10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 0-33203

LANDMARK BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware	43-1930755
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

701 Poyntz Avenue, Manhattan, Kansas      66502

(Address of principal executive offices)     (Zip code)

(785) 565-2000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: as of August 4, 2016, the issuer had outstanding 3,638,060 shares of its common stock, $.01 par value per share.

LANDMARK BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

		Page Number
	PART I
Item 1.	Financial Statements	2 - 25
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26 – 35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35 – 36
Item 4.	Controls and Procedures	37
	PART II
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
	Signature Page	39

1

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)	June 30,		December 31,
	2016		2015
	(Unaudited)
Assets
Cash and cash equivalents	$	14,317	$	13,569
Investment securities available-for-sale, at fair value		366,550		353,438
Bank Stocks, at cost		4,622		4,497
Loans, net of allowance for loans losses of $5,652 and $5,922		430,064		419,923
Loans held for sale, net		10,057		14,465
Premises and equipment, net		20,760		20,958
Bank owned life insurance		18,078		18,164
Goodwill		17,532		17,532
Other intangible assets, net		4,148		4,304
Real estate owned, net		718		1,000
Accrued interest and other assets		9,476		10,526
Total assets	$	896,322	$	878,376
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing demand	$	151,049	$	143,616
Money market and checking		328,816		346,106
Savings		87,106		81,062
Time		148,650		143,943
Total deposits		715,621		714,727
Federal Home Loan Bank borrowings		48,000		37,600
Subordinated debentures		21,184		21,084
Other borrowings		11,527		11,974
Accrued interest, taxes, and other liabilities		10,623		12,421
Total liabilities		806,955		797,806
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 200,000 shares authorized; none issued		-		-
Common stock, $0.01 par value per share, 7,500,000 shares authorized; 3,620,669 and 3,531,036 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively		36		35
Additional paid-in capital		46,763		45,372
Retained earnings		36,073		32,988
Accumulated other comprehensive income		6,495		2,175
Total stockholders’ equity		89,367		80,570
Total liabilities and stockholders’ equity	$	896,322	$	878,376

See accompanying notes to consolidated financial statements.

2

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30,				June 30,
	2016		2015		2016		2015
Interest income:
Loans:
Taxable	$	5,285	$	5,436	$	10,420	$	10,556
Tax-exempt		60		75		127		143
Investment securities:
Taxable		1,171		1,146		2,335		2,343
Tax-exempt		856		736		1,664		1,414
Total interest income		7,372		7,393		14,546		14,456
Interest expense:
Deposits		287		272		564		550
Borrowings		523		497		1,016		988
Total interest expense		810		769		1,580		1,538
Net interest income		6,562		6,624		12,966		12,918
Provision for loan losses		300		200		350		(800	)
Net interest income after provision for loan losses		6,262		6,424		12,616		13,718
Non-interest income:
Fees and service charges		1,847		1,813		3,576		3,495
Gains on sales of loans, net		1,405		2,251		3,199		4,194
Bank owned life insurance		145		123		265		245
Gains (losses) on sales of investment securities, net		285		-		297		(254	)
Other		266		495		505		765
Total non-interest income		3,948		4,682		7,842		8,445
Non-interest expense:
Compensation and benefits		3,777		3,845		7,578		7,566
Occupancy and equipment		1,055		1,059		2,111		2,130
Amortization of intangibles		331		346		668		681
Data processing		346		342		657		689
Professional fees		282		259		501		493
Advertising		166		125		332		249
Federal deposit insurance premiums		110		105		220		224
Foreclosure and real estate owned expense		51		20		116		45
Other		1,093		1,342		2,190		2,477
Total non-interest expense		7,211		7,443		14,373		14,554
Earnings before income taxes		2,999		3,663		6,085		7,609
Income tax expense		754		1,047		1,563		2,216
Net earnings	$	2,245	$	2,616	$	4,522	$	5,393
Earnings per share:
Basic (1)	$	0.62	$	0.75	$	1.26	$	1.54
Diluted (1)	$	0.61	$	0.72	$	1.24	$	1.50
Dividends per share (1)	$	0.20	$	0.18	$	0.40	$	0.36

(1) Per share amounts for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

See accompanying notes to consolidated financial statements.

3

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three months ended						Six months ended
(Dollars in thousands)	June 30,						June 30,
	2016			2015			2016			2015
Net earnings	$	2,245		$	2,616		$	4,522		$	5,393
Net unrealized holding gains (losses) on available-for-sale securities		3,771			(3,235	)		7,161			(1,322	)
Reclassification adjustment for net (gains) losses included in earnings		(285	)		-			(297	)		254
Net unrealized gains (losses)		3,486			(3,235	)		6,864			(1,068	)
Income tax effect on net (gains) losses included in earnings		105			-			110			(94	)
Income tax effect on net unrealized holding (gains) losses		(1,396	)		1,201			(2,654	)		493
Other comprehensive income (loss)		2,195			(2,034	)		4,320			(669	)
Total comprehensive income	$	4,440		$	582		$	8,842		$	4,724

See accompanying notes to consolidated financial statements.

4

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share amounts)	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Total
Balance at January 1, 2015	$	33	$	40,473	$	29,321		$	1,818		$	71,645
Net earnings		-		-		5,393			-			5,393
Other comprehensive loss		-		-		-			(669	)		(669	)
Dividends paid ($0.36 per share)		-		-		(1,268	)		-			(1,268	)
Stock-based compensation		-		16		-			-			16
Exercise of stock options, 4,181 shares, including excess tax benefit of $5		-		79		-			-			79
Balance at June 30, 2015	$	33	$	40,568	$	33,446		$	1,149		$	75,196
Balance at January 1, 2016	$	35	$	45,372	$	32,988		$	2,175		$	80,570
Net earnings		-		-		4,522			-			4,522
Other comprehensive income		-		-		-			4,320			4,320
Dividends paid ($0.40 per share)		-		-		(1,437	)		-			(1,437	)
Exercise of stock options, 89,633 shares, including excess tax benefit of $197		1		1,391		-			-			1,392
Balance at June 30, 2016	$	36	$	46,763	$	36,073		$	6,495		$	89,367

See accompanying notes to consolidated financial statements.

5

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six months ended
(Dollars in thousands)	June 30,
	2016			2015
Cash flows from operating activities:
Net earnings	$	4,522		$	5,393
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses		350			(800	)
Amortization of investment security premiums, net		818			767
Amortization of purchase accounting adjustment on loans		(57	)		(362	)
Amortization of purchase accounting adjustment on subordinated debentures		100			100
Amortization of intangibles		668			681
Depreciation		581			577
Increase in cash surrender value of bank owned life insurance		(265	)		(245	)
Stock-based compensation		-			16
Deferred income taxes		229			215
Net (gains) losses on sales of investment securities		(297	)		254
Impairment of affordable housing investment		-			163
Net loss (gain) on sales of premises, equipment and real estate owned		72			(236	)
Net gains on sales of loans		(3,199	)		(4,194	)
Proceeds from sales of loans		121,551			148,064
Origination of loans held for sale		(113,944	)		(151,326	)
Changes in assets and liabilities:
Accrued interest and other assets		(1,536	)		(1,534	)
Accrued expenses, taxes, and other liabilities		(2,538	)		(1,237	)
Net cash provided by (used in) operating activities		7,055			(3,704	)
Cash flows from investing activities:
Net increase in loans		(10,932	)		(3,659	)
Maturities and prepayments of investment securities		23,429			34,411
Purchases of investment securities		(43,815	)		(62,094	)
Proceeds from sales of investment securities		13,617			19,069
Redemption of bank stocks		3,009			4,769
Purchase of bank stocks		(3,134	)		(5,951	)
Proceeds from sales of premises and equipment and foreclosed assets		749			219
Proceeds from bank owned life insurance		351			-
Purchases of premises and equipment, net		(386	)		(509	)
Net cash used in investing activities		(17,112	)		(13,745	)
Cash flows from financing activities:
Net increase (decrease) in deposits		897			(5,005	)
Federal Home Loan Bank advance borrowings		156,291			131,251
Federal Home Loan Bank advance repayments		(145,891	)		(103,945	)
Proceeds from other borrowings		-			1,400
Repayments on other borrowings		(447	)		(2,688	)
Proceeds from exercise of stock options, including excess tax benefit		1,392			79
Payment of dividends		(1,437	)		(1,268	)
Net cash provided by financing activities		10,805			19,824
Net increase in cash and cash equivalents		748			2,375
Cash and cash equivalents at beginning of period		13,569			12,760
Cash and cash equivalents at end of period	$	14,317		$	15,135

(Continued)

6

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Unaudited)

	Six months ended
(Dollars in thousands)	June 30,
	2016		2015
Supplemental disclosure of cash flow information:
Cash payments for income taxes	$	500	$	1,890
Cash paid for interest		1,599		1,551
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to real estate owned		536		24
Investment securities purchases not yet settled		-		(2,817	)

See accompanying notes to consolidated financial statements.

7

LANDMARK BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Interim Financial Statements

The unaudited consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and subsidiary have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles ("GAAP") for complete financial statements and should be read in conjunction with the Company’s most recent annual report on Form 10-K, containing the latest audited consolidated financial statements and notes thereto. The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements have been reflected herein. The results of the six months ended June 30, 2016 are not necessarily indicative of the results expected for the year ending December 31, 2016 or for any other period. The Company has evaluated subsequent events for recognition and disclosure up to the date the financial statements were issued.

2. Investments

A summary of investment securities available-for-sale is as follows:

	As of June 30, 2016
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. treasury securities	$	6,011	$	38	$	-		$	6,049
U. S. federal agency obligations		27,721		269		(5	)		27,985
Municipal obligations, tax exempt		150,554		5,203		(22	)		155,735
Municipal obligations, taxable		71,998		2,268		-			74,266
Agency mortgage-backed securities		89,731		1,781		(11	)		91,501
Common stocks		562		752		-			1,314
Certificates of deposit		9,700		-		-			9,700
Total	$	356,277	$	10,311	$	(38	)	$	366,550

	As of December 31, 2015
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. treasury securities	$	6,517	$	1	$	(1	)	$	6,517
U. S. federal agency obligations		30,064		43		(187	)		29,920
Municipal obligations, tax exempt		135,341		2,671		(71	)		137,941
Municipal obligations, taxable		81,999		472		(581	)		81,890
Agency mortgage-backed securities		85,829		391		(235	)		85,985
Common stocks		580		906		-			1,486
Certificates of deposit		9,699		-		-			9,699
Total	$	350,029	$	4,484	$	(1,075	)	$	353,438

8

The tables above show that some of the securities in the available-for-sale investment portfolio had unrealized losses, or were temporarily impaired, as of June 30, 2016 and December 31, 2015. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

			As of June 30, 2016
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U.S. federal agency obligations		1	$	-	$	-		$	3,200	$	(5	)	$	3,200	$	(5	)
Municipal obligations, tax exempt		20		4,313		(20	)		626		(2	)		4,939		(22	)
Agency mortgage-backed securities		12		645		(1	)		1,907		(10	)		2,552		(11	)
Total		33	$	4,958	$	(21	)	$	5,733	$	(17	)	$	10,691	$	(38	)

			As of December 31, 2015
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U.S. treasury securities		2	$	3,542	$	(1	)	$	-	$	-		$	3,542	$	(1	)
U. S. federal agency obligations		18		23,015		(163	)		1,976		(24	)		24,991		(187	)
Municipal obligations, tax exempt		47		11,328		(53	)		2,132		(18	)		13,460		(71	)
Municipal obligations, taxable		105		38,605		(494	)		5,068		(87	)		43,673		(581	)
Agency mortgage-backed securities		40		29,814		(166	)		2,925		(69	)		32,739		(235	)
Total		212	$	106,304	$	(877	)	$	12,101	$	(198	)	$	118,405	$	(1,075	)

The Company’s U.S. federal agency portfolio consists of securities issued by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Bank (“FHLB”). The receipt of principal and interest on U.S. federal agency obligations is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its U.S. federal agency obligations do not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the U.S. federal agency obligations identified in the tables above were temporarily impaired as of the date of the respective table.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of June 30, 2016, the Company did not intend to sell and it was more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of their costs. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired as of the date of the respective table.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of FHLMC, FNMA and the Government National Mortgage Association (“GNMA”). The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the tables above were temporarily impaired as of the date of the respective table.

9

The table below of the amortized cost and estimated fair value of investment securities includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties. The amortized cost and fair value of investment securities at June 30, 2016 are as follows:

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	17,508	$	17,598
Due after one year but within five years		180,166		182,762
Due after five years but within ten years		88,657		92,255
Due after ten years		69,384		72,621
Common stocks		562		1,314
Total	$	356,277	$	366,550

Sales proceeds and gross realized gains and losses on sales of available-for-sale securities are as follows:

(Dollars in thousands)	Three months ended June 30,					Six months ended June 30,
	2016			2015		2016			2015
Sales proceeds	$	11,801		$	-	$	13,617		$	19,069
Realized gains	$	296		$	-	$	312		$	24
Realized losses		(11	)		-		(15	)		(278	)
Net realized losses	$	285		$	-	$	297		$	(254	)

Securities with carrying values of $201.8 million and $171.6 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at June 30, 2016 and December 31, 2015, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.

3. Loans and Allowance for Loan Losses

Loans consisted of the following as of the dates indicated below:

	June 30,			December 31,
(Dollars in thousands)	2016			2015
One-to-four family residential real estate	$	130,753		$	131,930
Construction and land		18,381			15,043
Commercial real estate		119,147			118,983
Commercial loans		62,120			61,300
Agriculture loans		78,817			71,030
Municipal loans		7,263			7,635
Consumer loans		19,203			19,895
Total gross loans		435,684			425,816
Net deferred loan costs and loans in process		32			29
Allowance for loan losses		(5,652	)		(5,922	)
Loans, net	$	430,064		$	419,923

10

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class:

	Three and six months ended June 30, 2016
(Dollars in thousands)	One-to-four family residential real estate			Construction and land		Commercial real estate			Commercial loans			Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for loan losses:
Balance at April 1, 2016	$	864		$	82	$	1,831		$	1,384		$	1,483		$	24		$	201		$	5,869
Charge-offs		-			-		-			(306	)		(83	)		-			(148	)		(537	)
Recoveries		3			-		-			1			-			6			10			20
Provision for loan losses		(283	)		7		(55	)		314			200			(7	)		124			300
Balance at June 30, 2016		584			89		1,776			1,393			1,600			23			187			5,652
Balance at January 1, 2016	$	925		$	77	$	1,740		$	1,530		$	1,428		$	23		$	199		$	5,922
Charge-offs		-			-		-			(306	)		(83	)		-			(285	)		(674	)
Recoveries		5			-		-			20			-			6			23			54
Provision for loan losses		(346	)		12		36			149			255			(6	)		250			350
Balance at June 30, 2016		584			89		1,776			1,393			1,600			23			187			5,652

	Three and six months ended June 30, 2015
(Dollars in thousands)	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial loans			Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for loan losses:
Balance at April 1, 2015	$	1,386		$	103		$	1,600		$	1,515		$	1,104		$	25		$	172		$	5,905
Charge-offs		(9	)		-			-			(10	)		-			-			(88	)		(107	)
Recoveries		3			4			2			2			-			-			8			19
Provision for loan losses		(55	)		(9	)		(63	)		249			(2	)		(4	)		84			200
Balance at June 30, 2015		1,325			99			1,539			1,756			1,102			21			176			6,018
Balance at January 1, 2015	$	755		$	762		$	1,832		$	836		$	915		$	51		$	169		$	5,320
Charge-offs		(9	)		-			-			(10	)		-			(88	)		(142	)		(249	)
Recoveries		5			1,719			2			3			-			-			18			1,747
Provision for loan losses		574			(2,382	)		(295	)		927			187			58			131			(800	)
Balance at June 30, 2015		1,325			99			1,539			1,756			1,102			21			176			6,018

11

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class and allowance methodology:

	As of June 30, 2016
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Individually evaluated for loss		19		-		-		13		206		-		7		245
Collectively evaluated for loss		565		89		1,776		1,380		1,394		23		180		5,407
Total		584		89		1,776		1,393		1,600		23		187		5,652
Loan balances:
Individually evaluated for loss		1,106		2,061		2,417		127		879		393		102		7,085
Collectively evaluated for loss		129,647		16,320		116,730		61,993		77,938		6,870		19,101		428,599
Total	$	130,753	$	18,381	$	119,147	$	62,120	$	78,817	$	7,263	$	19,203	$	435,684

	As of December 31, 2015
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Individually evaluated for loss		78		-		-		-		-		-		10		88
Collectively evaluated for loss		847		77		1,740		1,530		1,428		23		189		5,834
Total		925		77		1,740		1,530		1,428		23		199		5,922
Loan balances:
Individually evaluated for loss		752		2,220		2,429		620		189		591		36		6,837
Collectively evaluated for loss		131,178		12,823		116,554		60,680		70,841		7,044		19,859		418,979
Total	$	131,930	$	15,043	$	118,983	$	61,300	$	71,030	$	7,635	$	19,895	$	425,816

The Company recorded net loan charge-offs of $620,000 during the first six months of 2016 compared to net loan recoveries of $1.5 million during the first six months of 2015. The net loan charge-offs during the first six months of 2016 were primarily related to the liquidation of the assets securing a previously identified and impaired commercial loan. The charge-off associated with this commercial loan exceeded the related allowance recorded at March 31, 2016, which contributed to provision for loan losses during the second quarter of 2016. The net loan recoveries during 2015 were primarily associated with the recovery of $1.7 million on a $4.3 million construction loan which was fully charged-off during 2010 and 2011. As of June 30, 2016, the Company has recovered approximately $2.4 million of the loan and continues to pursue collection of the remaining amount.

The Company’s impaired loans increased from $6.8 million at December 31, 2015 to $7.1 million at June 30, 2016. The difference between the unpaid contractual principal and the impaired loan balance is a result of charge-offs recorded against impaired loans. The difference in the Company’s non-accrual loan balances and impaired loan balances at June 30, 2016 and December 31, 2015, was related to troubled debt restructurings (“TDR”) that are current and accruing interest, but still classified as impaired. Interest income recognized on a cash basis was immaterial during the six months ended June 30, 2016 and 2015. The following tables present information on impaired loans:

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(Dollars in thousands)	As of June 30, 2016
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to- date average loan balance		Year-to- date interest income recognized
One-to-four family residential real estate	$	1,106	$	1,106	$	502	$	604	$	19	$	1,117	$	4
Construction and land		3,796		2,061		2,061		-		-		2,137		38
Commercial real estate		2,417		2,417		2,417		-		-		2,426		253
Commercial loans		127		127		75		52		13		148		1
Agriculture loans		879		879		225		654		206		918		1
Municipal loans		393		393		393		-		-		514		8
Consumer loans		102		102		86		16		7		106		-
Total impaired loans	$	8,820	$	7,085	$	5,759	$	1,326	$	245	$	7,366	$	305

(Dollars in thousands)	As of December 31, 2015
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to- date average loan balance		Year-to- date interest income recognized
One-to-four family residential real estate	$	752	$	752	$	408	$	344	$	78	$	1,041	$	-
Construction and land		3,955		2,220		2,220		-		-		2,389		88
Commercial real estate		2,429		2,429		2,429		-		-		2,484		175
Commercial loans		637		620		620		-		-		634		3
Agriculture loans		189		189		189		-		-		188		3
Municipal loans		591		591		591		-		-		631		19
Consumer loans		36		36		10		26		10		41		-
Total impaired loans	$	8,589	$	6,837	$	6,467	$	370	$	88	$	7,408	$	288

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans ninety days delinquent and accruing interest at December 31, 2015. The following tables present information on the Company’s past due and non-accrual loans by loan class:

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(Dollars in thousands)	As of June 30, 2016
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non- accrual loans			Total loans not past due
One-to-four family residential real estate	$	140		$	512		$	-		$	652		$	916		$	1,568		$	129,185
Construction and land		5			-			-			5			607			612			17,769
Commercial real estate		10			237			-			247			39			286			118,861
Commercial loans		-			-			-			-			96			96			62,024
Agriculture loans		174			30			218			422			834			1,256			77,561
Municipal loans		-			-			-			-			-			-			7,263
Consumer loans		82			23			-			105			102			207			18,996
Total	$	411		$	802		$	218		$	1,431		$	2,594		$	4,025		$	431,659
Percent of gross loans		0.09	%		0.18	%		0.05	%		0.32	%		0.60	%		0.92	%		99.08	%

(Dollars in thousands)	As of December 31, 2015
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non- accrual loans			Total loans not past due
One-to-four family residential real estate	$	70		$	712		$	-		$	782		$	749		$	1,531		$	130,399
Construction and land		4			-			-			4			614			618			14,425
Commercial real estate		240			-			-			240			47			287			118,696
Commercial loans		90			40			-			130			583			713			60,587
Agriculture loans		174			5			-			179			139			318			70,712
Municipal loans		-			-			-			-			-			-			7,635
Consumer loans		65			2			-			67			36			103			19,792
Total	$	643		$	759		$	-		$	1,402		$	2,168		$	3,570		$	422,246
Percent of gross loans		0.15	%		0.18	%		0.00	%		0.33	%		0.51	%		0.84	%		99.16	%

Under the original terms of the Company’s non-accrual loans, interest earned on such loans for the six months ended June 30, 2016 and 2015, would have increased interest income by $44,000 and $237,000, respectively. No interest income related to non-accrual loans was included in interest income for the six months ended June 30, 2016 and 2015.

The Company also categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Non-classified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those that are assigned a special mention, substandard or doubtful risk rating using the following definitions:

Special Mention: Loans are currently protected by the current net worth and paying capacity of the obligor or of the collateral pledged but such protection is potentially weak. These loans constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. The credit risk may be relatively minor, yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.

Substandard: Loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

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The following table provides information on the Company’s risk categories by loan class:

	As of June 30, 2016				As of December 31, 2015
(Dollars in thousands)	Nonclassified		Classified		Nonclassified		Classified
One-to-four family residential real estate	$	129,286	$	1,467	$	130,575	$	1,355
Construction and land		17,638		743		14,429		614
Commercial real estate		109,454		9,693		111,016		7,967
Commercial loans		58,875		3,245		58,862		2,438
Agriculture loans		72,179		6,638		68,186		2,844
Municipal loans		7,263		-		7,635		-
Consumer loans		19,084		119		19,839		56
Total		413,779		21,905		410,542		15,274

At June 30, 2016, the Company had ten loan relationships consisting of fourteen outstanding loans that were classified as TDRs. During the second quarter of 2016, the Company classified a $8,000 commercial loan as a TDR after modifying the payments to interest only. Also during the second quarter of 2016, the Company classified a $188,000 one-to-four family residential real estate loan as a TDR after agreeing to a loan modification which adjusted the payment schedule. Since all of the loans were adequately secured, no charge-offs or provisions for loan losses were recorded against the principal as of June 30, 2016. No loan modifications were classified as TDRs during the first quarter 2016. During the second quarter of 2015, the Company classified a commercial loan relationship consisting of $2.7 million in real estate and land loans as a TDR after agreeing to a bankruptcy plan with the borrower. The bankruptcy plan restarted the amortization period of the loans which extended the maturities of the loans. During the first quarter of 2015, the Company classified a $44,000 agriculture loan relationship consisting of two loans as a TDR after extending the maturity of the loans. During the first six months of 2016, a $56,000 one-to-four family residential real estate loan and a $25,000 agriculture loan, which were both classified as TDRs during 2015 were paid off.

