10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2016

Or

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 000-30973

MBT FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Michigan	38-3516922
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

102 E. Front Street

Monroe, Michigan 48161

(Address of principal executive offices)

(Zip Code)

(734) 241-3431

(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 ☑ 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 ☑ 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 the definitions of “large accelerated filer”, “accelerated filer”, and “smaller accelerated filer” in Rule 12b-2 of the Exchange Act (check one).

Large accelerated filer ☐	Accelerated Filer ☑
Non-accelerated filer ☐	Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of November 9, 2016, there were 22,737,263 shares of the Company’s Common Stock outstanding.

Part I Financial Information

Item 1. Financial Statements

MBT FINANCIAL CORP.        

CONSOLIDATED BALANCE SHEETS

	September 30, 2016
Dollars in thousands	(Unaudited)			December 31, 2015
ASSETS
Cash and Cash Equivalents
Cash and due from banks
Non-interest bearing	$	16,122		$	14,996
Interest bearing		44,779			64,554
Total cash and cash equivalents		60,901			79,550
Interest Bearing Time Deposits in Other Banks		19,196			5,500
Securities - Held to Maturity		42,685			41,282
Securities - Available for Sale		465,610			496,859
Federal Home Loan Bank stock - at cost		4,148			4,148
Loans held for sale		636			1,477
Loans		655,809			617,308
Allowance for Loan Losses		(9,405	)		(10,896	)
Loans - Net		646,404			606,412
Accrued interest receivable and other assets		20,438			23,365
Other Real Estate Owned		1,686			2,383
Bank Owned Life Insurance		54,059			53,093
Premises and Equipment - Net		27,263			28,244
Total assets	$	1,343,026		$	1,342,313
LIABILITIES
Deposits:
Non-interest bearing	$	285,764		$	253,795
Interest-bearing		894,697			911,598
Total deposits		1,180,461			1,165,393
Repurchase agreements		-			15,000
Interest payable and other liabilities		14,903			14,579
Total liabilities		1,195,364			1,194,972
STOCKHOLDERS' EQUITY
Common stock (no par value; 50,000,000 shares authorized, 22,736,116 and 22,790,707 shares issued and outstanding)		22,474			23,492
Retained earnings		123,411			126,214
Unearned compensation		(19	)		(13	)
Accumulated other comprehensive income (loss)		1,796			(2,352	)
Total stockholders' equity		147,662			147,341
Total liabilities and stockholders' equity	$	1,343,026		$	1,342,313

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

-2-

MBT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - UNAUDITED

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
Dollars in thousands, except per share data	2016			2015			2016			2015
Interest Income
Interest and fees on loans	$	7,538		$	7,225		$	21,752		$	21,811
Interest on investment securities-
Tax-exempt		316			278			924			826
Taxable		1,970			2,437			6,714			7,301
Interest on balances due from banks		171			24			450			64
Total interest income		9,995			9,964			29,840			30,002
Interest Expense
Interest on deposits		480			562			1,483			1,826
Interest on borrowed funds		-			178			308			529
Total interest expense		480			740			1,791			2,355
Net Interest Income		9,515			9,224			28,049			27,647
Provision For (Recovery Of) Loan Losses		(700	)		(200	)		(1,200	)		(1,000	)
Net Interest Income After
Provision For Loan Losses		10,215			9,424			29,249			28,647
Other Income
Income from wealth management services		1,145			1,163			3,347			3,576
Service charges and other fees		1,118			1,134			3,142			3,058
Debit card income		721			594			2,130			1,749
Net gain on sales and redemptionsof securities available for sale		87			16			2,159			274
Net gain (loss) on sales of Other Real Estate Owned		(4	)		36			(61	)		(248	)
Origination fees on mortgage loans sold		149			184			415			450
Bank owned life insurance income		352			358			1,069			991
Other		471			493			1,507			1,558
Total other income		4,039			3,978			13,708			11,408
Other Expenses
Salaries and employee benefits		5,514			5,694			16,531			17,318
Occupancy expense		668			648			2,002			2,074
Equipment expense		731			708			2,141			2,232
Marketing expense		280			267			825			821
Professional fees		459			481			1,667			1,607
EFT/ATM Expense		235			109			781			317
Other Real Estate Owned expenses		35			59			129			364
FDIC Deposit Insurance Assessment		179			212			539			1,055
Bonding and other insurance expense		118			203			454			660
Telephone expense		95			113			312			317
Other		660			672			1,948			1,950
Total other expenses		8,974			9,166			27,329			28,715
Income Before Income Taxes		5,280			4,236			15,628			11,340
Income Tax Expense		1,593			1,230			4,705			3,272
Net Income	$	3,687		$	3,006		$	10,923		$	8,068
Other Comprehensive Income - Net of Tax
Unrealized gains (losses) on securities		(883	)		4,177			5,493			3,358
Reclassification adjustment for gains included in net income		(58	)		(10	)		(1,425	)		(181	)
Postretirement benefit liability		27			27			80			80
Total Other Comprehensive Income (Loss) - Net of Tax		(914	)		4,194			4,148			3,257
Comprehensive Income (Loss)	$	2,773		$	7,200		$	15,071		$	11,325
Basic Earnings Per Common Share	$	0.16		$	0.13		$	0.48		$	0.35
Diluted Earnings Per Common Share	$	0.16		$	0.13		$	0.48		$	0.35
Dividends Declared Per Share of Common Stock	$	0.04		$	-		$	0.60		$	-

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

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MBT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED

										Accumulated
										Other
	Common			Retained			Unearned			Comprehensive
Dollars in thousands	Stock			Earnings			Compensation			Income (Loss)			Total
Balance - January 1, 2016	$	23,492		$	126,214		$	(13	)	$	(2,352	)	$	147,341
Repurchase of Common Stock (192,080 shares)		(1,414	)		-			-			-			(1,414	)
Issuance of Common Stock
SOSARs exercised (109,727 shares)		84			-			-			-			84
Restricted stock awards (5,000 shares)		41			-			(41	)		-			-
Other stock issued (22,762 shares)		184			-			-			-			184
Equity Compensation		87			-			35			-			122
Dividends declared ($0.60 per share)		-			(13,726	)		-			.			(13,726	)
Net income		-			10,923			-			-			10,923
Other comprehensive income - net of tax		-			-			-			4,148			4,148
Balance - September 30, 2016	$	22,474		$	123,411		$	(19	)	$	1,796		$	147,662

								Accumulated
								Other
	Common		Retained		Unearned			Comprehensive
Dollars in thousands	Stock		Earnings		Compensation			Income (Loss)			Total
Balance - January 1, 2015	$	23,037	$	114,132	$	-		$	(2,633	)	$	134,536
Issuance of Common Stock
SOSARs exercised (23,855 shares)		-		-		-			-			-
Restricted stock awards (6,000 shares)		35		-		(35	)		-			-
Other stock issued (13,395 shares)		76		-		-			-			76
Equity Compensation		197		-		20			-			217
Net income		-		8,068		-			-			8,068
Other comprehensive income - net of tax		-		-		-			3,257			3,257
Balance - September 30, 2015	$	23,345	$	122,200	$	(15	)	$	624		$	146,154

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

-4-

MBT FINANCIAL CORP.        

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

	Nine Months Ended September 30,
Dollars in thousands	2016			2015
Cash Flows from Operating Activities
Net Income	$	10,923		$	8,068
Adjustments to reconcile net income to net cash from operating activities
Recovery of loan losses		(1,200	)		(1,000	)
Depreciation		1,202			1,177
Deferred tax expense		2,210			2,927
Net amortization of investment premium and discount		1,294			1,054
Writedowns of Other Real Estate Owned		78			509
Net decrease in interest payable and other liabilities		824			538
Net increase in interest receivable and other assets		(1,128	)		(693	)
Equity based compensation expense		206			217
Net gain on sale/settlement of securities		(2,159	)		(274	)
Increase in cash surrender value of life insurance		(966	)		(905	)
Net cash provided by operating activities	$	11,284		$	11,618
Cash Flows from Investing Activities
Proceeds from maturities of interest bearing time deposits in other banks	$	250		$	-
Proceeds from maturities and redemptions of investment securities held to maturity		6,789			8,245
Proceeds from maturities and redemptions of investment securities available for sale		297,099			126,388
Proceeds from sales of investment securities available for sale		33,144			29,327
Net increase in loans		(38,721	)		(14,308	)
Proceeds from sales of other real estate owned		1,376			3,728
Proceeds from sales of other assets		171			82
Purchase of time deposits in other banks		(13,946	)		-
Purchase of investment securities held to maturity		(8,259	)		(13,187	)
Purchase of investment securities available for sale		(291,898	)		(162,680	)
Purchase of bank premises and equipment		(1,050	)		(1,013	)
Net cash provided by (used for) investing activities	$	(15,045	)	$	(23,418	)
Cash Flows from Financing Activities
Net increase in deposits	$	15,068		$	24,998
Net increase in short term borrowings		-			1,029
Repayment of repurchase agreements		(15,000	)		-
Proceeds from issuance of common stock		184			76
Repurchase of common stock		(1,414	)		-
Dividends paid		(13,726	)		-
Net cash provided by (used for) financing activities	$	(14,888	)	$	26,103
Net Increase (Decrease) in Cash and Cash Equivalents	$	(18,649	)	$	14,303
Cash and Cash Equivalents at Beginning of Period		79,550			51,622
Cash and Cash Equivalents at End of Period	$	60,901		$	65,925
Supplemental Cash Flow Information
Cash paid for interest	$	1,845		$	2,379
Cash paid for federal income taxes	$	2,069		$	345
Supplemental Schedule of Non Cash Investing Activities
Transfer of loans to other real estate owned	$	736		$	516
Transfer of loans to other assets	$	34		$	54

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

-5-

MBT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The unaudited consolidated financial statements include the accounts of MBT Financial Corp. (the “Company”) and its subsidiary, Monroe Bank & Trust (the “Bank”). The Bank includes the accounts of its wholly owned subsidiary, MB&T Financial Services, Inc. The Bank operates fourteen branches in Monroe County, Michigan, six branches in Wayne County, Michigan, and one loan and wealth management office in each Wayne County and Lenawee County. The Bank’s primary source of revenue is from providing loans to customers, who are predominantly small and middle-market businesses and middle-income individuals. The Company’s sole business segment is community banking.

The accounting and reporting policies of the Bank conform to practice within the banking industry and are in accordance with accounting principles generally accepted in the United States. Preparation of financial statements in conformity with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term are the determination of the allowance for loan losses, the valuation of other real estate owned, and the fair value of investment securities.

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of Management, necessary for fair statement of results for the interim periods.

The significant accounting policies are as follows:

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany transactions and balances have been eliminated.

COMPREHENSIVE INCOME

Accounting principles generally require that revenue, expenses, gains, and losses be included in net income. Certain changes in assets and liabilities, however, such as unrealized gains and losses on securities available for sale and amounts recognized related to postretirement benefit plans (gains and losses, prior service costs, and transition assets or obligations), are reported as a direct adjustment to the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income.

BUSINESS SEGMENTS

While the Company's chief decision makers monitor the revenue streams of various products and services, operations are managed and financial performance is evaluated on a company wide basis. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable segment.

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FAIR VALUE

The Company measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities that are elected to be accounted for under The Fair Value Option as well as for certain assets and liabilities in which fair value is the primary basis of accounting. Examples of these include derivative instruments and available for sale securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Fair value is defined 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. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. 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 market observable data for similar assets or liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets and the Company must use alternative valuation techniques to derive a fair value measurement.

ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09 (ASU 2014-09), “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 adopts a standardized approach for revenue recognition and was a joint effort with the International Accounting Standards Board (IASB). The new revenue recognition standard is based on a core principle of recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 does not apply to financial instruments. ASU 2014-09 is effective for public entities for reporting periods beginning after December 15, 2017 (therefore, for the year ending December 31, 2018 for the Corporation). Early implementation is not allowed for public companies. Management is currently assessing the impact to the Corporation’s consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”. The amendments in ASU 2016-01 supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income. The amendments allow equity investments that do not have readily determinable fair values to be re-measured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. The amendments improve financial reporting by providing relevant information about an entity’s equity investments and reducing the number of items that are recognized in other comprehensive income. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The adoption of this guidance is not expected to have a material effect on the Company’s financial position or results of operations.

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, “Leases”, which will supersede the current lease requirements in ASC 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases.  Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations.  Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet.  The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new lease footnote guidance will be effective for the Company’s year ending December 31, 2019 and will be applied using a modified retrospective transition method to the beginning of the earliest period presented.  The effect of applying the new lease guidance on the financial statements as not yet been determined, however the new lease standard is not expected to have a significant effect on the Company’s financial statements.

-7-

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

ASU 2016-13 requires an entity measure expected credit losses for financial assets over the estimated lifetime of expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard includes the following core concepts in determining the expected credit loss estimate: (a) be based on an asset’s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments), (b) reflect losses expected over the remaining contractual life of an asset (considering the effect of voluntary prepayments), (c) consider available relevant information about the estimated collectability of cash flows (including information about past events, current conditions, and reasonable and supportable forecasts), and (d) reflect the risk of loss, even when that risk is remote.

ASU 2016-13 also amends the recording of purchased credit-deteriorated assets. Under the new guidance, an allowance will be recognized at acquisition through a gross-up approach whereby an entity will record as the initial amortized cost the sum of (a) the purchase price and (b) an estimate of credit losses as of the date of acquisition. In addition, the guidance also requires immediate recognition in earnings any subsequent changes, both favorable and unfavorable, in expected cash flows by adjusting this allowance.

ASU 2016-13 amends the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Management may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists, as is currently permitted. In addition, an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. As a result, entities will recognize improvements to credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time under current practice.

New disclosures required by ASU 2016-13 include: (a) for financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes, (b) for financial receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination or vintage for as many as five annual periods, and (c) for available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.

Upon adoption of ASU 2016-13, a cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted for annual periods beginning after December 15, 2018. The Corporation is currently evaluating the provisions of ASU 2016-13 to determine the potential impact on the Corporation's consolidated financial condition and results of operations.

-8-

2. EARNINGS PER SHARE

The calculations of earnings per common share are as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2016		2015		2016		2015
Basic
Net income	$	3,687,000	$	3,006,000	$	10,923,000	$	8,068,000
Average common shares outstanding		22,733,134		22,748,974		22,823,682		22,734,952
Earnings per common share - basic	$	0.16	$	0.13	$	0.48	$	0.35
Diluted
Net income	$	3,687,000	$	3,006,000	$	10,923,000	$	8,068,000
Average common shares outstanding		22,733,134		22,748,974		22,823,682		22,734,952
Equity compensation		182,144		200,089		164,682		181,492
Average common shares outstanding - diluted		22,915,278		22,949,063		22,988,364		22,916,444
Earnings per common share - diluted	$	0.16	$	0.13	$	0.48	$	0.35

3. STOCK BASED COMPENSATION

Stock Only Stock Appreciation Rights (SOSARs) - On February 25, 2016, 105,500 Stock Only Stock Appreciation Rights (SOSARs) were awarded to certain officers in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008 and amended by shareholders on May 7, 2015. The SOSARs have a term of ten years and vest in three equal annual installments beginning on December 31, 2016. The fair value of $3.08 for the SOSARs was estimated at the date of the grant, using the Black-Scholes option pricing model, with the following assumptions: expected option lives of 7 years, expected volatility of 41.21%, a risk free interest rate of 1.47% and dividend yield of 1.50%. The fair value of the Company’s common stock was $8.26 on the grant date.

SOSARs granted under the plan are structured as fixed grants with the base price equal to the market value of the underlying stock on the date of the grant. 

The following table summarizes the SOSARs that have been granted:

				Weighted Average
	SOSARs			Base Price
SOSARs Outstanding, January 1, 2016		609,275		$	4.02
Granted		105,500			8.26
Exercised		(209,887	)		2.77
Forfeited		(8,839	)		5.68
Expired		-			-
SOSARs Outstanding, September 30, 2016		496,049		$	5.42
SOSARs Exercisable, September 30, 2016		281,169		$	4.46

The exercise of a SOSAR results in the issuance of a number of shares of common stock of the Company based on the appreciation of the market price of the stock over the base price of the SOSAR. The market value of the Company’s common stock on September 30, 2016 was $9.05. The value of the exercisable SOSARs that are in-the-money as of September 30, 2016 was $1,300,000, and exercise of those SOSARs on that date would have resulted in the issuance of 142,604 shares of common stock. The plan allows participants to elect to withhold shares from the exercise of SOSARs to cover their tax liability. This may affect the number of shares issued and the value of the common stock account on the balance sheet and the statement of changes in equity.

-9-

Restricted Stock Unit Awards – On February 25, 2016, 35,000 performance restricted stock units were awarded to certain key executive officers in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008 and amended by shareholders on May 7, 2015. Each Restricted Stock Unit (RSU) is equivalent to one share of MBT Financial Corp. common stock. Stock will be issued to the participants following a two year performance period that ends on December 31, 2017 if the defined performance targets are achieved. Earned RSUs vest on December 15, 2018 and as of September 30, 2016 none of the RSUs were vested.

Restricted Stock Awards – On February 25, 2016, 5,000 restricted shares were awarded to certain non-executive members of the board of directors in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008 and amended by shareholders on May 7, 2015. The restricted shares vest on December 31, 2016. The expense for the restricted stock is based on the grant date value of $8.26 and is recognized over the vesting period. The unrecognized cost related to the non-vested restricted stock awards was $14,000 as of September 30, 2016.

The total expense for equity based compensation was $162,000 in the third quarter of 2016 and $116,000 in the third quarter of 2015. The total expense for equity based compensation was $438,000 in the first nine months of 2016 and $293,000 in the first nine months of 2015.

4. LOANS

The Bank makes commercial, consumer, and mortgage loans primarily to customers in Monroe County, Michigan, southern and western Wayne County, Michigan, Lenawee County, Michigan, and surrounding areas. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on the automotive, manufacturing, and real estate development economic sectors.

Loans consist of the following (000s omitted):

	September 30,		December 31,
	2016		2015
Residential real estate loans	$	217,252	$	213,989
Commercial and Construction real estate loans		272,412		259,139
Agriculture and agricultural real estate loans		21,961		19,243
Commercial and industrial loans		94,826		84,438
Loans to individuals for household, family, and other personal expenditures		49,358		40,499
Total loans, gross	$	655,809	$	617,308
Less: Allowance for loan losses		9,405		10,896
Net Loans	$	646,404	$	606,412

Loans are placed in a nonaccrual status when, in the opinion of Management, the collection of additional interest is doubtful. All loan relationships over $250,000 that are classified by Management as nonperforming as well as selected performing accounts and all renegotiated loans are reviewed for impairment each quarter. Allowances for loans determined to be impaired are included in the allowance for loan losses. All cash received on nonaccrual loans is applied to the principal balance. Nonperforming assets consist of nonaccrual loans, loans 90 days or more past due, restructured loans, nonaccrual investment securities, other real estate owned, and other repossessed assets. Other real estate owned includes real estate that has been acquired in full or partial satisfaction of loan obligations or upon foreclosure.

-10-

The following table summarizes nonperforming assets (000s omitted):

	September 30,			December 31,
	2016			2015
Nonaccrual loans	$	6,545		$	8,633
Loans 90 days past due and accruing		32			4
Restructured loans		15,923			18,910
Total nonperforming loans	$	22,500		$	27,547
Other real estate owned		1,686			2,383
Other assets		10			-
Total nonperforming assets	$	24,196		$	29,930
Nonperforming assets to total assets		1.80	%		2.23	%
Allowance for loan losses to nonperforming loans		41.80	%		39.55	%

5. ALLOWANCE FOR LOAN LOSSES

The Company separates its loan portfolio into segments to perform the calculation and analysis of the allowance for loan losses. The six segments analyzed are Agriculture and Agricultural Real Estate, Commercial, Commercial Real Estate, Construction Real Estate, Residential Real Estate, and Consumer and Other. The Agriculture and Agricultural Real Estate segment includes all loans to finance agricultural production and all loans secured by agricultural real estate. This segment does not include loans to finance agriculture that are secured by residential real estate, which are included in the Residential Real Estate segment. The Commercial segment includes loans to finance commercial and industrial businesses that are not secured by real estate. The Commercial Real Estate segment includes loans secured by non-farm, non-residential real estate. The Construction Real Estate segment includes loans to finance construction and land development. This includes residential and commercial construction and land development. The Residential Real Estate segment includes all loans, other than construction loans, that are secured by single family and multi family residential real estate properties. The Consumer and Other segment includes all loans not included in any other segment. These are primarily loans to consumers for household, family, and other personal expenditures. The majority of this segment is student loans, and it also includes loans for autos, boats, and recreational vehicles.

-11-

Activity in the allowance for loan losses during the three and nine months ended September 30, 2016 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate			Commercial			Commercial Real Estate			Construction Real Estate			Residential Real Estate			Consumer and Other			Total
Allowance for loan losses: For the three months ended September 30, 2016
Beginning Balance	$	200		$	1,526		$	4,470		$	460		$	1,791		$	1,456		$	9,903
Charge-offs		-			(14	)		(61	)		-			(39	)		-			(114	)
Recoveries		3			24			114			13			132			30			316
Provision		18			(84	)		(140	)		(104	)		(68	)		(322	)		(700	)
Ending balance	$	221		$	1,452		$	4,383		$	369		$	1,816		$	1,164		$	9,405
Allowance for loan losses: For the nine months ended September 30, 2016
Beginning Balance	$	389		$	2,279		$	4,350		$	420		$	2,235		$	1,223		$	10,896
Charge-offs		(221	)		(26	)		(413	)		-			(195	)		(86	)		(941	)
Recoveries		3			102			182			40			235			88			650
Provision		50			(903	)		264			(91	)		(459	)		(61	)		(1,200	)
Ending balance	$	221		$	1,452		$	4,383		$	369		$	1,816		$	1,164		$	9,405
Allowance for loan losses as of September 30, 2016
Ending balance individually evaluated for impairment	$	5		$	340		$	629		$	255		$	347		$	187		$	1,763
Ending balance collectively evaluated for impairment		216			1,112			3,754			114			1,469			977			7,642
Ending balance	$	221		$	1,452		$	4,383		$	369		$	1,816		$	1,164		$	9,405
Loans as of September 30, 2016
Ending balance individually evaluated for impairment	$	1,251		$	717		$	9,431		$	1,761		$	7,729		$	487		$	21,376
Ending balance collectively evaluated for impairment		20,710			94,109			245,209			16,011			209,523			48,871			634,433
Ending balance	$	21,961		$	94,826		$	254,640		$	17,772		$	217,252		$	49,358		$	655,809

Activity in the allowance for loan losses during the three and nine months ended September 30, 2015 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate			Commercial			Commercial Real Estate			Construction Real Estate			Residential Real Estate			Consumer and Other			Total
Allowance for loan losses: For the three months ended September 30, 2015
Beginning Balance	$	425		$	1,481		$	5,437		$	623		$	3,070		$	2,043		$	13,079
Charge-offs		-			-			(91	)		-			(101	)		-			(192	)
Recoveries		2			45			155			14			57			36			309
Provision		202			372			(1,232	)		(15	)		602			(129	)		(200	)
Ending balance	$	629		$	1,898		$	4,269		$	622		$	3,628		$	1,950		$	12,996
Allowance for loan losses: For the nine months ended September 30, 2015
Beginning Balance	$	216		$	1,361		$	6,179		$	803		$	3,226		$	1,423		$	13,208
Charge-offs		(75	)		(164	)		(212	)		-			(353	)		(117	)		(921	)
Recoveries		12			215			337			635			414			96			1,709
Provision		476			486			(2,035	)		(816	)		341			548			(1,000	)
Ending balance	$	629		$	1,898		$	4,269		$	622		$	3,628		$	1,950		$	12,996
Allowance for loan losses as of September 30, 2015
Ending balance individually evaluated for impairment	$	395		$	878		$	948		$	471		$	1,288		$	228		$	4,208
Ending balance collectively evaluated for impairment		234			1,020			3,321			151			2,340			1,722			8,788
Ending balance	$	629		$	1,898		$	4,269		$	622		$	3,628		$	1,950		$	12,996
Loans as of September 30, 2015
Ending balance individually evaluated for impairment	$	1,214		$	1,259		$	16,803		$	1,843		$	10,423		$	522		$	32,064
Ending balance collectively evaluated for impairment		18,926			84,715			232,177			12,831			205,348			37,748			591,745
Ending balance	$	20,140		$	85,974		$	248,980		$	14,674		$	215,771		$	38,270		$	623,809

-12-

Each period the provision for loan losses in the income statement results from the combination of an estimate by Management of loan losses that occurred during the current period and the ongoing adjustment of prior estimates of losses occurring in prior periods.

