10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended 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: 001-36706

	CB FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)

Pennsylvania	51-0534721
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 N. Market Street, Carmichaels, PA	15320
(Address of principal executive offices)	(Zip Code)

	(724) 966-5041
(Registrant’s telephone number, including area code)

	N/A
(Former name, former address and former fiscal year, if changed since last report)

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

Yes ☒ No ☐

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

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

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

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

As of August 9, 2016, the number of shares outstanding of the Registrant’s Common Stock was 4,081,017.

 

FORM 10-Q

INDEX

Page

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).	1
Consolidated Statement of Financial Condition	1
Consolidated Statement of Income	2
Consolidated Statement of Comprehensive Income	3
Consolidated Statement of Changes In Stockholders’ Equity	3
Consolidated Statement of Cash Flows	4
Notes to Unaudited Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	29
Item 3. Quantitative and Qualitative Disclosure about Market Risk.	38
Item 4. Controls and Procedures.	38
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.	39
Item 1A. Risk Factors.	39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	39
Item 3. Defaults Upon Senior Securities.	39
Item 4. Mine Safety Disclosures.	39
Item 5. Other Information.	39
Item 6. Exhibits	39
SIGNATURES	40

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

	(Unaudited)
(Dollars in thousands, except share data)	June 30, 2016			December 31, 2015
ASSETS
Cash and Due From Banks:
Interest Bearing	$	6,935		$	2,316
Non-Interest Bearing		6,278			9,024
Total Cash and Due From Banks		13,213			11,340
Investment Securities:
Available-for-Sale		94,419			95,863
Loans, Net		671,784			676,864
Premises and Equipment, Net		12,453			10,277
Bank-Owned Life Insurance		18,448			18,209
Goodwill		4,953			4,953
Core Deposit Intangible, Net		4,086			4,353
Accrued Interest and Other Assets		8,670			8,818
TOTAL ASSETS	$	828,026		$	830,677
LIABILITIES
Deposits:
Demand Deposits	$	163,564		$	161,053
NOW Accounts		98,555			99,514
Money Market Accounts		139,834			134,294
Savings Accounts		122,487			121,415
Time Deposits		134,286			145,651
Brokered Deposits		16,540			17,372
Total Deposits		675,266			679,299
Short-Term Borrowings		31,530			32,448
Other Borrowed Funds		28,000			28,000
Accrued Interest and Other Liabilities		3,695			4,034
TOTAL LIABILITIES		738,491			743,781
STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value; 5,000,000 Shares Authorized		-			-
Common Stock, $0.4167 Par Value; 35,000,000 Shares Authorized, 4,363,346 Shares Issued and 4,081,017 Shares Outstanding at June 30, 2016 and December 31, 2015, Respectively		1,818			1,818
Capital Surplus		41,788			41,614
Retained Earnings		49,912			47,725
Treasury Stock, at Cost (282,329 Shares at June 30, 2016 and December 31, 2015, Respectively)		(4,836	)		(4,836	)
Accumulated Other Comprehensive Income		853			575
TOTAL STOCKHOLDERS' EQUITY		89,535			86,896
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	828,026		$	830,677

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

 1

 

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands, except share and per share data)	2016		2015			2016			2015
INTEREST AND DIVIDEND INCOME
Loans, Including Fees	$	7,323	$	7,385		$	14,820		$	14,866
Federal Funds Sold		8		6			13			7
Investment Securities:
Taxable		307		225			631			467
Exempt From Federal Income Tax		266		274			526			570
Other Interest and Dividend Income		46		49			83			204
TOTAL INTEREST AND DIVIDEND INCOME		7,950		7,939			16,073			16,114
INTEREST EXPENSE
Deposits		560		594			1,121			1,192
Federal Funds Purchased		-		-			1			1
Short-Term Borrowings		15		15			29			45
Other Borrowed Funds		127		62			254			152
TOTAL INTEREST EXPENSE		702		671			1,405			1,390
NET INTEREST INCOME		7,248		7,268			14,668			14,724
Provision For Loan Losses		300		375			1,150			675
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,948		6,893			13,518			14,049
NONINTEREST INCOME
Service Fees on Deposit Accounts		606		625			1,192			1,202
Insurance Commissions		743		937			1,615			1,868
Other Commissions		112		116			229			237
Net Gains (Losses) on Sales of Loans		185		(28	)		309			43
Net Gains on Sales of Investments		58		-			58			-
Income from Bank-Owned Life Insurance		119		117			239			235
Other		45		39			73			47
TOTAL NONINTEREST INCOME		1,868		1,806			3,715			3,632
NONINTEREST EXPENSE
Salaries and Employee Benefits		3,285		3,187			6,654			6,335
Occupancy		438		427			912			898
Equipment		432		399			854			804
FDIC Assessment		115		115			241			253
PA Shares Tax		203		165			405			348
Contracted Services		156		147			289			284
Legal and Professional Fees		114		110			255			241
Advertising		189		221			354			446
Bankcard Processing Expense		122		116			234			227
Other Real Estate Owned Expense (Income)		10		(262	)		(535	)		(242	)
Amortization of Core Deposit Intangible		133		133			267			267
Other		891		777			1,672			1,421
TOTAL NONINTEREST EXPENSE		6,088		5,535			11,602			11,282
Income Before Income Taxes		2,728		3,164			5,631			6,399
Income Taxes		790		924			1,648			1,864
NET INCOME	$	1,938	$	2,240		$	3,983		$	4,535
EARNINGS PER SHARE
Basic	$	0.48	$	0.55		$	0.98		$	1.11
Diluted		0.48		0.55			0.98			1.11
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		4,081,017		4,071,462			4,081,017			4,071,462
Diluted		4,084,695		4,071,462			4,083,313			4,071,462