The Company evaluates each TDR individually and returns the loan to accrual status when a payment history is established after the restructuring and future payments are reasonably assured. There were no loans modified as TDRs for which there was a payment default within 12 months of modification as of June 30, 2016 and 2015. At June 30, 2016, there was a commitment of $84,000 to lend additional funds on one construction and land loan classified as a TDR. The Company had no allowance recorded against loans classified as TDRs at June 30, 2016 or December 31, 2015.

The following table presents information on loans that are classified as TDRs:

(Dollars in thousands)
	As of June 30, 2016						As of December 31, 2015
	Number of loans		Non-accrual balance		Accruing balance		Number of loans		Non-accrual balance		Accruing balance
One-to-four family residential real estate		2	$	-	$	190		2	$	55	$	3
Construction and land		4		594		1,454		4		600		1,606
Commercial real estate		3		-		2,378		3		-		2,382
Commercial loans		2		-		31		1		-		37
Agriculture		1		-		45		2		-		50
Municipal loans		2		-		393		2		-		591
Total troubled debt restructurings		14	$	594	$	4,491		14	$	655	$	4,669

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4. Goodwill and Other Intangible Assets

The Company tests goodwill for impairment annually or more frequently if circumstances warrant. The Company’s annual step one impairment test as of December 31, 2015 concluded that its goodwill was not impaired. The Company concluded there were no triggering events during the first six months of 2016 that required an interim goodwill impairment test.

Lease intangible assets are amortized over the life of the lease. Core deposit intangible assets are amortized over the estimated useful life of ten years on an accelerated basis. A summary of the other intangible assets that continue to be subject to amortization is as follows:

(Dollars in thousands)	As of June 30, 2016
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	2,067	$	(1,000	)	$	1,067
Lease intangible asset		350		(120	)		230
Mortgage servicing rights		5,580		(2,729	)		2,851
Total other intangible assets	$	7,997	$	(3,849	)	$	4,148

(Dollars in thousands)	As of December 31, 2015
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	2,067	$	(855	)	$	1,212
Lease intangible asset		350		(98	)		252
Mortgage servicing rights		5,322		(2,482	)		2,840
Total other intangible assets	$	7,739	$	(3,435	)	$	4,304

The following sets forth estimated amortization expense for core deposit and lease intangible assets for the remainder of 2016 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2016	$	160
2017		289
2018		252
2019		214
2020		177
Thereafter		205
Total	$	1,297

Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others:

(Dollars in thousands)	June 30,		December 31,
	2016		2015
FHLMC	$	467,663	$	444,714
FHLB		12,685		14,039

Custodial escrow balances maintained in connection with serviced loans were $4.5 million and $3.5 million at June 30, 2016 and December 31, 2015, respectively. Gross service fee income related to such loans was $304,000 and $268,000 for the three months ended June 30, 2016 and 2015, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income related to such loans was $604,000 and $523,000 for the six months ended June 30, 2016 and 2015, respectively.

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Activity for mortgage servicing rights and the related valuation allowance follows:

(Dollars in thousands)	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Mortgage servicing rights:
Balance at beginning of period	$	2,808		$	2,557		$	2,840		$	2,477
Additions		291			408			512			710
Amortization		(248	)		(236	)		(501	)		(458	)
Balance at end of period	$	2,851		$	2,729		$	2,851		$	2,729

The fair value of mortgage servicing rights was $4.1 million and $4.6 million at June 30, 2016 and December 31, 2015, respectively. Fair value at June 30, 2016 was determined using discount rates ranging from 9.50% to 9.52%; prepayment speeds ranging from 6.14% to 14.98%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 2.16%. Fair value at December 31, 2015 was determined using discount rates ranging from 9.50% to 10.00%; prepayment speeds ranging from 5.15% to 33.78%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 2.25%.

The Company had a mortgage repurchase reserve of $361,000 and $351,000 at June 30, 2016 and December 31, 2015, respectively, which represents the Company’s best estimate of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. The Company did not incur any losses charged against the reserve or make any provisions to the reserve during the first six months of 2016 and 2015. The Company recovered $3,000 of losses during the three months ended June 30, 2016 and $10,000 of losses against the mortgage repurchase reserve during the six months ended June 30, 2016. As of June 30, 2016, the Company did not have any outstanding mortgage repurchase requests.

5. Earnings per Share

Basic earnings per share have been computed based upon the weighted average number of common shares outstanding during each period. Diluted earnings per share include the effect of all potential common shares outstanding during each period. The shares used in the calculation of basic and diluted earnings per share are shown below:

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30				June 30
	2016		2015		2016		2015
Net earnings	$	2,245	$	2,616	$	4,522	$	5,393
Weighted average common shares outstanding - basic (1)		3,613,671		3,504,295		3,585,235		3,503,495
Assumed exercise of stock options (1)		76,324		109,128		75,064		103,749
Weighted average common shares outstanding - diluted (1)		3,689,995		3,613,423		3,660,299		3,607,244
Net earnings per share (1):
Basic	$	0.62	$	0.75	$	1.26	$	1.54
Diluted	$	0.61	$	0.72	$	1.24	$	1.50

(1) Share and per share values for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

The diluted earnings per share computations for the three and six months ended June 30, 2016 and 2015 include all unexercised stock options because no stock options were anti-dilutive during such periods.

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6. Repurchase Agreements

The Company has overnight repurchase agreements with certain deposit customers whereby the Company uses investment securities as collateral for non-insured funds. These balances are accounted for as collateralized financing and included in other borrowings on the balance sheet. The following is a summary of the balances of and collateral for the Company’s repurchase agreements:

	As of June 30, 2016
	Overnight and						Greater
	Continuous		Up to 30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	5,063	$	-	$	-	$	-	$	5,063
Agency mortgage-backed securities		6,464		-		-		-		6,464
Total	$	11,527	$	-	$	-	$	-	$	11,527

	As of December 31, 2015
	Overnight and		Up to				Greater
	Continuous		30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	5,810	$	-	$	-	$	-	$	5,810
Agency mortgage-backed securities		6,164		-		-		-		6,164
Total	$	11,974	$	-	$	-	$	-	$	11,974

Repurchase agreements are comprised of non-insured customer funds, totaling $11.5 million at June 30, 2016, and $12.0 million at December 31, 2015, which were secured by $17.3 million and $15.7 million of the Company’s investment portfolio at the same dates, respectively.

The investment securities are held by a third-party financial institution in the customer’s custodial account. The Company is required to maintain adequate collateral for each repurchase agreement. Changes in the fair value of the investment securities impact the amount of collateral required. If the Company were to default, the investment securities would be used to settle the repurchase agreement with the deposit customer.

7. Fair Value of Financial Instruments and Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

18

Fair value estimates of the Company’s financial instruments as of June 30, 2016 and December 31, 2015, including methods and assumptions utilized, are set forth below:

(Dollars in thousands)	As of June 30, 2016
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	14,317		$	14,317		$	-		$	-	$	14,317
Investment securities available-for-sale		366,550			7,363			359,187			-		366,550
Bank stocks, at cost		4,622			n/a			n/a			n/a		n/a
Loans, net		430,064			-			-			431,483		431,483
Loans held for sale, net		10,057			-			10,062			-		10,062
Derivative financial instruments		615			-			615			-		615
Accrued interest receivable		3,927			22			1,979			1,926		3,927
Financial liabilities:
Non-maturity deposits	$	(566,971	)	$	(566,971	)	$	-		$	-		(566,971	)
Time deposits		(148,650	)		-			(148,116	)		-		(148,116	)
FHLB borrowings		(48,000	)		-			(49,247	)		-		(49,247	)
Subordinated debentures		(21,184	)		-			(18,812	)		-		(18,812	)
Other borrowings		(11,527	)		-			(11,527	)		-		(11,527	)
Accrued interest payable		(271	)		-			(271	)		-		(271	)

	As of December 31, 2015
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	13,569		$	13,569		$	-		$	-	$	13,569
Investment securities available-for-sale		353,438			8,003			345,435			-		353,438
Bank stocks, at cost		4,497			n/a			n/a			n/a		n/a
Loans, net		419,923			-			-			420,061		420,061
Derivative financial instruments		797			-			797			-		797
Accrued interest receivable		4,002			22			2,117			1,863		4,002
Financial liabilities:
Non-maturity deposits	$	(570,784	)	$	(570,784	)	$	-		$	-	$	(570,784	)
Time deposits		(143,943	)		-			(142,924	)		-		(142,924	)
FHLB borrowings		(37,600	)		-			(38,215	)		-		(38,215	)
Subordinated debentures		(2,184	)		-			(19,051	)		-		(19,051	)
Other borrowings		(11,974	)		-			(11,974	)		-		(11,974	)
Accrued interest payable		(287	)		-			(287	)		-		(287	)

Methods and Assumptions Utilized

The carrying amount of cash and cash equivalents is considered to approximate fair value.

The Company’s investment securities classified as available-for-sale include U.S. treasury securities, U.S. federal agency securities, municipal obligations, agency mortgage-backed securities, certificates of deposits and common stocks. Quoted exchange prices are available for the Company’s U.S treasury securities and common stock investments, which are classified as Level 1. U.S. federal agency securities and agency mortgage-backed obligations are priced utilizing industry-standard models that consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. These measurements are classified as Level 2. Municipal securities are valued using a type of matrix, or grid, pricing in which securities are benchmarked against U.S. treasury rates based on credit rating. These model and matrix measurements are classified as Level 2 in the fair value hierarchy.

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It is not practical to determine the fair value of bank stocks due to restrictions placed on the transferability of FHLB and FRB stock.

The estimated fair value of the Company’s loan portfolio is based on the segregation of loans by collateral type, interest terms, and maturities. The fair value is estimated based on discounting scheduled and estimated cash flows through maturity using an appropriate risk-adjusted yield curve to approximate current interest rates for each category. No adjustment was made to the interest rates for changes in credit risk of performing loans where there are no known credit concerns. Management segregates loans in appropriate risk categories. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses applicable to the performing loan portfolio results in a fair valuation of such loans. The fair values of impaired loans are generally based on market prices for similar assets determined through independent appraisals or discounted values of independent appraisals and brokers’ opinions of value. This method of estimating fair value does not incorporate the exit-price concept of fair value prescribed by ASC Topic 820 and is classified as Level 3.

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value, determined on an aggregate basis. The mortgage loan valuations are based on quoted secondary market prices for similar loans and are classified as Level 2.

The carrying amounts of accrued interest receivable and payable are considered to approximate fair value.

The estimated fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, money market accounts, and checking accounts, is equal to the amount payable on demand. The fair value of interest-bearing time deposits is based on the discounted value of contractual cash flows of such deposits. The discount rate is tied to the FHLB yield curve plus an appropriate servicing spread. Fair value measurements based on discounted cash flows are classified as Level 2. These fair values do not incorporate the value of core deposit intangibles which may be associated with the deposit base.

The fair value of advances from the FHLB, subordinated debentures, and other borrowings is estimated using current yield curves for similar borrowings adjusted for the Company’s current credit spread and classified as Level 2.

The Company’s derivative financial instruments consist of interest rate lock commitments and corresponding forward sales contracts on mortgage loans held for sale. The fair values of these derivatives are based on quoted prices for similar loans in the secondary market. The market prices are adjusted by a factor, based on the Company’s historical data and management’s judgment about future economic trends, which considers the likelihood that a commitment will ultimately result in a closed loan. These instruments are classified as Level 2. The amounts are included in other assets or other liabilities on the consolidated balance sheets and gains on sale of loans, net in the consolidated statements of earnings.

Off-Balance-Sheet Financial Instruments

The fair value of letters of credit and commitments to extend credit is based on the fees currently charged to enter into similar agreements. The aggregate of these fees is not material.

Transfers

The Company did not transfer any assets or liabilities among levels during the six months ended June 30, 2016 or during the year ended December 31, 2015.

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Valuation Methods for Instruments Measured at Fair Value on a Recurring Basis

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at June 30, 2016 and December 31, 2015, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of June 30, 2016
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities
U. S. treasury securities	$	6,049	$	6,049	$	-	$	-
U. S. federal agency obligations		27,985		-		27,985		-
Municipal obligations, tax exempt		155,735		-		155,735		-
Municipal obligations, taxable		74,266		-		74,266		-
Agency mortgage-backed securities		91,501		-		91,501		-
Common stocks		1,314		1,314		-		-
Certificates of deposit		9,700		-		9,700		-
Derivative financial instruments	$	615	$	-	$	615	$	-

(Dollars in thousands)			As of December 31, 2015
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities
U. S. treasury securities	$	6,517	$	6,517	$	-	$	-
U. S. federal agency obligations		29,920		-		29,920		-
Municipal obligations, tax exempt		137,941		-		137,941		-
Municipal obligations, taxable		81,890		-		81,890		-
Agency mortgage-backed securities		85,985		-		85,985		-
Common stocks		1,486		1,486		-		-
Certificates of deposit		9,699		-		9,699		-
Derivative financial instruments		797		-		797		-

Changes in the fair value of available-for-sale securities are included in other comprehensive income to the extent the changes are not considered other-than-temporary impairments. Other-than-temporary impairment tests are performed on a quarterly basis and any decline in the fair value of an individual security below its cost that is deemed to be other-than-temporary results in a write-down of that security’s cost basis.

Valuation Methods for Instruments Measured at Fair Value on a Non-recurring Basis

The Company does not value its loan portfolio at fair value. Collateral-dependent impaired loans are generally carried at the lower of cost or fair value of the collateral, less estimated selling costs. Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the Company and then further adjusted if warranted based on relevant facts and circumstances. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Impaired loans are reviewed and evaluated at least quarterly for additional impairment and adjusted accordingly, based on the same factors identified above. The carrying value of the Company’s impaired loans was $7.1 million and $6.8 million, with an allocated allowance of $245,000 and $88,000, at June 30, 2016 and December 31, 2015, respectively.

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The following table represents the Company’s financial instruments that are measured at fair value on a non-recurring basis as of June 30, 2016 and December 31, 2015 allocated to the appropriate fair value hierarchy:

(Dollars in thousands)
			As of June 30, 2016						Total
			Fair value hierarchy						gains/
	Total		Level 1		Level 2		Level 3		(losses)
Assets:
Impaired loans:
One-to-four family residential real estate	$	585	$	-	$	-	$	585	$	3
Commercial loans		39		-		-		39		(13	)
Agriculture loans		448		-		-		448		(206	)
Consumer loans		9		-		-		9		2

			As of December 31, 2015						Total
			Fair value hierarchy						(losses)/
	Total		Level 1		Level 2		Level 3		gains
Assets:
Impaired loans:
One-to-four family residential real estate	$	266	$	-	$	-	$	266	$	(137	)
Consumer loans		16		-		-		16		6
Loans held for sale		14,465		-		14,465		-		(10	)

The following table presents quantitative information about Level 3 fair value measurements for impaired loans measured at fair value on a non-recurring basis as of June 30, 2016 and December 31, 2015.

(Dollars in thousands)
	Fair value		Valuation technique	Unobservable inputs	Range
As of June 30, 2016
Impaired loans:
One-to-four family residential real estate	$	585	Sales comparison	Adjustment to appraised value		6%-40	%
Commercial loans		39	Sales comparison	Adjustment to appraised value		15	%
Agriculture loans		448	Sales comparison	Adjustment to appraised value		20%-50	%
Consumer loans		9	Sales comparison	Adjustment to appraised value		0	%
As of December 31, 2015
Impaired loans:
One-to-four family residential real estate	$	266	Sales comparison	Adjustment to appraised value		0%-40	%
Consumer loans		16	Sales comparison	Adjustment to comparable sales		0	%

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8. Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of June 30, 2016, the Company and its subsidiary, Landmark National Bank (“the Bank”) meet all capital adequacy requirements to which they were subject at that time.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. On January 1, 2015, the Company and the Bank became subject to new capital rules (the “Basel III Rules”) that implemented the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $1.0 billion).

The Basel III Rules have maintained the general structure of the prompt corrective action framework, while incorporating increased requirements. The Basel III Rules include a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%. A capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer began on January 1, 2016 at 0.625% of risk-weighted assets, and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. The capital conservation buffer increases the common equity Tier 1 capital ratio, Tier 1 capital and total risk based capital ratios as of March 31 of each year until the final level of 2.5% is reached. The Bank made the one-time accumulated other comprehensive income (“AOCI”) opt-out election on its first Call Report filed after January 1, 2015, which allowed banks under $250 billion a one-time opt-out election to remove the impact of certain unrealized capital gains and losses from the calculation of capital.

As of June 30, 2016 and December 31, 2015, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2016 and December 31, 2015:

(Dollars in thousands)						For capital
	Actual					adequacy purposes*
	Amount		Ratio			Amount		Ratio
As of June 30, 2016
Leverage	$	85,237		9.66	%	$	35,286		4.0	%
Common Equity Tier 1 Capital		64,736		11.93	%		27,811		5.1	%
Tier 1 Capital		85,237		15.71	%		35,950		6.6	%
Total Risk Based Capital		91,378		16.84	%		46,803		8.6	%
As of December 31, 2015
Leverage	$	80,401		9.43	%	$	34,092		4.0	%
Common Equity Tier 1 Capital		60,375		11.05	%		24,584		4.5	%
Tier 1 Capital		80,401		14.72	%		32,779		6.0	%
Total Risk Based Capital		87,214		15.96	%		43,706		8.0	%

*The ratios for June 30, 2016 include a capital conservation buffer of 0.625%.

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The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2016 and December 31, 2015:

											To be well-capitalized
											under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes*					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of June 30, 2016
Leverage	$	83,830		9.53	%	$	35,198		4.0	%	$	43,998		5.0	%
Common Equity Tier 1 Capital		83,830		15.50	%		27,716		5.1	%		35,153		6.5	%
Tier 1 Capital		83,830		15.50	%		35,829		6.6	%		43,265		8.0	%
Total Risk Based Capital		89,632		16.57	%		46,645		8.6	%		54,081		10.0	%
As of December 31, 2015
Leverage	$	79,857		9.40	%	$	33,993		4.0	%	$	42,491		5.0	%
Common Equity Tier 1 Capital		79,857		14.66	%		24,519		4.5	%		35,416		6.5	%
Tier 1 Capital		79,857		14.66	%		32,692		6.0	%		43,589		8.0	%
Total Risk Based Capital		85,929		15.77	%		43,589		8.0	%		54,486		10.0	%

*The ratios for June 30, 2016 include a capital conservation buffer of 0.625%.

9. Impact of Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The main provisions of the update require the identification of performance obligations within a contract and require the recognition of revenue based on a stand-alone allocation of contract revenue to each performance obligation. Performance obligations may be satisfied and revenue recognized over a period of time if: 1) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs, or 2) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or 3) the entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date. For public entities the amendments of the update are effective for annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Management is evaluating the impact of adopting ASU 2014-09.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Liabilities. The main provisions of the update are to eliminate the available for sale classification of accounting for equity securities and to adjust the fair value disclosures for financial instruments carried at amortized costs such that the disclosed fair values represent an exit price as opposed to an entry price. The provisions of this update will require that equity securities be carried at fair market value on the balance sheet and any periodic changes in value will be adjustments to the income statement. A practical expedient is provided for equity securities without a readily determinable fair value, such that these securities can be carried at cost less any impairment. The provisions of this update become effective for interim and annual periods beginning after December 15, 2017. Upon the effective date of the update, changes in the value of the Company's common stock investments will be adjustments to the income statement. Management does not expect the remaining requirements of this update to have a material impact on the Company’s financial position, results of operations or cash flows.

In February 2016, the FASB issued an update (ASU No. 2016-02, Leases) creating FASB Topic 842, Leases. The guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requiring more disclosures related to leasing transactions. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact on the consolidated financial statements and related disclosures.

In March 2016, the FASB issued an update (ASU No. 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting.) The guidance in this update affects any entity that issues share-based payment awards including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flow. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact on the consolidated financial statements and related disclosures.

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In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), commonly referred to as “CECL”. The provisions of the update eliminate the probable initial recognition threshold under current GAAP which requires reserves to be based on an incurred loss methodology. Under CECL reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the contractual term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity debt securities. Under the provisions of the update credit losses recognized on available for sale debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans, with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Under current GAAP a purchased loan’s contractual balance is adjusted to fair value through a credit discount and no reserve is recorded on the purchased loan upon acquisition. Since under CECL reserves will be established for purchased loans at the time of acquisition the accounting for purchased loans is made more comparable to the accounting for originated loans. Finally, increased disclosure requirements under CECL oblige organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. For public entities the amendments of the update are effective beginning January 1, 2020. Management is in the process of evaluating the impact of CECL on the Company’s financial position, results of operations and cash flows as well as its required disclosures.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview. Landmark Bancorp, Inc. is a one-bank holding company incorporated under the laws of the State of Delaware and is engaged in the banking business through its wholly-owned subsidiary, Landmark National Bank. Except as otherwise required by the context, references to the “Company”, “we”, “us”, and “our” refer collectively to Landmark Bancorp, Inc. and Landmark National Bank The Company is listed on the Nasdaq Global Market under the symbol “LARK.” The Bank is dedicated to providing quality financial and banking services to its local communities. Our strategy includes continuing a tradition of holding quality assets while growing our commercial, commercial real estate and agriculture loan portfolios. We are committed to developing relationships with our borrowers and providing a total banking service.

The Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to originate one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal and consumer loans. Although not our primary business function, we do invest in certain investment and mortgage-related securities using deposits and other borrowings as funding sources.

Our results of operations depend generally on net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities. Our results of operations are also affected by non-interest income, such as service charges, loan fees and gains from the sale of newly originated loans, gains or losses on investments and certain other non-interest related items. Our principal operating expenses, aside from interest expense, consist of compensation and employee benefits, occupancy costs, professional fees, federal deposit insurance costs, data processing expenses, provision for loan losses and certain other non-interest related expenses.

We are significantly impacted by prevailing economic conditions including federal monetary and fiscal policies and federal regulations of financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and the personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing and the interest rate pricing competition from other lending institutions.

Currently, our business consists of ownership of the Bank, with its main office in Manhattan, Kansas and twenty-eight additional branch offices in central, eastern, southeast and southwest Kansas.

Critical Accounting Policies. Critical accounting policies are those which are both most important to the portrayal of our financial condition and results of operations and require our management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies relate to the allowance for loan losses, the valuation of investment securities, accounting for income taxes and the accounting for goodwill and other intangible assets, all of which involve significant judgment by our management. Information about our critical accounting policies is included under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2015.

Summary of Results. During the second quarter of 2016, we recorded net earnings of $2.2 million, which was a decrease of $371,000 from the $2.6 million of net earnings in the second quarter of 2015. The decrease in net earnings during the second quarter was primarily the result of an $846,000 decline in gains on sales of loans. Our gains on sales of loans declined during the second quarter of 2016 as a result of the loss of a few mortgage lenders during the quarter.

During the first six months of 2016, we recorded net earnings of $4.5 million, which was a decrease of $871,000 from the $5.4 million of net earnings in the first half of 2015. The decrease in net earnings was partially the result of a $1.7 million recovery on a previously charged-off construction loan, which contributed to an $800,000 credit provision for loan losses during the first six months of 2015 compared to a $350,000 provision for loan losses during the same period of 2016. Gains on sales of loans declined $995,000 during the first six months of 2016 as compared to the same period of 2015.

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The following table summarizes earnings and key performance measures for the periods presented.