The provision for loan losses increases the allowance for loan losses, a valuation account which appears on the consolidated balance sheets. As the specific customer and amount of a loan loss is confirmed by gathering additional information, taking collateral in full or partial settlement of the loan, bankruptcy of the borrower, etc., the loan is charged off, reducing the allowance for loan losses. If, subsequent to a charge off, the Bank is able to collect additional amounts from the customer or sell collateral worth more than earlier estimated, a recovery is recorded.

To serve as a basis for making this provision, the Bank maintains an extensive credit risk monitoring process that considers several factors including: current economic conditions affecting the Bank’s customers, the payment performance of individual loans and pools of homogeneous loans, portfolio seasoning, changes in collateral values, and detailed reviews of specific loan relationships.

The Company utilizes an internal loan grading system to assign a risk grade to all commercial loans, all renegotiated loans, and each commercial credit relationship. Grades 10 through 45 are considered “pass” credits and grades 50 through 65 are considered “watch” credits and are subject to greater scrutiny. Loans with grades 70 through 95 and considered “doubtful” or “loss” and have generally been charged off. A description of the general characteristics of each grade is as follows:

• Grade 10– Excellent – Loans secured by marketable collateral, with adequate margin, or supported by strong financial statements, including substantial levels of tangible net worth. Probability of serious financial deterioration is unlikely. Possess a sound repayment source and a secondary source. This classification will also include individual loans backed by liquid personal assets, established history and unquestionable character. High liquidity, minimum risk, strong ratios, and low handling costs are common to these loans.

• Grade 20– Above Average – Loans that exhibit less than average risk and clearly demonstrate debt service coverage that is consistently above average as well as a strong capital base. These loans may have some deficiency or vulnerability, but with offsetting features and are considered to be fully collectable.

• Grade 30– Satisfactory – Loans that have an acceptable amount of risk but may exhibit vulnerability to deterioration if adverse circumstances are encountered. These loans should demonstrate adequate debt service coverage and adequate levels of capital support but warrant periodic monitoring to ensure that weaknesses do not materialize or advance.

• Grades 40 and 45 – Pass – Loans that are considered “pass credits” and typically demonstrate adequate debt service coverage. The level of risk is considered acceptable but these loans warrant ongoing monitoring to ensure that adverse trends or other credit deficiencies have not materialized or advanced. The level of risk is considered acceptable so long as the loan is given adequate and ongoing management supervision.

• Grades 50 and 55 – Watch – Loans that possess some credit deficiency or potential weakness that deserves close attention. The primary source of loan repayment is sufficient but may be considered inadequate by the Bank’s standards.

• Grade 60– Substandard – Loans that exhibit one or more of the following characteristics: (1) a defined credit weakness, financial deterioration is underway, and uncertainty about the likelihood that the loan will be paid from the primary source of repayment; (2) inadequately protected by the current net worth and paying capacity of the obligor; (3) reliance on secondary source of repayment such as collateral liquidation or guarantees; (4) distinct possibility the Bank will sustain loss if deficiencies are not corrected; (5) unusual courses of action are needed to maintain a high probability of repayment; (6) insufficient cash flow to repay principal but continuing to pay interest; (7) the Bank is subordinated or unsecured due to flaws in documentation; (8) loans are restructured or are on nonaccrual status due to concessions to the borrower when compared to normal loan terms; (9) the Bank is contemplating foreclosure or legal action due to the apparent deterioration in the loan; or (10) there is deterioration in the market conditions and the borrower is highly vulnerable to these conditions.

-13-

• Grade 70– Doubtful – Loans that exhibit one or more of the following characteristics: (1) loans with all the weaknesses of Substandard loans and collection or liquidation is not probable to result in payment in full; (2) the primary source of repayment is gone and there is considerable doubt as to the quality of the secondary source of repayment; or (3) the possibility of loss is high, but certain important pending factors may strengthen the loan and loss classification is deferred.

• Grades 80 and 90 - Loss – Loans are considered uncollectible and of such little value that continuing to carry them on the Bank’s financial statements is not feasible.

The assessment of compensating factors may result in a rating plus or minus one grade from those listed above. These factors include, but are not limited to collateral, guarantors, environmental conditions, history, plan/projection reasonableness, quality of information, and payment delinquency.

The portfolio segments in each credit risk grade as of September 30, 2016 are as follows (000s omitted):

Credit Quality Indicators as of September 30, 2016

Credit Risk by Internally Assigned Grade

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	41	$	4,143	$	226	$	8,601	$	135,498	$	42,215	$	190,724
10		-		5,515		-		-		-		-		5,515
20		551		357		468		-		-		146		1,522
30		678		17,908		9,672		-		224		-		28,482
40		15,874		60,469		193,382		5,185		65,954		6,835		347,699
45		2,085		2,601		16,082		1,497		4,287		-		26,552
50		1,211		1,434		19,325		576		4,411		14		26,971
55		270		1,464		4,223		1,582		653		-		8,192
60		1,251		935		11,262		331		6,225		148		20,152
70		-		-		-		-		-		-		-
80		-		-		-		-		-		-		-
90		-		-		-		-		-		-		-
Total	$	21,961	$	94,826	$	254,640	$	17,772	$	217,252	$	49,358	$	655,809
Performing	$	21,239	$	93,961	$	244,269	$	16,007	$	209,100	$	48,733	$	633,309
Nonperforming		722		865		10,371		1,765		8,152		625		22,500
Total	$	21,961	$	94,826	$	254,640	$	17,772	$	217,252	$	49,358	$	655,809

-14-

The portfolio segments in each credit risk grade as of December 31, 2015 are as follows (000s omitted):

Credit Quality Indicators as of December 31, 2015

Credit Risk by Internally Assigned Grade

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	102	$	2,173	$	310	$	6,789	$	136,049	$	32,461	$	177,884
10		-		2,717		-		-		60		-		2,777
20		306		359		533		-		-		366		1,564
30		432		17,024		7,620		-		373		-		25,449
40		14,413		55,204		184,504		6,548		62,347		7,453		330,469
45		840		1,094		6,506		74		2,957		-		11,471
50		1,340		3,428		23,678		2,163		3,948		18		34,575
55		929		-		3,700		-		-		-		4,629
60		881		2,439		16,369		345		8,255		201		28,490
70		-		-		-		-		-		-		-
80		-		-		-		-		-		-		-
90		-		-		-		-		-		-		-
Total	$	19,243	$	84,438	$	243,220	$	15,919	$	213,989	$	40,499	$	617,308
Performing	$	18,362	$	83,372	$	228,624	$	14,104	$	205,430	$	39,869	$	589,761
Nonperforming		881		1,066		14,596		1,815		8,559		630		27,547
Total	$	19,243	$	84,438	$	243,220	$	15,919	$	213,989	$	40,499	$	617,308

Loans are considered past due when contractually required payment of interest or principal has not been received. The amount classified as past due is the entire principal balance outstanding of the loan, not just the amount of payments that are past due. The following is a summary of past due loans as of September 30, 2016 and December 31, 2015 (000s omitted):

September 30, 2016	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	238	$	-	$	113	$	351	$	21,610	$	21,961	$	-
Commercial		302		67		73		442		94,384		94,826		32
Commercial Real Estate		1,745		112		1,680		3,537		251,103		254,640		-
Construction Real Estate		-		-		-		-		17,772		17,772		-
Residential Real Estate		1,305		694		1,054		3,053		214,199		217,252		-
Consumer and Other		8		-		41		49		49,309		49,358		-
Total	$	3,598	$	873	$	2,961	$	7,432	$	648,377	$	655,809	$	32

December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	136	$	213	$	44	$	393	$	18,850	$	19,243	$	-
Commercial		10		75		76		161		84,277		84,438		4
Commercial Real Estate		2,194		230		2,123		4,547		238,673		243,220		-
Construction Real Estate		-		-		-		-		15,919		15,919		-
Residential Real Estate		2,252		227		464		2,943		211,046		213,989		-
Consumer and Other		130		81		52		263		40,236		40,499		-
Total	$	4,722	$	826	$	2,759	$	8,307	$	609,001	$	617,308	$	4

Loans are placed on non-accrual status when, in the opinion of Management, the collection of additional interest is doubtful. Loans are automatically placed on non-accrual status upon becoming ninety days past due, however, loans may be placed on non-accrual status regardless of whether or not they are past due. All cash received on non-accrual loans is applied to the principal balance. Loans are considered for return to accrual status on an individual basis when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

-15-

The following is a summary of non-accrual loans as of September 30, 2016 and December 31, 2015 (000s omitted):

	September 30, 2016		December 31, 2015
Agriculture and Agricultural Real Estate	$	113	$	565
Commercial		156		148
Commercial Real Estate		3,577		4,823
Construction Real Estate		35		46
Residential Real Estate		2,525		2,915
Consumer and Other		139		136
Total	$	6,545	$	8,633

For loans deemed to be impaired due to an expectation that all contractual payments will probably not be received, impairment is measured by comparing the Bank’s recorded investment in the loan to the present value of expected cash flows discounted at the loan’s effective interest rate, the fair value of the collateral, or the loan’s observable market price.

The following is a summary of impaired loans as of September 30, 2016 and 2015 (000s omitted):

September 30, 2016	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment for the Three Months Ended		Interest Income Recognized in the Three Months Ended		Average Recorded Investment for the Nine Months Ended		Interest Income Recognized in the Nine Months Ended
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	1,003	$	1,202	$	-	$	1,017	$	11	$	1,024	$	36
Commercial		146		197		-		152		2		157		8
Commercial Real Estate		5,209		5,575		-		5,390		49		5,456		152
Construction Real Estate		99		132		-		120		2		126		6
Residential Real Estate		5,188		5,486		-		5,433		69		5,553		198
Consumer and Other		33		33		-		34		1		36		2
With an allowance recorded:
Agriculture and Agricultural Real Estate		248		247		5		248		3		249		10
Commercial		571		581		340		651		7		729		24
Commercial Real Estate		4,222		4,435		629		4,431		45		4,590		153
Construction Real Estate		1,662		1,662		255		1,668		19		1,677		57
Residential Real Estate		2,541		2,590		347		2,659		33		2,726		84
Consumer and Other		454		475		187		457		5		465		17
Total:
Agriculture and Agricultural Real Estate	$	1,251	$	1,449	$	5	$	1,265	$	14	$	1,273	$	46
Commercial		717		778		340		803		9		886		32
Commercial Real Estate		9,431		10,010		629		9,821		94		10,046		305
Construction Real Estate		1,761		1,794		255		1,788		21		1,803		63
Residential Real Estate		7,729		8,076		347		8,092		102		8,279		282
Consumer and Other		487		508		187		491		6		501		19

-16-

	Recorded Investment as of December 31, 2015		Unpaid Principal Balance as of December 31, 2015		Related Allowance as of December 31, 2015		Average Recorded Investment for the Three Months Ended Sept. 30, 2015		Interest Income Recognized in the Three Months Ended Sept. 30, 2015		Average Recorded Investment for the Nine Months Ended Sept. 30, 2015		Interest Income Recognized in the Nine Months Ended Sept. 30, 2015
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	-	$	2	$	1	$	6
Commercial		63		113		-		56		1		64		3
Commercial Real Estate		7,701		8,107		-		8,919		85		9,031		275
Construction Real Estate		200		233		-		276		3		312		8
Residential Real Estate		4,137		4,359		-		4,943		63		5,087		191
Consumer and Other		26		26		-		34		1		37		4
With an allowance recorded:
Agriculture and Agricultural Real Estate		882		885		240		1,214		13		1,230		35
Commercial		895		916		672		1,279		14		1,338		47
Commercial Real Estate		5,697		6,183		634		9,686		96		9,755		302
Construction Real Estate		1,609		1,609		277		1,731		20		1,740		60
Residential Real Estate		3,206		3,310		506		6,204		76		6,243		209
Consumer and Other		470		468		223		500		6		509		17
Total:
Agriculture and Agricultural Real Estate	$	882	$	885	$	240	$	1,214	$	15	$	1,231	$	41
Commercial		958		1,029		672		1,335		15		1,402		50
Commercial Real Estate		13,398		14,290		634		18,605		181		18,786		577
Construction Real Estate		1,809		1,842		277		2,007		23		2,052		68
Residential Real Estate		7,343		7,669		506		11,147		139		11,330		400
Consumer and Other		496		494		223		534		7		546		21

The Bank may agree to modify the terms of a loan in order to improve the Bank’s ability to collect amounts due. These modifications may include reduction of the interest rate, extension of the loan term, or in some cases, reduction of the principal balance. Modifications that are performed due to the debtor’s financial difficulties are considered Troubled Debt Restructurings (“TDRs”).

Loans that have been classified as TDRs during the three and nine month periods ended September 30, 2016 and September 30, 2015 are as follows (000s omitted from dollar amounts):

	Three months ended						Nine months ended
	September 30, 2016						September 30, 2016
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance		Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-		1	$	362	$	361
Commercial		1		250		250		1		250		250
Commercial Real Estate		1		215		215		1		215		215
Construction Real Estate		-		-		-		-		-		-
Residential Real Estate		2		242		241		9		693		653
Consumer and Other		-		-		-		1		57		55
Total		4	$	707	$	706		13	$	1,577	$	1,534

-17- 

	Three months ended						Nine months ended
	September 30, 2015						September 30, 2015
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance		Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		3	$	325	$	324		3	$	325	$	324
Commercial		-		-		-		1		66		64
Commercial Real Estate		-		-		-		3		684		636
Construction Real Estate		-		-		-		-		-		-
Residential Real Estate		-		-		-		7		581		523
Consumer and Other		-		-		-		-		-		-
Total		3	$	325	$	324		14	$	1,656	$	1,547

The Bank considers TDRs that become past due under the modified terms as defaulted. There were no loans that became TDRs during the nine month periods ended September 30, 2016 and September 30, 2015 that subsequently defaulted during the nine month periods ended September 30, 2016 and September 30, 2015, respectively.

The Company has allocated $1,733,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings at September 30, 2016. In addition, there were no commitments to lend additional amounts to borrowers that are classified as troubled debt restructurings as of September 30, 2016 and September 30, 2015.

6. INVESTMENT SECURITIES

The following is a summary of the Bank’s investment securities portfolio as of September 30, 2016 and December 31, 2015 (000s omitted):

	Held to Maturity
	September 30, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of States and Political Subdivisions	$	42,185	$	1,746	$	(38	)	$	43,893
Corporate Debt Securities		500		3		-			503
	$	42,685	$	1,749	$	(38	)	$	44,396

	Available for Sale
	September 30, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of U.S. Government Agencies	$	247,783	$	3,312	$	(285	)	$	250,810
Mortgage Backed Securities issued by U.S. Government Agencies		153,492		663		(651	)		153,504
Obligations of States and Political Subdivisions		25,068		261		(21	)		25,308
Other Debt Securities		33,397		426		-			33,823
Equity Securities		2,044		121		-			2,165
	$	461,784	$	4,783	$	(957	)	$	465,610

	Held to Maturity
	December 31, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of States and Political Subdivisions	$	40,782	$	1,333	$	(178	)	$	41,937
Corporate Debt Securities		500		-		-			500
	$	41,282	$	1,333	$	(178	)	$	42,437

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	Available for Sale
	December 31, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of U.S. Government Agencies	$	370,469	$	1,647	$	(3,055	)	$	369,061
Mortgage Backed Securities issued by U.S. Government Agencies		104,472		107		(1,327	)		103,252
Obligations of States and Political Subdivisions		17,212		305		(48	)		17,469
Corporate Debt Securities		5,000		-		(50	)		4,950
Equity Securities		2,044		83		-			2,127
	$	499,197	$	2,142	$	(4,480	)	$	496,859

The amortized cost and estimated market values of securities by contractual maturity as of September 30, 2016 are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Held to Maturity				Available for Sale
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
Contractual maturity in
1 year or less	$	9,925	$	9,938	$	3,844	$	3,844
After 1 year through five years		21,406		21,890		130,791		132,281
After 5 years through 10 years		9,347		10,273		171,613		173,816
After 10 years		2,007		2,295		-		-
Total		42,685		44,396		306,248		309,941
Mortgage Backed Securities		-		-		153,492		153,504
Securities with no stated maturity		-		-		2,044		2,165
Total	$	42,685	$	44,396	$	461,784	$	465,610

The investment securities portfolio is evaluated for impairment throughout the year. Impairment is recorded against individual securities, unless the decrease in fair value is attributable to interest rates or the lack of an active market, and Management determines that the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before a recovery of their amortized costs bases, which may be maturity. The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2016 and December 31, 2015.

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	September 30, 2016
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized  Losses
Obligations of United States Government Agencies	$	69,230	$	285	$	-	$	-	$	69,230	$	285
Mortgage Backed Securities issued by U.S. Government Agencies		69,646		341		25,840		310		95,486		651
Obligations of States and Political Subdivisions		15,846		48		3,563		11		19,409		59
Corporate Debt Securities		-		-		-		-		-		-
	$	154,722	$	674	$	29,403	$	321	$	184,125	$	995

	December 31, 2015
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Obligations of United States Government Agencies	$	170,178	$	2,367	$	53,497	$	688	$	223,675	$	3,055
Mortgage Backed Securities issued by U.S. Government Agencies		57,949		633		31,118		694		89,067		1,327
Obligations of States and Political Subdivisions		10,830		165		5,324		61		16,154		226
Corporate Debt Securities		4,950		50		-		-		4,950		50
	$	243,907	$	3,215	$	89,939	$	1,443	$	333,846	$	4,658

The amount of investment securities issued by government agencies, states, and political subdivisions with unrealized losses and the amount of unrealized losses on those investment securities are primarily the result of market interest rates and not the result of the credit quality of the issuers of the securities. Because the Company does not intend to sell the investments and it is not more likely than not that 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 other than temporarily impaired at September 30, 2016. As of September 30, 2016 and December 31, 2015, there were 96 and 146 securities in an unrealized loss position, respectively.

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value, as defined in ASC Topic 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for market activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

The Company utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair value is used on a recurring basis for Available for Sale Securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value.

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The Company applied the following fair value hierarchy:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Company’s mutual fund investments where quoted prices are available in an active market generally are classified within Level 1 of the fair value hierarchy.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Company’s borrowed funds and investments in U.S. government agency securities, government sponsored mortgage backed securities, corporate debt securities, bank certificates of deposit, and obligations of states and political subdivisions are generally classified in Level 2 of the fair value hierarchy. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Private equity investments and certain municipal debt obligations are classified within Level 3 of the fair value hierarchy. Fair values are initially valued based on transaction price and are adjusted to reflect exit values.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015, and the valuation techniques used by the Company to determine those fair values.

									Total
	Carrying								Estimated
September 30, 2016	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	60,901	$	60,901	$	-	$	-	$	60,901
Time Deposits in Other Banks		19,196		-		19,216		250		19,466
Securities - Held to Maturity
Obligations of States and Political Subdivisions		42,185		-		3,453		40,440		43,893
Corporate Debt Securities		500		-		503		-		503
Securities - Available for Sale
Obligations of U.S. Government Agencies		250,810		-		250,810		-		250,810
MBS issued by U.S. Government Agencies		153,504		-		153,504		-		153,504
Obligations of States and Political Subdivisions		25,308		-		25,308		-		25,308
Other Debt Securities		33,823		-		33,823		-		33,823
Other Securities		2,165		2,165		-		-		2,165
Federal Home Loan Bank Stock		4,148		-		4,148		-		4,148
Loans Held for Sale		636		-		-		651		651
Loans, net		646,404		-		-		649,049		649,049
Accrued Interest Receivable		4,626		-		-		4,626		4,626
Financial Liabilities:
Noninterest Bearing Deposits		285,764		285,764		-		-		285,764
Interest Bearings Deposits		894,697		-		896,271		-		896,271
Accrued Interest Payable		54		-		-		54		54

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									Total
	Carrying								Estimated
December 31, 2015	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	79,550	$	79,550	$	-	$	-	$	79,550
Time Deposits in Other Banks		5,500		-		4,965		500		5,465
Securities - Held to Maturity
Obligations of States and Political Subdivisions		40,782		-		3,805		38,132		41,937
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		369,061		-		369,061		-		369,061
MBS issued by U.S. Government Agencies		103,252		-		103,252		-		103,252
Obligations of States and Political Subdivisions		17,469		-		17,469		-		17,469
Corporate Debt Securities		4,950		-		4,950		-		4,950
Other Securities		2,127		2,127		-		-		2,127
Federal Home Loan Bank Stock		4,148		-		4,148		-		4,148
Loans Held for Sale		1,477		-		-		1,508		1,508
Loans, net		606,412		-		-		613,397		613,397
Accrued Interest Receivable		4,170		-		-		4,170		4,170
Financial Liabilities:
Noninterest Bearing Deposits		253,795		253,795		-		-		253,795
Interest Bearings Deposits		911,598		-		913,410		-		913,410
Repurchase Agreements		15,000		-		15,253		-		15,253
Accrued Interest Payable		108		-		-		108		108

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset.

The Company did not have any Level 3 assets measured at fair value on a recurring basis as of September 30, 2016 or December 31, 2015. The Company did not have any sales or purchases of Level 3 available for sale securities during the period.

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 assets. As a result, the unrealized gains and losses for these assets presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs.

The Company also has assets that under certain conditions are subject to measurement at fair value on a nonrecurring basis. These assets include loans and Other Real Estate Owned. The Company estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections.

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Assets measured at fair value on a nonrecurring basis are as follows (000s omitted):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Impaired loans	$	-	$	-	$	19,613
Other Real Estate Owned	$	-	$	-	$	1,686
December 31, 2015
Impaired loans	$	-	$	-	$	22,334
Other Real Estate Owned	$	-	$	-	$	2,383

Impaired loans categorized as Level 3 assets consist of non-homogenous loans that are considered impaired. The Company estimates the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). Other Real Estate Owned (OREO) consists of property received in full or partial satisfaction of a receivable. The Company utilizes independent appraisals to estimate the fair value of OREO properties.

8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of condition.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for its other lending activities.

