross gains on the sale of securities were $241,000 and $242,000 in the three months and nine months ended September 30, 2014. Gross losses on the sale of securities were $141,000 in the nine months ended September 30, 2014.

At September 30, 2015, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of shareholders’ equity.

The amortized cost and estimated fair value of all debt securities at September 30, 2015, by contractual maturity, are shown below (in thousands). Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown separately since they are not due at a single maturity date.

	Amortized Cost		Fair Value
Due in one year or less	$	2,106	$	2,112
Due after one to five years		19,678		19,862
Due after five to ten years		20,990		21,256
Due after ten years		22,331		22,265
Mortgage-backed and related securities		15,991		16,524
Total	$	81,096	$	82,019

Securities with a fair value of $72.4 million at September 30, 2015 were pledged to secure public deposits and other obligations.

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Securities (Details 1) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)
Unrealized loss
Number of investments	41	37
Fair Value	$ 24,736	$ 23,013
Unrealized Losses	$ 222	$ 284
Collateralized mortgage obligations [Member]
Unrealized loss
Number of investments	20	13
Fair Value	$ 13,637	$ 9,298
Unrealized Losses	$ 80	$ 106
Less than 12 months [Member]
Unrealized loss
Number of investments	29	21
Fair Value	$ 16,765	$ 11,339
Unrealized Losses	$ 125	$ 49
Less than 12 months [Member] | Collateralized mortgage obligations [Member]
Unrealized loss
Number of investments	16	9
Fair Value	$ 10,349	$ 5,649
Unrealized Losses	$ 43	$ 21
12 months or longer [Member]
Unrealized loss
Number of investments	12	16
Fair value	$ 7,971	$ 11,674
Unrealized Losses	$ 97	$ 236
12 months or longer [Member] | Collateralized mortgage obligations [Member]
Unrealized loss
Number of investments	4	4
Fair value	$ 3,288	$ 3,649
Unrealized Losses	$ 37	$ 85
U.S. Government and agency obligations [Member]
Unrealized loss
Number of investments	4	7
Fair Value	$ 2,866	$ 6,934
Unrealized Losses	$ 27	$ 88
U.S. Government and agency obligations [Member] | Less than 12 months [Member]
Unrealized loss
Number of investments	2	3
Fair Value	$ 896	$ 2,488
Unrealized Losses	$ 1	$ 9
U.S. Government and agency obligations [Member] | 12 months or longer [Member]
Unrealized loss
Number of investments	2	4
Fair value	$ 1,970	$ 4,446
Unrealized Losses	$ 26	$ 79
Corporate bonds [Member]
Unrealized loss
Number of investments	5	5
Fair Value	$ 1,957	$ 2,167
Unrealized Losses	$ 8	$ 21
Corporate bonds [Member] | Less than 12 months [Member]
Unrealized loss
Number of investments	2	1
Fair Value	$ 552	$ 503
Unrealized Losses	$ 3	$ 1
Corporate bonds [Member] | 12 months or longer [Member]
Unrealized loss
Number of investments	3	4
Fair value	$ 1,405	$ 1,664
Unrealized Losses	$ 5	$ 21
State and municipal obligations [Member]
Unrealized loss
Number of investments	9	12
Fair Value	$ 3,706	$ 4,614
Unrealized Losses	$ 93	$ 69
State and municipal obligations [Member] | Less than 12 months [Member]
Unrealized loss
Number of investments	6	8
Fair Value	$ 2,398	$ 2,699
Unrealized Losses	$ 64	$ 18
State and municipal obligations [Member] | 12 months or longer [Member]
Unrealized loss
Number of investments	3	4
Fair value	$ 1,308	$ 1,915
Unrealized Losses	$ 29	$ 51
Mortgage-backed securities and other [Member]
Unrealized loss
Number of investments	3	0
Fair Value	$ 2,570	$ 0
Unrealized Losses	$ 14	$ 0
Mortgage-backed securities and other [Member] | Less than 12 months [Member]
Unrealized loss
Number of investments	3	0
Fair Value	$ 2,570	$ 0
Unrealized Losses	$ 14	$ 0
Mortgage-backed securities and other [Member] | 12 months or longer [Member]
Unrealized loss
Number of investments	0	0
Fair value	$ 0	$ 0
Unrealized Losses	$ 0	$ 0