(Dollars in thousands, except per share amounts)	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Net earnings:
Net earnings	$	2,245		$	2,616		$	4,522		$	5,393
Basic earnings per share (1)	$	0.62		$	0.75		$	1.26		$	1.54
Diluted earnings per share (1)	$	0.61		$	0.72		$	1.24		$	1.50
Earnings ratios:
Return on average assets (2)		1.00	%		1.20	%		1.02	%		1.25	%
Return on average equity (2)		10.48	%		13.95	%		10.75	%		14.67	%
Equity to total assets		9.97	%		8.45	%		9.17	%		8.45	%
Net interest margin (2) (3)		3.46	%		3.56	%		3.47	%		3.51	%
Dividend payout ratio		32.79	%		25.00	%		32.26	%		24.20	%

(1) Per share values for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

(2) Ratios have been annualized and are not necessarily indicative of the results for the entire year.

(3) Net interest margin is presented on a fully tax equivalent basis, using a 34% federal tax rate.

Interest Income. Interest income of $7.4 million for the quarter ended June 30, 2016 decreased $21,000, or 0.3%, as compared to the same period of 2015. Interest income on loans decreased $166,000, or 3.0%, to $5.3 million for the quarter ended June 30, 2016 compared to the quarter ended June 30, 2015, due to lower tax equivalent yields earned on loans, which decreased to 4.93% from 5.10% over the same periods. Partially offsetting the lower yields was an increase in our average loan balances from $436.8 million during the second quarter of 2015 to $438.3 million during the second quarter of 2016. Interest income on investment securities increased $145,000, or 7.7%, to $2.0 million for the second quarter of 2016, as compared to $1.9 million in the same period of 2015. The increase in interest income on investment securities was primarily the result of an increase in our average balance of investment securities from $350.8 million during the second quarter of 2015 to $376.0 million during the second quarter of 2016. Also contributing to the higher interest income on investment securities was an increase in our tax equivalent yield, which increased from 2.57% in the second quarter of 2015 to 2.62% during the second quarter of 2016.

Interest income of $14.5 million for the six months ended June 30, 2016 increased $90,000, or 0.6%, as compared to the same period of 2015. Interest income on loans decreased $152,000, or 1.4%, to $10.5 million for the six months ended June 30, 2016 compared to same period of 2015, due to lower tax equivalent yields earned on loans, which decreased to 4.94% from 5.06% over the same periods. Partially offsetting the lower yields was an increase in our average loan balances from $429.4 million during the first six months of 2015 to $432.1 million during the first six months of 2016. Interest income on investment securities increased $242,000, or 6.4%, to $4.0 million for the first six months of 2016, as compared to $3.8 million in the same period of 2015. The increase in interest income on investment securities was primarily the result of an increase in our tax equivalent yield, which increased from 2.56% in the six months ended June 30, 2015 to 2.64% during the same period of 2016. Also contributing to the higher interest income on investment securities was an increase in our average balance of investment securities from $351.6 million during the first half of 2015 to $367.5 million during the first six months of 2016.

Interest Expense. Interest expense during the quarter ended June 30, 2016 increased $41,000, or 5.3%, to $810,000 as compared to the same period of 2015. Interest expense on interest-bearing deposits increased $15,000, or 5.5%, to $287,000 for the quarter ended June 30, 2016 as compared to the quarter ended June 30, 2015, despite lower average balances. Our total cost of interest-bearing deposits increased from 0.19% during the second quarter of 2015 to 0.21% during the second quarter of 2016 as a result of higher rates on our money market and checking accounts as short-term interest rates were higher during the second quarter of 2016 as compared to the same period of 2015. Our average interest-bearing deposit balances decreased from $564.6 million to $561.9 million from the second quarter of 2015 to the second quarter of 2016. For the second quarter of 2016, interest expense on borrowings increased $26,000, or 5.2%, to $523,000 as compared to the same period of 2015, due to an increase in our average outstanding borrowings. Our average outstanding borrowings increased from $78.4 million in the second quarter of 2015 to $88.6 million during the same period of 2016. Partially offsetting the increase in average outstanding borrowings was a lower average rate on our borrowings, which decreased from 2.54% in the second quarter of 2015 to 2.38% in second quarter of 2016 as we borrowed on our lower cost lines of credit.

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Interest expense during the six months ended June 30, 2016 increased $42,000, or 2.7%, to $1.6 million as compared to the same period of 2015. Interest expense on interest-bearing deposits increased $14,000, or 2.6%, to $564,000 for the six months ended June 30, 2016 as compared to the same period of 2015, despite lower average balances. Our average interest-bearing deposit balances decreased from $566.8 million during the first six months of 2015 to $561.7 million during the first six months of 2016. Our total cost of interest-bearing deposits was flat at 0.20% during the first six months of both 2016 and 2015, despite higher rates on our money market and checking accounts in the first six months of 2016 as short-term interest rates increased. For the first six months of 2016, interest expense on borrowings increased $28,000, or 2.8%, to $1.0 million as compared to the same period of 2015, due to an increase in our average outstanding borrowings. Our average outstanding borrowings increased from $74.4 million in the first half of 2015 to $80.5 million during the same period of 2016. Partially offsetting the increase in average outstanding borrowings was a lower average rate on our borrowings, which decreased from 2.68% in the first six month of 2015 to 2.54% in same period of 2016 as we borrowed on our lower cost lines of credit.

Net Interest Income. Net interest income was $6.6 million for the quarter ended June 30, 2016, a decrease of $62,000, or 0.9%, from the second quarter of 2015. Net interest margin, on a tax equivalent basis, decreased from 3.56% in the second quarter of 2015 to 3.46% in the same period of 2016. The decrease in net interest income resulted from lower yields on interest-earning assets and higher rates on interest-bearing deposits and borrowings. Partially offsetting the changes in rates was a 2.8% increase in average interest-earning assets, from $792.5 million in the second quarter of 2015 to $815.1 million in the second quarter of 2016.

Net interest income was $13.0 million for the first six months of 2016, an increase of $48,000, or 0.4%, from the same period of 2015. Net interest margin, on a tax equivalent basis, decreased from 3.51% in the first half of 2015 to 3.47% in the first half of 2016. The increase in net interest income was primarily the result of a 2.2% increase in average interest-earning assets from $786.3 million in the first half of 2015 to $803.5 million in the first six months of 2016.

See the Average Assets/Liabilities and Rate/Volume tables at the end of Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional details on asset yields, liability rates and net interest margin.

Provision for Loan Losses. We maintain, and our Board of Directors monitors, an allowance for losses on loans. The allowance is established based upon management's periodic evaluation of known and inherent risks in the loan portfolio, review of significant individual loans and collateral, review of delinquent loans, past loss experience, adverse situations that may affect the borrowers’ ability to repay, current and expected market conditions, and other factors management deems important. Determining the appropriate level of reserves involves a high degree of management judgment and is based upon historical and projected losses in the loan portfolio and the collateral value or discounted cash flows of specifically identified impaired loans. Additionally, allowance policies are subject to periodic review and revision in response to a number of factors, including current market conditions, actual loss experience and management’s expectations.

During the second quarter of 2016, we recorded a provision for loan losses of $300,000 compared to $200,000 in the second quarter of 2015. We recorded net loan charge-offs of $517,000 during the second quarter of 2016 compared to net loan charge-offs of $88,000 during the second quarter of 2015. The net loan charge-offs during the second quarter of 2016 were primarily related to the liquidation of the assets securing a previously identified and impaired commercial loan.

During the first six months of 2016, we recorded a provision for loan losses of $350,000 compared to a credit provision for loan losses of $800,000 during the same period of 2015. We recorded net loan charge-offs of $620,000 during the six months ended June 30, 2016 compared to net loan recoveries of $1.5 million during the same period of 2015. The net loan recoveries during the first six months of 2015 were primarily associated with the recovery of $1.7 million on a $4.3 million construction loan which was fully charged-off during 2010 and 2011. As of June 30, 2016, the Company has recovered approximately $2.4 million of the loan and continues to pursue collection of the remaining amount. The net loan recoveries in the first six months of 2015 were the primary reason for the negative provision for loan losses during the period.

For further discussion of the allowance for loan losses, refer to the “Asset Quality and Distribution” section below.

Non-interest Income. Total non-interest income was $3.9 million in the second quarter of 2016, a decrease of $734,000, or 15.7%, compared to the same period of 2015. This change was primarily the result of an $846,000 decline in gains on sales of loans, as the departure of several mortgage lenders affected originations in the second quarter of 2016, and a $229,000 decline in other non-interest income. Included in other non-interest income during the second quarter of 2015 was a gain of $236,000 recorded on the sale of a closed branch facility. Partially offsetting those reductions were $285,000 of gains on sales of investment securities, relating to $11.8 million of municipal bonds that were identified for sale as part of the ongoing review of the portfolio, during the second quarter of 2016. There were no gains on sales of investment securities during the second quarter of 2015.

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Total non-interest income was $7.8 million in the first six months of 2016, a decrease of $603,000, or 7.1%, compared to the same period of 2015. The decrease in non-interest income was primarily due to a $995,000 decline in gains on sales of loans, the result of fewer mortgage lenders on staff, and a $260,000 decline in other non-interest income. Included in other non-interest income during the first half of 2015 was a gain of $236,000 on the sale of a closed branch facility. Partially offsetting those reductions were $297,000 of gains on sales of $13.6 million of investment securities during the first half of 2016. During the first six months of 2015, a loss of $254,000 on sales of investment securities was incurred due primarily to the sale of a portion of our agency mortgage-backed investment securities portfolio to reduce exposure to rising interest rates.

Non-interest Expense. Non-interest expense decreased $232,000, or 3.1%, to $7.2 million for the second quarter of 2016 compared to $7.4 million for the second quarter of 2015, primarily as a result of decreases of $249,000 in other non-interest expense and $68,000 in compensation and benefits. The decrease in other non-interest expense reflects a $163,000 impairment of the residual real estate collateral associated with an affordable housing investment that was recorded in the second quarter of 2015 and reduced mortgage banking activity in the second quarter of 2016, which also reduced compensation and benefits. The affordable housing investment had a residual equity value which was determined to be impaired based upon an updated appraisal. The Company does not have any other affordable housing investments which include residual equity values. Those decreases were partially offset by increases of $41,000 in advertising and $31,000 in foreclosure and other real estate expense. The increase in advertising expense reflected costs associated with our deposit programs, while the increase in foreclosure and real estate owned expense was primarily related to real estate owned properties added during the second quarter of 2016.

Non-interest expense decreased $181,000, or 1.2%, to $14.4 million for the first six months of 2016 compared to $14.6 million for the first six months of 2015. The decrease was primarily the result of a $287,000 decrease in other non-interest expense, reflecting a $163,000 impairment of the residual real estate collateral associated with an affordable housing investment that was recorded in 2015, as well as the reduced mortgage banking activity in the first six months of 2016. Those decreases were partially offset by increases of $83,000 in advertising and $71,000 in foreclosure and other real estate expense.  The increase in advertising expense reflected costs associated with our deposit programs, while the increase in foreclosure and real estate owned expense was primarily related to real estate owned properties added during the first six months of 2016.

Income Tax Expense. During the second quarter of 2016, we recorded income tax expense of $754,000, compared to $1.0 million during the same period of 2015. The effective tax rate decreased from 28.6% in the second quarter of 2015 to 25.1% in the second quarter of 2016 as a result of a decline in earnings before income taxes and higher tax exempt income.

During the first six months of 2016, we recorded income tax expense of $1.6 million, compared to $2.2 million during the same period of 2015. The effective tax rate decreased from 29.1% in the first half of 2015 to 25.7% in the same period of 2016 as a result of a decline in earnings before income taxes and higher tax exempt income.

Financial Condition. Despite measured improvement in certain metrics, general uncertainty with respect to economic conditions in the United States continues to affect our asset quality and performance. Although the geographic markets in which the Company operates have been impacted by these economic conditions in recent years, the effect has generally not been as severe as those experienced in some areas of the United States. In addition, our loan portfolio is diversified across various types of loans and collateral throughout the markets in which we operate. Despite a few problem loans that management continues to work to resolve, our asset quality has generally improved over the past few years. Outside of identified problem assets, management believes that the Company continues to have a high quality asset base and solid core earnings, and anticipates that its efforts to run a high quality financial institution with a sound asset base will continue to create a strong foundation for continued growth and profitability in the future.

Asset Quality and Distribution. Our primary investing activities are the origination of one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets increased to $896.3 million at June 30, 2016, compared to $878.4 million at December 31, 2015. The increase in our total assets was primarily the result of increases in our investment securities and loans. Investment securities increased from $353.4 million at December 31, 2015 to $366.6 million at June 30, 2016 as a result of the purchase of additional investment securities during the first half of 2016. Loans increased from $419.9 million at December 31, 2015 to $430.0 million at June 30, 2016 primarily as a result of increases in our agriculture loans.

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The allowance for loan losses is established through a provision for loan losses based on our evaluation of the risk inherent in the loan portfolio and changes in the nature and volume of our loan activity. This evaluation, which includes a review of all loans with respect to which full collectability may not be reasonably assured, considers the fair value of the underlying collateral, economic conditions, historical loan loss experience, level of classified loans and other factors that warrant recognition in providing for an appropriate allowance for loan losses. At June 30, 2016, our allowance for loan losses totaled $5.7 million or 1.30% of gross loans outstanding, as compared to $5.9 million, or 1.39% of gross loans outstanding, at December 31, 2015.

The decline in our allowance for loan losses during the first six months of 2016 was primarily related to the allowance for loan losses required on our one-to-four family residential real estate loans. The decline in our allowance for one-to-four family residential real estate loans resulted from lower historical loss rates and a decrease in the adjustments for qualitative and environmental factors.

As of June 30, 2016 and December 31, 2015, approximately $21.9 million and $15.3 million, respectively, of loans were assigned a risk rating of special mention, substandard or doubtful. These ratings indicate that the loans identified as potential problem loans have more than normal risk which raised doubts as to the ability of the borrower to comply with present loan repayment terms. Even though the borrowers of such loans were experiencing moderate cash flow problems as well as some deterioration in collateral value, management believed the general allowance was sufficient to cover the risks and probable incurred losses related to such loans at June 30, 2016 and December 31, 2015, respectively.

Loans past due 30-89 days and still accruing interest totaled $1.2 million, or 0.27% of gross loans, at June 30, 2016 compared to $1.4 million, or 0.33% of gross loans, at December 31, 2015. At June 30, 2016, $2.6 million in loans were on non-accrual status, or 0.60% of gross loans, compared to $2.2 million, or 0.51% of gross loans, at December 31, 2015. Non-accrual loans consist of loans 90 or more days past due and certain impaired loans. One loan totaling $218,000 or 0.05% of gross loans was 90 or more days delinquent and accruing interest at June 30, 2016, compared to no loans being 90 or more days delinquent and accruing interest at December 31, 2015. Our impaired loans totaled $7.1 million at June 30, 2016 compared to $6.8 million at December 31, 2015. The difference in the Company’s non-accrual loan balances and impaired loan balances at June 30, 2016 was related to TDRs that were accruing interest but still classified as impaired.

At June 30, 2016, the Company had ten loan relationships consisting of fourteen outstanding loans that were classified as TDRs. During the second quarter of 2016, the Company classified a $8,000 commercial loan as a TDR after modifying the payment to interest only. Also during the second quarter of 2016 the Company classified a $188,000 one-to-four family residential real estate loan as a TDR after agreeing to a loan modification which adjusted the payment schedule. Since all of the loans were adequately secured, no charge-offs or provision for loan losses were recorded against the principal as of June 30, 2016. No loan modifications were classified as TDRs during the first quarter of 2016. During the second quarter of 2015, the Company classified a commercial loan relationship consisting of $2.7 million in real estate and land loans as a TDR after agreeing to a bankruptcy plan with the borrower. The bankruptcy plan restarted the amortization period of the loans which extended the maturities of the loans. During the first quarter of 2015, the Company classified a $44,000 agriculture loan relationship consisting of two loans as a TDR after extending the maturity of the loans. During the first six months of 2016, a $56,000 one-to-four family residential real estate loan and a $25,000 agriculture loan, which were both classified as TDRs during 2015, were paid off.

As part of our credit risk management, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on commercial real estate and construction and land relationships. We are working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio.

Liability Distribution. Our primary ongoing sources of funds are deposits, FHLB borrowings, proceeds from principal and interest payments on loans and investment securities and proceeds from the sale of mortgage loans and investment securities. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates and economic conditions. We experienced an increase of $894,000 in total deposits during the first six months of 2016, to $715.6 million at June 30, 2016, from $714.7 million at December 31, 2015. The increase in deposits was primarily due to higher balances in non-interest bearing demand deposits, savings accounts and certificates of deposits. Money market and checking account balances decreased by $17.3 million between December 31, 2015 and June 30, 2016, due primarily to a seasonal decline in public fund balances. Total borrowings increased $10.0 million to $80.7 million at June 30, 2016, from $70.7 million at December 31, 2015. The increase in borrowings was used to fund the purchase of investment securities and to fund loan growth.

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Non-interest-bearing demand deposits at June 30, 2016, were $151.0 million, or 21.1% of total deposits, compared to $143.6 million, or 20.1% of total deposits, at December 31, 2015. Money market and checking deposit accounts were 45.9% of our deposit portfolio and totaled $328.8 million at June 30, 2016, compared to $346.1 million, or 48.4% of total deposits, at December 31, 2015. Savings accounts increased to $87.1 million, or 7.4% of deposits, at June 30, 2016, from $81.1 million, or 13.3% of total deposits, at December 31, 2015. Certificates of deposit totaled $148.7 million, or 20.8% of deposits, at June 30, 2016, compared to $143.9 million, or 20.1% of total deposits, at December 31, 2015.

Certificates of deposit at June 30, 2016, scheduled to mature in one year or less, totaled $98.9 million. Historically, maturing deposits have generally remained with the Bank, and we believe that a significant portion of the deposits maturing in one year or less will remain with us upon maturity in some type of deposit account.

Cash Flows. During the six months ended June 30, 2016, our cash and cash equivalents increased by $748,000. Our operating activities provided cash of $7.1 million during the first half of 2016, primarily due to a decrease in loans held for sale. Our investing activities used net cash of $17.1 million during the first six months of 2016, primarily as a result of funding loans and purchasing more investment securities than were sold or matured over the same time period. Financing activities provided net cash of $10.8 million during the first half of 2016, primarily as a result of increased borrowings which were used to fund the investment purchases and loan growth.

Liquidity. Our most liquid assets are cash and cash equivalents and investment securities available for sale. The levels of these assets are dependent on the operating, financing, lending and investing activities during any given year. These liquid assets totaled $380.9 million at June 30, 2016 and $367.0 million at December 31, 2015. During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments, we generally increase our liquid assets by investing in short-term, high-grade investments.

Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. Excess funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals and loan advances. In the event we require funds beyond our ability to generate them internally, additional funds are generally available through the use of FHLB advances, a line of credit with the FHLB, other borrowings or through sales of investment securities. At June 30, 2016, we had outstanding FHLB advances of $35.0 million and $13.0 million borrowed against our line of credit with the FHLB. At June 30, 2016, we had collateral pledged to the FHLB that would allow us to borrow an additional $37.4 million, subject to FHLB credit requirements and policies. At June 30, 2016, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $17.1 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $50.0 million in available credit under which we had no outstanding borrowings at June 30, 2016. At June 30, 2016, we had subordinated debentures totaling $21.2 million and other borrowings of $11.5 million, which consisted of repurchase agreements. At June 30, 2016, the Company had no borrowings against a $7.5 million line of credit from an unrelated financial institution maturing on November 1, 2016, with an interest rate that adjusts daily based on the prime rate plus 0.25%, and a floor of 3.75%. This line of credit has covenants specific to capital and other financial ratios, with which the Company was in compliance at June 30, 2016.

Off Balance Sheet Arrangements. As a provider of financial services, we routinely issue financial guarantees in the form of financial and performance standby letters of credit. Standby letters of credit are contingent commitments issued by us generally to guarantee the payment or performance obligation of a customer to a third party. While these standby letters of credit represent a potential outlay by us, a significant amount of the commitments may expire without being drawn upon. We have recourse against the customer for any amount the customer is required to pay to a third party under a standby letter of credit. The letters of credit are subject to the same credit policies, underwriting standards and approval process as loans made by us. Most of the standby letters of credit are secured, and in the event of nonperformance by the customers, we have the right to the underlying collateral, which could include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The contract amount of these standby letters of credit, which represents the maximum potential future payments guaranteed by us, was $1.7 million at June 30, 2016.

At June 30, 2016, we had outstanding loan commitments, excluding standby letters of credit, of $73.2 million. We anticipate that sufficient funds will be available to meet current loan commitments. These commitments consist of unfunded lines of credit and commitments to finance real estate loans.

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Capital. Current regulatory capital regulations require financial institutions (including banks and bank holding companies) to meet certain regulatory capital requirements. On January 1, 2015, the Company and the Bank became subject to the Basel III Rules that implemented the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $1.0 billion).

The Basel III Rules have maintained the general structure of the prompt corrective action framework, while incorporating increased requirements. The Basel III Rules include a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%. A capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer began on January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. The Bank made the one-time AOCI opt-out election on its first Call Report filed after January 1, 2015, which allowed banks under $250 billion a one-time opt-out election to remove the impact of certain unrealized capital gains and losses from the calculation of capital. As of June 30, 2016 and December 31, 2015, the Bank was rated “well capitalized,” which is the highest rating available under the regulatory capital regulations framework for prompt corrective action. Management believes that as of June 30, 2016, the Company and the Bank met all capital adequacy requirements to which we are subject.

Dividends. During the quarter ended June 30, 2016, we paid a quarterly cash dividend of $0.20 per share to our stockholders.

The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations. In addition, under the Basel III Rules, financial institutions will have to maintain 2.5% in common equity tier 1 capital attributable to the capital conservation buffer in order to pay dividends and make other capital distributions. This buffer is to be phased in over three years beginning in 2016. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of June 30, 2016. The National Bank Act imposes limitations on the amount of dividends that a national bank may pay without prior regulatory approval. Generally, the amount is limited to the bank's current year's net earnings plus the adjusted retained earnings for the two preceding years. As of June 30, 2016, approximately $19.4 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval.

Additionally, our ability to pay dividends is limited by the subordinated debentures that are held by three business trusts that we control. Interest payments on the debentures must be paid before we pay dividends on our capital stock, including our common stock. We have the right to defer interest payments on the debentures for up to 20 consecutive quarters. However, if we elect to defer interest payments, all deferred interest must be paid before we may pay dividends on our capital stock.