Financial instruments whose contractual amounts represent off-balance sheet credit risk were as follows (000s omitted):

	Contractual Amount
	September 30,		December 31,
	2016		2015
Commitments to extend credit:
Unused portion of commercial lines of credit	$	71,404	$	70,488
Unused portion of credit card lines of credit		4,323		4,396
Unused portion of home equity lines of credit		24,925		23,164
Standby letters of credit and financial guarantees written		1,582		1,555
All other off-balance sheet commitments		-		-

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Most commercial lines of credit are secured by real estate mortgages or other collateral, and generally have fixed expiration dates or other termination clauses. Since the lines of credit may expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. Credit card lines of credit have various established expiration dates, but are fundable on demand. Home equity lines of credit are secured by real estate mortgages, a majority of which have ten year expiration dates, but are fundable on demand. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of the collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on Management’s credit evaluation of the counterparty.

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Standby letters of credit written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements and other business transactions.

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

Introduction

MBT Financial Corp. (the “Company”) is a bank holding company with one commercial bank subsidiary, Monroe Bank & Trust (the “Bank”). The Bank operates 14 branch offices in Monroe County, Michigan and 6 branch offices in Wayne County, Michigan, and 1 loan and wealth management office in each Wayne County and Lenawee County, Michigan.

The Bank’s primary source of income is Net Interest Income (interest income on loans and investments less interest expense on deposits and borrowings), and its primary expense is the compensation of its employees. The discussion and analysis should be read in conjunction with the accompanying consolidated statements and footnotes.

Executive Overview

The Bank is operated as a community bank, primarily providing loan, deposit, and wealth management products and services to the people, businesses, and communities in its market area. In addition to our commitment to our mission of serving the needs of our local communities, we are focused on improving asset quality, increasing net interest income, and improving non-interest income and expenses.

The net profit of $10,923,000 for the first nine months of 2016 was an increase of $2,855,000 or 35.4% compared to the first nine months of 2015. The increase was the result of an increase in gains on securities transactions due to par calls of bonds owned at discounts and lower non-interest expenses. In addition, net interest income, the provision for loan losses, and non-interest income improved in 2016. These improvements resulted in increases in income before taxes and federal income tax expense.

The national economic recovery is continuing slowly, and the recovery in southeast Michigan is relatively strong. Local unemployment rates continued to improve, with areas in our market better than the state and national averages. Commercial and residential development property values continue to improve, with some values reaching or exceeding their pre-recession levels. Our total classified assets, which include internal watch list loans, other real estate owned, and nonperforming and watch list investment securities, have been improving steadily since 2014. Classified assets went down $9.0 million, or 29.2% during the first three quarters of 2016, and decreased $15.3 million or 41.1% compared to a year ago. The net charge offs for the nine months were $291,000, or 0.06% of loans, annualized. This is a very good result, however, it is an increase compared to the first nine months of 2015 when we recorded a net recovery of $788,000. Due to improving loan quality metrics and lower charge offs, a reduction in our Allowance for Loan and Lease Losses (ALLL) was appropriate, and we recorded a $1,200,000 credit to the provision expense, reflecting a decrease of $200,000 when compared to the negative provision of $1,000,000 recorded in the first three quarters of 2015. The ALLL as a percent of loans decreased from 1.76% at the end of 2015 to 1.43%. We assess the adequacy of our ALLL each quarter, and adjust it as necessary by debiting or crediting the provision expense. The allowance includes $1.8 million of specific allocations on $21.4 million of loans evaluated for impairment and $7.6 million of general allocations on the remainder of the portfolio. The general allocation is based on the historical charge off experience of the previous 16 quarters. For the last several quarters, we have been replacing high charge off periods with low charge off periods in the calculation of our historical charge off rate, necessitating the negative provisions. If we continue to experience low charge off amounts, further negative provisions will occur, however loan growth and asset quality changes may impact the provision expense.

-24-

Net Interest Income increased $402,000, or 1.4% compared to the first three quarters of 2015 even though the net interest margin decreased from 3.16% to 3.11% as the average earnings assets increased $43.3 million and the period was a day longer in 2016. The net interest margin decreased because the yield on earnings assets decreased more than the cost of interest bearing liabilities as interest rates remain at historically low levels. Non-interest income for the nine months increased $2,300,000, due to larger securities gains from bonds that were owned at discounts being called at par in the first three quarters of 2016 than in the first three quarters of 2015. Non-interest expenses decreased $1,386,000, as salaries, benefits, occupancy expenses, equipment expenses, Other Real Estate expenses, FDIC deposit insurance assessments, and insurance expenses decreased. These decreases were partially offset by increases in professional fees, EFT and ATM expenses, and other expenses. We completed a branch efficiency initiative that began in the fourth quarter of 2015, which contributed to the decreases in salaries, benefits, and occupancy expenses.

Critical Accounting Policies

The Company’s Allowance for Loan Losses, Fair Value of Investment Securities, and Other Real Estate Owned are “critical accounting estimates” because they are estimates that are based on assumptions that are highly uncertain, and if different assumptions were used or if any of the assumptions used were to change, there could be a material impact on the presentation of the Company’s financial condition. These assumptions include, but are not limited to, collateral values, the effect of economic conditions on the financial condition of the borrowers, the Company, and the issuers of investment securities, market interest rates, and projected earnings for the Company.

To determine the Allowance for Loan Losses, the Company estimates losses on all loans that are not classified as non accrual or renegotiated by applying historical loss rates, adjusted for current conditions, to those loans. In addition, all non accrual loan relationships over $250,000 that are classified by Management as nonperforming as well as selected performing accounts and all renegotiated loans are individually tested for impairment. Any amount of monetary impairment is included in the Allowance for Loan Losses.

To determine the fair value of investment securities, the Company utilizes quoted prices in active markets for identical assets, quoted prices for similar assets in active markets, or discounted cash flow calculations for investments where there is little, if any, market activity for the asset.

To determine the fair value of Other Real Estate Owned, the Company utilizes independent appraisals to estimate the fair value of the property.

-25-

Financial Condition

The regional economic recovery continued this quarter, with local unemployment and property values steadily improving since 2014. Management efforts are focused on improving asset quality, increasing net interest income, and improving non-interest income and expenses.

With respect to asset quality, our nonperforming assets (“NPAs”) decreased 7.3% during the quarter, from $26.1 million to $24.2 million, and total classified assets decreased 16.8% from $26.2 million to $21.8 million. Loan delinquencies increased from $6.4 million 30 days or more past due as of June 30, 2016 to $7.4 million as of September 30, 2016, the loan portfolio grew during the quarter, and the delinquency percentage only increased from 1.0% to 1.1% of the total loans. Over the last twelve months, NPAs decreased $9.6 million, or 28.3%, with nonperforming loans decreasing 28.8% from $31.6 million to $22.5 million, and Other Real Estate Owned (“OREO”) decreasing 22.7% from $2.2 million to $1.7 million. Total classified assets, which include internally classified watch list loans, other real estate, and watch list investment securities, decreased $15.3 million, or 41.1%. The amount required in the Allowance for Loan and Lease Losses (“ALLL”) decreased $3.6 million over the last four quarters because of the improvement in the quality of the assets in the loan portfolio and a decrease in the historical loss rates. The Company recorded a negative provision in order to decrease the ALLL to the required level. The ALLL is now 1.43% of loans, down from 2.08% at September 30, 2015. The ALLL is 41.80% of nonperforming loans (“NPLs”), compared to 39.55% at year end and 41.13% at September 30, 2015. In light of current economic conditions, we believe that this level of ALLL adequately estimates the potential losses in the loan portfolio.

Since December 31, 2015, total loans held for investment increased $38.5 million as new loan activity exceeded payments received and other reductions in the period. Even with the increase in loans, our pipeline of loans in process remained steady this quarter, and we expect new loan production to continue to exceed run off, resulting in an increase in loans outstanding in the fourth quarter of 2016.

Since December 31, 2015, deposits increased $15.1 million, borrowed funds and other liabilities decreased $14.7 million, and capital increased $0.3 million, and as a result our total assets increased $0.7 million, or 0.1%. The Company expects minimal deposit funding growth in the fourth quarter of 2016, as we have adequate liquidity to fund our anticipated loan growth without needing to actively grow deposits. The composition of deposits continues to change as customers move funds from maturing interest bearing time deposit accounts to low or no cost non maturity deposit accounts due to the low interest rate environment. As of September 30, 2016, deposits consisted of $157.4 million in certificates of deposit and IRAs with an average cost of 0.75%, $217.1 million in savings deposits with an average cost of 0.02%, $245.7 million in Money Market Deposit Accounts with an average cost of 0.13%, $274.4 million in interest bearing demand deposits with an average cost of 0.13%, and $285.8 million in non-interest bearing demand deposits. We do not expect significant changes in our deposit funding, and our expected loan growth will be primarily funded by reductions in our cash and investments. The total capital increased during the first three quarters of 2016 even though dividends exceeded earnings by $2.8 million and the company repurchased stock for $1.4 million due to the increase of $4.1 million in the Accumulated Other Comprehensive Income, which increased mainly due to the increase in the market value of securities available for sale. Capital increased at a slightly higher rate than assets, causing the capital to assets ratio to increase from 10.98% at December 31, 2015 to 10.99% at September 30, 2016.

-26-

Results of Operations – Third Quarter 2016 vs. Third Quarter 2015

Net Interest Income - A comparison of the income statements for the three months ended September 30, 2016 and 2015 shows an increase of $291,000, or 3.2%, in Net Interest Income. Interest income on loans increased $313,000 or 4.3% as the average loans outstanding increased $27.2 million and the average yield on loans increased from 4.59% to 4.60%. The average loans outstanding increased due to improving economic conditions and purchases of loan participations. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $282,000 even though the average amount of investments, fed funds sold, and interest bearing balances due from banks increased $16.4 million because the yield decreased from 1.92% to 1.68%. The Company continues to maintain a high level of liquidity by keeping a large amount of funds in low yielding short term investments and deposits in the Federal Reserve Bank. The interest expense on deposits decreased $82,000 or 14.6% even though the average deposits increased $48.1 million because the average cost of deposits decreased from 0.20% to 0.16%. The average cost of deposits decreased because maturing time deposits are either resetting at lower rates or customers are moving the funds to non interest bearing demand deposit accounts or low cost non maturity deposits due to the low interest rate environment. The interest expense on borrowed funds decreased $178,000 as the final remaining borrowed funds were repaid in the second quarter of 2016.

Provision for Loan Losses - The Provision for Loan Losses decreased $500,000 compared to the third quarter of 2015 as a $700,000 credit to provision expense was recorded in the third quarter of 2016, compared to a $200,000 credit to provision expense recorded in the third quarter of 2015. We charged off $114,000 of principal while recovering $316,000 of previously charged off loans in the third quarter of 2016, for a net recovery total of $202,000, or 0.12% of loans, annualized. Each quarter, the Company conducts a review and analysis of its ALLL to determine its adequacy. This analysis involves specific allocations for impaired credits and a general allocation for losses expected based on historical experience adjusted for current conditions. Due to an improvement in portfolio risk indicators and a decrease in the historical charge off percentages, the amount of ALLL required at the end of the third quarter of 2016 decreased from $9,903,000 at June 30, 2016 to $9,405,000 as of September 30, 2016. Along with the $202,000 net recovery, this required us to record a credit of $700,000 to the provision expense. The allowance includes $1.8 million of specific allocations and $7.6 million of general allocations. The general allocation is based on the historical charge off experience of the previous 16 quarters. For the last several quarters, we have been replacing high charge off periods with low charge off periods in the calculation of our historical charge off rate, necessitating the negative provisions. If we continue to experience low charge offs, further negative provisions may continue to occur. However, significant growth in loans outstanding or deterioration of asset quality impact the provision expense.

Other Income – Non interest income increased $61,000, or 1.5% compared to the third quarter of 2015. Debit card income increased $127,000, or 21.4% due to increased non customer surcharge and interchange activity. Gains on securities transactions increased $71,000 due to large gains in the third quarter of 2016 that were the result of the bonds purchased at discounts being called at par. Due to the low interest rates, issuers continued to call and refinance their debt in the third quarter of 2016. We do not expect this activity and these gains to continue beyond the third quarter of 2016. Gains from other real estate activity decreased $40,000 due to a small loss in the third quarter of 2016 compared to some small gains in the third quarter of 2015. Origination fees on mortgage loans sold decreased $35,000 or 19.0% due to lower origination activity. Other non-interest income decreased $22,000, or 4.5%, primarily due to lower rental income on Other Real Estate.

Other Expenses – Total non-interest expenses decreased $192,000, or 2.1% compared to the third quarter of 2015. Salaries and Employee Benefits decreased $180,000, or 3.2%, as the number of full time equivalent employees decreased from 337 to 281 primarily due to an efficiency initiative in the fourth quarter of 2015 that resulted in the closing of 4 branch offices and the reduction of 43 staff positions. Occupancy expense increased $20,000, or 3.1% as higher maintenance costs exceeded the reduction in depreciation expense. Electronic Funds Transfer and Automated Teller Machine related expenses increased $126,000 due to increased debit card use and higher card reissuance costs. FDIC insurance assessments decreased $33,000 and bonding and other insurance decreased $85,000 as the termination of our informal agreement with the FDIC and Michigan Department of Insurance and Financial Services in 2015 resulted in decreases in rates.

-27-

As a result of the above activity, the Profit Before Income Taxes in the third quarter of 2016 was $5,280,000, an increase of $1,044,000 compared to the pre-tax profit of $4,236,000 in the third quarter of 2015. The Company recorded a federal income tax expense of $1,593,000 in the third quarter of 2016, reflecting an effective tax rate of 30.2%, compared to the tax expense of $1,230,000 in the third quarter of 2015, which reflected an effective rate of 29.0%. The increase in the effective tax rate was the result of the decrease in the percentage of operating income that was from municipal investments and bank owned life insurance. The Net profit for the third quarter of 2016 was $3,687,000, an increase of 22.7% compared to the net profit of $3,006,000 in the third quarter of 2015.

Results of Operations – Nine Months Ended September 30, 2016 vs. Nine Months Ended September 30, 2015

Net Interest Income - A comparison of the income statements for the nine months ended September 30, 2016 and 2015 shows an increase of $402,000, or 1.5%, in Net Interest Income. Interest income on loans decreased $59,000 or 0.3% as the average loans outstanding increased $11.9 million while the average yield on loans was decreased from 4.70% to 4.59%. The average loans outstanding increased due to improving economic conditions and purchases of loan participations. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $103,000 even though the average amount of investments, fed funds sold, and interest bearing balances due from banks increased $31.3 million as the yield decreased from 1.95% to 1.82%. The Company continues to maintain a very high liquidity position by keeping a large amount of funds in low yielding short term investments and deposits in the Federal Reserve Bank. The interest expense on deposits decreased $343,000 or 18.8% even though the average deposits increased $46.7 million because the average cost of deposits decreased from 0.22% to 0.17%. The average cost of deposits decreased because maturing time deposits are either resetting at lower rates or customers are moving the funds to non interest bearing demand deposit accounts due to the low interest rate environment. The interest expense on borrowed funds decreased $221,000 as the average amount of borrowed funds decreased $6.3 million.

Provision for Loan Losses - The Provision for Loan Losses decreased $200,000 compared to the first nine months of 2015 as a $1.2 million credit to provision expense was recorded in the first three quarters of 2016, compared to the $1.0 million credit to provision expense recorded in the first three quarters of 2015. We charged off $941,000 of principal while recovering $650,000 of previously charged off loans in the first three quarters of 2016, for a net charge off total of $291,000, or 0.06% of loans, annualized. In the first three quarters of 2015, recoveries exceeded charge offs, resulting in a net recovery of $788,000, or 0.17% of loans.

Other Income – Non interest income increased $2.3 million, or 20.2% compared to the first nine months of 2015. Gains on securities transactions increased $1,885,000 due to large gains in the first nine months of 2016 that were the result of the bonds purchased at discounts being redeemed at par. Due to the low interest rates, issuers continued to call and refinance their debt in the third quarter of 2016. We do not expect early redemption activity to continue to produce significant gains beyond the third quarter of 2016. Excluding gains and losses on securities and other real estate owned activity, non-interest income increased $228,000, or 2.0%. Wealth management income decreased $229,000 or 6.4% as the market value of assets managed decreased. Service charges and other fees on deposit accounts increased $84,000, or 2.7% as we added new features and benefits to our primary checking account product and instituted a monthly service fee. Debit card income increased $381,000, or 21.8% due to increased activity. Losses from other real estate activity improved $187,000 due to smaller losses and write downs of the carrying values properties in the first nine months of 2016 compared to the first nine months of 2015. Bank Owned Life Insurance income increased $78,000 due to a non-recurring cash surrender value adjustment in 2015.

-28-

Other Expenses – Total non-interest expenses decreased $1,386,000, or 4.8% compared to the first nine months of 2015. Salaries and Employee Benefits decreased $787,000, or 4.5%, as the number of full time equivalent employees decreased from 347 to 286 due to various efforts to reduce staffing in 2015, culminating in an efficiency initiative in the fourth quarter that resulted in the closing of 4 branch offices and the reduction of 43 staff positions. Occupancy expense decreased $72,000, or 3.5% due to lower utilities and maintenance costs, resulting from the efficiency initiative and the mild winter weather. Electronic Funds Transfer and Automated Teller Machine related expenses increased $464,000 due to increased debit card use, the reissuance of all of our debit cards with EMV chip cards in the first quarter of 2016, and an incentive payment received from a vendor in the first quarter of 2015. FDIC insurance assessments decreased $516,000 and other insurance decreased $206,000 as the termination of our informal agreement with the FDIC and Michigan Department of Insurance and Financial Services in 2015 resulted in decreases in the rates.

As a result of the above activity, the Profit Before Income Taxes in the first three quarters of 2016 was $15,628,000, an increase of $4,288,000 compared to the pre-tax profit of $11,340,000 in the first three quarters of 2015. The Company recorded a federal income tax expense of $4,705,000 in the first three quarters of 2016, reflecting an effective tax rate of 30.1%, compared to the tax expense of $3,272,000 in the first three quarters of 2015, which reflected an effective rate of 28.9%. The increase in the effective tax rate was the result of the decrease in the percentage of operating income that was from municipal investments and bank owned life insurance. The Net profit for the first three quarters of 2016 was $10,923,000, an increase of 35.4% compared to the net profit of $8,068,000 in the first three quarters of 2015.

Cash Flows

Cash flows provided by operating activities decreased $334,000 compared to the first nine months of 2015 even though the net income was $2,855,000 higher because most of the improvement in earnings was due to securities gains, which are classified as investing activities for cash flow reporting. The amount of cash used for investing activities decreased by $8.4 million from $23.4 million in the first nine months of 2015 to $15.0 million in the first nine months of 2016 due to the decrease in cash provided by financing activities in the first nine months of 2016 compared to the first nine months of 2015. The amount of cash provided by (used for) financing activities was $41.0 million lower in the first nine months of 2016 than it was in the first nine months of 2015 due to the repayment of a maturing repurchase agreement of $15.0 million, the payment of $13.7 in cash dividends on the common stock, the repurchase of 192,080 shares of common stock for $1.4 million, and the decrease of $$9.9 million in the deposit growth. In the first nine months of 2016, the cash used for investing and financing activities exceeded the cash provided by operating activities, and the amount of cash and cash equivalents decreased by $18.6 million during the period. In the first nine months of 2015, the cash provided by operations and financing activities exceeded the cash used for investing activities, resulting in an increase of $14.3 million in cash and cash equivalents during the nine months. We expect cash flows from redemptions of callable investment securities to decrease in the fourth quarter of 2016, and we plan to use some of the cash and the cash provided by operations to fund loan growth and investment security purchases, resulting in a reduction in our cash and cash equivalents by the end of the year.

-29-

Liquidity and Capital

The Company believes it has sufficient liquidity to fund its lending activity and allow for fluctuations in deposit levels. Internal sources of liquidity include the maturities of loans and securities in the ordinary course of business as well as our available for sale securities portfolio. External sources of liquidity include a line of credit with the Federal Home Loan Bank of Indianapolis, the Federal funds line that has been established with our correspondent bank, and Repurchase Agreements with money center banks that allow us to pledge securities as collateral for borrowings. As of September 30, 2016, the Bank was not utilizing any of its authorized limit of $255 million with the Federal Home Loan Bank of Indianapolis, or its $20 million overdraft line of credit with the Federal Home Loan Bank of Indianapolis, or its $25 million federal funds line with a correspondent bank. The Company periodically draws on its overdraft and fed funds lines to ensure that funding will be available if needed.

The Company’s Funds Management Policy includes guidelines for desired amounts of liquidity and capital. The Funds Management Policy also includes contingency plans for liquidity and capital that specify actions to take if liquidity and capital ratios fall below the levels contained in the policy. Throughout the first nine months of 2016 the Company was in compliance with its Funds Management Policy regarding liquidity and capital.

Total stockholders’ equity of the Company was $147.7 million at September 30, 2016 and $147.3 million at December 31, 2015. Common stock decreased $1.0 million due to the repurchase of 192,080 shares, partially offset by issuance of stock under compensation programs and for our Employee Stock Purchase Plan. Retained earnings decreased $2.8 million as the year to date profit of $10.9 million was exceeded by the payment of $13.7 million in cash dividends on the common stock, and the Accumulated Other Comprehensive Income (AOCI) increased $4.1 million due to an increase in the value of our securities that are classified as Available For Sale. Total equity increased $0.3 million while total assets increased $0.7 million, so the ratio of equity to assets increased from 10.98% at December 31, 2015 to 10.99% at September 30, 2016.

Federal bank regulatory agencies have set capital adequacy standards for Total Risk Based Capital, Tier 1 Risk Based Capital, and Leverage Capital. These standards require banks to maintain Leverage and Tier 1 ratios of at least 4% and a Total Capital ratio of at least 8% to be adequately capitalized. The regulatory agencies consider a bank to be well capitalized if its Total Risk Based Capital is at least 10% of Risk Weighted Assets, Tier 1 Capital is at least 8% of Risk Weighted Assets, and the Leverage Capital Ratio is at least 5%. The Basel III capital requirements that began to be phased in the first quarter of 2015 increased the well capitalized requirement for the Tier 1 Capital as a percent of Risk Weighted Assets from 6% to 8%. Basel III also implemented the new Common Equity Tier 1 Capital to Risk Weighted Assets ratio, with a minimum of 6.5% required to be considered well capitalized.

-30-

The following table summarizes the capital ratios of the Company and the Bank:

	Actual					Minimum to Qualify as Well Capitalized
	Amount		Ratio			Amount		Ratio
As of September 30, 2016:
Total Capital to Risk-Weighted Assets
Consolidated	$	151,340		18.34	%	$	82,523		10.0	%
Monroe Bank & Trust		149,925		18.19	%		82,441		10.0	%
Tier 1 Capital to Risk-Weighted Assets
Consolidated		141,546		17.15	%		66,019		8.0	%
Monroe Bank & Trust		140,131		17.00	%		65,953		8.0	%
Common Equity Tier 1 Capital to
Risk-Weighted Assets
Consolidated		141,546		17.15	%		53,640		6.5	%
Monroe Bank & Trust		140,131		17.00	%		53,587		6.5	%
Tier 1 Capital to Average Assets
Consolidated		141,546		10.62	%		66,665		5.0	%
Monroe Bank & Trust		140,131		10.52	%		66,627		5.0	%

	Actual					Minimum to Qualify as Well Capitalized
	Amount		Ratio			Amount		Ratio
As of December 31, 2015:
Total Capital to Risk-Weighted Assets
Consolidated	$	154,718		19.79	%	$	78,163		10.0	%
Monroe Bank & Trust		153,026		19.59	%		78,107		10.0	%
Tier 1 Capital to Risk-Weighted Assets
Consolidated		144,857		18.53	%		62,531		8.0	%
Monroe Bank & Trust		143,175		18.33	%		62,485		8.0	%
Common Equity Tier 1 Capital to
Risk-Weighted Assets
Consolidated		144,857		18.53	%		50,806		6.5	%
Monroe Bank & Trust		143,175		18.33	%		50,769		6.5	%
Tier 1 Capital to Average Assets
Consolidated		144,857		11.04	%		65,625		5.0	%
Monroe Bank & Trust		143,175		10.91	%		65,602		5.0	%

Market risk for the Bank, as is typical for most banks, consists mainly of interest rate risk and market price risk. The Bank’s earnings and the economic value of its equity are exposed to interest rate risk and market price risk, and monitoring this risk is the responsibility of the Asset/Liability Management Committee (ALCO) of the Bank. The Bank’s market risk is monitored quarterly and it has not changed significantly since year-end 2015. 