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Credit Quality (Details 7) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 645	$ 1,508
Financing Receivable, Recorded Investment, Current	379,367	383,722
Financing Receivable, Recorded Investment, Subtotal	380,012	385,230
Recorded Investment greater than 90 days and Accruing	0	480
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	63	403
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	526	37
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	56	1,068
Consumer and credit card [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	120	193
Financing Receivable, Recorded Investment, Current	40,569	37,314
Financing Receivable, Recorded Investment, Subtotal	40,689	37,507
Recorded Investment greater than 90 days and Accruing	0	0
Consumer and credit card [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	34	66
Consumer and credit card [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	30	7
Consumer and credit card [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	56	120
Commercial and industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	68
Financing Receivable, Recorded Investment, Current	99,498	106,154
Financing Receivable, Recorded Investment, Subtotal	99,498	106,222
Recorded Investment greater than 90 days and Accruing	0	0
Commercial and industrial [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	68
Commercial and industrial [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial and industrial [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	355
Financing Receivable, Recorded Investment, Current	103,891	111,496
Financing Receivable, Recorded Investment, Subtotal	103,891	111,851
Recorded Investment greater than 90 days and Accruing	0	0
Commercial real estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	49
Commercial real estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial real estate [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	306
Residential real estate and home equity [member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	525	892
Financing Receivable, Recorded Investment, Current	135,409	128,758
Financing Receivable, Recorded Investment, Subtotal	135,934	129,650
Recorded Investment greater than 90 days and Accruing	0	480
Residential real estate and home equity [member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	29	220
Residential real estate and home equity [member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	496	30
Residential real estate and home equity [member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 0	$ 642

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Credit Quality (Tables)

9 Months Ended

Sep. 30, 2015

Credit Quality [Abstract]

Allowance for Credit Losses on Financing Receivables [Table Text Block]

The tables below summarize activity in the allowance for loan losses for the periods indicated (in thousands).

	Three months ended September 30, 2015
	Consumer						Residential
	and		Commercial				Real Estate
	Credit		and		Commercial		and Home
	Card		Industrial		Real Estate		Equity		Unallocated		Total
Beginning balance	$	172	$	1,035	$	2,195	$	315	$	447	$	4,164
Charge-offs		(63)		—		—		—				(63)
Recoveries		50		157		18		30				255
Net (charge-offs) recoveries		(13)		157		18		30				192
Provision		—		(63)		(217)		156		(26)		(150)
Ending balance	$	159	$	1,129	$	1,996	$	501	$	421	$	4,206

	Three months ended September 30, 2014
	Consumer						Residential
	and		Commercial				Real Estate
	Credit		and		Commercial		and Home
	Card		Industrial		Real Estate		Equity		Unallocated		Total
Beginning balance	$	161	$	1,418	$	2,511	$	220	$	258	$	4,568
Charge-offs		(43)		(197)		(173)		(32)				(445)
Recoveries		31		4		11		7				53
Net charge-offs		(12)		(193)		(162)		(25)				(392)
Provision		28		1		(166)		88		49		—
Ending balance	$	177	$	1,226	$	2,183	$	283	$	307	$	4,176

	Nine months ended September 30, 2015
	Consumer						Residential
	and		Commercial				Real Estate
	Credit		and		Commercial		and Home
	Card		Industrial		Real Estate		Equity		Unallocated		Total
Beginning balance	$	190	$	1,132	$	2,376	$	268	$	270	$	4,236
Charge-offs		(122)		(311)		(64)		(73)				(570)
Recoveries		109		297		37		97				540
Net (charge-offs) recoveries		(13)		(14)		(27)		24				(30)
Provision		(18)		11		(353)		209		151		—
Ending balance	$	159	$	1,129	$	1,996	$	501	$	421	$	4,206

	Nine months ended September 30, 2014
	Consumer						Residential
	and		Commercial				Real Estate
	Credit		and		Commercial		and Home
	Card		Industrial		Real Estate		Equity		Unallocated		Total
Beginning balance	$	301	$	3,231	$	2,973	$	219	$	—	$	6,724
Charge-offs		(111)		(1,390)		(1,041)		(161)				(2,703)
Recoveries		90		14		125		23				252
Net charge-offs		(21)		(1,376)		(916)		(138)				(2,451)
Provision		(103)		(629)		223		202		307		—
Transferred to loans held for sale		—		—		(97)		—		—		(97)
Ending balance	$	177	$	1,226	$	2,183	$	283	$	307	$	4,176

Recorded investment, unpaid balance and related allowance [Table Text Block]

The following presents by class, information related to the Company’s impaired loans as of the dates indicated (in thousands).