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Average Assets/Liabilities. The following tables reflect the tax-equivalent yields earned on average interest-earning assets and costs of average interest-bearing liabilities for the periods indicated (derived by dividing income or expense by the monthly average balance of assets or liabilities, respectively) as well as “net interest margin” (which reflects the effect of the net earnings balance) for the periods shown:

	Three months ended							Three months ended
	June 30, 2016							June 30, 2015
	Average  balance		Interest		Average yield/rate			Average balance		Interest		Average yield/rate
	(Dollars in thousands)
Assets
Interest-earning assets:
Interest-bearing deposits at banks	$	817	$	1		0.49	%	$	4,979	$	3		0.24	%
Investment securities (1)		375,976		2,453		2.62	%		350,754		2,247		2.57	%
Loans receivable, net (2)		438,261		5,375		4.93	%		436,781		5,548		5.10	%
Total interest-earning assets		815,054		7,829		3.86	%		792,514		7,798		3.95	%
Non-interest-earning assets		85,276							85,357
Total	$	900,330						$	877,871
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Money market and checking	$	332,109	$	116		0.14	%	$	324,741	$	78		0.10	%
Savings accounts		86,863		7		0.03	%		79,032		6		0.03	%
Time deposit		142,948		164		0.46	%		160,829		188		0.47	%
Total deposits		561,920		287		0.21	%		564,602		272		0.19	%
FHLB advances and other borrowings		88,560		523		2.38	%		78,445		497		2.54	%
Total interest-bearing liabilities		650,480		810		0.50	%		643,047		769		0.48	%
Non-interest-bearing liabilities		163,718							159,627
Stockholders' equity		86,132							75,197
Total	$	900,330						$	877,871
Interest rate spread (3)						3.36	%						3.47	%
Net interest margin (4)			$	7,019		3.46	%			$	7,029		3.56	%
Tax-equivalent interest - imputed				457							405
Net interest income			$	6,562						$	6,624
Ratio of average interest-earning assets to average interest-bearing liabilities						125.3	%						123.2	%

(1) Income on tax exempt securities is presented on a fully tax-equivalent basis, using a 34% federal tax rate.

(2) Includes loans classified as non-accrual. Income on tax-exempt loans is presented on a fully tax-equivalent basis, using a 34% federal tax rate.

(3) Interest rate spread represents the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities.

(4) Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets.

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	Six months ended							Six months ended
	June 30, 2016							June 30, 2015
	Average  balance		Interest		Average yield/rate			Average balance		Interest		Average yield/rate
	(Dollars in thousands)
Assets
Interest-earning assets:
Interest-bearing deposits at banks	$	3,875	$	10		0.52	%	$	5,249	$	7		0.27	%
Investment securities (1)		367,535		4,819		2.64	%		351,610		4,457		2.56	%
Loans receivable, net (2)		432,137		10,611		4.94	%		429,420		10,770		5.06	%
Total interest-earning assets		803,547		15,440		3.86	%		786,279		15,234		3.91	%
Non-interest-earning assets		85,168							84,849
Total	$	888,715						$	871,128
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Money market and checking	$	333,231	$	221		0.13	%	$	324,997	$	154		0.10	%
Savings accounts		85,143		13		0.03	%		78,264		12		0.03	%
Time deposit		143,304		330		0.46	%		163,506		384		0.47	%
Total deposits		561,678		564		0.20	%		566,767		550		0.20	%
FHLB advances and other borrowings		80,499		1,016		2.54	%		74,421		988		2.68	%
Total interest-bearing liabilities		642,177		1,580		0.49	%		641,188		1,538		0.48	%
Non-interest-bearing liabilities		161,982							155,801
Stockholders' equity		84,556							74,139
Total	$	888,715						$	871,128
Interest rate spread (3)						3.37	%						3.43	%
Net interest margin (4)			$	13,860		3.47	%			$	13,696		3.51	%
Tax-equivalent interest - imputed				894							778
Net interest income			$	12,966						$	12,918
Ratio of average interest-earning assets to average interest-bearing liabilities						125.1	%						122.6	%

(1) Income on tax exempt securities is presented on a fully tax-equivalent basis, using a 34% federal tax rate.

(2) Includes loans classified as non-accrual. Income on tax-exempt loans is presented on a fully tax-equivalent basis, using a 34% federal tax rate.

(3) Interest rate spread represents the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities.

(4) Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets.

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Rate/Volume Table. The following table describes the extent to which changes in tax-equivalent interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities affected the Company’s interest income and expense for the periods indicated. The table distinguishes between (i) changes attributable to rate (changes in rate multiplied by prior volume), (ii) changes attributable to volume (changes in volume multiplied by prior rate), and (iii) net change (the sum of the previous columns). The net changes attributable to the combined effect of volume and rate that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

	Three months ended June 30,									Six months ended June 30,
	2016 vs 2015									2016 vs 2015
	Increase/(decrease) attributable to									Increase/(decrease) attributable to
	Volume			Rate			Net			Volume			Rate			Net
	(Dollars in thousands)									(Dollars in thousands)
Interest income:
Interest-bearing deposits at banks	$	8		$	(10	)	$	(2	)	$	(1	)	$	4		$	3
Investment securities		162			44			206			214			148			362
Loans		20			(193	)		(173	)		58			(217	)		(159	)
Total		190			(159	)		31			271			(65	)		206
Interest expense:
Deposits		(1	)		16			15			14			-			14
Other borrowings		51			(25	)		26			78			(50	)		28
Total		50			(9	)		41			92			(50	)		42
Net interest income	$	140		$	(150	)	$	(10	)	$	179		$	(15	)	$	164

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our assets and liabilities are principally financial in nature, and the resulting net interest income thereon is subject to changes in market interest rates and the mix of various assets and liabilities. Interest rates in the financial markets affect our decisions relating to pricing our assets and liabilities, which impact net interest income, a significant cash flow source for us. As a result, a substantial portion of our risk management activities relates to managing interest rate risk.

Our Asset/Liability Management Committee monitors the interest rate sensitivity of our balance sheet using earnings simulation models. We have set policy limits of interest rate risk to be assumed in the normal course of business and monitor such limits through our simulation process.

We have been successful in meeting the interest rate sensitivity objectives set forth in our policy. Simulation models are prepared to determine the impact on net interest income for the coming twelve months, including one using rates at June 30, 2016, and forecasting volumes for the twelve-month projection. This position is then subjected to a shift in interest rates of 100 and 200 basis points with an impact to our net interest income on a one-year horizon as follows:

	Dollar change in net			Percent change in
Scenario	interest income ($000’s)			net interest income
200 basis point rising	$	(873	)		(3.4	)%
100 basis point rising	$	(461	)		(1.8	)%
100 basis point falling	$	(178	)		(0.7	)%
200 basis point falling		NM			NM

The 200 basis point falling scenario is considered to be not meaningful (“NM”) in the current low interest rate environment.

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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Forward-Looking Statements

This document (including information incorporated by reference) contains, and future oral and written statements by us and our management may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995, with respect to our financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on operations and future prospects by us and our subsidiaries include, but are not limited to, the following:

· The strength of the United States economy and international economy in general and the strength of the local economies in which we conduct our operations which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of our assets.

· The effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, insurance and monetary and financial matters (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated thereunder, as well as rules adopted by the federal bank regulatory agencies to implement Basel III) and the effects of increases in Federal Deposit Insurance Corporation premiums.

· The effects of changes in interest rates (including the effects of changes in the rate of prepayments of our assets) and the policies of the Board of Governors of the Federal Reserve System.

· Our ability to compete with other financial institutions as effectively as we currently do due to increases in competitive pressures in the financial services sector.

· Our inability to obtain new customers and to retain existing customers.

· The timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet.

· Technological changes implemented by us and by other parties, including third-party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to us and our customers.

· Our ability to develop and maintain secure and reliable electronic systems.

· Our ability to retain key executives and employees and the difficulty that we may experience in replacing key executives and employees in an effective manner.

· Consumer spending and saving habits which may change in a manner that affects our business adversely.

· Our ability to successfully integrate acquired businesses and future growth.

· The costs, effects and outcomes of existing or future litigation.

· Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board.

· The economic impact of past and any future terrorist attacks, acts of war or threats thereof, and the response of the United States to any such threats and attacks.

· Our ability to effectively manage our credit risk.

· Our ability to forecast probable loan losses and maintain an adequate allowance for loan losses.

· The effects of declines in the value of our investment portfolio.

· Our ability to raise additional capital if needed.

· The effects of cyber-attacks.

· The effects of declines in real estate markets.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning us and our business, including other factors that could materially affect our financial results, is included in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2015.

36

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of June 30, 2016. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2016.

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2016 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

37

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company or its subsidiaries is a party or which any of their property is subject, other than ordinary routine litigation incidental to their respective businesses.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors applicable to the Company from those disclosed in Part I, Item 1A. “Risk Factors,” in the Company's 2015 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit 4.1	Form of Landmark Bancorp, Inc. 2015 Stock Incentive Plan Restricted Stock Award Agreement (incorporated by reference to the registrant’s Form S-8 filed with the Commission on May 16, 2016 (SEC file no. 333-211399))
Exhibit 4.2	Form of Landmark Bancorp, Inc. 2015 Stock Incentive Plan Nonqualified Stock Option Award Agreement (incorporated by reference to the registrant’s Form S-8 filed with the Commission on May 16, 2016 (SEC file no. 333-211399))
Exhibit 4.3	Form of Landmark Bancorp, Inc. 2015 Stock Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to the registrant’s Form S-8 filed with the Commission on May 16, 2016 (SEC file no. 333-211399))
Exhibit 31.1	Certificate of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
Exhibit 31.2	Certificate of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
Exhibit 32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015; (ii) Consolidated Statements of Earnings for the three and six months ended June 30, 2016 and June 30, 2015; (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and June 30, 2015; (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and June 30, 2015; (v) Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2016 and June 30, 2015; and (vi) Notes to Consolidated Financial Statements

38

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.

	LANDMARK BANCORP, INC.
Date: August 5, 2016	/s/ Michael E. Scheopner
	Michael E. Scheopner
	President and Chief Executive Officer
Date: August 5, 2016	/s/ Mark A. Herpich
	Mark A. Herpich
	Vice President, Secretary, Treasurer and Chief Financial Officer

39

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a)

I, Michael E. Scheopner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Landmark Bancorp, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: August 5, 2016	/s/ Michael E. Scheopner
	Michael E. Scheopner
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a)

I, Mark A. Herpich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Landmark Bancorp, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: August 5, 2016	/s/ Mark A. Herpich
	Mark A. Herpich
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landmark Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael E. Scheopner, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 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, as amended; 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/ Michael E. Scheopner

Michael E. Scheopner

Chief Executive Officer

August 5, 2016

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landmark Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark A. Herpich, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 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, as amended; 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/ Mark A. Herpich

Mark A. Herpich

Chief Financial Officer

August 5, 2016

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 04, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Entity Registrant Name	LANDMARK BANCORP INC
Entity Central Index Key	0001141688
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	LARK
Entity Common Stock, Shares Outstanding		3,638,060

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Assets
Cash and cash equivalents	$ 14,317	$ 13,569
Investment securities available-for-sale, at fair value	366,550	353,438
Bank Stocks, at cost	4,622	4,497
Loans, net of allowance for loans losses of $5,652 and $5,922	430,064	419,923
Loans held for sale, net	10,057	14,465
Premises and equipment, net	20,760	20,958
Bank owned life insurance	18,078	18,164
Goodwill	17,532	17,532
Other intangible assets, net	4,148	4,304
Real estate owned, net	718	1,000
Accrued interest and other assets	9,476	10,526
Total assets	896,322	878,376
Deposits:
Non-interest-bearing demand	151,049	143,616
Money market and checking	328,816	346,106
Savings	87,106	81,062
Time	148,650	143,943
Total deposits	715,621	714,727
Federal Home Loan Bank borrowings	48,000	37,600
Subordinated debentures	21,184	21,084
Other borrowings	11,527	11,974
Accrued interest, taxes, and other liabilities	10,623	12,421
Total liabilities	806,955	797,806
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value per share, 200,000 shares authorized; none issued	0	0
Common stock, $0.01 par value per share, 7,500,000 shares authorized; 3,620,669 and 3,531,036 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively	36	35
Additional paid-in capital	46,763	45,372
Retained earnings	36,073	32,988
Accumulated other comprehensive income	6,495	2,175
Total stockholders' equity	89,367	80,570
Total liabilities and stockholders' equity	$ 896,322	$ 878,376

XML

CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Allowance for loan losses	$ 5,652	$ 5,922
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	200,000	200,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	7,500,000	7,500,000
Common stock, shares issued	3,620,669	3,531,036
Common stock, shares, outstanding	3,620,669	3,531,036

XML

CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Loans:
Taxable		$ 5,285	$ 5,436	$ 10,420	$ 10,556
Tax-exempt		60	75	127	143
Investment securities:
Taxable		1,171	1,146	2,335	2,343
Tax-exempt		856	736	1,664	1,414
Total interest income		7,372	7,393	14,546	14,456
Interest expense:
Deposits		287	272	564	550
Borrowings		523	497	1,016	988
Total interest expense		810	769	1,580	1,538
Net interest income		6,562	6,624	12,966	12,918
Provision for loan losses		300	200	350	(800)
Net interest income after provision for loan losses		6,262	6,424	12,616	13,718
Non-interest income:
Fees and service charges		1,847	1,813	3,576	3,495
Gains on sales of loans, net		1,405	2,251	3,199	4,194
Bank owned life insurance		145	123	265	245
Gains (losses) on sales of investment securities, net		285	0	297	(254)
Other		266	495	505	765
Total non-interest income		3,948	4,682	7,842	8,445
Non-interest expense:
Compensation and benefits		3,777	3,845	7,578	7,566
Occupancy and equipment		1,055	1,059	2,111	2,130
Amortization of intangibles		331	346	668	681
Data processing		346	342	657	689
Professional fees		282	259	501	493
Advertising		166	125	332	249
Federal deposit insurance premiums		110	105	220	224
Foreclosure and real estate owned expense		51	20	116	45
Other		1,093	1,342	2,190	2,477
Total non-interest expense		7,211	7,443	14,373	14,554
Earnings before income taxes		2,999	3,663	6,085	7,609
Income tax expense		754	1,047	1,563	2,216
Net earnings		$ 2,245	$ 2,616	$ 4,522	$ 5,393
Earnings per share:
Basic (1)	[1],[2]	$ 0.62	$ 0.75	$ 1.26	$ 1.54
Diluted (1)	[1],[2]	0.61	0.72	1.24	1.5
Dividends per share (1)	[1]	$ 0.2	$ 0.18	$ 0.4	$ 0.36

[1] Per share amounts for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

[2] Share and per share values for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

XML

CONSOLIDATED STATEMENTS OF EARNINGS [Parenthetical]	12 Months Ended
	Dec. 31, 2015
Percentage Of Stocks Dividend	5.00%

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net earnings	$ 2,245	$ 2,616	$ 4,522	$ 5,393
Net unrealized holding gains (losses) on available-for-sale securities	3,771	(3,235)	7,161	(1,322)
Reclassification adjustment for net (gains) losses included in earnings	(285)	0	(297)	254
Net unrealized gains (losses)	3,486	(3,235)	6,864	(1,068)
Income tax effect on net (gains) losses included in earnings	105	0	110	(94)
Income tax effect on net unrealized holding (gains) losses	(1,396)	1,201	(2,654)	493
Other comprehensive income (loss)	2,195	(2,034)	4,320	(669)
Total comprehensive income	$ 4,440	$ 582	$ 8,842	$ 4,724

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common stock [Member]	Additional paid-in capital [Member]	Retained earnings [Member]	Accumulated other comprehensive income (loss) [Member]
Balance at Dec. 31, 2014	$ 71,645	$ 33	$ 40,473	$ 29,321	$ 1,818
Net earnings	5,393	0	0	5,393	0
Other comprehensive income	(669)	0	0	0	(669)
Dividends paid	(1,268)	0	0	(1,268)	0
Stock-based compensation	16	0	16	0	0
Exercise of stock options shares including excess tax benefit	79	0	79	0	0
Balance at Jun. 30, 2015	75,196	33	40,568	33,446	1,149
Balance at Dec. 31, 2015	80,570	35	45,372	32,988	2,175
Net earnings	4,522	0	0	4,522	0
Other comprehensive income	4,320	0	0	0	4,320
Dividends paid	(1,437)	0	0	(1,437)	0
Exercise of stock options shares including excess tax benefit	1,392	1	1,391	0	0
Balance at Jun. 30, 2016	$ 89,367	$ 36	$ 46,763	$ 36,073	$ 6,495

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY [Parenthetical] - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015
Dividends per share (in dollars per shares)	[1]	$ 0.4	$ 0.36
Exercise of stock options (in shares)		89,633	4,181
Excess tax benefit related to stock option plans (in dollars)		$ 197	$ 5

[1] Per share amounts for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net earnings	$ 4,522	$ 5,393
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses	350	(800)
Amortization of investment security premiums, net	818	767
Amortization of purchase accounting adjustment on loans	(57)	(362)
Amortization of purchase accounting adjustment on subordinated debentures	100	100
Amortization of intangibles	668	681
Depreciation	581	577
Increase in cash surrender value of bank owned life insurance	(265)	(245)
Stock-based compensation	0	16
Deferred income taxes	229	215
Net (gains) losses on sales of investment securities	(297)	254
Impairment of affordable housing investment	0	163
Net loss (gain) on sales of premises, equipment and real estate owned	72	(236)
Net gains on sales of loans	(3,199)	(4,194)
Proceeds from sales of loans	121,551	148,064
Origination of loans held for sale	(113,944)	(151,326)
Changes in assets and liabilities:
Accrued interest and other assets	(1,536)	(1,534)
Accrued expenses, taxes, and other liabilities	(2,538)	(1,237)
Net cash provided by (used in) operating activities	7,055	(3,704)
Cash flows from investing activities:
Net increase in loans	(10,932)	(3,659)
Maturities and prepayments of investment securities	23,429	34,411
Purchases of investment securities	(43,815)	(62,094)
Proceeds from sales of investment securities	13,617	19,069
Redemption of bank stocks	3,009	4,769
Purchase of bank stocks	(3,134)	(5,951)
Proceeds from sales of premises and equipment and foreclosed assets	749	219
Proceeds from bank owned life insurance	351	0
Purchases of premises and equipment, net	(386)	(509)
Net cash used in investing activities	(17,112)	(13,745)
Cash flows from financing activities:
Net increase (decrease) in deposits	897	(5,005)
Federal Home Loan Bank advance borrowings	156,291	131,251
Federal Home Loan Bank advance repayments	(145,891)	(103,945)
Proceeds from other borrowings	0	1,400
Repayments on other borrowings	(447)	(2,688)
Proceeds from exercise of stock options, including excess tax benefit	1,392	79
Payment of dividends	(1,437)	(1,268)
Net cash provided by financing activities	10,805	19,824
Net increase in cash and cash equivalents	748	2,375
Cash and cash equivalents at beginning of period	13,569	12,760
Cash and cash equivalents at end of period	14,317	15,135
Supplemental disclosure of cash flow information:
Cash payments for income taxes	500	1,890
Cash paid for interest	1,599	1,551
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to real estate owned	536	24
Investment securities purchases not yet settled	$ 0	$ (2,817)

XML

Interim Financial Statements

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Interim Financial Statements

The unaudited consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and subsidiary have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles ("GAAP") for complete financial statements and should be read in conjunction with the Company’s most recent annual report on Form 10-K, containing the latest audited consolidated financial statements and notes thereto. The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements have been reflected herein. The results of the six months ended June 30, 2016 are not necessarily indicative of the results expected for the year ending December 31, 2016 or for any other period. The Company has evaluated subsequent events for recognition and disclosure up to the date the financial statements were issued.

XML

Investments

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Marketable Securities [Text Block]

2. Investments

A summary of investment securities available-for-sale is as follows:

	As of June 30, 2016
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated
(Dollars in thousands)	cost		gains		losses		fair value
U. S. treasury securities	$	6,011	$	38	$	-	$	6,049
U. S. federal agency obligations		27,721		269		(5)		27,985
Municipal obligations, tax exempt		150,554		5,203		(22)		155,735
Municipal obligations, taxable		71,998		2,268		-		74,266
Agency mortgage-backed securities		89,731		1,781		(11)		91,501
Common stocks		562		752		-		1,314
Certificates of deposit		9,700		-		-		9,700
Total	$	356,277	$	10,311	$	(38)	$	366,550

	As of December 31, 2015
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated
(Dollars in thousands)	cost		gains		losses		fair value
U. S. treasury securities	$	6,517	$	1	$	(1)	$	6,517
U. S. federal agency obligations		30,064		43		(187)		29,920
Municipal obligations, tax exempt		135,341		2,671		(71)		137,941
Municipal obligations, taxable		81,999		472		(581)		81,890
Agency mortgage-backed securities		85,829		391		(235)		85,985
Common stocks		580		906		-		1,486
Certificates of deposit		9,699		-		-		9,699
Total	$	350,029	$	4,484	$	(1,075)	$	353,438

The tables above show that some of the securities in the available-for-sale investment portfolio had unrealized losses, or were temporarily impaired, as of June 30, 2016 and December 31, 2015. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

			As of June 30, 2016
(Dollars in thousands)			Less than 12 months				12 months or longer				Total
	No. of		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	securities		value		losses		value		losses		value		losses
U.S. federal agency obligations		1	$	-	$	-	$	3,200	$	(5)	$	3,200	$	(5)
Municipal obligations, tax exempt		20		4,313		(20)		626		(2)		4,939		(22)
Agency mortgage-backed securities		12		645		(1)		1,907		(10)		2,552		(11)
Total		33	$	4,958	$	(21)	$	5,733	$	(17)	$	10,691	$	(38)

			As of December 31, 2015
(Dollars in thousands)			Less than 12 months				12 months or longer				Total
	No. of		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	securities		value		losses		value		losses		value		losses
U.S. treasury securities		2	$	3,542	$	(1)	$	-	$	-	$	3,542	$	(1)
U. S. federal agency obligations		18		23,015		(163)		1,976		(24)		24,991		(187)
Municipal obligations, tax exempt		47		11,328		(53)		2,132		(18)		13,460		(71)
Municipal obligations, taxable		105		38,605		(494)		5,068		(87)		43,673		(581)
Agency mortgage-backed securities		40		29,814		(166)		2,925		(69)		32,739		(235)
Total		212	$	106,304	$	(877)	$	12,101	$	(198)	$	118,405	$	(1,075)

The Company’s U.S. federal agency portfolio consists of securities issued by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Bank (“FHLB”). The receipt of principal and interest on U.S. federal agency obligations is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its U.S. federal agency obligations do not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the U.S. federal agency obligations identified in the tables above were temporarily impaired as of the date of the respective table.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of June 30, 2016, the Company did not intend to sell and it was more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of their costs. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired as of the date of the respective table.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of FHLMC, FNMA and the Government National Mortgage Association (“GNMA”). The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the tables above were temporarily impaired as of the date of the respective table.

The table below of the amortized cost and estimated fair value of investment securities includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties. The amortized cost and fair value of investment securities at June 30, 2016 are as follows:

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	17,508	$	17,598
Due after one year but within five years		180,166		182,762
Due after five years but within ten years		88,657		92,255
Due after ten years		69,384		72,621
Common stocks		562		1,314
Total	$	356,277	$	366,550

Sales proceeds and gross realized gains and losses on sales of available-for-sale securities are as follows:

(Dollars in thousands)	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Sales proceeds	$	11,801	$	-	$	13,617	$	19,069
Realized gains	$	296	$	-	$	312	$	24
Realized losses		(11)		-		(15)		(278)
Net realized losses	$	285	$	-	$	297	$	(254)

Securities with carrying values of $201.8 million and $171.6 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at June 30, 2016 and December 31, 2015, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.