Forward-Looking Statements

Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements which are based on various assumptions (some of which are beyond the Company's control), may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of these terms. Actual results could differ materially from those set forth in forward-looking statements, due to a variety of factors, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset/liability management, changes in the financial and securities markets, including changes with respect to the market value of our financial assets, the availability of and costs associated with sources of liquidity, and the ability of the Company to resolve or dispose of problem loans.

-31-

The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Bank faces market risk to the extent that the fair values of its financial instruments are affected by changes in interest rates. The Bank does not face market risk due to changes in foreign currency exchange rates, commodity prices, or equity prices. The asset and liability management process of the Bank seeks to monitor and manage the amount of interest rate risk. This is accomplished by analyzing the differences in repricing opportunities for assets and liabilities, by simulating operating results under varying interest rate scenarios, and by estimating the change in the net present value of the Bank’s assets and liabilities due to interest rate changes.

Each quarter, the Asset and Liability Committee (ALCO), which includes the senior management of the Bank and a non executive member of the board of directors, estimates the effect of interest rate changes on the projected net interest income of the Bank. The sensitivity of the Bank’s net interest income to changes in interest rates is measured by using a computer based simulation model to estimate the impact on earnings of increases of 100, 200, 300, and 400 basis points and decreases of 100 and 200 basis points in the interest rates. The net interest income projections are compared to a base case projection, which assumes no changes in interest rates.

The Bank’s ALCO has established limits in the acceptable amount of interest rate risk, as measured by the change in the Bank’s projected net interest income, in its policy. Throughout the first nine months of 2016, the Bank’s interest rate risk has remained within its policy limits.

The ALCO also monitors interest rate risk by estimating the effect of changes in interest rates on the economic value of the Bank’s equity each quarter. The economic value of the Bank’s equity is first determined by subtracting the fair value of the Bank’s liabilities from the fair value of the Bank’s assets. The Bank estimates the interest rate risk by calculating the effect of market interest rate changes on that economic value of its equity. For this analysis, the Bank assumes immediate parallel shifts of plus 100, 200, 300, and 400 basis points and minus 100 and 200 basis points in interest rates. The discount rates used to determine the present values of the loans and deposits, as well as the prepayment rates for the loans, are based on Management’s expectations of the effect of the rate changes on the market for loans and deposits. In addition, each quarter, the Bank conducts additional analyses that utilize other rate scenarios, such as larger shifts in rates and changes in the shape of the yield curve, to assess the Bank’s exposure to interest rate risk in stress scenarios.

The Bank’s interest rate risk, as measured by the net interest income and economic value of equity simulations, has not changed significantly from December 31, 2015.

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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 of September 30, 2016, 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, 2016, in alerting them in a timely manner to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic SEC filings.

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended September 30, 2016, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

-33-

Part II Other Information

Item 1. Legal Proceedings

MBT Financial Corp. and its subsidiaries are not a party to, nor is any of their property the subject of any material legal proceedings other than ordinary routine litigation incidental to their respective businesses, nor are any such proceedings known to be contemplated by governmental authorities.

Item 1A. Risk Factors

There have been no material changes in the risk factors disclosed by the Company in its Report on Form 10-K for the fiscal year ended December 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company has a stock repurchase program which it publicly announced on January 28, 2016. On that date, the Board of Directors authorized the repurchase of 2 million of the Company’s common shares, which authorization commenced on February 1, 2016 and will expire on January 31, 2018. The following table summarizes the open-market and privately negotiated stock repurchase activity of the Company during the three months ended September 30, 2016:

	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2016 - July 31, 2016		-	$	-		-		1,807,920
August 1, 2016 - August 31, 2016		-	$	-		-		1,807,920
September 1, 2016 - September 30, 2016		-	$	-		-		1,807,920
Total		-	$	-		-

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

.

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Item 6. Exhibits

3.1 Amended and Restated Articles of Incorporation of MBT Financial Corp. Previously filed as Exhibit 3.1 to MBT Financial Corp.’s Form 10-Q for its quarter ended June 30, 2016.

3.2 Amended and Restated Bylaws of MBT Financial Corp. Previously filed as Exhibit 3.2 to MBT Financial Corp.’s Form 10-Q for its quarter ended March 31, 2008.

31.1 Certification by Chief Executive Officer required by Securities and Exchange Commission Rule 13a-14.

31.2 Certification by Chief Financial Officer required by Securities and Exchange Commission Rule 13a-14.

32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS     XBRL Instance Document

101.SCH     XBRL Taxonomy Extension Schema Document

101.CAL     XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF     XBRL Taxonomy Extension Definition Linkbase Document

101.LAB     XBRL Taxonomy Extension Label Linkbase Document

101.PRE     XBRL Taxonomy Extension Presentation Linkbase Document

-35-

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.

	MBT Financial Corp.
	(Registrant)
November 9, 2016	By	/s/ H. Douglas Chaffin
Date	H. Douglas Chaffin
	President &
	Chief Executive Officer
November 9, 2016	By	/s/ John L. Skibski
Date	John L. Skibski
	Executive Vice President and
	Chief Financial Officer

-36-

Exhibit Index

Exhibit Number	Description of Exhibits
31.1	Certification by Chief Executive Officer required by Securities and Exchange Commission Rule 13a-14.
31.2	Certification by Chief Financial Officer required by Securities and Exchange Commission Rule 13a-14.
32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

-37-

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, H. Douglas Chaffin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MBT 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(s) 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(s) 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.

Date: November 9, 2016	/s/ H. Douglas Chaffin
	H. Douglas Chaffin
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, John L. Skibski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MBT 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(s) 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(s) 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.

Date: November 9, 2016	/s/ John L. Skibski
	John L. Skibski
	Chief Financial 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 MBT Financial Corp. (the "Company") on Form 10-Q for the period ending September 30, 2016 as filed with the Securities and Exchange Commission (the "Report"), I, H. Douglas Chaffin, 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.

/s/ H. Douglas Chaffin          

H. Douglas Chaffin

Chief Executive Officer

November 9, 2016

A signed original of this written statement required by Section 906 has been provided to MBT Financial Corp. and will be retained by MBT Financial Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

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 MBT Financial Corp. (the "Company") on Form 10-Q for the period ending September 30, 2016 as filed with the Securities and Exchange Commission (the "Report"), I, John L. Skibski, 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.

/s/ John L. Skibski          

John L. Skibski

Chief Financial Officer

November 9, 2016

A signed original of this written statement required by Section 906 has been provided to MBT Financial Corp. and will be retained by MBT Financial Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 09, 2016
Document Information [Line Items]
Entity Registrant Name	MBT Financial Corp
Entity Central Index Key	0001118237
Trading Symbol	mbtf
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		22,737,263
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Cash and due from banks
Non-interest bearing	$ 16,122	$ 14,996
Interest bearing	44,779	64,554
Total cash and cash equivalents	60,901	79,550
Interest Bearing Time Deposits in Other Banks	19,196	5,500
Securities - Held to Maturity	42,685	41,282
Available for Sale Securities	465,610	496,859
Federal Home Loan Bank stock - at cost	4,148	4,148
Loans held for sale	636	1,477
Loans	655,809	617,308
Allowance for Loan Losses	(9,405)	(10,896)
Loans - Net	646,404	606,412
Accrued interest receivable and other assets	20,438	23,365
Other Real Estate Owned	1,686	2,383
Bank Owned Life Insurance	54,059	53,093
Premises and Equipment - Net	27,263	28,244
Total assets	1,343,026	1,342,313
Deposits:
Non-interest bearing	285,764	253,795
Interest-bearing	894,697	911,598
Total deposits	1,180,461	1,165,393
Repurchase agreements		15,000
Interest payable and other liabilities	14,903	14,579
Total liabilities	1,195,364	1,194,972
STOCKHOLDERS' EQUITY
Common stock (no par value; 50,000,000 shares authorized, 22,736,116 and 22,790,707 shares issued and outstanding)	22,474	23,492
Retained earnings	123,411	126,214
Unearned compensation	(19)	(13)
Accumulated other comprehensive income (loss)	1,796	(2,352)
Total stockholders' equity	147,662	147,341
Total liabilities and stockholders' equity	$ 1,343,026	$ 1,342,313

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Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	22,736,116	22,790,707
Common stock, shares outstanding (in shares)	22,736,116	22,790,707

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Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest Income
Interest and fees on loans	$ 7,538	$ 7,225	$ 21,752	$ 21,811
Interest on investment securities-
Tax-exempt	316	278	924	826
Taxable	1,970	2,437	6,714	7,301
Interest on balances due from banks	171	24	450	64
Total interest income	9,995	9,964	29,840	30,002
Interest Expense
Interest on deposits	480	562	1,483	1,826
Interest on borrowed funds		178	308	529
Total interest expense	480	740	1,791	2,355
Net Interest Income	9,515	9,224	28,049	27,647
Provision For (Recovery Of) Loan Losses	(700)	(200)	(1,200)	(1,000)
Net Interest Income After Provision For Loan Losses	10,215	9,424	29,249	28,647
Other Income
Income from wealth management services	1,145	1,163	3,347	3,576
Service charges and other fees	1,118	1,134	3,142	3,058
Debit card income	721	594	2,130	1,749
Net gain on sales and redemptions of securities available for sale	87	16	2,159	274
Net gain (loss) on sales of Other Real Estate Owned	(4)	36	(61)	(248)
Origination fees on mortgage loans sold	149	184	415	450
Bank owned life insurance income	352	358	1,069	991
Other	471	493	1,507	1,558
Total other income	4,039	3,978	13,708	11,408
Other Expenses
Salaries and employee benefits	5,514	5,694	16,531	17,318
Occupancy expense	668	648	2,002	2,074
Equipment expense	731	708	2,141	2,232
Marketing expense	280	267	825	821
Professional fees	459	481	1,667	1,607
EFT/ATM Expense	235	109	781	317
Other Real Estate Owned expenses	35	59	129	364
FDIC Deposit Insurance Assessment	179	212	539	1,055
Bonding and other insurance expense	118	203	454	660
Telephone expense	95	113	312	317
Other	660	672	1,948	1,950
Total other expenses	8,974	9,166	27,329	28,715
Income Before Income Taxes	5,280	4,236	15,628	11,340
Income Tax Expense	1,593	1,230	4,705	3,272
Net Income	3,687	3,006	10,923	8,068
Other Comprehensive Income - Net of Tax
Unrealized gains (losses) on securities	(883)	4,177	5,493	3,358
Reclassification adjustment for gains included in net income	(58)	(10)	(1,425)	(181)
Postretirement benefit liability	27	27	80	80
Total Other Comprehensive Income (Loss) - Net of Tax	(914)	4,194	4,148	3,257
Comprehensive Income (Loss)	$ 2,773	$ 7,200	$ 15,071	$ 11,325
Basic Earnings Per Common Share (in dollars per share)	$ 0.16	$ 0.13	$ 0.48	$ 0.35
Diluted Earnings Per Common Share (in dollars per share)	0.16	0.13	0.48	0.35
Dividends Declared Per Share of Common Stock (in dollars per share)	$ 0.04		$ 0.60

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Retained Earnings [Member]	Deferred Compensation, Share-based Payments [Member]	AOCI Attributable to Parent [Member]	Total
Balance at Dec. 31, 2014	$ 23,037	$ 114,132		$ (2,633)	$ 134,536
SOSARs exercised
Restricted stock awards	35		(35)
Other stock issued	76				76
Equity Compensation	197		20		217
Net Income		8,068			8,068
Other comprehensive income - net of tax				3,257	3,257
Balance at Sep. 30, 2015	23,345	122,200	(15)	624	146,154
Balance at Dec. 31, 2015	23,492	126,214	(13)	(2,352)	147,341
Repurchase of Common Stock (192,080 shares)	(1,414)				(1,414)
SOSARs exercised	84				84
Restricted stock awards	41		(41)
Other stock issued	184				184
Equity Compensation	87		35		122
Dividends declared ($0.60 per share)		(13,726)			(13,726)
Net Income		10,923			10,923
Other comprehensive income - net of tax				4,148	4,148
Balance at Sep. 30, 2016	$ 22,474	$ 123,411	$ (19)	$ 1,796	$ 147,662

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Common Stock [Member]
Repurchase of common stock, shares (in shares)	192,080
SOSARs exercised, shares (in shares)	109,727	23,855
Restricted stock awards, shares (in shares)	5,000	6,000
Other stock issued (in shares)	22,762	13,395
Retained Earnings [Member]
Dividends declared, per share (in dollars per share)	$ 0.60
Dividends declared, per share (in dollars per share)	$ 0.60

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash Flows from Operating Activities
Net Income	$ 10,923	$ 8,068
Adjustments to reconcile net income to net cash from operating activities
Recovery of loan losses	(1,200)	(1,000)
Depreciation	1,202	1,177
Deferred tax expense	2,210	2,927
Net amortization of investment premium and discount	1,294	1,054
Writedowns of Other Real Estate Owned	78	509
Net decrease in interest payable and other liabilities	824	538
Net increase in interest receivable and other assets	(1,128)	(693)
Equity based compensation expense	206	217
Net gain on sale/settlement of securities	(2,159)	(274)
Increase in cash surrender value of life insurance	(966)	(905)
Net cash provided by operating activities	11,284	11,618
Cash Flows from Investing Activities
Proceeds from maturities of interest bearing time deposits in other banks	250
Proceeds from maturities and redemptions of investment securities held to maturity	6,789	8,245
Proceeds from maturities and redemptions of investment securities available for sale	297,099	126,388
Proceeds from sales of investment securities available for sale	33,144	29,327
Net increase in loans	(38,721)	(14,308)
Proceeds from sales of other real estate owned	1,376	3,728
Proceeds from sales of other assets	171	82
Purchase of time deposits in other banks	(13,946)
Purchase of investment securities held to maturity	(8,259)	(13,187)
Purchase of investment securities available for sale	(291,898)	(162,680)
Purchase of bank premises and equipment	(1,050)	(1,013)
Net cash provided by (used for) investing activities	(15,045)	(23,418)
Cash Flows from Financing Activities
Net increase in deposits	15,068	24,998
Net increase in short term borrowings		1,029
Repayment of repurchase agreements	(15,000)
Proceeds from issuance of common stock	184	76
Repurchase of common stock	(1,414)
Dividends paid	(13,726)
Net cash provided by (used for) financing activities	(14,888)	26,103
Net Increase (Decrease) in Cash and Cash Equivalents	(18,649)	14,303
Cash and Cash Equivalents at Beginning of Period	79,550	51,622
Cash and Cash Equivalents at End of Period	60,901	65,925
Supplemental Cash Flow Information
Cash paid for interest	1,845	2,379
Cash paid for federal income taxes	2,069	345
Supplemental Schedule of Non Cash Investing Activities
Transfer of loans to other real estate owned	736	516
Transfer of loans to other assets	$ 34	$ 54

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Note 1 - Basis of Presentation and Accounting Policies

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The unaudited consolidated financial statements include the accounts of MBT Financial Corp. (the “Company”) and its subsidiary, Monroe Bank & Trust (the “Bank”). The Bank includes the accounts of its wholly owned subsidiary, MB&T Financial Services, Inc. The Bank operates fourteen branches in Monroe County, Michigan, six branches in Wayne County, Michigan, and one loan and wealth management office in each Wayne County and Lenawee County. The Bank’s primary source of revenue is from providing loans to customers, who are predominantly small and middle-market businesses and middle-income individuals. The Company’s sole business segment is community banking.

The accounting and reporting policies of the Bank conform to practice within the banking industry and are in accordance with accounting principles generally accepted in the United States. Preparation of financial statements in conformity with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term are the determination of the allowance for loan losses, the valuation of other real estate owned, and the fair value of investment securities.

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of Management, necessary for fair statement of results for the interim periods.

The significant accounting policies are as follows:

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany transactions and balances have been eliminated.

COMPREHENSIVE INCOME

Accounting principles generally require that revenue, expenses, gains, and losses be included in net income. Certain changes in assets and liabilities, however, such as unrealized gains and losses on securities available for sale and amounts recognized related to postretirement benefit plans (gains and losses, prior service costs, and transition assets or obligations), are reported as a direct adjustment to the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income.

BUSINESS SEGMENTS

While the Company's chief decision makers monitor the revenue streams of various products and services, operations are managed and financial performance is evaluated on a company wide basis. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable segment.

FAIR VALUE

The Company measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities that are elected to be accounted for under The Fair Value Option as well as for certain assets and liabilities in which fair value is the primary basis of accounting. Examples of these include derivative instruments and available for sale securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Fair value is defined 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. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. 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 market observable data for similar assets or liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets and the Company must use alternative valuation techniques to derive a fair value measurement.

ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09 (ASU 2014-09), “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 adopts a standardized approach for revenue recognition and was a joint effort with the International Accounting Standards Board (IASB). The new revenue recognition standard is based on a core principle of recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 does not apply to financial instruments. ASU 2014-09 is effective for public entities for reporting periods beginning after December 15, 2017 (therefore, for the year ending December 31, 2018 for the Corporation). Early implementation is not allowed for public companies. Management is currently assessing the impact to the Corporation’s consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”. The amendments in ASU 2016-01 supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income. The amendments allow equity investments that do not have readily determinable fair values to be re-measured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. The amendments improve financial reporting by providing relevant information about an entity’s equity investments and reducing the number of items that are recognized in other comprehensive income. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The adoption of this guidance is not expected to have a material effect on the Company’s financial position or results of operations.

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, “Leases”, which will supersede the current lease requirements in ASC 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases.  Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations.  Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet.  The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new lease footnote guidance will be effective for the Company’s year ending December 31, 2019 and will be applied using a modified retrospective transition method to the beginning of the earliest period presented.  The effect of applying the new lease guidance on the financial statements as not yet been determined, however the new lease standard is not expected to have a significant effect on the Company’s financial statements.

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

ASU 2016-13 requires an entity measure expected credit losses for financial assets over the estimated lifetime of expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard includes the following core concepts in determining the expected credit loss estimate: (a) be based on an asset’s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments), (b) reflect losses expected over the remaining contractual life of an asset (considering the effect of voluntary prepayments), (c) consider available relevant information about the estimated collectability of cash flows (including information about past events, current conditions, and reasonable and supportable forecasts), and (d) reflect the risk of loss, even when that risk is remote.

ASU 2016-13 also amends the recording of purchased credit-deteriorated assets. Under the new guidance, an allowance will be recognized at acquisition through a gross-up approach whereby an entity will record as the initial amortized cost the sum of (a) the purchase price and (b) an estimate of credit losses as of the date of acquisition. In addition, the guidance also requires immediate recognition in earnings any subsequent changes, both favorable and unfavorable, in expected cash flows by adjusting this allowance.

ASU 2016-13 amends the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Management may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists, as is currently permitted. In addition, an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. As a result, entities will recognize improvements to credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time under current practice.

New disclosures required by ASU 2016-13 include: (a) for financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes, (b) for financial receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination or vintage for as many as five annual periods, and (c) for available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.

Upon adoption of ASU 2016-13, a cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted for annual periods beginning after December 15, 2018. The Corporation is currently evaluating the provisions of ASU 2016-13 to determine the potential impact on the Corporation's consolidated financial condition and results of operations.

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Note 2 - Earnings Per Share

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Earnings Per Share [Text Block]

2. EARNINGS PER SHARE

The calculations of earnings per common share are as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2016		2015		2016		2015
Basic
Net income	$	3,687,000	$	3,006,000	$	10,923,000	$	8,068,000
Average common shares outstanding		22,733,134		22,748,974		22,823,682		22,734,952
Earnings per common share - basic	$	0.16	$	0.13	$	0.48	$	0.35
Diluted
Net income	$	3,687,000	$	3,006,000	$	10,923,000	$	8,068,000
Average common shares outstanding		22,733,134		22,748,974		22,823,682		22,734,952
Equity compensation		182,144		200,089		164,682		181,492
Average common shares outstanding - diluted		22,915,278		22,949,063		22,988,364		22,916,444
Earnings per common share - diluted	$	0.16	$	0.13	$	0.48	$	0.35

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Note 3 - Stock Based Compensation

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

3. STOCK BASED COMPENSATION

Stock Only Stock Appreciation Rights (SOSARs)

- On February 25, 2016, 105,500 Stock Only Stock Appreciation Rights (SOSARs) were awarded to certain officers in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008 and amended by shareholders on May 7, 2015. The SOSARs have a term of ten years and vest in three equal annual installments beginning on December 31, 2016. The fair value of $3.08 for the SOSARs was estimated at the date of the grant, using the Black-Scholes option pricing model, with the following assumptions: expected option lives of 7 years, expected volatility of 41.21%, a risk free interest rate of 1.47% and dividend yield of 1.50%. The fair value of the Company’s common stock was $8.26 on the grant date.

SOSARs granted under the plan are structured as fixed grants with the base price equal to the market value of the underlying stock on the date of the grant. 

The following table summarizes the SOSARs that have been granted:

				Weighted Average
	SOSARs			Base Price
SOSARs Outstanding, January 1, 2016		609,275		$	4.02
Granted		105,500			8.26
Exercised		(209,887	)		2.77
Forfeited		(8,839	)		5.68
Expired		-			-
SOSARs Outstanding, September 30, 2016		496,049		$	5.42
SOSARs Exercisable, September 30, 2016		281,169		$	4.46

The exercise of a SOSAR results in the issuance of a number of shares of common stock of the Company based on the appreciation of the market price of the stock over the base price of the SOSAR. The market value of the Company’s common stock on September 30, 2016 was $9.05. The value of the exercisable SOSARs that are in-the-money as of September 30, 2016 was $1,300,000, and exercise of those SOSARs on that date would have resulted in the issuance of 142,604 shares of common stock. The plan allows participants to elect to withhold shares from the exercise of SOSARs to cover their tax liability. This may affect the number of shares issued and the value of the common stock account on the balance sheet and the statement of changes in equity.

Restricted Stock Unit Awards

– On February 25, 2016, 35,000 performance restricted stock units were awarded to certain key executive officers in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008 and amended by shareholders on May 7, 2015. Each Restricted Stock Unit (RSU) is equivalent to one share of MBT Financial Corp. common stock. Stock will be issued to the participants following a two year performance period that ends on December 31, 2017 if the defined performance targets are achieved. Earned RSUs vest on December 15, 2018 and as of September 30, 2016 none of the RSUs were vested.

Restricted Stock Awards

– On February 25, 2016, 5,000 restricted shares were awarded to certain non-executive members of the board of directors in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008 and amended by shareholders on May 7, 2015. The restricted shares vest on December 31, 2016. The expense for the restricted stock is based on the grant date value of $8.26 and is recognized over the vesting period. The unrecognized cost related to the non-vested restricted stock awards was $14,000 as of September 30, 2016.