	At September 30, 2015						Period ended September 30, 2015
							Three		Three		Nine
							months		months		months		Nine months
			Unpaid				Average		Interest		Average		Interest
	Recorded		Principal		Related		Recorded		Income		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Consumer and credit card	$	467	$	467			$	469	$	7	$	469	$	19
Commercial and industrial		907		907				914		5		1,106		21
Commercial real estate		129		129				451		2		468		2
Residential real estate and home equity		679		679				733		—		552		8
		2,182		2,182				2,567		14		2,595		50
With an allowance recorded:
Commercial and industrial	$	965	$	1,043	$	144	$	1,134	$	13	$	1,016	$	43
Commercial real estate		4,608		4,608		435		6,706		53		7,727		163
		5,573		5,651		579		7,840		66		8,743		206
Total:
Consumer and credit card	$	467	$	467	$	—	$	469	$	7	$	469	$	19
Commercial and industrial		1,872		1,950		144		2,048		18		2,122		64
Commercial real estate		4,737		4,737		435		7,157		55		8,195		165
Residential real estate and home equity		679		679		—		733		—		552		8
Total	$	7,755	$	7,833	$	579	$	10,407	$	80	$	11,338	$	256

	At December 31, 2014						Period ended September 30, 2014
							Three		Three		Nine
							months		months		months		Nine months
			Unpaid				Average		Interest		Average		Interest
	Recorded		Principal		Related		Recorded		Income		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Consumer and credit card	$	455	$	455			$	462	$	4	$	474	$	21
Commercial and industrial		1,288		1,288				1,306		24		1,624		35
Commercial real estate		1,088		1,088				6,372		57		8,373		92
		2,831		2,831				8,140		85		10,471		148
With an allowance recorded:
Commercial and industrial		740		817		256		1,016		23		2,096		33
Commercial real estate		8,602		8,602		1,042		5,369		285		5,127		452
		9,342		9,419		1,298		6,385		308		7,223		485
Total:
Consumer and credit card	$	455	$	455	$	—	$	462	$	4	$	474	$	21
Commercial and industrial		2,028		2,105		256		2,322		47		3,720		68
Commercial real estate		9,690		9,690		1,042		11,741		342		13,500		544
Total	$	12,173	$	12,250	$	1,298	$	14,525	$	393	$	17,694	$	633

Allowance for Loan Losses on Financing Receivables [Table Text Block]

The allocation of the allowance for loan losses summarized on the basis of the Company’s impairment methodology was as follows at the dates indicated (in thousands):

							Residential
	Consumer		Commercial				Real Estate
	and Credit		and		Commercial		and Home
	card		Industrial		Real Estate		Equity		Total
September 30, 2015
Individually evaluated for impairment	$	—	$	144	$	435	$	—	$	579
Collectively evaluated for impairment		159		985		1,561		501		3,206
Allocated	$	159	$	1,129	$	1,996	$	501		3,785
Unallocated										421
									$	4,206
December 31, 2014
Individually evaluated for impairment	$	—	$	256	$	1,042	$	—	$	1,298
Collectively evaluated for impairment		190		876		1,334		268		2,668
Allocated	$	190	$	1,132	$	2,376	$	268		3,966
Unallocated										270
									$	4,236

Investment in Loan and Leases On Financing Receivables [Table Text Block]

The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology at the dates indicated was as follows (in thousands):

	Consumer and Credit card		Commercial and Industrial		Commercial Real Estate		Residential Real Estate and Home Equity		Total
September 30, 2015
Individually evaluated for impairment	$	467	$	1,872	$	4,737	$	679	$	7,755
Collectively evaluated for impairment		40,222		97,626		99,154		135,255		372,257
Ending balance	$	40,689	$	99,498	$	103,891	$	135,934	$	380,012

	Consumer and Credit card		Commercial and Industrial		Commercial Real Estate		Residential Real Estate and Home Equity		Total
December 31, 2014
Individually evaluated for impairment	$	455	$	2,028	$	9,690	$	-	$	12,173
Collectively evaluated for impairment		37,052		109,823		96,532		129,650		373,057
Ending balance	$	37,507	$	111,851	$	106,222	$	129,650	$	385,230