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Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

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

3. Loans and Allowance for Loan Losses

Loans consisted of the following as of the dates indicated below:

	June 30,		December 31,
(Dollars in thousands)	2016		2015
One-to-four family residential real estate	$	130,753	$	131,930
Construction and land		18,381		15,043
Commercial real estate		119,147		118,983
Commercial loans		62,120		61,300
Agriculture loans		78,817		71,030
Municipal loans		7,263		7,635
Consumer loans		19,203		19,895
Total gross loans		435,684		425,816
Net deferred loan costs and loans in process		32		29
Allowance for loan losses		(5,652)		(5,922)
Loans, net	$	430,064	$	419,923

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class:

	Three and six months ended June 30, 2016
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Balance at April 1, 2016	$	864	$	82	$	1,831	$	1,384	$	1,483	$	24	$	201	$	5,869
Charge-offs		-		-		-		(306)		(83)		-		(148)		(537)
Recoveries		3		-		-		1		-		6		10		20
Provision for loan losses		(283)		7		(55)		314		200		(7)		124		300
Balance at June 30, 2016		584		89		1,776		1,393		1,600		23		187		5,652
Balance at January 1, 2016	$	925	$	77	$	1,740	$	1,530	$	1,428	$	23	$	199	$	5,922
Charge-offs		-		-		-		(306)		(83)		-		(285)		(674)
Recoveries		5		-		-		20		-		6		23		54
Provision for loan losses		(346)		12		36		149		255		(6)		250		350
Balance at June 30, 2016		584		89		1,776		1,393		1,600		23		187		5,652

	Three and six months ended June 30, 2015
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Balance at April 1, 2015	$	1,386	$	103	$	1,600	$	1,515	$	1,104	$	25	$	172	$	5,905
Charge-offs		(9)		-		-		(10)		-		-		(88)		(107)
Recoveries		3		4		2		2		-		-		8		19
Provision for loan losses		(55)		(9)		(63)		249		(2)		(4)		84		200
Balance at June 30, 2015		1,325		99		1,539		1,756		1,102		21		176		6,018
Balance at January 1, 2015	$	755	$	762	$	1,832	$	836	$	915	$	51	$	169	$	5,320
Charge-offs		(9)		-		-		(10)		-		(88)		(142)		(249)
Recoveries		5		1,719		2		3		-		-		18		1,747
Provision for loan losses		574		(2,382)		(295)		927		187		58		131		(800)
Balance at June 30, 2015		1,325		99		1,539		1,756		1,102		21		176		6,018

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class and allowance methodology:

	As of June 30, 2016
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Individually evaluated for loss		19		-		-		13		206		-		7		245
Collectively evaluated for loss		565		89		1,776		1,380		1,394		23		180		5,407
Total		584		89		1,776		1,393		1,600		23		187		5,652
Loan balances:
Individually evaluated for loss		1,106		2,061		2,417		127		879		393		102		7,085
Collectively evaluated for loss		129,647		16,320		116,730		61,993		77,938		6,870		19,101		428,599
Total	$	130,753	$	18,381	$	119,147	$	62,120	$	78,817	$	7,263	$	19,203	$	435,684

	As of December 31, 2015
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Individually evaluated for loss		78		-		-		-		-		-		10		88
Collectively evaluated for loss		847		77		1,740		1,530		1,428		23		189		5,834
Total		925		77		1,740		1,530		1,428		23		199		5,922
Loan balances:
Individually evaluated for loss		752		2,220		2,429		620		189		591		36		6,837
Collectively evaluated for loss		131,178		12,823		116,554		60,680		70,841		7,044		19,859		418,979
Total	$	131,930	$	15,043	$	118,983	$	61,300	$	71,030	$	7,635	$	19,895	$	425,816

The Company recorded net loan charge-offs of $620,000 during the first six months of 2016 compared to net loan recoveries of $1.5 million during the first six months of 2015. The net loan charge-offs during the first six months of 2016 were primarily related to the liquidation of the assets securing a previously identified and impaired commercial loan. The charge-off associated with this commercial loan exceeded the related allowance recorded at March 31, 2016, which contributed to provision for loan losses during the second quarter of 2016. The net loan recoveries during 2015 were primarily associated with the recovery of $1.7 million on a $4.3 million construction loan which was fully charged-off during 2010 and 2011. As of June 30, 2016, the Company has recovered approximately $2.4 million of the loan and continues to pursue collection of the remaining amount.

The Company’s impaired loans increased from $6.8 million at December 31, 2015 to $7.1 million at June 30, 2016. The difference between the unpaid contractual principal and the impaired loan balance is a result of charge-offs recorded against impaired loans. The difference in the Company’s non-accrual loan balances and impaired loan balances at June 30, 2016 and December 31, 2015, was related to troubled debt restructurings (“TDR”) that are current and accruing interest, but still classified as impaired. Interest income recognized on a cash basis was immaterial during the six months ended June 30, 2016 and 2015. The following tables present information on impaired loans:

(Dollars in thousands)	As of June 30, 2016
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to- date average loan balance		Year-to- date interest income recognized
One-to-four family residential real estate	$	1,106	$	1,106	$	502	$	604	$	19	$	1,117	$	4
Construction and land		3,796		2,061		2,061		-		-		2,137		38
Commercial real estate		2,417		2,417		2,417		-		-		2,426		253
Commercial loans		127		127		75		52		13		148		1
Agriculture loans		879		879		225		654		206		918		1
Municipal loans		393		393		393		-		-		514		8
Consumer loans		102		102		86		16		7		106		-
Total impaired loans	$	8,820	$	7,085	$	5,759	$	1,326	$	245	$	7,366	$	305

(Dollars in thousands)	As of December 31, 2015
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to- date average loan balance		Year-to- date interest income recognized
One-to-four family residential real estate	$	752	$	752	$	408	$	344	$	78	$	1,041	$	-
Construction and land		3,955		2,220		2,220		-		-		2,389		88
Commercial real estate		2,429		2,429		2,429		-		-		2,484		175
Commercial loans		637		620		620		-		-		634		3
Agriculture loans		189		189		189		-		-		188		3
Municipal loans		591		591		591		-		-		631		19
Consumer loans		36		36		10		26		10		41		-
Total impaired loans	$	8,589	$	6,837	$	6,467	$	370	$	88	$	7,408	$	288

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans ninety days delinquent and accruing interest at December 31, 2015. The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)	As of June 30, 2016
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non- accrual loans			Total loans not past due
One-to-four family residential real estate	$	140		$	512		$	-		$	652		$	916		$	1,568		$	129,185
Construction and land		5			-			-			5			607			612			17,769
Commercial real estate		10			237			-			247			39			286			118,861
Commercial loans		-			-			-			-			96			96			62,024
Agriculture loans		174			30			218			422			834			1,256			77,561
Municipal loans		-			-			-			-			-			-			7,263
Consumer loans		82			23			-			105			102			207			18,996
Total	$	411		$	802		$	218		$	1,431		$	2,594		$	4,025		$	431,659
Percent of gross loans		0.09	%		0.18	%		0.05	%		0.32	%		0.60	%		0.92	%		99.08	%

(Dollars in thousands)	As of December 31, 2015
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non- accrual loans			Total loans not past due
One-to-four family residential real estate	$	70		$	712		$	-		$	782		$	749		$	1,531		$	130,399
Construction and land		4			-			-			4			614			618			14,425
Commercial real estate		240			-			-			240			47			287			118,696
Commercial loans		90			40			-			130			583			713			60,587
Agriculture loans		174			5			-			179			139			318			70,712
Municipal loans		-			-			-			-			-			-			7,635
Consumer loans		65			2			-			67			36			103			19,792
Total	$	643		$	759		$	-		$	1,402		$	2,168		$	3,570		$	422,246
Percent of gross loans		0.15	%		0.18	%		0.00	%		0.33	%		0.51	%		0.84	%		99.16	%

Under the original terms of the Company’s non-accrual loans, interest earned on such loans for the six months ended June 30, 2016 and 2015, would have increased interest income by $44,000 and $237,000, respectively. No interest income related to non-accrual loans was included in interest income for the six months ended June 30, 2016 and 2015.

The Company also categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Non-classified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those that are assigned a special mention, substandard or doubtful risk rating using the following definitions:

Special Mention: Loans are currently protected by the current net worth and paying capacity of the obligor or of the collateral pledged but such protection is potentially weak. These loans constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. The credit risk may be relatively minor, yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.

Substandard: Loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

The following table provides information on the Company’s risk categories by loan class:

	As of June 30, 2016				As of December 31, 2015
(Dollars in thousands)	Nonclassified		Classified		Nonclassified		Classified
One-to-four family residential real estate	$	129,286	$	1,467	$	130,575	$	1,355
Construction and land		17,638		743		14,429		614
Commercial real estate		109,454		9,693		111,016		7,967
Commercial loans		58,875		3,245		58,862		2,438
Agriculture loans		72,179		6,638		68,186		2,844
Municipal loans		7,263		-		7,635		-
Consumer loans		19,084		119		19,839		56
Total		413,779		21,905		410,542		15,274

At June 30, 2016, the Company had ten loan relationships consisting of fourteen outstanding loans that were classified as TDRs. During the second quarter of 2016, the Company classified a $8,000 commercial loan as a TDR after modifying the payments to interest only. Also during the second quarter of 2016, the Company classified a $188,000 one-to-four family residential real estate loan as a TDR after agreeing to a loan modification which adjusted the payment schedule. Since all of the loans were adequately secured, no charge-offs or provisions for loan losses were recorded against the principal as of June 30, 2016. No loan modifications were classified as TDRs during the first quarter 2016. During the second quarter of 2015, the Company classified a commercial loan relationship consisting of $2.7 million in real estate and land loans as a TDR after agreeing to a bankruptcy plan with the borrower. The bankruptcy plan restarted the amortization period of the loans which extended the maturities of the loans. During the first quarter of 2015, the Company classified a $44,000 agriculture loan relationship consisting of two loans as a TDR after extending the maturity of the loans. During the first six months of 2016, a $56,000 one-to-four family residential real estate loan and a $25,000 agriculture loan, which were both classified as TDRs during 2015 were paid off.

The Company evaluates each TDR individually and returns the loan to accrual status when a payment history is established after the restructuring and future payments are reasonably assured. There were no loans modified as TDRs for which there was a payment default within 12 months of modification as of June 30, 2016 and 2015. At June 30, 2016, there was a commitment of $84,000 to lend additional funds on one construction and land loan classified as a TDR. The Company had no allowance recorded against loans classified as TDRs at June 30, 2016 or December 31, 2015.

The following table presents information on loans that are classified as TDRs:

(Dollars in thousands)
	As of June 30, 2016						As of December 31, 2015
	Number of loans		Non-accrual balance		Accruing balance		Number of loans		Non-accrual balance		Accruing balance
One-to-four family residential real estate		2	$	-	$	190		2	$	55	$	3
Construction and land		4		594		1,454		4		600		1,606
Commercial real estate		3		-		2,378		3		-		2,382
Commercial loans		2		-		31		1		-		37
Agriculture		1		-		45		2		-		50
Municipal loans		2		-		393		2		-		591
Total troubled debt restructurings		14	$	594	$	4,491		14	$	655	$	4,669

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

4. Goodwill and Other Intangible Assets

The Company tests goodwill for impairment annually or more frequently if circumstances warrant. The Company’s annual step one impairment test as of December 31, 2015 concluded that its goodwill was not impaired. The Company concluded there were no triggering events during the first six months of 2016 that required an interim goodwill impairment test.

Lease intangible assets are amortized over the life of the lease. Core deposit intangible assets are amortized over the estimated useful life of ten years on an accelerated basis. A summary of the other intangible assets that continue to be subject to amortization is as follows:

(Dollars in thousands)	As of June 30, 2016
	Gross carrying amount		Accumulated amortization		Net carrying amount
Core deposit intangible assets	$	2,067	$	(1,000)	$	1,067
Lease intangible asset		350		(120)		230
Mortgage servicing rights		5,580		(2,729)		2,851
Total other intangible assets	$	7,997	$	(3,849)	$	4,148

(Dollars in thousands)	As of December 31, 2015
	Gross carrying amount		Accumulated amortization		Net carrying amount
Core deposit intangible assets	$	2,067	$	(855)	$	1,212
Lease intangible asset		350		(98)		252
Mortgage servicing rights		5,322		(2,482)		2,840
Total other intangible assets	$	7,739	$	(3,435)	$	4,304

The following sets forth estimated amortization expense for core deposit and lease intangible assets for the remainder of 2016 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2016	$	160
2017		289
2018		252
2019		214
2020		177
Thereafter		205
Total	$	1,297

Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others:

(Dollars in thousands)	June 30,		December 31,
	2016		2015
FHLMC	$	467,663	$	444,714
FHLB		12,685		14,039

Custodial escrow balances maintained in connection with serviced loans were $4.5 million and $3.5 million at June 30, 2016 and December 31, 2015, respectively. Gross service fee income related to such loans was $304,000 and $268,000 for the three months ended June 30, 2016 and 2015, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income related to such loans was $604,000 and $523,000 for the six months ended June 30, 2016 and 2015, respectively.

Activity for mortgage servicing rights and the related valuation allowance follows:

(Dollars in thousands)	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Mortgage servicing rights:
Balance at beginning of period	$	2,808	$	2,557	$	2,840	$	2,477
Additions		291		408		512		710
Amortization		(248)		(236)		(501)		(458)
Balance at end of period	$	2,851	$	2,729	$	2,851	$	2,729

The fair value of mortgage servicing rights was $4.1 million and $4.6 million at June 30, 2016 and December 31, 2015, respectively. Fair value at June 30, 2016 was determined using discount rates ranging from 9.50% to 9.52%; prepayment speeds ranging from 6.14% to 14.98%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 2.16%. Fair value at December 31, 2015 was determined using discount rates ranging from 9.50% to 10.00%; prepayment speeds ranging from 5.15% to 33.78%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 2.25%.

The Company had a mortgage repurchase reserve of $361,000 and $351,000 at June 30, 2016 and December 31, 2015, respectively, which represents the Company’s best estimate of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. The Company did not incur any losses charged against the reserve or make any provisions to the reserve during the first six months of 2016 and 2015. The Company recovered $3,000 of losses during the three months ended June 30, 2016 and $10,000 of losses against the mortgage repurchase reserve during the six months ended June 30, 2016. As of June 30, 2016, the Company did not have any outstanding mortgage repurchase requests.

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Earnings per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

5. Earnings per Share

 

Basic earnings per share have been computed based upon the weighted average number of common shares outstanding during each period. Diluted earnings per share include the effect of all potential common shares outstanding during each period. The shares used in the calculation of basic and diluted earnings per share are shown below:

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30				June 30
	2016		2015		2016		2015
Net earnings	$	2,245	$	2,616	$	4,522	$	5,393
Weighted average common shares outstanding - basic (1)		3,613,671		3,504,295		3,585,235		3,503,495
Assumed exercise of stock options (1)		76,324		109,128		75,064		103,749
Weighted average common shares outstanding - diluted (1)		3,689,995		3,613,423		3,660,299		3,607,244
Net earnings per share (1):
Basic	$	0.62	$	0.75	$	1.26	$	1.54
Diluted	$	0.61	$	0.72	$	1.24	$	1.50

(1) Share and per share values for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

 

The diluted earnings per share computations for the three and six months ended June 30, 2016 and 2015 include all unexercised stock options because no stock options were anti-dilutive during such periods.

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Repurchase Agreements

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Repurchase Agreements, Resale Agreements, Securities Borrowed, and Securities Loaned Disclosure [Text Block]

6. Repurchase Agreements

The Company has overnight repurchase agreements with certain deposit customers whereby the Company uses investment securities as collateral for non-insured funds. These balances are accounted for as collateralized financing and included in other borrowings on the balance sheet. The following is a summary of the balances of and collateral for the Company’s repurchase agreements:

	As of June 30, 2016
	Overnight and						Greater
	Continuous		Up to 30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	5,063	$	-	$	-	$	-	$	5,063
Agency mortgage-backed securities		6,464		-		-		-		6,464
Total	$	11,527	$	-	$	-	$	-	$	11,527

	As of December 31, 2015
	Overnight and		Up to				Greater
	Continuous		30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	5,810	$	-	$	-	$	-	$	5,810
Agency mortgage-backed securities		6,164		-		-		-		6,164
Total	$	11,974	$	-	$	-	$	-	$	11,974

Repurchase agreements are comprised of non-insured customer funds, totaling $11.5 million at June 30, 2016, and $12.0 million at December 31, 2015, which were secured by $17.3 million and $15.7 million of the Company’s investment portfolio at the same dates, respectively.

 

The investment securities are held by a third-party financial institution in the customer’s custodial account. The Company is required to maintain adequate collateral for each repurchase agreement. Changes in the fair value of the investment securities impact the amount of collateral required. If the Company were to default, the investment securities would be used to settle the repurchase agreement with the deposit customer.

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Fair Value of Financial Instruments and Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

7. Fair Value of Financial Instruments and Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Fair value estimates of the Company’s financial instruments as of June 30, 2016 and December 31, 2015, including methods and assumptions utilized, are set forth below:

(Dollars in thousands)	As of June 30, 2016
	Carrying
	amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	14,317	$	14,317	$	-	$	-	$	14,317
Investment securities available-for-sale		366,550		7,363		359,187		-		366,550
Bank stocks, at cost		4,622		n/a		n/a		n/a		n/a
Loans, net		430,064		-		-		431,483		431,483
Loans held for sale, net		10,057		-		10,062		-		10,062
Derivative financial instruments		615		-		615		-		615
Accrued interest receivable		3,927		22		1,979		1,926		3,927
Financial liabilities:
Non-maturity deposits	$	(566,971)	$	(566,971)	$	-	$	-		(566,971)
Time deposits		(148,650)		-		(148,116)		-		(148,116)
FHLB borrowings		(48,000)		-		(49,247)		-		(49,247)
Subordinated debentures		(21,184)		-		(18,812)		-		(18,812)
Other borrowings		(11,527)		-		(11,527)		-		(11,527)
Accrued interest payable		(271)		-		(271)		-		(271)

	As of December 31, 2015
	Carrying
	amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	13,569	$	13,569	$	-	$	-	$	13,569
Investment securities available-for-sale		353,438		8,003		345,435		-		353,438
Bank stocks, at cost		4,497		n/a		n/a		n/a		n/a
Loans, net		419,923		-		-		420,061		420,061
Derivative financial instruments		797		-		797		-		797
Accrued interest receivable		4,002		22		2,117		1,863		4,002
Financial liabilities:
Non-maturity deposits	$	(570,784)	$	(570,784)	$	-	$	-	$	(570,784)
Time deposits		(143,943)		-		(142,924)		-		(142,924)
FHLB borrowings		(37,600)		-		(38,215)		-		(38,215)
Subordinated debentures		(2,184)		-		(19,051)		-		(19,051)
Other borrowings		(11,974)		-		(11,974)		-		(11,974)
Accrued interest payable		(287)		-		(287)		-		(287)

Methods and Assumptions Utilized

The carrying amount of cash and cash equivalents is considered to approximate fair value.

The Company’s investment securities classified as available-for-sale include U.S. treasury securities, U.S. federal agency securities, municipal obligations, agency mortgage-backed securities, certificates of deposits and common stocks. Quoted exchange prices are available for the Company’s U.S treasury securities and common stock investments, which are classified as Level 1. U.S. federal agency securities and agency mortgage-backed obligations are priced utilizing industry-standard models that consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. These measurements are classified as Level 2. Municipal securities are valued using a type of matrix, or grid, pricing in which securities are benchmarked against U.S. treasury rates based on credit rating. These model and matrix measurements are classified as Level 2 in the fair value hierarchy.

It is not practical to determine the fair value of bank stocks due to restrictions placed on the transferability of FHLB and FRB stock.

The estimated fair value of the Company’s loan portfolio is based on the segregation of loans by collateral type, interest terms, and maturities. The fair value is estimated based on discounting scheduled and estimated cash flows through maturity using an appropriate risk-adjusted yield curve to approximate current interest rates for each category. No adjustment was made to the interest rates for changes in credit risk of performing loans where there are no known credit concerns. Management segregates loans in appropriate risk categories. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses applicable to the performing loan portfolio results in a fair valuation of such loans. The fair values of impaired loans are generally based on market prices for similar assets determined through independent appraisals or discounted values of independent appraisals and brokers’ opinions of value. This method of estimating fair value does not incorporate the exit-price concept of fair value prescribed by ASC Topic 820 and is classified as Level 3.

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value, determined on an aggregate basis. The mortgage loan valuations are based on quoted secondary market prices for similar loans and are classified as Level 2.

The carrying amounts of accrued interest receivable and payable are considered to approximate fair value.

The estimated fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, money market accounts, and checking accounts, is equal to the amount payable on demand. The fair value of interest-bearing time deposits is based on the discounted value of contractual cash flows of such deposits. The discount rate is tied to the FHLB yield curve plus an appropriate servicing spread. Fair value measurements based on discounted cash flows are classified as Level 2. These fair values do not incorporate the value of core deposit intangibles which may be associated with the deposit base.

The fair value of advances from the FHLB, subordinated debentures, and other borrowings is estimated using current yield curves for similar borrowings adjusted for the Company’s current credit spread and classified as Level 2.

The Company’s derivative financial instruments consist of interest rate lock commitments and corresponding forward sales contracts on mortgage loans held for sale. The fair values of these derivatives are based on quoted prices for similar loans in the secondary market. The market prices are adjusted by a factor, based on the Company’s historical data and management’s judgment about future economic trends, which considers the likelihood that a commitment will ultimately result in a closed loan. These instruments are classified as Level 2. The amounts are included in other assets or other liabilities on the consolidated balance sheets and gains on sale of loans, net in the consolidated statements of earnings.

Off-Balance-Sheet Financial Instruments

The fair value of letters of credit and commitments to extend credit is based on the fees currently charged to enter into similar agreements. The aggregate of these fees is not material.

Transfers

The Company did not transfer any assets or liabilities among levels during the six months ended June 30, 2016 or during the year ended December 31, 2015.

Valuation Methods for Instruments Measured at Fair Value on a Recurring Basis

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at June 30, 2016 and December 31, 2015, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of June 30, 2016
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities
U. S. treasury securities	$	6,049	$	6,049	$	-	$	-
U. S. federal agency obligations		27,985		-		27,985		-
Municipal obligations, tax exempt		155,735		-		155,735		-
Municipal obligations, taxable		74,266		-		74,266		-
Agency mortgage-backed securities		91,501		-		91,501		-
Common stocks		1,314		1,314		-		-
Certificates of deposit		9,700		-		9,700		-
Derivative financial instruments	$	615	$	-	$	615	$	-

(Dollars in thousands)			As of December 31, 2015
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities
U. S. treasury securities	$	6,517	$	6,517	$	-	$	-
U. S. federal agency obligations		29,920		-		29,920		-
Municipal obligations, tax exempt		137,941		-		137,941		-
Municipal obligations, taxable		81,890		-		81,890		-
Agency mortgage-backed securities		85,985		-		85,985		-
Common stocks		1,486		1,486		-		-
Certificates of deposit		9,699		-		9,699		-
Derivative financial instruments		797		-		797		-

Changes in the fair value of available-for-sale securities are included in other comprehensive income to the extent the changes are not considered other-than-temporary impairments. Other-than-temporary impairment tests are performed on a quarterly basis and any decline in the fair value of an individual security below its cost that is deemed to be other-than-temporary results in a write-down of that security’s cost basis.

Valuation Methods for Instruments Measured at Fair Value on a Non-recurring Basis

The Company does not value its loan portfolio at fair value. Collateral-dependent impaired loans are generally carried at the lower of cost or fair value of the collateral, less estimated selling costs. Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the Company and then further adjusted if warranted based on relevant facts and circumstances. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Impaired loans are reviewed and evaluated at least quarterly for additional impairment and adjusted accordingly, based on the same factors identified above. The carrying value of the Company’s impaired loans was $7.1 million and $6.8 million, with an allocated allowance of $245,000 and $88,000, at June 30, 2016 and December 31, 2015, respectively.