The total expense for equity based compensation was $162,000 in the third quarter of 2016 and $116,000 in the third quarter of 2015. The total expense for equity based compensation was $438,000 in the first nine months of 2016 and $293,000 in the first nine months of 2015.

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Note 4 - Loans

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables, Excluding Allowance for Credit Losses [Text Block]

4. LOANS

The Bank makes commercial, consumer, and mortgage loans primarily to customers in Monroe County, Michigan, southern and western Wayne County, Michigan, Lenawee County, Michigan, and surrounding areas. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on the automotive, manufacturing, and real estate development economic sectors.

Loans consist of the following (000s omitted):

	September 30,		December 31,
	2016		2015
Residential real estate loans	$	217,252	$	213,989
Commercial and Construction real estate loans		272,412		259,139
Agriculture and agricultural real estate loans		21,961		19,243
Commercial and industrial loans		94,826		84,438
Loans to individuals for household, family, and other personal expenditures		49,358		40,499
Total loans, gross	$	655,809	$	617,308
Less: Allowance for loan losses		9,405		10,896
Net Loans	$	646,404	$	606,412

Loans are placed in a nonaccrual status when, in the opinion of Management, the collection of additional interest is doubtful. All loan relationships over $250,000 that are classified by Management as nonperforming as well as selected performing accounts and all renegotiated loans are reviewed for impairment each quarter. Allowances for loans determined to be impaired are included in the allowance for loan losses. All cash received on nonaccrual loans is applied to the principal balance. Nonperforming assets consist of nonaccrual loans, loans 90 days or more past due, restructured loans, nonaccrual investment securities, other real estate owned, and other repossessed assets. Other real estate owned includes real estate that has been acquired in full or partial satisfaction of loan obligations or upon foreclosure.

The following table summarizes nonperforming assets (000s omitted):

	September 30,			December 31,
	2016			2015
Nonaccrual loans	$	6,545		$	8,633
Loans 90 days past due and accruing		32			4
Restructured loans		15,923			18,910
Total nonperforming loans	$	22,500		$	27,547
Other real estate owned		1,686			2,383
Other assets		10			-
Total nonperforming assets	$	24,196		$	29,930
Nonperforming assets to total assets		1.80	%		2.23	%
Allowance for loan losses to nonperforming loans		41.80	%		39.55	%

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Note 5 - Allowance for Loan Losses

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Financing Receivables [Text Block]

5. ALLOWANCE FOR LOAN LOSSES

The Company separates its loan portfolio into segments to perform the calculation and analysis of the allowance for loan losses. The six segments analyzed are Agriculture and Agricultural Real Estate, Commercial, Commercial Real Estate, Construction Real Estate, Residential Real Estate, and Consumer and Other. The Agriculture and Agricultural Real Estate segment includes all loans to finance agricultural production and all loans secured by agricultural real estate. This segment does not include loans to finance agriculture that are secured by residential real estate, which are included in the Residential Real Estate segment. The Commercial segment includes loans to finance commercial and industrial businesses that are not secured by real estate. The Commercial Real Estate segment includes loans secured by non-farm, non-residential real estate. The Construction Real Estate segment includes loans to finance construction and land development. This includes residential and commercial construction and land development. The Residential Real Estate segment includes all loans, other than construction loans, that are secured by single family and multi family residential real estate properties. The Consumer and Other segment includes all loans not included in any other segment. These are primarily loans to consumers for household, family, and other personal expenditures. The majority of this segment is student loans, and it also includes loans for autos, boats, and recreational vehicles.

Activity in the allowance for loan losses during the three and nine months ended September 30, 2016 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate			Commercial			Commercial Real Estate			Construction Real Estate			Residential Real Estate			Consumer and Other			Total
Allowance for loan losses: For the three months ended September 30, 2016
Beginning Balance	$	200		$	1,526		$	4,470		$	460		$	1,791		$	1,456		$	9,903
Charge-offs		-			(14	)		(61	)		-			(39	)		-			(114	)
Recoveries		3			24			114			13			132			30			316
Provision		18			(84	)		(140	)		(104	)		(68	)		(322	)		(700	)
Ending balance	$	221		$	1,452		$	4,383		$	369		$	1,816		$	1,164		$	9,405
Allowance for loan losses: For the nine months ended September 30, 2016
Beginning Balance	$	389		$	2,279		$	4,350		$	420		$	2,235		$	1,223		$	10,896
Charge-offs		(221	)		(26	)		(413	)		-			(195	)		(86	)		(941	)
Recoveries		3			102			182			40			235			88			650
Provision		50			(903	)		264			(91	)		(459	)		(61	)		(1,200	)
Ending balance	$	221		$	1,452		$	4,383		$	369		$	1,816		$	1,164		$	9,405
Allowance for loan losses as of September 30, 2016
Ending balance individually evaluated for impairment	$	5		$	340		$	629		$	255		$	347		$	187		$	1,763
Ending balance collectively evaluated for impairment		216			1,112			3,754			114			1,469			977			7,642
Ending balance	$	221		$	1,452		$	4,383		$	369		$	1,816		$	1,164		$	9,405
Loans as of September 30, 2016
Ending balance individually evaluated for impairment	$	1,251		$	717		$	9,431		$	1,761		$	7,729		$	487		$	21,376
Ending balance collectively evaluated for impairment		20,710			94,109			245,209			16,011			209,523			48,871			634,433
Ending balance	$	21,961		$	94,826		$	254,640		$	17,772		$	217,252		$	49,358		$	655,809

Activity in the allowance for loan losses during the three and nine months ended September 30, 2015 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate			Commercial			Commercial Real Estate			Construction Real Estate			Residential Real Estate			Consumer and Other			Total
Allowance for loan losses: For the three months ended September 30, 2015
Beginning Balance	$	425		$	1,481		$	5,437		$	623		$	3,070		$	2,043		$	13,079
Charge-offs		-			-			(91	)		-			(101	)		-			(192	)
Recoveries		2			45			155			14			57			36			309
Provision		202			372			(1,232	)		(15	)		602			(129	)		(200	)
Ending balance	$	629		$	1,898		$	4,269		$	622		$	3,628		$	1,950		$	12,996
Allowance for loan losses: For the nine months ended September 30, 2015
Beginning Balance	$	216		$	1,361		$	6,179		$	803		$	3,226		$	1,423		$	13,208
Charge-offs		(75	)		(164	)		(212	)		-			(353	)		(117	)		(921	)
Recoveries		12			215			337			635			414			96			1,709
Provision		476			486			(2,035	)		(816	)		341			548			(1,000	)
Ending balance	$	629		$	1,898		$	4,269		$	622		$	3,628		$	1,950		$	12,996
Allowance for loan losses as of September 30, 2015
Ending balance individually evaluated for impairment	$	395		$	878		$	948		$	471		$	1,288		$	228		$	4,208
Ending balance collectively evaluated for impairment		234			1,020			3,321			151			2,340			1,722			8,788
Ending balance	$	629		$	1,898		$	4,269		$	622		$	3,628		$	1,950		$	12,996
Loans as of September 30, 2015
Ending balance individually evaluated for impairment	$	1,214		$	1,259		$	16,803		$	1,843		$	10,423		$	522		$	32,064
Ending balance collectively evaluated for impairment		18,926			84,715			232,177			12,831			205,348			37,748			591,745
Ending balance	$	20,140		$	85,974		$	248,980		$	14,674		$	215,771		$	38,270		$	623,809

Each period the provision for loan losses in the income statement results from the combination of an estimate by Management of loan losses that occurred during the current period and the ongoing adjustment of prior estimates of losses occurring in prior periods.

The provision for loan losses increases the allowance for loan losses, a valuation account which appears on the consolidated balance sheets. As the specific customer and amount of a loan loss is confirmed by gathering additional information, taking collateral in full or partial settlement of the loan, bankruptcy of the borrower, etc., the loan is charged off, reducing the allowance for loan losses. If, subsequent to a charge off, the Bank is able to collect additional amounts from the customer or sell collateral worth more than earlier estimated, a recovery is recorded.

To serve as a basis for making this provision, the Bank maintains an extensive credit risk monitoring process that considers several factors including: current economic conditions affecting the Bank’s customers, the payment performance of individual loans and pools of homogeneous loans, portfolio seasoning, changes in collateral values, and detailed reviews of specific loan relationships.

The Company utilizes an internal loan grading system to assign a risk grade to all commercial loans, all renegotiated loans, and each commercial credit relationship. Grades 10 through 45 are considered “pass” credits and grades 50 through 65 are considered “watch” credits and are subject to greater scrutiny. Loans with grades 70 through 95 and considered “doubtful” or “loss” and have generally been charged off. A description of the general characteristics of each grade is as follows:

• Grade 10– Excellent – Loans secured by marketable collateral, with adequate margin, or supported by strong financial statements, including substantial levels of tangible net worth. Probability of serious financial deterioration is unlikely. Possess a sound repayment source and a secondary source. This classification will also include individual loans backed by liquid personal assets, established history and unquestionable character. High liquidity, minimum risk, strong ratios, and low handling costs are common to these loans.

• Grade 20– Above Average – Loans that exhibit less than average risk and clearly demonstrate debt service coverage that is consistently above average as well as a strong capital base. These loans may have some deficiency or vulnerability, but with offsetting features and are considered to be fully collectable.

• Grade 30– Satisfactory – Loans that have an acceptable amount of risk but may exhibit vulnerability to deterioration if adverse circumstances are encountered. These loans should demonstrate adequate debt service coverage and adequate levels of capital support but warrant periodic monitoring to ensure that weaknesses do not materialize or advance.

• Grades 40 and 45 – Pass – Loans that are considered “pass credits” and typically demonstrate adequate debt service coverage. The level of risk is considered acceptable but these loans warrant ongoing monitoring to ensure that adverse trends or other credit deficiencies have not materialized or advanced. The level of risk is considered acceptable so long as the loan is given adequate and ongoing management supervision.

• Grades 50 and 55 – Watch – Loans that possess some credit deficiency or potential weakness that deserves close attention. The primary source of loan repayment is sufficient but may be considered inadequate by the Bank’s standards.

• Grade 60– Substandard – Loans that exhibit one or more of the following characteristics: (1) a defined credit weakness, financial deterioration is underway, and uncertainty about the likelihood that the loan will be paid from the primary source of repayment; (2) inadequately protected by the current net worth and paying capacity of the obligor; (3) reliance on secondary source of repayment such as collateral liquidation or guarantees; (4) distinct possibility the Bank will sustain loss if deficiencies are not corrected; (5) unusual courses of action are needed to maintain a high probability of repayment; (6) insufficient cash flow to repay principal but continuing to pay interest; (7) the Bank is subordinated or unsecured due to flaws in documentation; (8) loans are restructured or are on nonaccrual status due to concessions to the borrower when compared to normal loan terms; (9) the Bank is contemplating foreclosure or legal action due to the apparent deterioration in the loan; or (10) there is deterioration in the market conditions and the borrower is highly vulnerable to these conditions.

• Grade 70– Doubtful – Loans that exhibit one or more of the following characteristics: (1) loans with all the weaknesses of Substandard loans and collection or liquidation is not probable to result in payment in full; (2) the primary source of repayment is gone and there is considerable doubt as to the quality of the secondary source of repayment; or (3) the possibility of loss is high, but certain important pending factors may strengthen the loan and loss classification is deferred.

• Grades 80 and 90 - Loss – Loans are considered uncollectible and of such little value that continuing to carry them on the Bank’s financial statements is not feasible.

The assessment of compensating factors may result in a rating plus or minus one grade from those listed above. These factors include, but are not limited to collateral, guarantors, environmental conditions, history, plan/projection reasonableness, quality of information, and payment delinquency.

The portfolio segments in each credit risk grade as of September 30, 2016 are as follows (000s omitted):

Credit Quality Indicators as of September 30, 2016

Credit Risk by Internally Assigned Grade

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	41	$	4,143	$	226	$	8,601	$	135,498	$	42,215	$	190,724
10		-		5,515		-		-		-		-		5,515
20		551		357		468		-		-		146		1,522
30		678		17,908		9,672		-		224		-		28,482
40		15,874		60,469		193,382		5,185		65,954		6,835		347,699
45		2,085		2,601		16,082		1,497		4,287		-		26,552
50		1,211		1,434		19,325		576		4,411		14		26,971
55		270		1,464		4,223		1,582		653		-		8,192
60		1,251		935		11,262		331		6,225		148		20,152
70		-		-		-		-		-		-		-
80		-		-		-		-		-		-		-
90		-		-		-		-		-		-		-
Total	$	21,961	$	94,826	$	254,640	$	17,772	$	217,252	$	49,358	$	655,809
Performing	$	21,239	$	93,961	$	244,269	$	16,007	$	209,100	$	48,733	$	633,309
Nonperforming		722		865		10,371		1,765		8,152		625		22,500
Total	$	21,961	$	94,826	$	254,640	$	17,772	$	217,252	$	49,358	$	655,809

The portfolio segments in each credit risk grade as of December 31, 2015 are as follows (000s omitted):

Credit Quality Indicators as of December 31, 2015

Credit Risk by Internally Assigned Grade

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	102	$	2,173	$	310	$	6,789	$	136,049	$	32,461	$	177,884
10		-		2,717		-		-		60		-		2,777
20		306		359		533		-		-		366		1,564
30		432		17,024		7,620		-		373		-		25,449
40		14,413		55,204		184,504		6,548		62,347		7,453		330,469
45		840		1,094		6,506		74		2,957		-		11,471
50		1,340		3,428		23,678		2,163		3,948		18		34,575
55		929		-		3,700		-		-		-		4,629
60		881		2,439		16,369		345		8,255		201		28,490
70		-		-		-		-		-		-		-
80		-		-		-		-		-		-		-
90		-		-		-		-		-		-		-
Total	$	19,243	$	84,438	$	243,220	$	15,919	$	213,989	$	40,499	$	617,308
Performing	$	18,362	$	83,372	$	228,624	$	14,104	$	205,430	$	39,869	$	589,761
Nonperforming		881		1,066		14,596		1,815		8,559		630		27,547
Total	$	19,243	$	84,438	$	243,220	$	15,919	$	213,989	$	40,499	$	617,308

Loans are considered past due when contractually required payment of interest or principal has not been received. The amount classified as past due is the entire principal balance outstanding of the loan, not just the amount of payments that are past due. The following is a summary of past due loans as of September 30, 2016 and December 31, 2015 (000s omitted):

September 30, 2016	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	238	$	-	$	113	$	351	$	21,610	$	21,961	$	-
Commercial		302		67		73		442		94,384		94,826		32
Commercial Real Estate		1,745		112		1,680		3,537		251,103		254,640		-
Construction Real Estate		-		-		-		-		17,772		17,772		-
Residential Real Estate		1,305		694		1,054		3,053		214,199		217,252		-
Consumer and Other		8		-		41		49		49,309		49,358		-
Total	$	3,598	$	873	$	2,961	$	7,432	$	648,377	$	655,809	$	32

December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	136	$	213	$	44	$	393	$	18,850	$	19,243	$	-
Commercial		10		75		76		161		84,277		84,438		4
Commercial Real Estate		2,194		230		2,123		4,547		238,673		243,220		-
Construction Real Estate		-		-		-		-		15,919		15,919		-
Residential Real Estate		2,252		227		464		2,943		211,046		213,989		-
Consumer and Other		130		81		52		263		40,236		40,499		-
Total	$	4,722	$	826	$	2,759	$	8,307	$	609,001	$	617,308	$	4

Loans are placed on non-accrual status when, in the opinion of Management, the collection of additional interest is doubtful. Loans are automatically placed on non-accrual status upon becoming ninety days past due, however, loans may be placed on non-accrual status regardless of whether or not they are past due. All cash received on non-accrual loans is applied to the principal balance. Loans are considered for return to accrual status on an individual basis when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following is a summary of non-accrual loans as of September 30, 2016 and December 31, 2015 (000s omitted):

	September 30, 2016		December 31, 2015
Agriculture and Agricultural Real Estate	$	113	$	565
Commercial		156		148
Commercial Real Estate		3,577		4,823
Construction Real Estate		35		46
Residential Real Estate		2,525		2,915
Consumer and Other		139		136
Total	$	6,545	$	8,633

For loans deemed to be impaired due to an expectation that all contractual payments will probably not be received, impairment is measured by comparing the Bank’s recorded investment in the loan to the present value of expected cash flows discounted at the loan’s effective interest rate, the fair value of the collateral, or the loan’s observable market price.

The following is a summary of impaired loans as of September 30, 2016 and 2015 (000s omitted):

September 30, 2016	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment for the Three Months Ended		Interest Income Recognized in the Three Months Ended		Average Recorded Investment for the Nine Months Ended		Interest Income Recognized in the Nine Months Ended
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	1,003	$	1,202	$	-	$	1,017	$	11	$	1,024	$	36
Commercial		146		197		-		152		2		157		8
Commercial Real Estate		5,209		5,575		-		5,390		49		5,456		152
Construction Real Estate		99		132		-		120		2		126		6
Residential Real Estate		5,188		5,486		-		5,433		69		5,553		198
Consumer and Other		33		33		-		34		1		36		2
With an allowance recorded:
Agriculture and Agricultural Real Estate		248		247		5		248		3		249		10
Commercial		571		581		340		651		7		729		24
Commercial Real Estate		4,222		4,435		629		4,431		45		4,590		153
Construction Real Estate		1,662		1,662		255		1,668		19		1,677		57
Residential Real Estate		2,541		2,590		347		2,659		33		2,726		84
Consumer and Other		454		475		187		457		5		465		17
Total:
Agriculture and Agricultural Real Estate	$	1,251	$	1,449	$	5	$	1,265	$	14	$	1,273	$	46
Commercial		717		778		340		803		9		886		32
Commercial Real Estate		9,431		10,010		629		9,821		94		10,046		305
Construction Real Estate		1,761		1,794		255		1,788		21		1,803		63
Residential Real Estate		7,729		8,076		347		8,092		102		8,279		282
Consumer and Other		487		508		187		491		6		501		19

	Recorded Investment as of December 31, 2015		Unpaid Principal Balance as of December 31, 2015		Related Allowance as of December 31, 2015		Average Recorded Investment for the Three Months Ended Sept. 30, 2015		Interest Income Recognized in the Three Months Ended Sept. 30, 2015		Average Recorded Investment for the Nine Months Ended Sept. 30, 2015		Interest Income Recognized in the Nine Months Ended Sept. 30, 2015
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	-	$	2	$	1	$	6
Commercial		63		113		-		56		1		64		3
Commercial Real Estate		7,701		8,107		-		8,919		85		9,031		275
Construction Real Estate		200		233		-		276		3		312		8
Residential Real Estate		4,137		4,359		-		4,943		63		5,087		191
Consumer and Other		26		26		-		34		1		37		4
With an allowance recorded:
Agriculture and Agricultural Real Estate		882		885		240		1,214		13		1,230		35
Commercial		895		916		672		1,279		14		1,338		47
Commercial Real Estate		5,697		6,183		634		9,686		96		9,755		302
Construction Real Estate		1,609		1,609		277		1,731		20		1,740		60
Residential Real Estate		3,206		3,310		506		6,204		76		6,243		209
Consumer and Other		470		468		223		500		6		509		17
Total:
Agriculture and Agricultural Real Estate	$	882	$	885	$	240	$	1,214	$	15	$	1,231	$	41
Commercial		958		1,029		672		1,335		15		1,402		50
Commercial Real Estate		13,398		14,290		634		18,605		181		18,786		577
Construction Real Estate		1,809		1,842		277		2,007		23		2,052		68
Residential Real Estate		7,343		7,669		506		11,147		139		11,330		400
Consumer and Other		496		494		223		534		7		546		21

The Bank may agree to modify the terms of a loan in order to improve the Bank’s ability to collect amounts due. These modifications may include reduction of the interest rate, extension of the loan term, or in some cases, reduction of the principal balance. Modifications that are performed due to the debtor’s financial difficulties are considered Troubled Debt Restructurings (“TDRs”).

Loans that have been classified as TDRs during the three and nine month periods ended September 30, 2016 and September 30, 2015 are as follows (000s omitted from dollar amounts):

	Three months ended						Nine months ended
	September 30, 2016						September 30, 2016
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance		Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-		1	$	362	$	361
Commercial		1		250		250		1		250		250
Commercial Real Estate		1		215		215		1		215		215
Construction Real Estate		-		-		-		-		-		-
Residential Real Estate		2		242		241		9		693		653
Consumer and Other		-		-		-		1		57		55
Total		4	$	707	$	706		13	$	1,577	$	1,534

	Three months ended						Nine months ended
	September 30, 2015						September 30, 2015
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance		Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		3	$	325	$	324		3	$	325	$	324
Commercial		-		-		-		1		66		64
Commercial Real Estate		-		-		-		3		684		636
Construction Real Estate		-		-		-		-		-		-
Residential Real Estate		-		-		-		7		581		523
Consumer and Other		-		-		-		-		-		-
Total		3	$	325	$	324		14	$	1,656	$	1,547

The Bank considers TDRs that become past due under the modified terms as defaulted. There were no loans that became TDRs during the nine month periods ended September 30, 2016 and September 30, 2015 that subsequently defaulted during the nine month periods ended September 30, 2016 and September 30, 2015, respectively.

The Company has allocated $1,733,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings at September 30, 2016. In addition, there were no commitments to lend additional amounts to borrowers that are classified as troubled debt restructurings as of September 30, 2016 and September 30, 2015.

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Note 6 - Investment Securities

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

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

6. INVESTMENT SECURITIES

The following is a summary of the Bank’s investment securities portfolio as of September 30, 2016 and December 31, 2015 (000s omitted):

	Held to Maturity
	September 30, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of States and Political Subdivisions	$	42,185	$	1,746	$	(38	)	$	43,893
Corporate Debt Securities		500		3		-			503
	$	42,685	$	1,749	$	(38	)	$	44,396

	Available for Sale
	September 30, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of U.S. Government Agencies	$	247,783	$	3,312	$	(285	)	$	250,810
Mortgage Backed Securities issued by U.S. Government Agencies		153,492		663		(651	)		153,504
Obligations of States and Political Subdivisions		25,068		261		(21	)		25,308
Other Debt Securities		33,397		426		-			33,823
Equity Securities		2,044		121		-			2,165
	$	461,784	$	4,783	$	(957	)	$	465,610

	Held to Maturity
	December 31, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of States and Political Subdivisions	$	40,782	$	1,333	$	(178	)	$	41,937
Corporate Debt Securities		500		-		-			500
	$	41,282	$	1,333	$	(178	)	$	42,437

	Available for Sale
	December 31, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of U.S. Government Agencies	$	370,469	$	1,647	$	(3,055	)	$	369,061
Mortgage Backed Securities issued by U.S. Government Agencies		104,472		107		(1,327	)		103,252
Obligations of States and Political Subdivisions		17,212		305		(48	)		17,469
Corporate Debt Securities		5,000		-		(50	)		4,950
Equity Securities		2,044		83		-			2,127
	$	499,197	$	2,142	$	(4,480	)	$	496,859

The amortized cost and estimated market values of securities by contractual maturity as of September 30, 2016 are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Held to Maturity				Available for Sale
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
Contractual maturity in
1 year or less	$	9,925	$	9,938	$	3,844	$	3,844
After 1 year through five years		21,406		21,890		130,791		132,281
After 5 years through 10 years		9,347		10,273		171,613		173,816
After 10 years		2,007		2,295		-		-
Total		42,685		44,396		306,248		309,941
Mortgage Backed Securities		-		-		153,492		153,504
Securities with no stated maturity		-		-		2,044		2,165
Total	$	42,685	$	44,396	$	461,784	$	465,610

The investment securities portfolio is evaluated for impairment throughout the year. Impairment is recorded against individual securities, unless the decrease in fair value is attributable to interest rates or the lack of an active market, and Management determines that the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before a recovery of their amortized costs bases, which may be maturity. The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2016 and December 31, 2015.