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

Loans on non-accrual status were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2015		2014
Consumer and credit card	$	56	$	120
Commercial and industrial		573		632
Commercial real estate		30		298
Residential real estate and home equity		679		334
Total	$	1,338	$	1,384

Financing Receivable Credit Quality Indicators [Table Text Block]

As of the dates indicated and based on the most recent analysis performed, the recorded investment by risk category and class of loans is as of the dates indicated (in thousands):

	September 30, 2015				December 31, 2014
	Commercial and Industrial		Commercial Real Estate		Commercial and Industrial		Commercial Real Estate
Pass	$	95,101	$	94,137	$	100,961	$	96,217
Special mention		933		4,668		823		6,146
Substandard		3,464		5,086		4,438		9,488
Total	$	99,498	$	103,891	$	106,222	$	111,851

Consumer Risk [Table Text Block]

The following table presents the recorded investment in residential real estate and consumer loans based on payment activity as of the dates indicated (in thousands):

	September 30, 2015				December 31, 2014
	Consumer and Credit Card		Residential Real Estate and Home Equity		Consumer and Credit Card		Residential Real Estate and Home Equity
Performing	$	40,633	$	135,255	$	37,387	$	128,836
Non-performing		56		679		120		814
Total	$	40,689	$	135,934	$	37,507	$	129,650

Past Due Financing Receivables [Table Text Block]

The following tables present past due loans aged as of the dates indicated (in thousands).

	September 30, 2015
			60-89										Recorded
			Days		90 Days or								Investment >
	30-59 Days		Past		more Past		Total						90 days and
	Past Due		Due		Due		Past Due		Current		Total Loans		Accruing
Consumer and credit card	$	34	$	30	$	56	$	120	$	40,569	$	40,689	$	—
Commercial and industrial		—		—		—		—		99,498		99,498		—
Commercial real estate		—		—		—		—		103,891		103,891		—
Residential real estate and home equity		29		496		—		525		135,409		135,934		—
Total	$	63	$	526	$	56	$	645	$	379,367	$	380,012	$	—

	December 31, 2014
					Greater								Recorded
					than 90								Investment >
	30-59 Days		60-89 Days		Days Past		Total				Total		90 days and
	Past Due		Past Due		Due		Past Due		Current		Loans		Accruing
Consumer and credit card	$	66	$	7	$	120	$	193	$	37,314	$	37,507	$	—
Commercial and industrial		68		—		—		68		106,154		106,222		—
Commercial real estate		49		—		306		355		111,496		111,851		—
Residential real estate and home equity		220		30		642		892		128,758		129,650		480
Total	$	403	$	37	$	1,068	$	1,508	$	383,722	$	385,230	$	480

Schedule of Debtor Troubled Debt Restructuring, Current Period [Table Text Block]

Troubled Debt Restructurings

The following table summarizes troubled debt restructurings that occurred during the periods indicated (dollars in thousands):

	For the three months ended September 30,
	2015					2014
	Number of		Recorded Investment		Number of			Recorded Investment
	Contracts		(as of period end)		Contracts			(as of period end)
Consumer and credit card		1	$	188			—	$	—
Commercial and industrial		—		—			2		547
Total		1	$	188			2	$	547

	For the nine months ended September 30,
	2015				2014
	Number of		Recorded Investment		Number of		Recorded Investment
	Contracts		(as of period end)		Contracts		(as of period end)
Consumer and credit card		7	$	279		—	$	—
Commercial and industrial		—		—		2		547
Total		7	$	279		2	$	547

The following presents by class loans modified in a TDR that subsequently defaulted within twelve months of the modification (i.e. 60 days or more past due) during the periods indicated (dollars in thousands):

	For the three months ended September 30,
	2015				2014
	Number of		Recorded Investment		Number of		Recorded Investment
	Contracts		(as of period end) (1)		Contracts		(as of period end) (1)
Commercial real estate		—	$	—		1	$	315
Total		—	$	—		1	$	315

	For the nine months ended September 30,
	2015				2014
	Number of		Recorded Investment		Number of		Recorded Investment
	Contracts		(as of period end) (1)		Contracts		(as of period end) (1)
Commercial real estate		—	$	—		1	$	315
Total		—	$	—		1	$	315

(1) Period end balances are inclusive of all partial pay downs and charge-offs since the modification date. Loans modified in a TDR that were fully paid down, charged off, or foreclosed upon by period end are not reported.