The following table represents the Company’s financial instruments that are measured at fair value on a non-recurring basis as of June 30, 2016 and December 31, 2015 allocated to the appropriate fair value hierarchy:

(Dollars in thousands)
			As of June 30, 2016						Total
			Fair value hierarchy						gains/
	Total		Level 1		Level 2		Level 3		(losses)
Assets:
Impaired loans:
One-to-four family residential real estate	$	585	$	-	$	-	$	585	$	3
Commercial loans		39		-		-		39		(13)
Agriculture loans		448		-		-		448		(206)
Consumer loans		9		-		-		9		2

			As of December 31, 2015						Total
			Fair value hierarchy						(losses)/
	Total		Level 1		Level 2		Level 3		gains
Assets:
Impaired loans:
One-to-four family residential real estate	$	266	$	-	$	-	$	266	$	(137)
Consumer loans		16		-		-		16		6
Loans held for sale		14,465		-		14,465		-		(10)

The following table presents quantitative information about Level 3 fair value measurements for impaired loans measured at fair value on a non-recurring basis as of June 30, 2016 and December 31, 2015.

(Dollars in thousands)
	Fair value		Valuation technique	Unobservable inputs	Range
As of June 30, 2016
Impaired loans:
One-to-four family residential real estate	$	585	Sales comparison	Adjustment to appraised value		6%-40	%
Commercial loans		39	Sales comparison	Adjustment to appraised value		15	%
Agriculture loans		448	Sales comparison	Adjustment to appraised value		20%-50	%
Consumer loans		9	Sales comparison	Adjustment to appraised value		0	%
As of December 31, 2015
Impaired loans:
One-to-four family residential real estate	$	266	Sales comparison	Adjustment to appraised value		0%-40	%
Consumer loans		16	Sales comparison	Adjustment to comparable sales		0	%

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Regulatory Capital Requirements

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

8. Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of June 30, 2016, the Company and its subsidiary, Landmark National Bank (“the Bank”) meet all capital adequacy requirements to which they were subject at that time.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. On January 1, 2015, the Company and the Bank became subject to new capital rules (the “Basel III Rules”) that implemented the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $1.0 billion).

The Basel III Rules have maintained the general structure of the prompt corrective action framework, while incorporating increased requirements. The Basel III Rules include a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%. A capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer began on January 1, 2016 at 0.625% of risk-weighted assets, and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. The capital conservation buffer increases the common equity Tier 1 capital ratio, Tier 1 capital and total risk based capital ratios as of March 31 of each year until the final level of 2.5% is reached. The Bank made the one-time accumulated other comprehensive income (“AOCI”) opt-out election on its first Call Report filed after January 1, 2015, which allowed banks under $250 billion a one-time opt-out election to remove the impact of certain unrealized capital gains and losses from the calculation of capital.

As of June 30, 2016 and December 31, 2015, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2016 and December 31, 2015:

(Dollars in thousands)						For capital
	Actual					adequacy purposes*
	Amount		Ratio			Amount		Ratio
As of June 30, 2016
Leverage	$	85,237		9.66	%	$	35,286		4.0	%
Common Equity Tier 1 Capital		64,736		11.93	%		27,811		5.1	%
Tier 1 Capital		85,237		15.71	%		35,950		6.6	%
Total Risk Based Capital		91,378		16.84	%		46,803		8.6	%
As of December 31, 2015
Leverage	$	80,401		9.43	%	$	34,092		4.0	%
Common Equity Tier 1 Capital		60,375		11.05	%		24,584		4.5	%
Tier 1 Capital		80,401		14.72	%		32,779		6.0	%
Total Risk Based Capital		87,214		15.96	%		43,706		8.0	%

*The ratios for June 30, 2016 include a capital conservation buffer of 0.625%.

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2016 and December 31, 2015:

											To be well-capitalized
											under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes*					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of June 30, 2016
Leverage	$	83,830		9.53	%	$	35,198		4.0	%	$	43,998		5.0	%
Common Equity Tier 1 Capital		83,830		15.50	%		27,716		5.1	%		35,153		6.5	%
Tier 1 Capital		83,830		15.50	%		35,829		6.6	%		43,265		8.0	%
Total Risk Based Capital		89,632		16.57	%		46,645		8.6	%		54,081		10.0	%
As of December 31, 2015
Leverage	$	79,857		9.40	%	$	33,993		4.0	%	$	42,491		5.0	%
Common Equity Tier 1 Capital		79,857		14.66	%		24,519		4.5	%		35,416		6.5	%
Tier 1 Capital		79,857		14.66	%		32,692		6.0	%		43,589		8.0	%
Total Risk Based Capital		85,929		15.77	%		43,589		8.0	%		54,486		10.0	%

*The ratios for June 30, 2016 include a capital conservation buffer of 0.625%.

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Impact of Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

9. Impact of Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The main provisions of the update require the identification of performance obligations within a contract and require the recognition of revenue based on a stand-alone allocation of contract revenue to each performance obligation. Performance obligations may be satisfied and revenue recognized over a period of time if: 1) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs, or 2) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or 3) the entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date. For public entities the amendments of the update are effective for annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Management is evaluating the impact of adopting ASU 2014-09.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Liabilities. The main provisions of the update are to eliminate the available for sale classification of accounting for equity securities and to adjust the fair value disclosures for financial instruments carried at amortized costs such that the disclosed fair values represent an exit price as opposed to an entry price. The provisions of this update will require that equity securities be carried at fair market value on the balance sheet and any periodic changes in value will be adjustments to the income statement. A practical expedient is provided for equity securities without a readily determinable fair value, such that these securities can be carried at cost less any impairment. The provisions of this update become effective for interim and annual periods beginning after December 15, 2017. Upon the effective date of the update, changes in the value of the Company's common stock investments will be adjustments to the income statement. Management does not expect the remaining requirements of this update to have a material impact on the Company’s financial position, results of operations or cash flows.

In February 2016, the FASB issued an update (ASU No. 2016-02, Leases) creating FASB Topic 842, Leases. The guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requiring more disclosures related to leasing transactions. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact on the consolidated financial statements and related disclosures.

In March 2016, the FASB issued an update (ASU No. 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting.) The guidance in this update affects any entity that issues share-based payment awards including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flow. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact on the consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), commonly referred to as “CECL”. The provisions of the update eliminate the probable initial recognition threshold under current GAAP which requires reserves to be based on an incurred loss methodology. Under CECL reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the contractual term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity debt securities. Under the provisions of the update credit losses recognized on available for sale debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans, with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Under current GAAP a purchased loan’s contractual balance is adjusted to fair value through a credit discount and no reserve is recorded on the purchased loan upon acquisition. Since under CECL reserves will be established for purchased loans at the time of acquisition the accounting for purchased loans is made more comparable to the accounting for originated loans. Finally, increased disclosure requirements under CECL oblige organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. For public entities the amendments of the update are effective beginning January 1, 2020. Management is in the process of evaluating the impact of CECL on the Company’s financial position, results of operations and cash flows as well as its required disclosures.

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Investments (Tables)

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities [Table Text Block]

A summary of investment securities available-for-sale is as follows:

	As of June 30, 2016
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated
(Dollars in thousands)	cost		gains		losses		fair value
U. S. treasury securities	$	6,011	$	38	$	-	$	6,049
U. S. federal agency obligations		27,721		269		(5)		27,985
Municipal obligations, tax exempt		150,554		5,203		(22)		155,735
Municipal obligations, taxable		71,998		2,268		-		74,266
Agency mortgage-backed securities		89,731		1,781		(11)		91,501
Common stocks		562		752		-		1,314
Certificates of deposit		9,700		-		-		9,700
Total	$	356,277	$	10,311	$	(38)	$	366,550

	As of December 31, 2015
			Gross		Gross
	Amortized		unrealized		unrealized		Estimated
(Dollars in thousands)	cost		gains		losses		fair value
U. S. treasury securities	$	6,517	$	1	$	(1)	$	6,517
U. S. federal agency obligations		30,064		43		(187)		29,920
Municipal obligations, tax exempt		135,341		2,671		(71)		137,941
Municipal obligations, taxable		81,999		472		(581)		81,890
Agency mortgage-backed securities		85,829		391		(235)		85,985
Common stocks		580		906		-		1,486
Certificates of deposit		9,699		-		-		9,699
Total	$	350,029	$	4,484	$	(1,075)	$	353,438

Available For Sale Securities Continuous Unrealized Loss Position Fair Value [Table Text Block]

Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

			As of June 30, 2016
(Dollars in thousands)			Less than 12 months				12 months or longer				Total
	No. of		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	securities		value		losses		value		losses		value		losses
U.S. federal agency obligations		1	$	-	$	-	$	3,200	$	(5)	$	3,200	$	(5)
Municipal obligations, tax exempt		20		4,313		(20)		626		(2)		4,939		(22)
Agency mortgage-backed securities		12		645		(1)		1,907		(10)		2,552		(11)
Total		33	$	4,958	$	(21)	$	5,733	$	(17)	$	10,691	$	(38)

			As of December 31, 2015
(Dollars in thousands)			Less than 12 months				12 months or longer				Total
	No. of		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	securities		value		losses		value		losses		value		losses
U.S. treasury securities		2	$	3,542	$	(1)	$	-	$	-	$	3,542	$	(1)
U. S. federal agency obligations		18		23,015		(163)		1,976		(24)		24,991		(187)
Municipal obligations, tax exempt		47		11,328		(53)		2,132		(18)		13,460		(71)
Municipal obligations, taxable		105		38,605		(494)		5,068		(87)		43,673		(581)
Agency mortgage-backed securities		40		29,814		(166)		2,925		(69)		32,739		(235)
Total		212	$	106,304	$	(877)	$	12,101	$	(198)	$	118,405	$	(1,075)

Investments Classified by Contractual Maturity Date [Table Text Block]

The table below of the amortized cost and estimated fair value of investment securities includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties. The amortized cost and fair value of investment securities at June 30, 2016 are as follows:

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	17,508	$	17,598
Due after one year but within five years		180,166		182,762
Due after five years but within ten years		88,657		92,255
Due after ten years		69,384		72,621
Common stocks		562		1,314
Total	$	356,277	$	366,550

Schedule of Realized Gain (Loss) [Table Text Block]

Sales proceeds and gross realized gains and losses on sales of available-for-sale securities are as follows:

(Dollars in thousands)	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Sales proceeds	$	11,801	$	-	$	13,617	$	19,069
Realized gains	$	296	$	-	$	312	$	24
Realized losses		(11)		-		(15)		(278)
Net realized losses	$	285	$	-	$	297	$	(254)

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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

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

Loans consisted of the following as of the dates indicated below:

	June 30,		December 31,
(Dollars in thousands)	2016		2015
One-to-four family residential real estate	$	130,753	$	131,930
Construction and land		18,381		15,043
Commercial real estate		119,147		118,983
Commercial loans		62,120		61,300
Agriculture loans		78,817		71,030
Municipal loans		7,263		7,635
Consumer loans		19,203		19,895
Total gross loans		435,684		425,816
Net deferred loan costs and loans in process		32		29
Allowance for loan losses		(5,652)		(5,922)
Loans, net	$	430,064	$	419,923

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

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class:

	Three and six months ended June 30, 2016
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Balance at April 1, 2016	$	864	$	82	$	1,831	$	1,384	$	1,483	$	24	$	201	$	5,869
Charge-offs		-		-		-		(306)		(83)		-		(148)		(537)
Recoveries		3		-		-		1		-		6		10		20
Provision for loan losses		(283)		7		(55)		314		200		(7)		124		300
Balance at June 30, 2016		584		89		1,776		1,393		1,600		23		187		5,652
Balance at January 1, 2016	$	925	$	77	$	1,740	$	1,530	$	1,428	$	23	$	199	$	5,922
Charge-offs		-		-		-		(306)		(83)		-		(285)		(674)
Recoveries		5		-		-		20		-		6		23		54
Provision for loan losses		(346)		12		36		149		255		(6)		250		350
Balance at June 30, 2016		584		89		1,776		1,393		1,600		23		187		5,652

	Three and six months ended June 30, 2015
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Balance at April 1, 2015	$	1,386	$	103	$	1,600	$	1,515	$	1,104	$	25	$	172	$	5,905
Charge-offs		(9)		-		-		(10)		-		-		(88)		(107)
Recoveries		3		4		2		2		-		-		8		19
Provision for loan losses		(55)		(9)		(63)		249		(2)		(4)		84		200
Balance at June 30, 2015		1,325		99		1,539		1,756		1,102		21		176		6,018
Balance at January 1, 2015	$	755	$	762	$	1,832	$	836	$	915	$	51	$	169	$	5,320
Charge-offs		(9)		-		-		(10)		-		(88)		(142)		(249)
Recoveries		5		1,719		2		3		-		-		18		1,747
Provision for loan losses		574		(2,382)		(295)		927		187		58		131		(800)
Balance at June 30, 2015		1,325		99		1,539		1,756		1,102		21		176		6,018

	As of June 30, 2016
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Individually evaluated for loss		19		-		-		13		206		-		7		245
Collectively evaluated for loss		565		89		1,776		1,380		1,394		23		180		5,407
Total		584		89		1,776		1,393		1,600		23		187		5,652
Loan balances:
Individually evaluated for loss		1,106		2,061		2,417		127		879		393		102		7,085
Collectively evaluated for loss		129,647		16,320		116,730		61,993		77,938		6,870		19,101		428,599
Total	$	130,753	$	18,381	$	119,147	$	62,120	$	78,817	$	7,263	$	19,203	$	435,684

	As of December 31, 2015
(Dollars in thousands)	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Individually evaluated for loss		78		-		-		-		-		-		10		88
Collectively evaluated for loss		847		77		1,740		1,530		1,428		23		189		5,834
Total		925		77		1,740		1,530		1,428		23		199		5,922
Loan balances:
Individually evaluated for loss		752		2,220		2,429		620		189		591		36		6,837
Collectively evaluated for loss		131,178		12,823		116,554		60,680		70,841		7,044		19,859		418,979
Total	$	131,930	$	15,043	$	118,983	$	61,300	$	71,030	$	7,635	$	19,895	$	425,816

Impaired Financing Receivables [Table Text Block]

The following tables present information on impaired loans:

(Dollars in thousands)	As of June 30, 2016
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to- date average loan balance		Year-to- date interest income recognized
One-to-four family residential real estate	$	1,106	$	1,106	$	502	$	604	$	19	$	1,117	$	4
Construction and land		3,796		2,061		2,061		-		-		2,137		38
Commercial real estate		2,417		2,417		2,417		-		-		2,426		253
Commercial loans		127		127		75		52		13		148		1
Agriculture loans		879		879		225		654		206		918		1
Municipal loans		393		393		393		-		-		514		8
Consumer loans		102		102		86		16		7		106		-
Total impaired loans	$	8,820	$	7,085	$	5,759	$	1,326	$	245	$	7,366	$	305

(Dollars in thousands)	As of December 31, 2015
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to- date average loan balance		Year-to- date interest income recognized
One-to-four family residential real estate	$	752	$	752	$	408	$	344	$	78	$	1,041	$	-
Construction and land		3,955		2,220		2,220		-		-		2,389		88
Commercial real estate		2,429		2,429		2,429		-		-		2,484		175
Commercial loans		637		620		620		-		-		634		3
Agriculture loans		189		189		189		-		-		188		3
Municipal loans		591		591		591		-		-		631		19
Consumer loans		36		36		10		26		10		41		-
Total impaired loans	$	8,589	$	6,837	$	6,467	$	370	$	88	$	7,408	$	288

Past Due Financing Receivables [Table Text Block]

The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)	As of June 30, 2016
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non- accrual loans			Total loans not past due
One-to-four family residential real estate	$	140		$	512		$	-		$	652		$	916		$	1,568		$	129,185
Construction and land		5			-			-			5			607			612			17,769
Commercial real estate		10			237			-			247			39			286			118,861
Commercial loans		-			-			-			-			96			96			62,024
Agriculture loans		174			30			218			422			834			1,256			77,561
Municipal loans		-			-			-			-			-			-			7,263
Consumer loans		82			23			-			105			102			207			18,996
Total	$	411		$	802		$	218		$	1,431		$	2,594		$	4,025		$	431,659
Percent of gross loans		0.09	%		0.18	%		0.05	%		0.32	%		0.60	%		0.92	%		99.08	%

(Dollars in thousands)	As of December 31, 2015
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non- accrual loans			Total loans not past due
One-to-four family residential real estate	$	70		$	712		$	-		$	782		$	749		$	1,531		$	130,399
Construction and land		4			-			-			4			614			618			14,425
Commercial real estate		240			-			-			240			47			287			118,696
Commercial loans		90			40			-			130			583			713			60,587
Agriculture loans		174			5			-			179			139			318			70,712
Municipal loans		-			-			-			-			-			-			7,635
Consumer loans		65			2			-			67			36			103			19,792
Total	$	643		$	759		$	-		$	1,402		$	2,168		$	3,570		$	422,246
Percent of gross loans		0.15	%		0.18	%		0.00	%		0.33	%		0.51	%		0.84	%		99.16	%

Risk Categories By Loan Class [Table Text Block]

The following table provides information on the Company’s risk categories by loan class:

	As of June 30, 2016				As of December 31, 2015
(Dollars in thousands)	Nonclassified		Classified		Nonclassified		Classified
One-to-four family residential real estate	$	129,286	$	1,467	$	130,575	$	1,355
Construction and land		17,638		743		14,429		614
Commercial real estate		109,454		9,693		111,016		7,967
Commercial loans		58,875		3,245		58,862		2,438
Agriculture loans		72,179		6,638		68,186		2,844
Municipal loans		7,263		-		7,635		-
Consumer loans		19,084		119		19,839		56
Total		413,779		21,905		410,542		15,274

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

The following table presents information on loans that are classified as TDRs:

(Dollars in thousands)
	As of June 30, 2016						As of December 31, 2015
	Number of loans		Non-accrual balance		Accruing balance		Number of loans		Non-accrual balance		Accruing balance
One-to-four family residential real estate		2	$	-	$	190		2	$	55	$	3
Construction and land		4		594		1,454		4		600		1,606
Commercial real estate		3		-		2,378		3		-		2,382
Commercial loans		2		-		31		1		-		37
Agriculture		1		-		45		2		-		50
Municipal loans		2		-		393		2		-		591
Total troubled debt restructurings		14	$	594	$	4,491		14	$	655	$	4,669

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

A summary of the other intangible assets that continue to be subject to amortization is as follows:

(Dollars in thousands)	As of June 30, 2016
	Gross carrying amount		Accumulated amortization		Net carrying amount
Core deposit intangible assets	$	2,067	$	(1,000)	$	1,067
Lease intangible asset		350		(120)		230
Mortgage servicing rights		5,580		(2,729)		2,851
Total other intangible assets	$	7,997	$	(3,849)	$	4,148

(Dollars in thousands)	As of December 31, 2015
	Gross carrying amount		Accumulated amortization		Net carrying amount
Core deposit intangible assets	$	2,067	$	(855)	$	1,212
Lease intangible asset		350		(98)		252
Mortgage servicing rights		5,322		(2,482)		2,840
Total other intangible assets	$	7,739	$	(3,435)	$	4,304

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The following sets forth estimated amortization expense for core deposit and lease intangible assets for the remainder of 2016 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2016	$	160
2017		289
2018		252
2019		214
2020		177
Thereafter		205
Total	$	1,297

Schedule of Participating Mortgage Loans [Table Text Block]

The following table provides information on the principal balances of mortgage loans serviced for others:

(Dollars in thousands)	June 30,		December 31,
	2016		2015
FHLMC	$	467,663	$	444,714
FHLB		12,685		14,039

Servicing Asset at Amortized Cost [Table Text Block]

Activity for mortgage servicing rights and the related valuation allowance follows:

(Dollars in thousands)	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Mortgage servicing rights:
Balance at beginning of period	$	2,808	$	2,557	$	2,840	$	2,477
Additions		291		408		512		710
Amortization		(248)		(236)		(501)		(458)
Balance at end of period	$	2,851	$	2,729	$	2,851	$	2,729

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Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

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

The shares used in the calculation of basic and diluted earnings per share are shown below:

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30				June 30
	2016		2015		2016		2015
Net earnings	$	2,245	$	2,616	$	4,522	$	5,393
Weighted average common shares outstanding - basic (1)		3,613,671		3,504,295		3,585,235		3,503,495
Assumed exercise of stock options (1)		76,324		109,128		75,064		103,749
Weighted average common shares outstanding - diluted (1)		3,689,995		3,613,423		3,660,299		3,607,244
Net earnings per share (1):
Basic	$	0.62	$	0.75	$	1.26	$	1.54
Diluted	$	0.61	$	0.72	$	1.24	$	1.50

(1) Share and per share values for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

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Repurchase Agreements (Tables)

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Schedule of Repurchase Agreements [Table Text Block]

The Company has overnight repurchase agreements with certain deposit customers whereby the Company uses investment securities as collateral for non-insured funds. These balances are accounted for as collateralized financing and included in other borrowings on the balance sheet. The following is a summary of the balances of and collateral for the Company’s repurchase agreements:

	As of June 30, 2016
	Overnight and						Greater
	Continuous		Up to 30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	5,063	$	-	$	-	$	-	$	5,063
Agency mortgage-backed securities		6,464		-		-		-		6,464
Total	$	11,527	$	-	$	-	$	-	$	11,527

	As of December 31, 2015
	Overnight and		Up to				Greater
	Continuous		30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	5,810	$	-	$	-	$	-	$	5,810
Agency mortgage-backed securities		6,164		-		-		-		6,164
Total	$	11,974	$	-	$	-	$	-	$	11,974

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Fair Value of Financial Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

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

Fair value estimates of the Company’s financial instruments as of June 30, 2016 and December 31, 2015, including methods and assumptions utilized, are set forth below:

(Dollars in thousands)	As of June 30, 2016
	Carrying
	amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	14,317	$	14,317	$	-	$	-	$	14,317
Investment securities available-for-sale		366,550		7,363		359,187		-		366,550
Bank stocks, at cost		4,622		n/a		n/a		n/a		n/a
Loans, net		430,064		-		-		431,483		431,483
Loans held for sale, net		10,057		-		10,062		-		10,062
Derivative financial instruments		615		-		615		-		615
Accrued interest receivable		3,927		22		1,979		1,926		3,927
Financial liabilities:
Non-maturity deposits	$	(566,971)	$	(566,971)	$	-	$	-		(566,971)
Time deposits		(148,650)		-		(148,116)		-		(148,116)
FHLB borrowings		(48,000)		-		(49,247)		-		(49,247)
Subordinated debentures		(21,184)		-		(18,812)		-		(18,812)
Other borrowings		(11,527)		-		(11,527)		-		(11,527)
Accrued interest payable		(271)		-		(271)		-		(271)

	As of December 31, 2015
	Carrying
	amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	13,569	$	13,569	$	-	$	-	$	13,569
Investment securities available-for-sale		353,438		8,003		345,435		-		353,438
Bank stocks, at cost		4,497		n/a		n/a		n/a		n/a
Loans, net		419,923		-		-		420,061		420,061
Derivative financial instruments		797		-		797		-		797
Accrued interest receivable		4,002		22		2,117		1,863		4,002
Financial liabilities:
Non-maturity deposits	$	(570,784)	$	(570,784)	$	-	$	-	$	(570,784)
Time deposits		(143,943)		-		(142,924)		-		(142,924)
FHLB borrowings		(37,600)		-		(38,215)		-		(38,215)
Subordinated debentures		(2,184)		-		(19,051)		-		(19,051)
Other borrowings		(11,974)		-		(11,974)		-		(11,974)
Accrued interest payable		(287)		-		(287)		-		(287)

Fair Value, Assets Measured On Recurring Basis [Table Text Block]

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at June 30, 2016 and December 31, 2015, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of June 30, 2016
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities
U. S. treasury securities	$	6,049	$	6,049	$	-	$	-
U. S. federal agency obligations		27,985		-		27,985		-
Municipal obligations, tax exempt		155,735		-		155,735		-
Municipal obligations, taxable		74,266		-		74,266		-
Agency mortgage-backed securities		91,501		-		91,501		-
Common stocks		1,314		1,314		-		-
Certificates of deposit		9,700		-		9,700		-
Derivative financial instruments	$	615	$	-	$	615	$	-

(Dollars in thousands)			As of December 31, 2015
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities
U. S. treasury securities	$	6,517	$	6,517	$	-	$	-
U. S. federal agency obligations		29,920		-		29,920		-
Municipal obligations, tax exempt		137,941		-		137,941		-
Municipal obligations, taxable		81,890		-		81,890		-
Agency mortgage-backed securities		85,985		-		85,985		-
Common stocks		1,486		1,486		-		-
Certificates of deposit		9,699		-		9,699		-
Derivative financial instruments		797		-		797		-

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

The following table represents the Company’s financial instruments that are measured at fair value on a non-recurring basis as of June 30, 2016 and December 31, 2015 allocated to the appropriate fair value hierarchy:

(Dollars in thousands)
			As of June 30, 2016						Total
			Fair value hierarchy						gains/
	Total		Level 1		Level 2		Level 3		(losses)
Assets:
Impaired loans:
One-to-four family residential real estate	$	585	$	-	$	-	$	585	$	3
Commercial loans		39		-		-		39		(13)
Agriculture loans		448		-		-		448		(206)
Consumer loans		9		-		-		9		2

			As of December 31, 2015						Total
			Fair value hierarchy						(losses)/
	Total		Level 1		Level 2		Level 3		gains
Assets:
Impaired loans:
One-to-four family residential real estate	$	266	$	-	$	-	$	266	$	(137)
Consumer loans		16		-		-		16		6
Loans held for sale		14,465		-		14,465		-		(10)

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

The following table presents quantitative information about Level 3 fair value measurements for impaired loans measured at fair value on a non-recurring basis as of June 30, 2016 and December 31, 2015.