	September 30, 2016
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized  Losses
Obligations of United States Government Agencies	$	69,230	$	285	$	-	$	-	$	69,230	$	285
Mortgage Backed Securities issued by U.S. Government Agencies		69,646		341		25,840		310		95,486		651
Obligations of States and Political Subdivisions		15,846		48		3,563		11		19,409		59
Corporate Debt Securities		-		-		-		-		-		-
	$	154,722	$	674	$	29,403	$	321	$	184,125	$	995

	December 31, 2015
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Obligations of United States Government Agencies	$	170,178	$	2,367	$	53,497	$	688	$	223,675	$	3,055
Mortgage Backed Securities issued by U.S. Government Agencies		57,949		633		31,118		694		89,067		1,327
Obligations of States and Political Subdivisions		10,830		165		5,324		61		16,154		226
Corporate Debt Securities		4,950		50		-		-		4,950		50
	$	243,907	$	3,215	$	89,939	$	1,443	$	333,846	$	4,658

The amount of investment securities issued by government agencies, states, and political subdivisions with unrealized losses and the amount of unrealized losses on those investment securities are primarily the result of market interest rates and not the result of the credit quality of the issuers of the securities. Because the Company does not intend to sell the investments and it is not more likely than not that 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 other than temporarily impaired at September 30, 2016. As of September 30, 2016 and December 31, 2015, there were 96 and 146 securities in an unrealized loss position, respectively.

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Note 7 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value, as defined in ASC Topic 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for market activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

The Company utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair value is used on a recurring basis for Available for Sale Securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value.

The Company applied the following fair value hierarchy:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Company’s mutual fund investments where quoted prices are available in an active market generally are classified within Level 1 of the fair value hierarchy.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Company’s borrowed funds and investments in U.S. government agency securities, government sponsored mortgage backed securities, corporate debt securities, bank certificates of deposit, and obligations of states and political subdivisions are generally classified in Level 2 of the fair value hierarchy. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Private equity investments and certain municipal debt obligations are classified within Level 3 of the fair value hierarchy. Fair values are initially valued based on transaction price and are adjusted to reflect exit values.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015, and the valuation techniques used by the Company to determine those fair values.

									Total
	Carrying								Estimated
September 30, 2016	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	60,901	$	60,901	$	-	$	-	$	60,901
Time Deposits in Other Banks		19,196		-		19,216		250		19,466
Securities - Held to Maturity
Obligations of States and Political Subdivisions		42,185		-		3,453		40,440		43,893
Corporate Debt Securities		500		-		503		-		503
Securities - Available for Sale
Obligations of U.S. Government Agencies		250,810		-		250,810		-		250,810
MBS issued by U.S. Government Agencies		153,504		-		153,504		-		153,504
Obligations of States and Political Subdivisions		25,308		-		25,308		-		25,308
Other Debt Securities		33,823		-		33,823		-		33,823
Other Securities		2,165		2,165		-		-		2,165
Federal Home Loan Bank Stock		4,148		-		4,148		-		4,148
Loans Held for Sale		636		-		-		651		651
Loans, net		646,404		-		-		649,049		649,049
Accrued Interest Receivable		4,626		-		-		4,626		4,626
Financial Liabilities:
Noninterest Bearing Deposits		285,764		285,764		-		-		285,764
Interest Bearings Deposits		894,697		-		896,271		-		896,271
Accrued Interest Payable		54		-		-		54		54

									Total
	Carrying								Estimated
December 31, 2015	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	79,550	$	79,550	$	-	$	-	$	79,550
Time Deposits in Other Banks		5,500		-		4,965		500		5,465
Securities - Held to Maturity
Obligations of States and Political Subdivisions		40,782		-		3,805		38,132		41,937
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		369,061		-		369,061		-		369,061
MBS issued by U.S. Government Agencies		103,252		-		103,252		-		103,252
Obligations of States and Political Subdivisions		17,469		-		17,469		-		17,469
Corporate Debt Securities		4,950		-		4,950		-		4,950
Other Securities		2,127		2,127		-		-		2,127
Federal Home Loan Bank Stock		4,148		-		4,148		-		4,148
Loans Held for Sale		1,477		-		-		1,508		1,508
Loans, net		606,412		-		-		613,397		613,397
Accrued Interest Receivable		4,170		-		-		4,170		4,170
Financial Liabilities:
Noninterest Bearing Deposits		253,795		253,795		-		-		253,795
Interest Bearings Deposits		911,598		-		913,410		-		913,410
Repurchase Agreements		15,000		-		15,253		-		15,253
Accrued Interest Payable		108		-		-		108		108

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset.

The Company did not have any Level 3 assets measured at fair value on a recurring basis as of September 30, 2016 or December 31, 2015. The Company did not have any sales or purchases of Level 3 available for sale securities during the period.

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 assets. As a result, the unrealized gains and losses for these assets presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs.

The Company also has assets that under certain conditions are subject to measurement at fair value on a nonrecurring basis. These assets include loans and Other Real Estate Owned. The Company estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections.

Assets measured at fair value on a nonrecurring basis are as follows (000s omitted):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Impaired loans	$	-	$	-	$	19,613
Other Real Estate Owned	$	-	$	-	$	1,686
December 31, 2015
Impaired loans	$	-	$	-	$	22,334
Other Real Estate Owned	$	-	$	-	$	2,383

Impaired loans categorized as Level 3 assets consist of non-homogenous loans that are considered impaired. The Company estimates the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). Other Real Estate Owned (OREO) consists of property received in full or partial satisfaction of a receivable. The Company utilizes independent appraisals to estimate the fair value of OREO properties.

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Note 8 - Financial Instruments with Off-balance Sheet Risk

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Fair Value of Off-Balance Sheet Risks Disclosure [Text Block]

8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of condition.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for its other lending activities.

Financial instruments whose contractual amounts represent off-balance sheet credit risk were as follows (000s omitted):

	Contractual Amount
	September 30,		December 31,
	2016		2015
Commitments to extend credit:
Unused portion of commercial lines of credit	$	71,404	$	70,488
Unused portion of credit card lines of credit		4,323		4,396
Unused portion of home equity lines of credit		24,925		23,164
Standby letters of credit and financial guarantees written		1,582		1,555
All other off-balance sheet commitments		-		-

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Most commercial lines of credit are secured by real estate mortgages or other collateral, and generally have fixed expiration dates or other termination clauses. Since the lines of credit may expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. Credit card lines of credit have various established expiration dates, but are fundable on demand. Home equity lines of credit are secured by real estate mortgages, a majority of which have ten year expiration dates, but are fundable on demand. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of the collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on Management’s credit evaluation of the counterparty.

Standby letters of credit written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements and other business transactions.

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany transactions and balances have been eliminated.

Comprehensive Income, Policy [Policy Text Block]

COMPREHENSIVE INCOME

Accounting principles generally require that revenue, expenses, gains, and losses be included in net income. Certain changes in assets and liabilities, however, such as unrealized gains and losses on securities available for sale and amounts recognized related to postretirement benefit plans (gains and losses, prior service costs, and transition assets or obligations), are reported as a direct adjustment to the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income.

Segment Reporting, Policy [Policy Text Block]

BUSINESS SEGMENTS

While the Company's chief decision makers monitor the revenue streams of various products and services, operations are managed and financial performance is evaluated on a company wide basis. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable segment.

Fair Value Measurement, Policy [Policy Text Block]

FAIR VALUE

The Company measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities that are elected to be accounted for under The Fair Value Option as well as for certain assets and liabilities in which fair value is the primary basis of accounting. Examples of these include derivative instruments and available for sale securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Fair value is defined 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. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. 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 market observable data for similar assets or liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets and the Company must use alternative valuation techniques to derive a fair value measurement.

New Accounting Pronouncements, Policy [Policy Text Block]

ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09 (ASU 2014-09), “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 adopts a standardized approach for revenue recognition and was a joint effort with the International Accounting Standards Board (IASB). The new revenue recognition standard is based on a core principle of recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 does not apply to financial instruments. ASU 2014-09 is effective for public entities for reporting periods beginning after December 15, 2017 (therefore, for the year ending December 31, 2018 for the Corporation). Early implementation is not allowed for public companies. Management is currently assessing the impact to the Corporation’s consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”. The amendments in ASU 2016-01 supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income. The amendments allow equity investments that do not have readily determinable fair values to be re-measured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. The amendments improve financial reporting by providing relevant information about an entity’s equity investments and reducing the number of items that are recognized in other comprehensive income. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The adoption of this guidance is not expected to have a material effect on the Company’s financial position or results of operations.

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, “Leases”, which will supersede the current lease requirements in ASC 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases.  Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations.  Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet.  The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new lease footnote guidance will be effective for the Company’s year ending December 31, 2019 and will be applied using a modified retrospective transition method to the beginning of the earliest period presented.  The effect of applying the new lease guidance on the financial statements as not yet been determined, however the new lease standard is not expected to have a significant effect on the Company’s financial statements.

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

ASU 2016-13 requires an entity measure expected credit losses for financial assets over the estimated lifetime of expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard includes the following core concepts in determining the expected credit loss estimate: (a) be based on an asset’s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments), (b) reflect losses expected over the remaining contractual life of an asset (considering the effect of voluntary prepayments), (c) consider available relevant information about the estimated collectability of cash flows (including information about past events, current conditions, and reasonable and supportable forecasts), and (d) reflect the risk of loss, even when that risk is remote.

ASU 2016-13 also amends the recording of purchased credit-deteriorated assets. Under the new guidance, an allowance will be recognized at acquisition through a gross-up approach whereby an entity will record as the initial amortized cost the sum of (a) the purchase price and (b) an estimate of credit losses as of the date of acquisition. In addition, the guidance also requires immediate recognition in earnings any subsequent changes, both favorable and unfavorable, in expected cash flows by adjusting this allowance.

ASU 2016-13 amends the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Management may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists, as is currently permitted. In addition, an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. As a result, entities will recognize improvements to credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time under current practice.

New disclosures required by ASU 2016-13 include: (a) for financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes, (b) for financial receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination or vintage for as many as five annual periods, and (c) for available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.

Upon adoption of ASU 2016-13, a cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted for annual periods beginning after December 15, 2018. The Corporation is currently evaluating the provisions of ASU 2016-13 to determine the potential impact on the Corporation's consolidated financial condition and results of operations.

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Note 2 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the three months ended September 30,				For the nine months ended September 30,
	2016		2015		2016		2015
Basic
Net income	$	3,687,000	$	3,006,000	$	10,923,000	$	8,068,000
Average common shares outstanding		22,733,134		22,748,974		22,823,682		22,734,952
Earnings per common share - basic	$	0.16	$	0.13	$	0.48	$	0.35
Diluted
Net income	$	3,687,000	$	3,006,000	$	10,923,000	$	8,068,000
Average common shares outstanding		22,733,134		22,748,974		22,823,682		22,734,952
Equity compensation		182,144		200,089		164,682		181,492
Average common shares outstanding - diluted		22,915,278		22,949,063		22,988,364		22,916,444
Earnings per common share - diluted	$	0.16	$	0.13	$	0.48	$	0.35

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Note 3 - Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Share-based Compensation, Stock Options and Stock Appreciation Rights Award Activity [Table Text Block]

				Weighted Average
	SOSARs			Base Price
SOSARs Outstanding, January 1, 2016		609,275		$	4.02
Granted		105,500			8.26
Exercised		(209,887	)		2.77
Forfeited		(8,839	)		5.68
Expired		-			-
SOSARs Outstanding, September 30, 2016		496,049		$	5.42
SOSARs Exercisable, September 30, 2016		281,169		$	4.46

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Note 4 - Loans (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

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

	September 30,		December 31,
	2016		2015
Residential real estate loans	$	217,252	$	213,989
Commercial and Construction real estate loans		272,412		259,139
Agriculture and agricultural real estate loans		21,961		19,243
Commercial and industrial loans		94,826		84,438
Loans to individuals for household, family, and other personal expenditures		49,358		40,499
Total loans, gross	$	655,809	$	617,308
Less: Allowance for loan losses		9,405		10,896
Net Loans	$	646,404	$	606,412

Schedule of Non-performing Assets [Table Text Block]

	September 30,			December 31,
	2016			2015
Nonaccrual loans	$	6,545		$	8,633
Loans 90 days past due and accruing		32			4
Restructured loans		15,923			18,910
Total nonperforming loans	$	22,500		$	27,547
Other real estate owned		1,686			2,383
Other assets		10			-
Total nonperforming assets	$	24,196		$	29,930
Nonperforming assets to total assets		1.80	%		2.23	%
Allowance for loan losses to nonperforming loans		41.80	%		39.55	%

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Note 5 - Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

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

	Agriculture and Agricultural Real Estate			Commercial			Commercial Real Estate			Construction Real Estate			Residential Real Estate			Consumer and Other			Total
Allowance for loan losses: For the three months ended September 30, 2016
Beginning Balance	$	200		$	1,526		$	4,470		$	460		$	1,791		$	1,456		$	9,903
Charge-offs		-			(14	)		(61	)		-			(39	)		-			(114	)
Recoveries		3			24			114			13			132			30			316
Provision		18			(84	)		(140	)		(104	)		(68	)		(322	)		(700	)
Ending balance	$	221		$	1,452		$	4,383		$	369		$	1,816		$	1,164		$	9,405
Allowance for loan losses: For the nine months ended September 30, 2016
Beginning Balance	$	389		$	2,279		$	4,350		$	420		$	2,235		$	1,223		$	10,896
Charge-offs		(221	)		(26	)		(413	)		-			(195	)		(86	)		(941	)
Recoveries		3			102			182			40			235			88			650
Provision		50			(903	)		264			(91	)		(459	)		(61	)		(1,200	)
Ending balance	$	221		$	1,452		$	4,383		$	369		$	1,816		$	1,164		$	9,405
Allowance for loan losses as of September 30, 2016
Ending balance individually evaluated for impairment	$	5		$	340		$	629		$	255		$	347		$	187		$	1,763
Ending balance collectively evaluated for impairment		216			1,112			3,754			114			1,469			977			7,642
Ending balance	$	221		$	1,452		$	4,383		$	369		$	1,816		$	1,164		$	9,405
Loans as of September 30, 2016
Ending balance individually evaluated for impairment	$	1,251		$	717		$	9,431		$	1,761		$	7,729		$	487		$	21,376
Ending balance collectively evaluated for impairment		20,710			94,109			245,209			16,011			209,523			48,871			634,433
Ending balance	$	21,961		$	94,826		$	254,640		$	17,772		$	217,252		$	49,358		$	655,809

	Agriculture and Agricultural Real Estate			Commercial			Commercial Real Estate			Construction Real Estate			Residential Real Estate			Consumer and Other			Total
Allowance for loan losses: For the three months ended September 30, 2015
Beginning Balance	$	425		$	1,481		$	5,437		$	623		$	3,070		$	2,043		$	13,079
Charge-offs		-			-			(91	)		-			(101	)		-			(192	)
Recoveries		2			45			155			14			57			36			309
Provision		202			372			(1,232	)		(15	)		602			(129	)		(200	)
Ending balance	$	629		$	1,898		$	4,269		$	622		$	3,628		$	1,950		$	12,996
Allowance for loan losses: For the nine months ended September 30, 2015
Beginning Balance	$	216		$	1,361		$	6,179		$	803		$	3,226		$	1,423		$	13,208
Charge-offs		(75	)		(164	)		(212	)		-			(353	)		(117	)		(921	)
Recoveries		12			215			337			635			414			96			1,709
Provision		476			486			(2,035	)		(816	)		341			548			(1,000	)
Ending balance	$	629		$	1,898		$	4,269		$	622		$	3,628		$	1,950		$	12,996
Allowance for loan losses as of September 30, 2015
Ending balance individually evaluated for impairment	$	395		$	878		$	948		$	471		$	1,288		$	228		$	4,208
Ending balance collectively evaluated for impairment		234			1,020			3,321			151			2,340			1,722			8,788
Ending balance	$	629		$	1,898		$	4,269		$	622		$	3,628		$	1,950		$	12,996
Loans as of September 30, 2015
Ending balance individually evaluated for impairment	$	1,214		$	1,259		$	16,803		$	1,843		$	10,423		$	522		$	32,064
Ending balance collectively evaluated for impairment		18,926			84,715			232,177			12,831			205,348			37,748			591,745
Ending balance	$	20,140		$	85,974		$	248,980		$	14,674		$	215,771		$	38,270		$	623,809

Financing Receivable Credit Quality Indicators [Table Text Block]

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	41	$	4,143	$	226	$	8,601	$	135,498	$	42,215	$	190,724
10		-		5,515		-		-		-		-		5,515
20		551		357		468		-		-		146		1,522
30		678		17,908		9,672		-		224		-		28,482
40		15,874		60,469		193,382		5,185		65,954		6,835		347,699
45		2,085		2,601		16,082		1,497		4,287		-		26,552
50		1,211		1,434		19,325		576		4,411		14		26,971
55		270		1,464		4,223		1,582		653		-		8,192
60		1,251		935		11,262		331		6,225		148		20,152
70		-		-		-		-		-		-		-
80		-		-		-		-		-		-		-
90		-		-		-		-		-		-		-
Total	$	21,961	$	94,826	$	254,640	$	17,772	$	217,252	$	49,358	$	655,809
Performing	$	21,239	$	93,961	$	244,269	$	16,007	$	209,100	$	48,733	$	633,309
Nonperforming		722		865		10,371		1,765		8,152		625		22,500
Total	$	21,961	$	94,826	$	254,640	$	17,772	$	217,252	$	49,358	$	655,809

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	102	$	2,173	$	310	$	6,789	$	136,049	$	32,461	$	177,884
10		-		2,717		-		-		60		-		2,777
20		306		359		533		-		-		366		1,564
30		432		17,024		7,620		-		373		-		25,449
40		14,413		55,204		184,504		6,548		62,347		7,453		330,469
45		840		1,094		6,506		74		2,957		-		11,471
50		1,340		3,428		23,678		2,163		3,948		18		34,575
55		929		-		3,700		-		-		-		4,629
60		881		2,439		16,369		345		8,255		201		28,490
70		-		-		-		-		-		-		-
80		-		-		-		-		-		-		-
90		-		-		-		-		-		-		-
Total	$	19,243	$	84,438	$	243,220	$	15,919	$	213,989	$	40,499	$	617,308
Performing	$	18,362	$	83,372	$	228,624	$	14,104	$	205,430	$	39,869	$	589,761
Nonperforming		881		1,066		14,596		1,815		8,559		630		27,547
Total	$	19,243	$	84,438	$	243,220	$	15,919	$	213,989	$	40,499	$	617,308

Past Due Financing Receivables [Table Text Block]

September 30, 2016	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	238	$	-	$	113	$	351	$	21,610	$	21,961	$	-
Commercial		302		67		73		442		94,384		94,826		32
Commercial Real Estate		1,745		112		1,680		3,537		251,103		254,640		-
Construction Real Estate		-		-		-		-		17,772		17,772		-
Residential Real Estate		1,305		694		1,054		3,053		214,199		217,252		-
Consumer and Other		8		-		41		49		49,309		49,358		-
Total	$	3,598	$	873	$	2,961	$	7,432	$	648,377	$	655,809	$	32

December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	136	$	213	$	44	$	393	$	18,850	$	19,243	$	-
Commercial		10		75		76		161		84,277		84,438		4
Commercial Real Estate		2,194		230		2,123		4,547		238,673		243,220		-
Construction Real Estate		-		-		-		-		15,919		15,919		-
Residential Real Estate		2,252		227		464		2,943		211,046		213,989		-
Consumer and Other		130		81		52		263		40,236		40,499		-
Total	$	4,722	$	826	$	2,759	$	8,307	$	609,001	$	617,308	$	4

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

	September 30, 2016		December 31, 2015
Agriculture and Agricultural Real Estate	$	113	$	565
Commercial		156		148
Commercial Real Estate		3,577		4,823
Construction Real Estate		35		46
Residential Real Estate		2,525		2,915
Consumer and Other		139		136
Total	$	6,545	$	8,633

Impaired Financing Receivables [Table Text Block]

September 30, 2016	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment for the Three Months Ended		Interest Income Recognized in the Three Months Ended		Average Recorded Investment for the Nine Months Ended		Interest Income Recognized in the Nine Months Ended
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	1,003	$	1,202	$	-	$	1,017	$	11	$	1,024	$	36
Commercial		146		197		-		152		2		157		8
Commercial Real Estate		5,209		5,575		-		5,390		49		5,456		152
Construction Real Estate		99		132		-		120		2		126		6
Residential Real Estate		5,188		5,486		-		5,433		69		5,553		198
Consumer and Other		33		33		-		34		1		36		2
With an allowance recorded:
Agriculture and Agricultural Real Estate		248		247		5		248		3		249		10
Commercial		571		581		340		651		7		729		24
Commercial Real Estate		4,222		4,435		629		4,431		45		4,590		153
Construction Real Estate		1,662		1,662		255		1,668		19		1,677		57
Residential Real Estate		2,541		2,590		347		2,659		33		2,726		84
Consumer and Other		454		475		187		457		5		465		17
Total:
Agriculture and Agricultural Real Estate	$	1,251	$	1,449	$	5	$	1,265	$	14	$	1,273	$	46
Commercial		717		778		340		803		9		886		32
Commercial Real Estate		9,431		10,010		629		9,821		94		10,046		305
Construction Real Estate		1,761		1,794		255		1,788		21		1,803		63
Residential Real Estate		7,729		8,076		347		8,092		102		8,279		282
Consumer and Other		487		508		187		491		6		501		19

	Recorded Investment as of December 31, 2015		Unpaid Principal Balance as of December 31, 2015		Related Allowance as of December 31, 2015		Average Recorded Investment for the Three Months Ended Sept. 30, 2015		Interest Income Recognized in the Three Months Ended Sept. 30, 2015		Average Recorded Investment for the Nine Months Ended Sept. 30, 2015		Interest Income Recognized in the Nine Months Ended Sept. 30, 2015
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	-	$	2	$	1	$	6
Commercial		63		113		-		56		1		64		3
Commercial Real Estate		7,701		8,107		-		8,919		85		9,031		275
Construction Real Estate		200		233		-		276		3		312		8
Residential Real Estate		4,137		4,359		-		4,943		63		5,087		191
Consumer and Other		26		26		-		34		1		37		4
With an allowance recorded:
Agriculture and Agricultural Real Estate		882		885		240		1,214		13		1,230		35
Commercial		895		916		672		1,279		14		1,338		47
Commercial Real Estate		5,697		6,183		634		9,686		96		9,755		302
Construction Real Estate		1,609		1,609		277		1,731		20		1,740		60
Residential Real Estate		3,206		3,310		506		6,204		76		6,243		209
Consumer and Other		470		468		223		500		6		509		17
Total:
Agriculture and Agricultural Real Estate	$	882	$	885	$	240	$	1,214	$	15	$	1,231	$	41
Commercial		958		1,029		672		1,335		15		1,402		50
Commercial Real Estate		13,398		14,290		634		18,605		181		18,786		577
Construction Real Estate		1,809		1,842		277		2,007		23		2,052		68
Residential Real Estate		7,343		7,669		506		11,147		139		11,330		400
Consumer and Other		496		494		223		534		7		546		21

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	Three months ended						Nine months ended
	September 30, 2016						September 30, 2016
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance		Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-		1	$	362	$	361
Commercial		1		250		250		1		250		250
Commercial Real Estate		1		215		215		1		215		215
Construction Real Estate		-		-		-		-		-		-
Residential Real Estate		2		242		241		9		693		653
Consumer and Other		-		-		-		1		57		55
Total		4	$	707	$	706		13	$	1,577	$	1,534

	Three months ended						Nine months ended
	September 30, 2015						September 30, 2015
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance		Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		3	$	325	$	324		3	$	325	$	324
Commercial		-		-		-		1		66		64
Commercial Real Estate		-		-		-		3		684		636
Construction Real Estate		-		-		-		-		-		-
Residential Real Estate		-		-		-		7		581		523
Consumer and Other		-		-		-		-		-		-
Total		3	$	325	$	324		14	$	1,656	$	1,547

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Note 6 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Held-to-maturity Securities [Table Text Block]

	Held to Maturity
	September 30, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of States and Political Subdivisions	$	42,185	$	1,746	$	(38	)	$	43,893
Corporate Debt Securities		500		3		-			503
	$	42,685	$	1,749	$	(38	)	$	44,396

	Held to Maturity
	December 31, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of States and Political Subdivisions	$	40,782	$	1,333	$	(178	)	$	41,937
Corporate Debt Securities		500		-		-			500
	$	41,282	$	1,333	$	(178	)	$	42,437

Available-for-sale Securities [Table Text Block]

	Available for Sale
	September 30, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of U.S. Government Agencies	$	247,783	$	3,312	$	(285	)	$	250,810
Mortgage Backed Securities issued by U.S. Government Agencies		153,492		663		(651	)		153,504
Obligations of States and Political Subdivisions		25,068		261		(21	)		25,308
Other Debt Securities		33,397		426		-			33,823
Equity Securities		2,044		121		-			2,165
	$	461,784	$	4,783	$	(957	)	$	465,610

	Available for Sale
	December 31, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of U.S. Government Agencies	$	370,469	$	1,647	$	(3,055	)	$	369,061
Mortgage Backed Securities issued by U.S. Government Agencies		104,472		107		(1,327	)		103,252
Obligations of States and Political Subdivisions		17,212		305		(48	)		17,469
Corporate Debt Securities		5,000		-		(50	)		4,950
Equity Securities		2,044		83		-			2,127
	$	499,197	$	2,142	$	(4,480	)	$	496,859

Expected Maturities of Amortized Cost and Estimated Market Value [Table Text Block]

	Held to Maturity				Available for Sale
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
Contractual maturity in
1 year or less	$	9,925	$	9,938	$	3,844	$	3,844
After 1 year through five years		21,406		21,890		130,791		132,281
After 5 years through 10 years		9,347		10,273		171,613		173,816
After 10 years		2,007		2,295		-		-
Total		42,685		44,396		306,248		309,941
Mortgage Backed Securities		-		-		153,492		153,504
Securities with no stated maturity		-		-		2,044		2,165
Total	$	42,685	$	44,396	$	461,784	$	465,610

Schedule of Unrealized Loss on Investments [Table Text Block]

	September 30, 2016
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized  Losses
Obligations of United States Government Agencies	$	69,230	$	285	$	-	$	-	$	69,230	$	285
Mortgage Backed Securities issued by U.S. Government Agencies		69,646		341		25,840		310		95,486		651
Obligations of States and Political Subdivisions		15,846		48		3,563		11		19,409		59
Corporate Debt Securities		-		-		-		-		-		-
	$	154,722	$	674	$	29,403	$	321	$	184,125	$	995

	December 31, 2015
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Obligations of United States Government Agencies	$	170,178	$	2,367	$	53,497	$	688	$	223,675	$	3,055
Mortgage Backed Securities issued by U.S. Government Agencies		57,949		633		31,118		694		89,067		1,327
Obligations of States and Political Subdivisions		10,830		165		5,324		61		16,154		226
Corporate Debt Securities		4,950		50		-		-		4,950		50
	$	243,907	$	3,215	$	89,939	$	1,443	$	333,846	$	4,658

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Note 7 - Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

									Total
	Carrying								Estimated
September 30, 2016	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	60,901	$	60,901	$	-	$	-	$	60,901
Time Deposits in Other Banks		19,196		-		19,216		250		19,466
Securities - Held to Maturity
Obligations of States and Political Subdivisions		42,185		-		3,453		40,440		43,893
Corporate Debt Securities		500		-		503		-		503
Securities - Available for Sale
Obligations of U.S. Government Agencies		250,810		-		250,810		-		250,810
MBS issued by U.S. Government Agencies		153,504		-		153,504		-		153,504
Obligations of States and Political Subdivisions		25,308		-		25,308		-		25,308
Other Debt Securities		33,823		-		33,823		-		33,823
Other Securities		2,165		2,165		-		-		2,165
Federal Home Loan Bank Stock		4,148		-		4,148		-		4,148
Loans Held for Sale		636		-		-		651		651
Loans, net		646,404		-		-		649,049		649,049
Accrued Interest Receivable		4,626		-		-		4,626		4,626
Financial Liabilities:
Noninterest Bearing Deposits		285,764		285,764		-		-		285,764
Interest Bearings Deposits		894,697		-		896,271		-		896,271
Accrued Interest Payable		54		-		-		54		54

									Total
	Carrying								Estimated
December 31, 2015	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	79,550	$	79,550	$	-	$	-	$	79,550
Time Deposits in Other Banks		5,500		-		4,965		500		5,465
Securities - Held to Maturity
Obligations of States and Political Subdivisions		40,782		-		3,805		38,132		41,937
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		369,061		-		369,061		-		369,061
MBS issued by U.S. Government Agencies		103,252		-		103,252		-		103,252
Obligations of States and Political Subdivisions		17,469		-		17,469		-		17,469
Corporate Debt Securities		4,950		-		4,950		-		4,950
Other Securities		2,127		2,127		-		-		2,127
Federal Home Loan Bank Stock		4,148		-		4,148		-		4,148
Loans Held for Sale		1,477		-		-		1,508		1,508
Loans, net		606,412		-		-		613,397		613,397
Accrued Interest Receivable		4,170		-		-		4,170		4,170
Financial Liabilities:
Noninterest Bearing Deposits		253,795		253,795		-		-		253,795
Interest Bearings Deposits		911,598		-		913,410		-		913,410
Repurchase Agreements		15,000		-		15,253		-		15,253
Accrued Interest Payable		108		-		-		108		108

Fair Value Measurements, Nonrecurring [Table Text Block]

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Impaired loans	$	-	$	-	$	19,613
Other Real Estate Owned	$	-	$	-	$	1,686
December 31, 2015
Impaired loans	$	-	$	-	$	22,334
Other Real Estate Owned	$	-	$	-	$	2,383

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Note 8 - Financial Instruments with Off-balance Sheet Risk (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Fair Value, Off-balance Sheet Risks [Table Text Block]

	Contractual Amount
	September 30,		December 31,
	2016		2015
Commitments to extend credit:
Unused portion of commercial lines of credit	$	71,404	$	70,488
Unused portion of credit card lines of credit		4,323		4,396
Unused portion of home equity lines of credit		24,925		23,164
Standby letters of credit and financial guarantees written		1,582		1,555
All other off-balance sheet commitments		-		-

XML

Note 1 - Basis of Presentation and Accounting Policies (Details Textual)	Sep. 30, 2016
Lenawee County, Michigan [Member]
Number of Loan and Wealth Management Offices	1
Monroe County, Michigan [Member]
Number of Stores	14
Wayne County, Michigan [Member]
Number of Loan and Wealth Management Offices	1
Number of Stores	6

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Note 2 - Earnings Per Share - Calculations of Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net income	$ 3,687	$ 3,006	$ 10,923	$ 8,068
Average common shares outstanding (in shares)	22,733,134	22,748,974	22,823,682	22,734,952
Earnings per common share - basic (in dollars per share)	$ 0.16	$ 0.13	$ 0.48	$ 0.35
Equity compensation (in shares)	182,144	200,089	164,682	181,492
Average common shares outstanding - diluted (in shares)	22,915,278	22,949,063	22,988,364	22,916,444
Earnings per common share - diluted (in dollars per share)	$ 0.16	$ 0.13	$ 0.48	$ 0.35

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Note 3 - Stock Based Compensation (Details Textual) - USD ($)		3 Months Ended		9 Months Ended
	Feb. 25, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Executive Officer [Member] | Stock Incentive Plan 2008 [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period	2 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period				0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	35,000
Executive Officer [Member] | Stock Incentive Plan 2008 [Member]
Restricted Stock Units, Number of Shares of Common Stock Per RSU	1
Certain Officers [Member] | Stock Incentive Plan 2008 [Member] | Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	105,500
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Non-executive Members of Board of Directors [Member] | Stock Incentive Plan 2008 [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 8.26
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	5,000
Director [Member] | Stock Incentive Plan 2008 [Member] | Restricted Stock [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 14,000		$ 14,000
Stock Incentive Plan 2008 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	7 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	41.21%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	1.47%
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted				105,500
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 3.08
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	1.50%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value		$ 1,300,000		$ 1,300,000
Shares, Issued		142,604		142,604
Share Price	$ 8.26	$ 9.05		$ 9.05
Allocated Share-based Compensation Expense		$ 162,000	$ 116,000	$ 438,000	$ 293,000

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Note 3 - Stock Based Compensation - SOSARs Activity (Details) - Stock Appreciation Rights (SARs) [Member]	9 Months Ended
	Sep. 30, 2016 $ / shares shares
SOSARs Outstanding, January 1, 2016 (in shares) | shares	609,275
SOSARs Outstanding, January 1, 2016 (in dollars per share) | $ / shares	$ 4.02
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | shares	105,500
Granted (in dollars per share) | $ / shares	$ 8.26
Exercised (in shares) | shares	(209,887)
Exercised (in dollars per share) | $ / shares	$ 2.77
Forfeited (in shares) | shares	(8,839)
Forfeited (in dollars per share) | $ / shares	$ 5.68
Expired (in shares) | shares
Expired (in dollars per share) | $ / shares
SOSARs Outstanding, September 30, 2016 (in shares) | shares	496,049
SOSARs Outstanding, September 30, 2016 (in dollars per share) | $ / shares	$ 5.42
SOSARs Exercisable, September 30, 2016 (in shares) | shares	281,169
SOSARs Exercisable, September 30, 2016 (in dollars per share) | $ / shares	$ 4.46

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Note 4 - Loans (Details Textual)	9 Months Ended
	Sep. 30, 2016 USD ($)
Impairment Review Minimum Amount Threshold	$ 250,000

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Note 4 - Loans - Loans Receivable Outstanding (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Residential Portfolio Segment [Member]
Total loans, gross	$ 217,252	$ 213,989	$ 215,771
Commercial and Construction Real Estate Portfolio Segment [Member]
Total loans, gross	272,412	259,139
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Total loans, gross	21,961	19,243	20,140
Commercial and Industrial Portfolio Segment [Member]
Total loans, gross	94,826	84,438
Consumer and Other Portfolio Segment [Member]
Total loans, gross	49,358	40,499	38,270
Total loans, gross	655,809	617,308	$ 623,809
Less: Allowance for loan losses	9,405	10,896
Net Loans	$ 646,404	$ 606,412

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Note 4 - Loans - Nonperforming Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Nonperforming Financial Instruments [Member]
Non-accrual loans	$ 6,545	$ 8,633
Loans 90 days past due and accruing	32	4
Restructured loans	15,923	18,910
Total loans, gross	22,500	27,547
Other real estate owned	1,686	2,383
Other assets	10
Total nonperforming assets	$ 24,196	$ 29,930
Nonperforming assets to total assets	1.80%	2.23%
Allowance for loan losses to nonperforming loans	41.80%	39.55%
Non-accrual loans	$ 6,545	$ 8,633
Loans 90 days past due and accruing	32	4
Total loans, gross	655,809	617,308	$ 623,809
Other real estate owned	1,686	2,383
Total nonperforming assets	$ 1,343,026	$ 1,342,313

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Note 5 - Allowance for Loan Losses (Details Textual)	9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)
Troubled Debt Restructuring [Member]
Financing Receivable, Allowance for Credit Losses	$ 1,733,000
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0
Loans and Leases Receivable, Impaired, Commitment to Lend	$ 0	$ 0
Financing Receivable, Allowance for Credit Losses	$ 9,405,000	$ 12,996,000	$ 9,903,000	$ 10,896,000	$ 13,079,000	$ 13,208,000

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Note 5 - Allowance for Loan Losses - Activity in the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Balance	$ 200	$ 425	$ 389	$ 216
Charge-offs			(221)	(75)
Recoveries	3	2	3	12
Provision For (Recovery Of) Loan Losses	18	202	50	476
Balance	221	629	221	629
Ending balance individually evaluated for impairment					$ 5		$ 395
Ending balance collectively evaluated for impairment					216		234
Financing Receivable, Allowance for Credit Losses	200	425	221	629	221	$ 389	629
Ending balance individually evaluated for impairment					1,251		1,214
Ending balance collectively evaluated for impairment					20,710		18,926
Total loans, gross					21,961	19,243	20,140
Commercial Portfolio Segment [Member]
Balance	1,526	1,481	2,279	1,361
Charge-offs	(14)		(26)	(164)
Recoveries	24	45	102	215
Provision For (Recovery Of) Loan Losses	(84)	372	(903)	486
Balance	1,452	1,898	1,452	1,898
Ending balance individually evaluated for impairment					340		878
Ending balance collectively evaluated for impairment					1,112		1,020
Financing Receivable, Allowance for Credit Losses	1,526	1,481	1,452	1,898	1,452	2,279	1,898
Ending balance individually evaluated for impairment					717		1,259
Ending balance collectively evaluated for impairment					94,109		84,715
Total loans, gross					94,826	84,438	85,974
Commercial Real Estate Portfolio Segment [Member]
Balance	4,470	5,437	4,350	6,179
Charge-offs	(61)	(91)	(413)	(212)
Recoveries	114	155	182	337
Provision For (Recovery Of) Loan Losses	(140)	(1,232)	264	(2,035)
Balance	4,383	4,269	4,383	4,269
Ending balance individually evaluated for impairment					629		948
Ending balance collectively evaluated for impairment					3,754		3,321
Financing Receivable, Allowance for Credit Losses	4,470	5,437	4,383	4,269	4,383	4,350	4,269
Ending balance individually evaluated for impairment					9,431		16,803
Ending balance collectively evaluated for impairment					245,209		232,177
Total loans, gross					254,640	243,220	248,980
Construction Real Estate Portfolio Segment [Member]
Balance	460	623	420	803
Charge-offs
Recoveries	13	14	40	635
Provision For (Recovery Of) Loan Losses	(104)	(15)	(91)	(816)
Balance	369	622	369	622
Ending balance individually evaluated for impairment					255		471
Ending balance collectively evaluated for impairment					114		151
Financing Receivable, Allowance for Credit Losses	460	623	369	622	369	420	622
Ending balance individually evaluated for impairment					1,761		1,843
Ending balance collectively evaluated for impairment					16,011		12,831
Total loans, gross					17,772	15,919	14,674
Residential Portfolio Segment [Member]
Balance	1,791	3,070	2,235	3,226
Charge-offs	(39)	(101)	(195)	(353)
Recoveries	132	57	235	414
Provision For (Recovery Of) Loan Losses	(68)	602	(459)	341
Balance	1,816	3,628	1,816	3,628
Ending balance individually evaluated for impairment					347		1,288
Ending balance collectively evaluated for impairment					1,469		2,340
Financing Receivable, Allowance for Credit Losses	1,791	3,070	1,816	3,628	1,816	2,235	3,628
Ending balance individually evaluated for impairment					7,729		10,423
Ending balance collectively evaluated for impairment					209,523		205,348
Total loans, gross					217,252	213,989	215,771
Consumer and Other Portfolio Segment [Member]
Balance	1,456	2,043	1,223	1,423
Charge-offs			(86)	(117)
Recoveries	30	36	88	96
Provision For (Recovery Of) Loan Losses	(322)	(129)	(61)	548
Balance	1,164	1,950	1,164	1,950
Ending balance individually evaluated for impairment					187		228
Ending balance collectively evaluated for impairment					977		1,722
Financing Receivable, Allowance for Credit Losses	1,456	2,043	1,164	1,950	1,164	1,223	1,950
Ending balance individually evaluated for impairment					487		522
Ending balance collectively evaluated for impairment					48,871		37,748
Total loans, gross					49,358	40,499	38,270
Balance	9,903	13,079	10,896	13,208
Charge-offs	(114)	(192)	(941)	(921)
Recoveries	316	309	650	1,709
Provision For (Recovery Of) Loan Losses	(700)	(200)	(1,200)	(1,000)
Balance	9,405	12,996	9,405	12,996
Ending balance individually evaluated for impairment					1,763		4,208
Ending balance collectively evaluated for impairment					7,642		8,788
Financing Receivable, Allowance for Credit Losses	$ 9,903	$ 13,079	$ 9,405	$ 12,996	9,405	10,896	12,996
Ending balance individually evaluated for impairment					21,376		32,064
Ending balance collectively evaluated for impairment					634,433		591,745
Total loans, gross					$ 655,809	$ 617,308	$ 623,809

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Note 5 - Allowance for Loan Losses - Credit Risk by Internally Assigned Grade (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Not Rated [Member]
Total loans, gross	$ 41	$ 102
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 1 [Member]
Total loans, gross
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Rating Grade 2 [Member]
Total loans, gross	551	306
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 3 [Member]
Total loans, gross	678	432
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 4 [Member]
Total loans, gross	15,874	14,413
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 4.5 [Member]
Total loans, gross	2,085	840
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 5 [Member]
Total loans, gross	1,211	1,340
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 5.5 [Member]
Total loans, gross	270	929
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 6 [Member]
Total loans, gross	1,251	881
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 7 [Member]
Total loans, gross
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 8 [Member]
Total loans, gross
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Risk Grade Rating 9 [Member]
Total loans, gross
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Performing Financial Instruments [Member]
Total loans, gross	21,239	18,362
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Total loans, gross	722	881
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Total loans, gross	21,961	19,243	$ 20,140
Commercial Portfolio Segment [Member] | Not Rated [Member]
Total loans, gross	4,143	2,173
Commercial Portfolio Segment [Member] | Risk Grade Rating 1 [Member]
Total loans, gross	5,515	2,717
Commercial Portfolio Segment [Member] | Risk Rating Grade 2 [Member]
Total loans, gross	357	359
Commercial Portfolio Segment [Member] | Risk Grade Rating 3 [Member]
Total loans, gross	17,908	17,024
Commercial Portfolio Segment [Member] | Risk Grade Rating 4 [Member]
Total loans, gross	60,469	55,204
Commercial Portfolio Segment [Member] | Risk Grade Rating 4.5 [Member]
Total loans, gross	2,601	1,094
Commercial Portfolio Segment [Member] | Risk Grade Rating 5 [Member]
Total loans, gross	1,434	3,428
Commercial Portfolio Segment [Member] | Risk Grade Rating 5.5 [Member]
Total loans, gross	1,464
Commercial Portfolio Segment [Member] | Risk Grade Rating 6 [Member]
Total loans, gross	935	2,439
Commercial Portfolio Segment [Member] | Risk Grade Rating 7 [Member]
Total loans, gross
Commercial Portfolio Segment [Member] | Risk Grade Rating 8 [Member]
Total loans, gross
Commercial Portfolio Segment [Member] | Risk Grade Rating 9 [Member]
Total loans, gross
Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Total loans, gross	93,961	83,372
Commercial Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Total loans, gross	865	1,066
Commercial Portfolio Segment [Member]
Total loans, gross	94,826	84,438	85,974
Commercial Real Estate Portfolio Segment [Member] | Not Rated [Member]
Total loans, gross	226	310
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 1 [Member]
Total loans, gross
Commercial Real Estate Portfolio Segment [Member] | Risk Rating Grade 2 [Member]
Total loans, gross	468	533
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 3 [Member]
Total loans, gross	9,672	7,620
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 4 [Member]
Total loans, gross	193,382	184,504
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 4.5 [Member]
Total loans, gross	16,082	6,506
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 5 [Member]
Total loans, gross	19,325	23,678
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 5.5 [Member]
Total loans, gross	4,223	3,700
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 6 [Member]
Total loans, gross	11,262	16,369
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 7 [Member]
Total loans, gross
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 8 [Member]
Total loans, gross
Commercial Real Estate Portfolio Segment [Member] | Risk Grade Rating 9 [Member]
Total loans, gross
Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Total loans, gross	244,269	228,624
Commercial Real Estate Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Total loans, gross	10,371	14,596
Commercial Real Estate Portfolio Segment [Member]
Total loans, gross	254,640	243,220	248,980
Construction Real Estate Portfolio Segment [Member] | Not Rated [Member]
Total loans, gross	8,601	6,789
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 1 [Member]
Total loans, gross
Construction Real Estate Portfolio Segment [Member] | Risk Rating Grade 2 [Member]
Total loans, gross
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 3 [Member]
Total loans, gross
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 4 [Member]
Total loans, gross	5,185	6,548
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 4.5 [Member]
Total loans, gross	1,497	74
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 5 [Member]
Total loans, gross	576	2,163
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 5.5 [Member]
Total loans, gross	1,582
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 6 [Member]
Total loans, gross	331	345
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 7 [Member]
Total loans, gross
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 8 [Member]
Total loans, gross
Construction Real Estate Portfolio Segment [Member] | Risk Grade Rating 9 [Member]
Total loans, gross
Construction Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Total loans, gross	16,007	14,104
Construction Real Estate Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Total loans, gross	1,765	1,815
Construction Real Estate Portfolio Segment [Member]
Total loans, gross	17,772	15,919	14,674
Residential Portfolio Segment [Member] | Not Rated [Member]
Total loans, gross	135,498	136,049
Residential Portfolio Segment [Member] | Risk Grade Rating 1 [Member]
Total loans, gross		60
Residential Portfolio Segment [Member] | Risk Rating Grade 2 [Member]
Total loans, gross
Residential Portfolio Segment [Member] | Risk Grade Rating 3 [Member]
Total loans, gross	224	373
Residential Portfolio Segment [Member] | Risk Grade Rating 4 [Member]
Total loans, gross	65,954	62,347
Residential Portfolio Segment [Member] | Risk Grade Rating 4.5 [Member]
Total loans, gross	4,287	2,957
Residential Portfolio Segment [Member] | Risk Grade Rating 5 [Member]
Total loans, gross	4,411	3,948
Residential Portfolio Segment [Member] | Risk Grade Rating 5.5 [Member]
Total loans, gross	653
Residential Portfolio Segment [Member] | Risk Grade Rating 6 [Member]
Total loans, gross	6,225	8,255
Residential Portfolio Segment [Member] | Risk Grade Rating 7 [Member]
Total loans, gross
Residential Portfolio Segment [Member] | Risk Grade Rating 8 [Member]
Total loans, gross
Residential Portfolio Segment [Member] | Risk Grade Rating 9 [Member]
Total loans, gross
Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Total loans, gross	209,100	205,430
Residential Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Total loans, gross	8,152	8,559
Residential Portfolio Segment [Member]
Total loans, gross	217,252	213,989	215,771
Consumer and Other Portfolio Segment [Member] | Not Rated [Member]
Total loans, gross	42,215	32,461
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 1 [Member]
Total loans, gross
Consumer and Other Portfolio Segment [Member] | Risk Rating Grade 2 [Member]
Total loans, gross	146	366
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 3 [Member]
Total loans, gross
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 4 [Member]
Total loans, gross	6,835	7,453
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 4.5 [Member]
Total loans, gross
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 5 [Member]
Total loans, gross	14	18
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 5.5 [Member]
Total loans, gross
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 6 [Member]
Total loans, gross	148	201
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 7 [Member]
Total loans, gross
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 8 [Member]
Total loans, gross
Consumer and Other Portfolio Segment [Member] | Risk Grade Rating 9 [Member]
Total loans, gross
Consumer and Other Portfolio Segment [Member] | Performing Financial Instruments [Member]
Total loans, gross	48,733	39,869
Consumer and Other Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Total loans, gross	625	630
Consumer and Other Portfolio Segment [Member]
Total loans, gross	49,358	40,499	38,270
Not Rated [Member]
Total loans, gross	190,724	177,884
Risk Grade Rating 1 [Member]
Total loans, gross	5,515	2,777
Risk Rating Grade 2 [Member]
Total loans, gross	1,522	1,564
Risk Grade Rating 3 [Member]
Total loans, gross	28,482	25,449
Risk Grade Rating 4 [Member]
Total loans, gross	347,699	330,469
Risk Grade Rating 4.5 [Member]
Total loans, gross	26,552	11,471
Risk Grade Rating 5 [Member]
Total loans, gross	26,971	34,575
Risk Grade Rating 5.5 [Member]
Total loans, gross	8,192	4,629
Risk Grade Rating 6 [Member]
Total loans, gross	20,152	28,490
Risk Grade Rating 7 [Member]
Total loans, gross
Risk Grade Rating 8 [Member]
Total loans, gross
Risk Grade Rating 9 [Member]
Total loans, gross
Performing Financial Instruments [Member]
Total loans, gross	633,309	589,761
Nonperforming Financial Instruments [Member]
Total loans, gross	22,500	27,547
Total loans, gross	$ 655,809	$ 617,308	$ 623,809