(Dollars in thousands)
	Fair value		Valuation technique	Unobservable inputs	Range
As of June 30, 2016
Impaired loans:
One-to-four family residential real estate	$	585	Sales comparison	Adjustment to appraised value		6%-40	%
Commercial loans		39	Sales comparison	Adjustment to appraised value		15	%
Agriculture loans		448	Sales comparison	Adjustment to appraised value		20%-50	%
Consumer loans		9	Sales comparison	Adjustment to appraised value		0	%
As of December 31, 2015
Impaired loans:
One-to-four family residential real estate	$	266	Sales comparison	Adjustment to appraised value		0%-40	%
Consumer loans		16	Sales comparison	Adjustment to comparable sales		0	%

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Regulatory Capital Requirements (Tables)

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements for Mortgage Companies [Table Text Block]

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2016 and December 31, 2015:

(Dollars in thousands)						For capital
	Actual					adequacy purposes*
	Amount		Ratio			Amount		Ratio
As of June 30, 2016
Leverage	$	85,237		9.66	%	$	35,286		4.0	%
Common Equity Tier 1 Capital		64,736		11.93	%		27,811		5.1	%
Tier 1 Capital		85,237		15.71	%		35,950		6.6	%
Total Risk Based Capital		91,378		16.84	%		46,803		8.6	%
As of December 31, 2015
Leverage	$	80,401		9.43	%	$	34,092		4.0	%
Common Equity Tier 1 Capital		60,375		11.05	%		24,584		4.5	%
Tier 1 Capital		80,401		14.72	%		32,779		6.0	%
Total Risk Based Capital		87,214		15.96	%		43,706		8.0	%

*The ratios for June 30, 2016 include a capital conservation buffer of 0.625%.

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2016 and December 31, 2015:

											To be well-capitalized
											under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes*					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of June 30, 2016
Leverage	$	83,830		9.53	%	$	35,198		4.0	%	$	43,998		5.0	%
Common Equity Tier 1 Capital		83,830		15.50	%		27,716		5.1	%		35,153		6.5	%
Tier 1 Capital		83,830		15.50	%		35,829		6.6	%		43,265		8.0	%
Total Risk Based Capital		89,632		16.57	%		46,645		8.6	%		54,081		10.0	%
As of December 31, 2015
Leverage	$	79,857		9.40	%	$	33,993		4.0	%	$	42,491		5.0	%
Common Equity Tier 1 Capital		79,857		14.66	%		24,519		4.5	%		35,416		6.5	%
Tier 1 Capital		79,857		14.66	%		32,692		6.0	%		43,589		8.0	%
Total Risk Based Capital		85,929		15.77	%		43,589		8.0	%		54,486		10.0	%

*The ratios for June 30, 2016 include a capital conservation buffer of 0.625%

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Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 356,277	$ 350,029
Gross unrealized gains	10,311	4,484
Gross unrealized losses	(38)	(1,075)
Estimated fair value	366,550	353,438
U. S. treasury securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	6,011	6,517
Gross unrealized gains	38	1
Gross unrealized losses	0	(1)
Estimated fair value	6,049	6,517
Common stocks [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	562	580
Gross unrealized gains	752	906
Gross unrealized losses	0	0
Estimated fair value	1,314	1,486
U. S. federal agency obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	27,721	30,064
Gross unrealized gains	269	43
Gross unrealized losses	(5)	(187)
Estimated fair value	27,985	29,920
Municipal obligations, tax exempt [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	150,554	135,341
Gross unrealized gains	5,203	2,671
Gross unrealized losses	(22)	(71)
Estimated fair value	155,735	137,941
Municipal obligations, taxable [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	71,998	81,999
Gross unrealized gains	2,268	472
Gross unrealized losses	0	(581)
Estimated fair value	74,266	81,890
Agency mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	89,731	85,829
Gross unrealized gains	1,781	391
Gross unrealized losses	(11)	(235)
Estimated fair value	91,501	85,985
Certificates of deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	9,700	9,699
Gross unrealized gains	0	0
Gross unrealized losses	0	0
Estimated fair value	$ 9,700	$ 9,699

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Investments (Details 1) $ in Thousands	Jun. 30, 2016 USD ($) Number	Dec. 31, 2015 USD ($) Number
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	33	212
Fair value, Less than 12 months	$ 4,958	$ 106,304
Unrealized losses, Less than 12 months	(21)	(877)
Fair value, 12 months or longer	5,733	12,101
Unrealized losses, 12 months or longer	(17)	(198)
Total, Fair value	10,691	118,405
Total, Unrealized losses	$ (38)	$ (1,075)
U. S. treasury securities [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number		2
Fair value, Less than 12 months		$ 3,542
Unrealized losses, Less than 12 months		(1)
Fair value, 12 months or longer		0
Unrealized losses, 12 months or longer		0
Total, Fair value		3,542
Total, Unrealized losses		$ (1)
U.S. federal agency obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	1	18
Fair value, Less than 12 months	$ 0	$ 23,015
Unrealized losses, Less than 12 months	0	(163)
Fair value, 12 months or longer	3,200	1,976
Unrealized losses, 12 months or longer	(5)	(24)
Total, Fair value	3,200	24,991
Total, Unrealized losses	$ (5)	$ (187)
Municipal obligations, tax exempt [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	20	47
Fair value, Less than 12 months	$ 4,313	$ 11,328
Unrealized losses, Less than 12 months	(20)	(53)
Fair value, 12 months or longer	626	2,132
Unrealized losses, 12 months or longer	(2)	(18)
Total, Fair value	4,939	13,460
Total, Unrealized losses	$ (22)	$ (71)
Municipal obligations, taxable [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number		105
Fair value, Less than 12 months		$ 38,605
Unrealized losses, Less than 12 months		(494)
Fair value, 12 months or longer		5,068
Unrealized losses, 12 months or longer		(87)
Total, Fair value		43,673
Total, Unrealized losses		$ (581)
Agency mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	12	40
Fair value, Less than 12 months	$ 645	$ 29,814
Unrealized losses, Less than 12 months	(1)	(166)
Fair value, 12 months or longer	1,907	2,925
Unrealized losses, 12 months or longer	(10)	(69)
Total, Fair value	2,552	32,739
Total, Unrealized losses	$ (11)	$ (235)

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Investments (Details 2) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized cost, Due in less than one year	$ 17,508
Amortized cost, Due after one year but within five years	180,166
Amortized cost, Due after five years but within ten years	88,657
Amortized cost, Due after ten years	69,384
Amortized cost	356,277	$ 350,029
Amortized cost, Total	356,277
Estimated fair value, Due in less than one year	17,598
Estimated fair value, Due after one year but within five years	182,762
Estimated fair value, Due after five years but within ten years	92,255
Estimated fair value, Due after ten years	72,621
Estimated fair value	366,550	353,438
Securities available-for-sale, at fair value	366,550	353,438
Common Stock [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	562	580
Estimated fair value	1,314	1,486
Securities available-for-sale, at fair value	$ 1,314	$ 1,486

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Investments (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Schedule of Available-for-sale Securities [Line Items]
Sales proceeds	$ 11,801	$ 0	$ 13,617	$ 19,069
Realized gains	296	0	312	24
Realized losses	(11)	0	(15)	(278)
Net realized gains (losses)	$ 285	$ 0	$ 297	$ (254)

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Investments (Details Textual) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Security Owned and Pledged as Collateral, Fair Value, Total	$ 201.8	$ 171.6

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Loans and Allowance for Loan Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	$ 435,684		$ 425,816
Net deferred loan costs and loans in process	32		29
Allowance for loan losses	(5,652)	$ (5,869)	(5,922)	$ (6,018)	$ (5,905)	$ (5,320)
Loans, net	430,064		419,923
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	130,753		131,930
Allowance for loan losses	(584)	(864)	(925)	(1,325)	(1,386)	(755)
Loans, net	130,753		131,930
Construction Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	18,381		15,043
Allowance for loan losses	(89)	(82)	(77)	(99)	(103)	(762)
Loans, net	18,381		15,043
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	119,147		118,983
Allowance for loan losses	(1,776)	(1,831)	(1,740)	(1,539)	(1,600)	(1,832)
Loans, net	119,147		118,983
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	62,120		61,300
Allowance for loan losses	(1,393)	(1,384)	(1,530)	(1,756)	(1,515)	(836)
Loans, net	62,120		61,300
Agriculture Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	78,817		71,030
Allowance for loan losses	(1,600)	(1,483)	(1,428)	(1,102)	(1,104)	(915)
Loans, net	78,817		71,030
Municipal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	7,263		7,635
Allowance for loan losses	(23)	(24)	(23)	(21)	(25)	(51)
Loans, net	7,263		7,635
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	19,203		19,895
Allowance for loan losses	(187)	$ (201)	(199)	$ (176)	$ (172)	$ (169)
Loans, net	$ 19,203		$ 19,895

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Loans and Allowance for Loan Losses (Details 1) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Dec. 31, 2015
Allowance for loan losses:
Balance	$ 5,869	$ 5,905	$ 5,922	$ 5,320
Charge-offs	(537)	(107)	(674)	(249)
Recoveries	20	19	54	1,747
Provision for loan losses	300	200	350	(800)
Balance	5,652	6,018	5,652	6,018
Allowance for loan losses:
Individually evaluated for loss					$ 245	$ 88
Collectively evaluated for loss					5,407	5,834
Total	5,869	5,905	5,652	6,018	5,652	5,922
Loan balances:
Individually evaluated for loss					7,085	6,837
Collectively evaluated for loss					428,599	418,979
Total					430,064	419,923
Residential Real Estate [Member]
Allowance for loan losses:
Balance	864	1,386	925	755
Charge-offs	0	(9)	0	(9)
Recoveries	3	3	5	5
Provision for loan losses	(283)	(55)	(346)	574
Balance	584	1,325	584	1,325
Allowance for loan losses:
Individually evaluated for loss					19	78
Collectively evaluated for loss					565	847
Total	864	1,386	584	1,325	584	925
Loan balances:
Individually evaluated for loss					1,106	752
Collectively evaluated for loss					129,647	131,178
Total					130,753	131,930
Construction Loans [Member]
Allowance for loan losses:
Balance	82	103	77	762
Charge-offs	0	0	0	0
Recoveries	0	4	0	1,719
Provision for loan losses	7	(9)	12	(2,382)
Balance	89	99	89	99
Allowance for loan losses:
Individually evaluated for loss					0	0
Collectively evaluated for loss					89	77
Total	82	103	89	99	89	77
Loan balances:
Individually evaluated for loss					2,061	2,220
Collectively evaluated for loss					16,320	12,823
Total					18,381	15,043
Commercial Real Estate [Member]
Allowance for loan losses:
Balance	1,831	1,600	1,740	1,832
Charge-offs	0	0	0	0
Recoveries	0	2	0	2
Provision for loan losses	(55)	(63)	36	(295)
Balance	1,776	1,539	1,776	1,539
Allowance for loan losses:
Individually evaluated for loss					0	0
Collectively evaluated for loss					1,776	1,740
Total	1,831	1,600	1,776	1,539	1,776	1,740
Loan balances:
Individually evaluated for loss					2,417	2,429
Collectively evaluated for loss					116,730	116,554
Total					119,147	118,983
Commercial Loan [Member]
Allowance for loan losses:
Balance	1,384	1,515	1,530	836
Charge-offs	(306)	(10)	(306)	(10)
Recoveries	1	2	20	3
Provision for loan losses	314	249	149	927
Balance	1,393	1,756	1,393	1,756
Allowance for loan losses:
Individually evaluated for loss					13	0
Collectively evaluated for loss					1,380	1,530
Total	1,384	1,515	1,393	1,756	1,393	1,530
Loan balances:
Individually evaluated for loss					127	620
Collectively evaluated for loss					61,993	60,680
Total					62,120	61,300
Agriculture Loans [Member]
Allowance for loan losses:
Balance	1,483	1,104	1,428	915
Charge-offs	(83)	0	(83)	0
Recoveries	0	0	0	0
Provision for loan losses	200	(2)	255	187
Balance	1,600	1,102	1,600	1,102
Allowance for loan losses:
Individually evaluated for loss					206	0
Collectively evaluated for loss					1,394	1,428
Total	1,483	1,104	1,600	1,102	1,600	1,428
Loan balances:
Individually evaluated for loss					879	189
Collectively evaluated for loss					77,938	70,841
Total					78,817	71,030
Municipal Loans [Member]
Allowance for loan losses:
Balance	24	25	23	51
Charge-offs	0	0	0	(88)
Recoveries	6	0	6	0
Provision for loan losses	(7)	(4)	(6)	58
Balance	23	21	23	21
Allowance for loan losses:
Individually evaluated for loss					0	0
Collectively evaluated for loss					23	23
Total	24	25	23	21	23	23
Loan balances:
Individually evaluated for loss					393	591
Collectively evaluated for loss					6,870	7,044
Total					7,263	7,635
Consumer Loan [Member]
Allowance for loan losses:
Balance	201	172	199	169
Charge-offs	(148)	(88)	(285)	(142)
Recoveries	10	8	23	18
Provision for loan losses	124	84	250	131
Balance	187	176	187	176
Allowance for loan losses:
Individually evaluated for loss					7	10
Collectively evaluated for loss					180	189
Total	$ 201	$ 172	$ 187	$ 176	187	199
Loan balances:
Individually evaluated for loss					102	36
Collectively evaluated for loss					19,101	19,859
Total					$ 19,203	$ 19,895

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Loans and Allowance for Loan Losses (Details 2) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	$ 8,820	$ 8,589
Impaired loan balance	7,085	6,837
Impaired loans without an allowance	5,759	6,467
Impaired loans with an allowance	1,326	370
Related allowance recorded	245	88
Year-to-date average loan balance	7,366	7,408
Year-to-date interest income recognized	305	288
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	1,106	752
Impaired loan balance	1,106	752
Impaired loans without an allowance	502	408
Impaired loans with an allowance	604	344
Related allowance recorded	19	78
Year-to-date average loan balance	1,117	1,041
Year-to-date interest income recognized	4	0
Construction Loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	3,796	3,955
Impaired loan balance	2,061	2,220
Impaired loans without an allowance	2,061	2,220
Impaired loans with an allowance	0	0
Related allowance recorded	0	0
Year-to-date average loan balance	2,137	2,389
Year-to-date interest income recognized	38	88
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	2,417	2,429
Impaired loan balance	2,417	2,429
Impaired loans without an allowance	2,417	2,429
Impaired loans with an allowance	0	0
Related allowance recorded	0	0
Year-to-date average loan balance	2,426	2,484
Year-to-date interest income recognized	253	175
Commercial Loan [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	127	637
Impaired loan balance	127	620
Impaired loans without an allowance	75	620
Impaired loans with an allowance	52	0
Related allowance recorded	13	0
Year-to-date average loan balance	148	634
Year-to-date interest income recognized	1	3
Agriculture Loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	879	189
Impaired loan balance	879	189
Impaired loans without an allowance	225	189
Impaired loans with an allowance	654	0
Related allowance recorded	206	0
Year-to-date average loan balance	918	188
Year-to-date interest income recognized	1	3
Municipal Loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	393	591
Impaired loan balance	393	591
Impaired loans without an allowance	393	591
Impaired loans with an allowance	0	0
Related allowance recorded	0	0
Year-to-date average loan balance	514	631
Year-to-date interest income recognized	8	19
Consumer Loan [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	102	36
Impaired loan balance	102	36
Impaired loans without an allowance	86	10
Impaired loans with an allowance	16	26
Related allowance recorded	7	10
Year-to-date average loan balance	106	41
Year-to-date interest income recognized	$ 0	$ 0

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Loans and Allowance for Loan Losses (Details 3) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing	$ 218	$ 0
Loans, Total past due loans accruing	1,431	1,402
Loans, Non-accrual loans	2,594	2,168
Loans, Total past due and non-accrual loans	4,025	3,570
Loans, Total loans not past due	$ 431,659	$ 422,246
Percent of gross loans, 30-59 days delinquent and accruing	0.09%	0.15%
Percent of gross loans, 60-89 days delinquent and accruing	0.18%	0.18%
Percent of gross loans, 90 days or more delinquent and accruing	0.05%	0.00%
Percentage of gross loans, Total past due loans accruing	0.32%	0.33%
Percent of gross loans, Non-accrual loans	0.60%	0.51%
Percentage of Total past due and non-accrual loans	0.92%	0.84%
Percentage of Total loans not past due	99.08%	99.16%
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 411	$ 643
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	802	759
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	652	782
Loans, Non-accrual loans	916	749
Loans, Total past due and non-accrual loans	1,568	1,531
Loans, Total loans not past due	129,185	130,399
Residential Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	140	70
Residential Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	512	712
Construction Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	5	4
Loans, Non-accrual loans	607	614
Loans, Total past due and non-accrual loans	612	618
Loans, Total loans not past due	17,769	14,425
Construction Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	5	4
Construction Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	247	240
Loans, Non-accrual loans	39	47
Loans, Total past due and non-accrual loans	286	287
Loans, Total loans not past due	118,861	118,696
Commercial Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	10	240
Commercial Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	237	0
Commercial Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	0	130
Loans, Non-accrual loans	96	583
Loans, Total past due and non-accrual loans	96	713
Loans, Total loans not past due	62,024	60,587
Commercial Loan [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	90
Commercial Loan [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	40
Agriculture Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing	218	0
Loans, Total past due loans accruing	422	179
Loans, Non-accrual loans	834	139
Loans, Total past due and non-accrual loans	1,256	318
Loans, Total loans not past due	77,561	70,712
Agriculture Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	174	174
Agriculture Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	30	5
Municipal Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	0	0
Loans, Non-accrual loans	0	0
Loans, Total past due and non-accrual loans	0	0
Loans, Total loans not past due	7,263	7,635
Municipal Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Municipal Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	105	67
Loans, Non-accrual loans	102	36
Loans, Total past due and non-accrual loans	207	103
Loans, Total loans not past due	18,996	19,792
Consumer Loan [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	82	65
Consumer Loan [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 23	$ 2

XML

Loans and Allowance for Loan Losses (Details 4) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	$ 435,684	$ 425,816
Loans Receivables Non Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	413,779	410,542
Loans Receivables Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	21,905	15,274
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	130,753	131,930
Residential Real Estate [Member] | Loans Receivables Non Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	129,286	130,575
Residential Real Estate [Member] | Loans Receivables Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	1,467	1,355
Construction Loans [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	18,381	15,043
Construction Loans [Member] | Loans Receivables Non Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	17,638	14,429
Construction Loans [Member] | Loans Receivables Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	743	614
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	119,147	118,983
Commercial Real Estate [Member] | Loans Receivables Non Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	109,454	111,016
Commercial Real Estate [Member] | Loans Receivables Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	9,693	7,967
Commercial Loan [Member] | Loans Receivables Non Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	58,875	58,862
Commercial Loan [Member] | Loans Receivables Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	3,245	2,438
Municipal Loans [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	7,263	7,635
Municipal Loans [Member] | Loans Receivables Non Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	7,263	7,635
Municipal Loans [Member] | Loans Receivables Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	0	0
Agriculture Loans [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	78,817	71,030
Agriculture Loans [Member] | Loans Receivables Non Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	72,179	68,186
Agriculture Loans [Member] | Loans Receivables Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	6,638	2,844
Consumer Loan [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	19,203	19,895
Consumer Loan [Member] | Loans Receivables Non Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	19,084	19,839
Consumer Loan [Member] | Loans Receivables Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	$ 119	$ 56

XML

Loans and Allowance for Loan Losses (Details 5) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016 USD ($) Number	Dec. 31, 2015 USD ($) Number
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 2,594	$ 2,168
Troubled Debt Restructurings [Member]
Troubled debt restructurings, Number of loans | Number	14	14
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 594	$ 655
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	$ 4,491	$ 4,669
Municipal Loans [Member] | Troubled Debt Restructurings [Member]
Troubled debt restructurings, Number of loans | Number	2	2
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 0	$ 0
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	393	591
Commercial Loan [Member]
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 96	$ 583
Commercial Loan [Member] | Troubled Debt Restructurings [Member]
Troubled debt restructurings, Number of loans | Number	2	1
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 0	$ 0
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	$ 31	$ 37
Construction Loans [Member] | Troubled Debt Restructurings [Member]
Troubled debt restructurings, Number of loans | Number	4	4
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 594	$ 600
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	$ 1,454	$ 1,606
Agriculture loan [Member] | Troubled Debt Restructurings [Member]
Troubled debt restructurings, Number of loans | Number	1	2
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 0	$ 0
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	45	50
Residential Real Estate [Member]
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 916	$ 749
Residential Real Estate [Member] | Troubled Debt Restructurings [Member]
Troubled debt restructurings, Number of loans | Number	2	2
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 0	$ 55
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	190	3
Commercial Real Estate [Member]
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 39	$ 47
Commercial Real Estate [Member] | Troubled Debt Restructurings [Member]
Troubled debt restructurings, Number of loans | Number	3	3
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 0	$ 0
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	$ 2,378	$ 2,382

XML

Loans and Allowance for Loan Losses (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans			$ 44,000	$ 237,000
Impaired Financing Receivable, Recorded Investment, Total	$ 7,085,000		7,085,000			$ 6,837,000
Loans Receivable, Gross, Commercial, Agricultural							$ 44,000
Proceeds from Loan Originations			2,400,000
Allowance for loan losses	5,652,000	$ 6,018,000	5,652,000	6,018,000	$ 5,869,000	5,922,000	5,905,000	$ 5,320,000
Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Restructuring, Trial Modifications, Amount	8,000	2,700,000
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Restructuring, Trial Modifications, Amount	188,000		56,000
Agriculture Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Restructuring, Trial Modifications, Amount			25,000
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable, Recorded Investment, Total	2,417,000		2,417,000			2,429,000
Allowance for loan losses	1,776,000	1,539,000	1,776,000	1,539,000	$ 1,831,000	$ 1,740,000	$ 1,600,000	$ 1,832,000
Construction Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	620,000,000	$ 4,300,000	620,000,000	$ 4,300,000
Construction Loans [Member] | Trouble Debt Restructurings [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Impaired, Commitment to Lend	$ 84,000		$ 84,000

XML

Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	$ 7,997	$ 7,739
Intangible assets, Accumulated amortization	(3,849)	(3,435)
Intangible assets, Net carrying amount	4,148	4,304
Core deposit intangible assets [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	2,067	2,067
Intangible assets, Accumulated amortization	(1,000)	(855)
Intangible assets, Net carrying amount	1,067	1,212
Lease intangible asset [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	350	350
Intangible assets, Accumulated amortization	(120)	(98)
Intangible assets, Net carrying amount	230	252
Mortgage servicing rights [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	5,580	5,322
Intangible assets, Accumulated amortization	(2,729)	(2,482)
Intangible assets, Net carrying amount	$ 2,851	$ 2,840

XML

Goodwill and Other Intangible Assets (Details 1) $ in Thousands	Jun. 30, 2016 USD ($)
Finite-Lived Intangible Assets [Line Items]
Remainder of 2016	$ 160
2017	289
2018	252
2019	214
2020	177
Thereafter	205
Total	$ 1,297

XML

Goodwill and Other Intangible Assets (Details 2) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
FHLMC [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage Loans on Real Estate, Face Amount of Mortgages	$ 467,663	$ 444,714
FHLB [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage Loans on Real Estate, Face Amount of Mortgages	$ 12,685	$ 14,039

XML

Goodwill and Other Intangible Assets (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Mortgage servicing rights:
Balance at beginning of period	$ 2,808	$ 2,557	$ 2,840	$ 2,477
Additions	291	408	512	710
Amortization	(248)	(236)	(501)	(458)
Balance at end of period	$ 2,851	$ 2,729	$ 2,851	$ 2,729

XML

Goodwill and Other Intangible Assets (Details Textual) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Weighted Average [Member]
Finite-Lived Intangible Assets [Line Items]
Assumption For Fair Value Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities Weighted Average Default Rate			2.16%		2.25%
Mortgage Loans Serviced [Member]
Finite-Lived Intangible Assets [Line Items]
Escrow Deposit	$ 4,500,000		$ 4,500,000		$ 3,500,000
Interest and Fee Income, Other Loans	304,000	$ 268,000	604,000	$ 523,000
Servicing Asset at Fair Value, Amount	4,100,000		$ 4,100,000		$ 4,600,000
Mortgage Loans Serviced [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Assumption for Fair Value of Assets or Liabilities that relate to Transferor's Continuing Involvement, Discount Rate			9.50%		9.50%
Assumption for Fair Value of Assets or Liabilities that relate to Transferor's Continuing Involvement, Prepayment Speed			6.14%		5.15%
Mortgage Loans Serviced [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Assumption for Fair Value of Assets or Liabilities that relate to Transferor's Continuing Involvement, Discount Rate			9.52%		10.00%
Assumption for Fair Value of Assets or Liabilities that relate to Transferor's Continuing Involvement, Prepayment Speed			14.98%		33.78%
Mortgage Repurchase Reserve [Member]
Finite-Lived Intangible Assets [Line Items]
Mortgage Loans on Real Estate, Write-down or Reserve, Amount	361,000		$ 361,000		$ 351,000
Financing Receivable, Allowance for Credit Losses, Recovery	$ 3,000		$ 10,000

XML

Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net earnings		$ 2,245	$ 2,616	$ 4,522	$ 5,393
Weighted average common shares outstanding - basic	[1]	3,613,671	3,504,295	3,585,235	3,503,495
Assumed exercise of stock options	[1]	76,324	109,128	75,064	103,749
Weighted average common shares outstanding - diluted	[1]	3,689,995	3,613,423	3,660,299	3,607,244
Net earnings per share :
Basic	[1],[2]	$ 0.62	$ 0.75	$ 1.26	$ 1.54
Diluted	[1],[2]	$ 0.61	$ 0.72	$ 1.24	$ 1.5

[1] Share and per share values for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

[2] Per share amounts for the periods ended June 30, 2015 have been adjusted to give effect to the 5% stock dividend paid during December 2015.

XML

Earnings per Share (Details Textual)	12 Months Ended
	Dec. 31, 2015
Percentage Of Stocks Dividend	5.00%

XML

Repurchase Agreements (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	$ 11,527	$ 11,974
U. S. federal agency obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	5,063	5,810
Agency mortgage-backed securities [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	6,464	6,164
Overnight and Continuous [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	11,527	11,974
Overnight and Continuous [Member] | U. S. federal agency obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	5,063	5,810
Overnight and Continuous [Member] | Agency mortgage-backed securities [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	6,464	6,164
Maturity Up to 30 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	0	0
Maturity Up to 30 Days [Member] | U. S. federal agency obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	0	0
Maturity Up to 30 Days [Member] | Agency mortgage-backed securities [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	0	0
Maturity 30 to 90 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	0	0
Maturity 30 to 90 Days [Member] | U. S. federal agency obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	0	0
Maturity 30 to 90 Days [Member] | Agency mortgage-backed securities [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	0	0
Maturity Greater than 90 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	0	0
Maturity Greater than 90 Days [Member] | U. S. federal agency obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	0	0
Maturity Greater than 90 Days [Member] | Agency mortgage-backed securities [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	$ 0	$ 0

XML

Repurchase Agreements (Details Textual) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Assets Sold under Agreements to Repurchase [Line Items]
Customer Funds	$ 11.5	$ 12.0
Repurchase Agreements [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Debt Instrument, Collateral Amount	$ 17.3	$ 15.7

XML

Fair Value of Financial Instruments and Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Financial assets:
Cash and cash equivalents, carrying amount	$ 14,317	$ 13,569	$ 15,135	$ 12,760
Cash and cash equivalents	14,317	13,569
Investment securities available-for-sale	366,550	353,438
Bank stocks, at cost, carrying amount	4,622	4,497
Loans, net	431,483	420,061
Loans held for sale, net	10,062
Loans, net, carrying amount	430,064	419,923
Loans held for sale, net, carrying amount	10,057	14,465
Derivative financial instruments	615	797
Accrued interest receivable	3,927	4,002
Financial liabilities:
Non-maturity deposits	(566,971)	(570,784)
Time deposits, carrying amount	(148,650)	(143,943)
FHLB borrowings, carrying amount	(48,000)	(37,600)
Subordinated debentures, carrying amount	(21,184)	(21,084)
Other borrowings, carrying amount	(11,527)	(11,974)
Time deposits	(148,116)	(142,924)
FHLB borrowings	(49,247)	(38,215)
Subordinated debentures	(18,812)	(19,051)
Other borrowings	(11,527)	(11,974)
Accrued interest payable	(271)	(287)
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and cash equivalents	14,317	13,569
Investment securities available-for-sale	7,363	8,003
Loans, net	0	0
Loans held for sale, net	0
Derivative financial instruments	0	0
Accrued interest receivable	22	22
Financial liabilities:
Non-maturity deposits	(566,971)	(570,784)
Time deposits	0	0
FHLB borrowings	0	0
Subordinated debentures	0	0
Other borrowings	0	0
Accrued interest payable	0	0
Fair Value, Inputs, Level 2 [Member]
Financial assets:
Cash and cash equivalents	0	0
Investment securities available-for-sale	359,187	345,435
Loans, net	0	0
Loans held for sale, net	10,062
Derivative financial instruments	615	797
Accrued interest receivable	1,979	2,117
Financial liabilities:
Non-maturity deposits	0	0
Time deposits	(148,116)	(142,924)
FHLB borrowings	(49,247)	(38,215)
Subordinated debentures	(18,812)	(19,051)
Other borrowings	(11,527)	(11,974)
Accrued interest payable	(271)	(287)
Fair Value, Inputs, Level 3 [Member]
Financial assets:
Cash and cash equivalents	0	0
Investment securities available-for-sale	0	0
Loans, net	431,483	420,061
Loans held for sale, net	0
Derivative financial instruments	0	0
Accrued interest receivable	1,926	1,863
Financial liabilities:
Non-maturity deposits	0	0
Time deposits	0	0
FHLB borrowings	0	0
Subordinated debentures	0	0
Other borrowings	0	0
Accrued interest payable	0	0
Carrying Amount, Fair Value Disclosure [Member]
Financial assets:
Cash and cash equivalents, carrying amount	14,317	13,569
Investment securities available-for-sale	366,550	353,438
Bank stocks, at cost, carrying amount	4,622	4,497
Loans, net, carrying amount	430,064	419,923
Loans held for sale, net, carrying amount	10,057
Derivative financial instruments	615	797
Accrued interest receivable, carrying amount	3,927	4,002
Financial liabilities:
Non-maturity deposits, carrying amount	(566,971)	(570,784)
Time deposits, carrying amount	(148,650)	(143,943)
FHLB borrowings, carrying amount	(48,000)	(37,600)
Subordinated debentures, carrying amount	(21,184)	(2,184)
Other borrowings, carrying amount	(11,527)	(11,974)
Accrued interest payable, carrying amount	$ (271)	$ (287)

XML

Fair Value of Financial Instruments and Fair Value Measurements (Details 1) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Assets:
Estimated fair value	$ 366,550	$ 353,438
Derivative financial instruments	615	797
Common stocks [Member]
Assets:
Estimated fair value	1,314	1,486
Fair Value, Measurements, Recurring [Member]
Assets:
Derivative financial instruments	615	797
Fair Value, Measurements, Recurring [Member] | Common stocks [Member]
Assets:
Estimated fair value	1,314	1,486
Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities [Member]
Assets:
Estimated fair value	91,501	85,985
U. S. federal agency obligations [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	27,985	29,920
Municipal obligations, tax exempt [Member]
Assets:
Estimated fair value	155,735	137,941
Municipal obligations, tax exempt [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	155,735	137,941
Municipal obligations, taxable [Member]
Assets:
Estimated fair value	74,266	81,890
Municipal obligations, taxable [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	74,266	81,890
U. S. treasury securities [Member]
Assets:
Estimated fair value	6,049	6,517
U. S. treasury securities [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	6,049	6,517
Certificates of deposit [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	9,700	9,699
Fair Value, Inputs, Level 1 [Member]
Assets:
Estimated fair value	7,363	8,003
Derivative financial instruments	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Derivative financial instruments	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Common stocks [Member]
Assets:
Estimated fair value	1,314	1,486
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 1 [Member] | U. S. federal agency obligations [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 1 [Member] | Municipal obligations, tax exempt [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 1 [Member] | Municipal obligations, taxable [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 1 [Member] | U. S. treasury securities [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	6,049	6,517
Fair Value, Inputs, Level 1 [Member] | Certificates of deposit [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 2 [Member]
Assets:
Estimated fair value	359,187	345,435
Derivative financial instruments	615	797
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Derivative financial instruments	615	797
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Common stocks [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities [Member]
Assets:
Estimated fair value	91,501	85,985
Fair Value, Inputs, Level 2 [Member] | U. S. federal agency obligations [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	27,985	29,920
Fair Value, Inputs, Level 2 [Member] | Municipal obligations, tax exempt [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	155,735	137,941
Fair Value, Inputs, Level 2 [Member] | Municipal obligations, taxable [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	74,266	81,890
Fair Value, Inputs, Level 2 [Member] | U. S. treasury securities [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 2 [Member] | Certificates of deposit [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	9,700	9,699
Fair Value, Inputs, Level 3 [Member]
Assets:
Estimated fair value	0	0
Derivative financial instruments	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Derivative financial instruments	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Common stocks [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 3 [Member] | U. S. federal agency obligations [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 3 [Member] | Municipal obligations, tax exempt [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 3 [Member] | Municipal obligations, taxable [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 3 [Member] | U. S. treasury securities [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	0	0
Fair Value, Inputs, Level 3 [Member] | Certificates of deposit [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Estimated fair value	$ 0	$ 0

XML

Fair Value of Financial Instruments and Fair Value Measurements (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Assets:
Loans held for sale	$ 10,062		$ 10,062
Gain (Loss) on loans held for sale, net	1,405	$ 2,251	3,199	$ 4,194
Fair Value, Measurements, Nonrecurring [Member]
Assets:
Loans held for sale					$ 14,465
Gain (Loss) on loans held for sale, net					(10)
Fair Value, Measurements, Nonrecurring [Member] | Commercial loans [Member]
Assets:
Impaired loans	39		39
Total (losses)/gains On Impaired Loans Fair Value Disclosure			(13)
Fair Value, Measurements, Nonrecurring [Member] | Agriculture loans [Member]
Assets:
Impaired loans	448		448
Total (losses)/gains On Impaired Loans Fair Value Disclosure			(206)
Fair Value, Measurements, Nonrecurring [Member] | Consumer loans [Member]
Assets:
Impaired loans	9		9		16
Total (losses)/gains On Impaired Loans Fair Value Disclosure			2		6
Fair Value, Measurements, Nonrecurring [Member] | One-to-four family residential real estate [Member]
Assets:
Impaired loans	585		585		266
Total (losses)/gains On Impaired Loans Fair Value Disclosure			3		(137)
Fair Value, Inputs, Level 1 [Member]
Assets:
Loans held for sale	0		0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets:
Loans held for sale					0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial loans [Member]
Assets:
Impaired loans	0		0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Agriculture loans [Member]
Assets:
Impaired loans	0		0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Consumer loans [Member]
Assets:
Impaired loans	0		0		0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member] | One-to-four family residential real estate [Member]
Assets:
Impaired loans	0		0		0
Fair Value, Inputs, Level 2 [Member]
Assets:
Loans held for sale	10,062		10,062
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets:
Loans held for sale					14,465
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial loans [Member]
Assets:
Impaired loans	0		0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Agriculture loans [Member]
Assets:
Impaired loans	0		0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Consumer loans [Member]
Assets:
Impaired loans	0		0		0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | One-to-four family residential real estate [Member]
Assets:
Impaired loans	0		0		0
Fair Value, Inputs, Level 3 [Member]
Assets:
Loans held for sale	0		0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets:
Loans held for sale					0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial loans [Member]
Assets:
Impaired loans	39		39
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Agriculture loans [Member]
Assets:
Impaired loans	448		448
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | Consumer loans [Member]
Assets:
Impaired loans	9		9		16
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | One-to-four family residential real estate [Member]
Assets:
Impaired loans	$ 585		$ 585		$ 266

XML

Fair Value of Financial Instruments and Fair Value Measurements (Details 3) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
One-to-four family residential real estate [Member] | Minimum [Member]
Fair Value Measurements Sales Comparison Range	6.00%	0.00%
One-to-four family residential real estate [Member] | Maximum [Member]
Fair Value Measurements Sales Comparison Range	40.00%	40.00%
Commercial loans [Member] | Minimum [Member]
Fair Value Measurements Sales Comparison Range	15.00%
Agriculture loans [Member] | Minimum [Member]
Fair Value Measurements Sales Comparison Range	20.00%
Agriculture loans [Member] | Maximum [Member]
Fair Value Measurements Sales Comparison Range	50.00%
Fair Value, Measurements, Nonrecurring [Member] | One-to-four family residential real estate [Member]
Impaired Loans Fair Value Disclosure	$ 585	$ 266
Fair Value Measurements, Valuation Techniques	Sales comparison	Sales comparison
Fair Value Measurements, Changes in Valuation Techniques	Adjustment to appraised value	Adjustment to appraised value
Fair Value, Measurements, Nonrecurring [Member] | Commercial loans [Member]
Impaired Loans Fair Value Disclosure	$ 39
Fair Value Measurements, Valuation Techniques	Sales comparison
Fair Value Measurements, Changes in Valuation Techniques	Adjustment to appraised value
Fair Value, Measurements, Nonrecurring [Member] | Agriculture loans [Member]
Impaired Loans Fair Value Disclosure	$ 448
Fair Value Measurements, Valuation Techniques	Sales comparison
Fair Value Measurements, Changes in Valuation Techniques	Adjustment to appraised value
Fair Value, Measurements, Nonrecurring [Member] | Consumer loans [Member]
Impaired Loans Fair Value Disclosure	$ 9	$ 16
Fair Value Measurements, Valuation Techniques	Sales comparison	Sales comparison
Fair Value Measurements, Changes in Valuation Techniques	Adjustment to appraised value	Adjustment to comparable sales
Fair Value Measurements Sales Comparison Range	0.00%	0.00%

XML

Fair Value of Financial Instruments and Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value of Financial Instruments And Fair Value Measurements [Line Items]
Impaired Financing Receivable, Related Allowance	$ 245	$ 88
Impaired Financing Receivable, Recorded Investment, Total	$ 7,085	$ 6,837

XML

Regulatory Capital Requirements (Details) - USD ($) $ in Thousands		Jun. 30, 2016	Dec. 31, 2015
Regulatory Capital Requirements [Line Items]
Leverage - For capital adequacy purposes Ratio		4.00%
Common Equity Tier 1 Capital - For capital adequacy purposes Ratio		4.50%
Total Risk Based Capital - For capital adequacy purposes Ratio		8.00%
Companys Regulatory Capital Requirements [Member]
Regulatory Capital Requirements [Line Items]
Leverage - Actual Amount		$ 85,237	$ 80,401
Common Equity Tier 1 Capital - Actual Amount		64,736	60,375
Tier 1 Capital - Actual Amount		85,237	80,401
Total Risk Based Capital - Actual Amount		$ 91,378	$ 87,214
Leverage - Actual Ratio		9.66%	9.43%
Common Equity Tier 1 Capital - Actual Ratio		11.93%	11.05%
Tier 1 Capital - Actual Ratio		15.71%	14.72%
Total Risk Based Capital - Actual Ratio		16.84%	15.96%
Leverage - For capital adequacy purposes Amount	[1]	$ 35,286	$ 34,092
Common Equity Tier 1 Capital - For capital adequacy purposes Amount	[1]	27,811	24,584
Tier 1 Capital - For capital adequacy purposes Amount	[1]	35,950	32,779
Total Risk Based Capital - For capital adequacy purposes Amount	[1]	$ 46,803	$ 43,706
Leverage - For capital adequacy purposes Ratio	[1]	4.00%	4.00%
Common Equity Tier 1 Capital - For capital adequacy purposes Ratio	[1]	5.10%	4.50%
Tier 1 Capital - For capital adequacy purposes Ratio	[1]	6.60%	6.00%
Total Risk Based Capital - For capital adequacy purposes Ratio	[1]	8.60%	8.00%

[1] The ratios for June 30, 2016 include a capital conservation buffer of 0.625%.

XML

Regulatory Capital Requirements (Details 1) - USD ($) $ in Thousands		Jun. 30, 2016	Dec. 31, 2015
Regulatory Capital Requirements [Line Items]
Leverage - For capital adequacy purposes Ratio		4.00%
Common Equity Tier 1 Capital - For capital adequacy purposes Ratio		4.50%
Total Risk Based Capital - For capital adequacy purposes Ratio		8.00%
Banks Regulatory Capital Requirements [Member]
Regulatory Capital Requirements [Line Items]
Leverage - Actual Amount		$ 83,830	$ 79,857
Common Equity Tier 1 Capital - Actual Amount		83,830	79,857
Tier 1 Capital - Actual Amount		83,830	79,857
Total Risk Based Capital - Actual Amount		$ 89,632	$ 85,929
Leverage - Actual Ratio		9.53%	9.40%
Common Equity Tier 1 Capital - Actual Ratio		15.50%	14.66%
Tier 1 Capital - Actual Ratio		15.50%	14.66%
Total Risk Based Capital - Actual Ratio		16.57%	15.77%
Leverage - For capital adequacy purposes Amount	[1]	$ 35,198	$ 33,993
Common Equity Tier 1 Capital - For capital adequacy purposes Amount	[1]	27,716	24,519
Tier 1 Capital - For capital adequacy purposes Amount	[1]	35,829	32,692
Total Risk Based Capital - For capital adequacy purposes Amount	[1]	$ 46,645	$ 43,589
Leverage - For capital adequacy purposes Ratio	[1]	4.00%	4.00%
Common Equity Tier 1 Capital - For capital adequacy purposes Ratio	[1]	5.10%	4.50%
Tier 1 Capital - For capital adequacy purposes Ratio	[1]	6.60%	6.00%
Total Risk Based Capital - For capital adequacy purposes Ratio	[1]	8.60%	8.00%
Leverage - To be well-capitalized under prompt corrective action provisions Amount		$ 43,998	$ 42,491
Common Equity Tier 1 Capital - To be well-capitalized under prompt corrective action provisions Amount		35,153	35,416
Tier 1 Capital - To be well-capitalized under prompt corrective action provisions Amount		43,265	43,589
Total Risk Based Capital - To be well-capitalized under prompt corrective action provisions Amount		$ 54,081	$ 54,486
Leverage - To be well-capitalized under prompt corrective action provisions Ratio		5.00%	5.00%
Common Equity Tier 1 Capital - To be well-capitalized under prompt corrective action provisions Ratio		6.50%	6.50%
Tier 1 Capital - To be well-capitalized under prompt corrective action provisions Ratio		8.00%	8.00%
Total Risk Based Capital - To be well-capitalized under prompt corrective action provisions Ratio		10.00%	10.00%

[1] The ratios for June 30, 2016 include a capital conservation buffer of 0.625%.

XML

Regulatory Capital Requirements (Details Textual) - USD ($) $ in Thousands	6 Months Ended	37 Months Ended
	Jun. 30, 2016	Jan. 31, 2019	Dec. 31, 2015
Regulatory Capital Requirements [Line Items]
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%
Assets, Total	$ 896,322		$ 878,376
Common Equity Tier One Risk Based Capital Required For Capital Adequacy To Risk Weighted Assets	4.50%
Scenario, Forecast [Member]
Regulatory Capital Requirements [Line Items]
Tier One Capital Conversation Buffer		2.50%
Maximum [Member]
Regulatory Capital Requirements [Line Items]
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	6.00%
Small Bank Holding Companies [Member]
Regulatory Capital Requirements [Line Items]
Assets, Total	$ 1,000,000
Opt Out Election Description	The Bank made the one-time accumulated other comprehensive income (“AOCI”) opt-out election on its first Call Report filed after January 1, 2015, which allowed banks under $250 billion a one-time opt-out election to remove the impact of certain unrealized capital gains and losses from the calculation of capital.
Capital Conservation Buffer [Member]
Regulatory Capital Requirements [Line Items]
Tier One Capital Conversation Buffer	0.625%
Tier One Capital Conversation Buffer, Increase	0.625%