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Note 5 - Allowance for Loan Losses - Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Financing Receivables, 30 to 59 Days Past Due [Member] | Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Total past due	$ 238	$ 136
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Portfolio Segment [Member]
Total past due	302	10
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Total past due	1,745	2,194
Financing Receivables, 30 to 59 Days Past Due [Member] | Construction Real Estate Portfolio Segment [Member]
Total past due
Financing Receivables, 30 to 59 Days Past Due [Member] | Residential Portfolio Segment [Member]
Total past due	1,305	2,252
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer and Other Portfolio Segment [Member]
Total past due	8	130
Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	3,598	4,722
Financing Receivables, 60 to 89 Days Past Due [Member] | Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Total past due		213
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Portfolio Segment [Member]
Total past due	67	75
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Total past due	112	230
Financing Receivables, 60 to 89 Days Past Due [Member] | Construction Real Estate Portfolio Segment [Member]
Total past due
Financing Receivables, 60 to 89 Days Past Due [Member] | Residential Portfolio Segment [Member]
Total past due	694	227
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer and Other Portfolio Segment [Member]
Total past due		81
Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	873	826
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Total past due	113	44
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Portfolio Segment [Member]
Total past due	73	76
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Total past due	1,680	2,123
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Construction Real Estate Portfolio Segment [Member]
Total past due
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member]
Total past due	1,054	464
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer and Other Portfolio Segment [Member]
Total past due	41	52
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	2,961	2,759
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Total past due	351	393
Current past due	21,610	18,850
Total loans, gross	21,961	19,243	$ 20,140
Recorded investment >90 days past due and accruing
Commercial Portfolio Segment [Member]
Total past due	442	161
Current past due	94,384	84,277
Total loans, gross	94,826	84,438	85,974
Recorded investment >90 days past due and accruing	32	4
Commercial Real Estate Portfolio Segment [Member]
Total past due	3,537	4,547
Current past due	251,103	238,673
Total loans, gross	254,640	243,220	248,980
Recorded investment >90 days past due and accruing
Construction Real Estate Portfolio Segment [Member]
Total past due
Current past due	17,772	15,919
Total loans, gross	17,772	15,919	14,674
Recorded investment >90 days past due and accruing
Residential Portfolio Segment [Member]
Total past due	3,053	2,943
Current past due	214,199	211,046
Total loans, gross	217,252	213,989	215,771
Recorded investment >90 days past due and accruing
Consumer and Other Portfolio Segment [Member]
Total past due	49	263
Current past due	49,309	40,236
Total loans, gross	49,358	40,499	38,270
Recorded investment >90 days past due and accruing
Total past due	7,432	8,307
Current past due	648,377	609,001
Total loans, gross	655,809	617,308	$ 623,809
Recorded investment >90 days past due and accruing	$ 32	$ 4

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Note 5 - Allowance for Loan Losses - Non-accrual Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Non-accrual loans	$ 113	$ 565
Commercial Portfolio Segment [Member]
Non-accrual loans	156	148
Commercial Real Estate Portfolio Segment [Member]
Non-accrual loans	3,577	4,823
Construction Real Estate Portfolio Segment [Member]
Non-accrual loans	35	46
Residential Portfolio Segment [Member]
Non-accrual loans	2,525	2,915
Consumer and Other Portfolio Segment [Member]
Non-accrual loans	139	136
Non-accrual loans	$ 6,545	$ 8,633

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Note 5 - Allowance for Loan Losses - Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Recorded investment - without allowance	$ 1,003		$ 1,003
Unpaid principal balance - without allowance	1,202		1,202
Average recorded investment - without allowance	1,017		1,024	$ 1
Interest income recognized without allowance	11	2	36	6
Recorded investment - with allowance	248		248		882
Unpaid principal balance - with allowance	247		247		885
Related allowance	5		5		240
Average recorded investment - with allowance	248	1,214	249	1,230
Interest income recognized with allowance	3	13	10	35
Impaired Loans	1,251		1,251		882
Unpaid principal balance	1,449		1,449		885
Average recorded investment	1,265	1,214	1,273	1,231
Interest income recognized	14	15	46	41
Commercial Portfolio Segment [Member]
Recorded investment - without allowance	146		146		63
Unpaid principal balance - without allowance	197		197		113
Average recorded investment - without allowance	152	56	157	64
Interest income recognized without allowance	2	1	8	3
Recorded investment - with allowance	571		571		895
Unpaid principal balance - with allowance	581		581		916
Related allowance	340		340		672
Average recorded investment - with allowance	651	1,279	729	1,338
Interest income recognized with allowance	7	14	24	47
Impaired Loans	717		717		958
Unpaid principal balance	778		778		1,029
Average recorded investment	803	1,335	886	1,402
Interest income recognized	9	15	32	50
Commercial Real Estate Portfolio Segment [Member]
Recorded investment - without allowance	5,209		5,209		7,701
Unpaid principal balance - without allowance	5,575		5,575		8,107
Average recorded investment - without allowance	5,390	8,919	5,456	9,031
Interest income recognized without allowance	49	85	152	275
Recorded investment - with allowance	4,222		4,222		5,697
Unpaid principal balance - with allowance	4,435		4,435		6,183
Related allowance	629		629		634
Average recorded investment - with allowance	4,431	9,686	4,590	9,755
Interest income recognized with allowance	45	96	153	302
Impaired Loans	9,431		9,431		13,398
Unpaid principal balance	10,010		10,010		14,290
Average recorded investment	9,821	18,605	10,046	18,786
Interest income recognized	94	181	305	577
Construction Real Estate Portfolio Segment [Member]
Recorded investment - without allowance	99		99		200
Unpaid principal balance - without allowance	132		132		233
Average recorded investment - without allowance	120	276	126	312
Interest income recognized without allowance	2	3	6	8
Recorded investment - with allowance	1,662		1,662		1,609
Unpaid principal balance - with allowance	1,662		1,662		1,609
Related allowance	255		255		277
Average recorded investment - with allowance	1,668	1,731	1,677	1,740
Interest income recognized with allowance	19	20	57	60
Impaired Loans	1,761		1,761		1,809
Unpaid principal balance	1,794		1,794		1,842
Average recorded investment	1,788	2,007	1,803	2,052
Interest income recognized	21	23	63	68
Residential Portfolio Segment [Member]
Recorded investment - without allowance	5,188		5,188		4,137
Unpaid principal balance - without allowance	5,486		5,486		4,359
Average recorded investment - without allowance	5,433	4,943	5,553	5,087
Interest income recognized without allowance	69	63	198	191
Recorded investment - with allowance	2,541		2,541		3,206
Unpaid principal balance - with allowance	2,590		2,590		3,310
Related allowance	347		347		506
Average recorded investment - with allowance	2,659	6,204	2,726	6,243
Interest income recognized with allowance	33	76	84	209
Impaired Loans	7,729		7,729		7,343
Unpaid principal balance	8,076		8,076		7,669
Average recorded investment	8,092	11,147	8,279	11,330
Interest income recognized	102	139	282	400
Consumer and Other Portfolio Segment [Member]
Recorded investment - without allowance	33		33		26
Unpaid principal balance - without allowance	33		33		26
Average recorded investment - without allowance	34	34	36	37
Interest income recognized without allowance	1	1	2	4
Recorded investment - with allowance	454		454		470
Unpaid principal balance - with allowance	475		475		468
Related allowance	187		187		223
Average recorded investment - with allowance	457	500	465	509
Interest income recognized with allowance	5	6	17	17
Impaired Loans	487		487		496
Unpaid principal balance	508		508		$ 494
Average recorded investment	491	534	501	546
Interest income recognized	$ 6	$ 7	$ 19	$ 21

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Note 5 - Allowance for Loan Losses - Troubled Debt Restructurings (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)
Agriculture and Agricultural Real Estate Loans Portfolio Segment [Member]
Number of contracts		3	1	3
Pre-modification recorded principal balance		$ 325	$ 362	$ 325
Post-modification recorded principal balance		$ 324	$ 361	$ 324
Commercial Portfolio Segment [Member]
Number of contracts	1		1	1
Pre-modification recorded principal balance	$ 250		$ 250	$ 66
Post-modification recorded principal balance	$ 250		$ 250	$ 64
Commercial Real Estate Portfolio Segment [Member]
Number of contracts	1		1	3
Pre-modification recorded principal balance	$ 215		$ 215	$ 684
Post-modification recorded principal balance	$ 215		$ 215	$ 636
Construction Real Estate Portfolio Segment [Member]
Number of contracts
Pre-modification recorded principal balance
Post-modification recorded principal balance
Residential Portfolio Segment [Member]
Number of contracts	2		9	7
Pre-modification recorded principal balance	$ 242		$ 693	$ 581
Post-modification recorded principal balance	$ 241		$ 653	$ 523
Consumer and Other Portfolio Segment [Member]
Number of contracts			1
Pre-modification recorded principal balance			$ 57
Post-modification recorded principal balance			$ 55
Number of contracts	4	3	13	14
Pre-modification recorded principal balance	$ 707	$ 325	$ 1,577	$ 1,656
Post-modification recorded principal balance	$ 706	$ 324	$ 1,534	$ 1,547

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Note 6 - Investment Securities (Details Textual)	9 Months Ended
	Sep. 30, 2016 USD ($)	Dec. 31, 2015
Other than Temporary Impairment Losses, Investments	$ 0
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	96	146

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Note 6 - Investment Securities - Held to Maturity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
US States and Political Subdivisions Debt Securities [Member]
Securities - Held to Maturity	$ 42,185	$ 40,782
Held to maturity, gross unrealized gains	1,746	1,333
Held to maturity, gross unrealized losses	(38)	(178)
Held to Maturity Securities	43,893	41,937
Corporate Debt Securities [Member]
Securities - Held to Maturity	500	500
Held to maturity, gross unrealized gains	3
Held to maturity, gross unrealized losses
Held to Maturity Securities	503	500
Securities - Held to Maturity	42,685	41,282
Held to maturity, gross unrealized gains	1,749	1,333
Held to maturity, gross unrealized losses	(38)	(178)
Held to Maturity Securities	$ 44,396	$ 42,437

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Note 6 - Investment Securities - Available for Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
US Treasury and Government [Member]
Available for sale securities, amortized cost	$ 247,783	$ 370,469
Available for sale securities, gross unrealized gains	3,312	1,647
Available for sale securities, gross unrealized losses	(285)	(3,055)
Available for Sale Securities	250,810	369,061
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for sale securities, amortized cost	153,492	104,472
Available for sale securities, gross unrealized gains	663	107
Available for sale securities, gross unrealized losses	(651)	(1,327)
Available for Sale Securities	153,504	103,252
US States and Political Subdivisions Debt Securities [Member]
Available for sale securities, amortized cost	25,068	17,212
Available for sale securities, gross unrealized gains	261	305
Available for sale securities, gross unrealized losses	(21)	(48)
Available for Sale Securities	25,308	17,469
Other Debt Obligations [Member]
Available for sale securities, amortized cost	33,397
Available for sale securities, gross unrealized gains	426
Available for sale securities, gross unrealized losses
Available for Sale Securities	33,823
Corporate Debt Securities [Member]
Available for sale securities, amortized cost		5,000
Available for sale securities, gross unrealized gains
Available for sale securities, gross unrealized losses		(50)
Available for Sale Securities		4,950
Equity Securities [Member]
Available for sale securities, amortized cost	2,044	2,044
Available for sale securities, gross unrealized gains	121	83
Available for sale securities, gross unrealized losses
Available for Sale Securities	2,165	2,127
Available for sale securities, amortized cost	461,784	499,197
Available for sale securities, gross unrealized gains	4,783	2,142
Available for sale securities, gross unrealized losses	(957)	(4,480)
Available for Sale Securities	$ 465,610	$ 496,859

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Note 6 - Investment Securities - Amortized Cost and Estimated Market Values of Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Contractual maturity in
1 year or less, amortized cost	$ 9,925
1 year or less, estimated market value	9,938
1 year or less, amortized cost	3,844
1 year or less, estimated market value	3,844
After 1 year through five years, amortized cost	21,406
After 1 year through five years, estimated market value	21,890
After 1 year through five years, amortized cost	130,791
After 1 year through five years, estimated market value	132,281
After 5 years through 10 years, amortized cost	9,347
After 5 years through 10 years, estimated market value	10,273
After 5 years through 10 years, amortized cost	171,613
After 5 years through 10 years, estimated market value	173,816
After 10 years, amortized cost	2,007
After 10 years, estimated market value	2,295
After 10 years, amortized cost
After 10 years, estimated market value
Total, amortized cost	42,685
Total, estimated market value	44,396
Total, amortized cost	306,248
Total, estimated market value	309,941
Mortgage Backed Securities, amortized cost
Mortgage Backed Securities
Mortgage Backed Securities, amortized cost	153,492
Mortgage Backed Securities, estimated market value	153,504
Securities with no stated maturity, amortized cost
Securities with no stated maturity, estimated market value
Securities with no stated maturity, amortized cost	2,044
Securities with no stated maturity	2,165
Total, amortized cost	42,685	$ 41,282
Total, estimated market value	44,396	$ 42,437
Total, amortized cost	461,784
Total, estimated market value	$ 465,610

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Note 6 - Investment Securities - Securities in Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
US Treasury and Government [Member]
Less than 12 months, aggregate fair value	$ 69,230	$ 170,178
Less than 12 months, gross unrealized losses	285	2,367
12 months or longer, aggregate fair value		53,497
12 months or longer, gross unrealized losses		688
Total, aggregate fair value	69,230	223,675
Total, gross unrealized losses	285	3,055
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Less than 12 months, aggregate fair value	69,646	57,949
Less than 12 months, gross unrealized losses	341	633
12 months or longer, aggregate fair value	25,840	31,118
12 months or longer, gross unrealized losses	310	694
Total, aggregate fair value	95,486	89,067
Total, gross unrealized losses	651	1,327
US States and Political Subdivisions Debt Securities [Member]
Less than 12 months, aggregate fair value	15,846	10,830
Less than 12 months, gross unrealized losses	48	165
12 months or longer, aggregate fair value	3,563	5,324
12 months or longer, gross unrealized losses	11	61
Total, aggregate fair value	19,409	16,154
Total, gross unrealized losses	59	226
Corporate Debt Securities [Member]
Less than 12 months, aggregate fair value		4,950
Less than 12 months, gross unrealized losses		50
12 months or longer, aggregate fair value
12 months or longer, gross unrealized losses
Total, aggregate fair value		4,950
Total, gross unrealized losses		50
Less than 12 months, aggregate fair value	154,722	243,907
Less than 12 months, gross unrealized losses	674	3,215
12 months or longer, aggregate fair value	29,403	89,939
12 months or longer, gross unrealized losses	321	1,443
Total, aggregate fair value	184,125	333,846
Total, gross unrealized losses	$ 995	$ 4,658

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Note 7 - Fair Value of Financial Instruments (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure	$ 0		$ 0
Proceeds from Sale of Available-for-sale Securities	0
Payments to Acquire Available-for-sale Securities	0
Proceeds from Sale of Available-for-sale Securities	33,144,000	$ 29,327,000
Payments to Acquire Available-for-sale Securities	$ 291,898,000	$ 162,680,000

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Note 7 - Fair Value of Financial Instruments - Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Reported Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Held to Maturity Securities	$ 42,185	$ 40,782
Available for Sale Securities	25,308	17,469
Reported Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member]
Held to Maturity Securities	500	500
Available for Sale Securities		4,950
Reported Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | US Treasury and Government [Member]
Available for Sale Securities	250,810	369,061
Reported Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for Sale Securities	153,504
Reported Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Backed Securities [Member]
Available for Sale Securities		103,252
Reported Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Other Debt Obligations [Member]
Available for Sale Securities	33,823
Reported Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Equity Securities [Member]
Available for Sale Securities	2,165	2,127
Reported Value Measurement [Member] | Fair Value, Measurements, Recurring [Member]
Cash and due from banks	60,901	79,550
Time Deposits in Other Banks	19,196	5,500
Federal Home Loan Bank Stock	4,148	4,148
Loans Held for Sale	636	1,477
Loans, net	646,404	606,412
Accrued Interest Receivable	4,626	4,170
Noninterest Bearing Deposits	285,764	253,795
Interest Bearings Deposits	894,697	911,598
Accrued Interest Payable	54	108
Repurchase Agreements		15,000
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | US States and Political Subdivisions Debt Securities [Member]
Held to Maturity Securities
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Corporate Debt Securities [Member]
Held to Maturity Securities
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | US Treasury and Government [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Collateralized Mortgage Backed Securities [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Other Debt Obligations [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member]
Available for Sale Securities	2,165	2,127
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and due from banks	60,901	79,550
Time Deposits in Other Banks
Federal Home Loan Bank Stock
Loans Held for Sale
Loans, net
Accrued Interest Receivable
Noninterest Bearing Deposits	285,764	253,795
Interest Bearings Deposits
Accrued Interest Payable
Repurchase Agreements
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member]
Held to Maturity Securities	3,453	3,805
Available for Sale Securities	25,308	17,469
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Corporate Debt Securities [Member]
Held to Maturity Securities	503	500
Available for Sale Securities		4,950
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US Treasury and Government [Member]
Available for Sale Securities	250,810	369,061
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for Sale Securities	153,504
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Collateralized Mortgage Backed Securities [Member]
Available for Sale Securities		103,252
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Other Debt Obligations [Member]
Available for Sale Securities	33,823
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Equity Securities [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Cash and due from banks
Time Deposits in Other Banks	19,216	4,965
Federal Home Loan Bank Stock	4,148	4,148
Loans Held for Sale
Loans, net
Accrued Interest Receivable
Noninterest Bearing Deposits
Interest Bearings Deposits	896,271	913,410
Accrued Interest Payable
Repurchase Agreements		15,253
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | US States and Political Subdivisions Debt Securities [Member]
Held to Maturity Securities	40,440	38,132
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Corporate Debt Securities [Member]
Held to Maturity Securities
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | US Treasury and Government [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Collateralized Mortgage Backed Securities [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Other Debt Obligations [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Equity Securities [Member]
Available for Sale Securities
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Cash and due from banks
Time Deposits in Other Banks	250	500
Federal Home Loan Bank Stock
Loans Held for Sale	651	1,508
Loans, net	649,049	613,397
Accrued Interest Receivable	4,626	4,170
Noninterest Bearing Deposits
Interest Bearings Deposits
Accrued Interest Payable	54	108
Repurchase Agreements
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Held to Maturity Securities	43,893	41,937
Available for Sale Securities	25,308	17,469
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member]
Held to Maturity Securities	503	500
Available for Sale Securities		4,950
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | US Treasury and Government [Member]
Available for Sale Securities	250,810	369,061
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for Sale Securities	153,504
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Backed Securities [Member]
Available for Sale Securities		103,252
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Other Debt Obligations [Member]
Available for Sale Securities	33,823
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Equity Securities [Member]
Available for Sale Securities	2,165	2,127
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member]
Cash and due from banks	60,901	79,550
Time Deposits in Other Banks	19,466	5,465
Federal Home Loan Bank Stock	4,148	4,148
Loans Held for Sale	651	1,508
Loans, net	649,049	613,397
Accrued Interest Receivable	4,626	4,170
Noninterest Bearing Deposits	285,764	253,795
Interest Bearings Deposits	896,271	913,410
Accrued Interest Payable	54	108
Repurchase Agreements		15,253
US States and Political Subdivisions Debt Securities [Member]
Held to Maturity Securities	43,893	41,937
Available for Sale Securities	25,308	17,469
Corporate Debt Securities [Member]
Held to Maturity Securities	503	500
Available for Sale Securities		4,950
US Treasury and Government [Member]
Available for Sale Securities	250,810	369,061
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for Sale Securities	153,504	103,252
Other Debt Obligations [Member]
Available for Sale Securities	33,823
Equity Securities [Member]
Available for Sale Securities	2,165	2,127
Time Deposits in Other Banks	19,196	5,500
Held to Maturity Securities	44,396	42,437
Available for Sale Securities	$ 465,610	$ 496,859

XML

Note 7 - Fair Value of Financial Instruments - Assets Measure at Fair Value on a Nonrecurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Impaired Loans
Other real estate owned
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Impaired Loans
Other real estate owned
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired Loans	19,613	22,334
Other real estate owned	1,686	2,383
Other real estate owned	$ 1,686	$ 2,383

XML

Note 8 - Financial Instruments with Off-balance Sheet Risk (Details Textual)	9 Months Ended
	Sep. 30, 2016
Home Equity Line of Credit [Member]
Line of Credit Facility, Expiration Period	10 years

XML

Note 8 - Financial Instruments with Off-balance Sheet Risk - Off-balance Sheet Credit Risk Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Commitments to Extend Credit - Commercial Lines of Credit [Member]
Off-balance sheet credit risks	$ 71,404	$ 70,488
Commitments to Extend Credit - Credit Card Lines of Credit [Member]
Off-balance sheet credit risks	4,323	4,396
Commitments to Extend Credit - Home Equity Lines of Credit [Member]
Off-balance sheet credit risks	24,925	23,164
Standby Letters of Credit and Financial Guarantees [Member]
Off-balance sheet credit risks	1,582	1,555
All Other Off-Balance Sheet Commitments [Member]
Off-balance sheet credit risks