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

 2

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2016			2015			2016			2015
Net Income	$	1,938		$	2,240		$	3,983		$	4,535
Other Comprehensive Income (Loss)
Unrealized Gains (Losses) on Available-for-Sale Securities Net of Income Tax of $28 and $(194) for the Three Months Ended June 30, 2016 and 2015, Respectively, and $164 and $(22) for the Six Months Ended June 30, 2016 and 2015, Respectively		55			(376	)		316			(45	)
Reclassification Adjustment for Gains on Securities Included in Net Income, Net of Income Tax of $20 for the Three and Six Months Ended June 30,2016, Respectively		(38	)		-			(38	)		-
Other Comprehensive Income (Loss), Net of Income Tax		17			(376	)		278			(45	)
Total Comprehensive Income	$	1,955		$	1,864		$	4,261		$	4,490

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

(Dollars in thousands, except share and per share data)	Shares Issued		Common Stock		Capital Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income			Total Stockholders' Equity
December 31, 2014		4,363,346	$	1,818	$	41,762	$	42,766		$	(4,999	)	$	565		$	81,912
Comprehensive income (loss):
Net income		-		-		-		4,535			-			-			4,535
Other comprehensive income (loss)		-		-		-		-			-			(45	)		(45	)
Dividends paid ($0.42 per share)		-		-		-		(1,710	)		-			-			(1,710	)
June 30, 2015		4,363,346	$	1,818	$	41,762	$	45,591		$	(4,999	)	$	520		$	84,692

(Dollars in thousands, except share and per share data)	Shares Issued		Common Stock		Capital Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income		Total Stockholders' Equity
December 31, 2015		4,363,346	$	1,818	$	41,614	$	47,725		$	(4,836	)	$	575	$	86,896
Comprehensive income:
Net income		-		-		-		3,983			-			-		3,983
Other comprehensive income		-		-		-		-			-			278		278
Stock-based compensation expense		-		-		174		-			-			-		174
Dividends paid ($0.44 per share)		-		-		-		(1,796	)		-			-		(1,796	)
June 30, 2016		4,363,346	$	1,818	$	41,788	$	49,912		$	(4,836	)	$	853	$	89,535

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

 3

 

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
(Dollars in thousands)	2016			2015
OPERATING ACTIVITIES
Net Income	$	3,983		$	4,535
Αdjustmеnts to Rеconcilе Net Income to Net Cash Provided By Operating Activities:
Net Amortization on Investments		116			366
Depreciation and Amortization		1,510			1,221
Provision for Loan Losses		1,150			675
Income from Bank-Owned Life Insurance		(239	)		(235	)
Proceeds From Mortgage Loans Sold		11,574			45,801
Originations of Mortgage Loans for Sale		(11,265	)		(7,509	)
Gains on Sales of Loans		(309	)		(43	)
Gains on Sales of Investment Securities		(58	)		-
Gains on Sales of Other Real Estate Owned and Repossessed Assets		(49	)		(284	)
Noncash Expense for Stock-Based Compensation		174			-
Decrease in Accrued Interest Receivable		32			135
Valuation Adjustment on Foreclosed Real Estate		(566	)		-
Increase (Decrease) in Taxes Payable		1,605			(91	)
(Decrease) Increase in Accrued Interest Payable		(19	)		13
Net (Payment) Refund of Federal/State Income Taxes		(1,450	)		1,218
Other, Net		237			223
NET CASH PROVIDED BY OPERATING ACTIVITIES		6,426			46,025
INVESTING ACTIVITIES
Investment Securities Available for Sale:
Proceeds From Principal Repayments and Maturities		36,894			21,418
Purchases of Securities		(35,388	)		(13,789	)
Proceeds from Sales of Securities		302			-
Investment Securities Held-to-Maturity:
Proceeds From Principal Repayments and Maturities		-			500
Net Increase in Loans		(79	)		(16,845	)
Purchase of Premises and Equipment		(281	)		(237	)
Proceeds From Sales of Other Real Estate Owned and Repossessed Assets		175			15
Decrease in Restricted Equity Securities		571			320
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		2,194			(8,618	)
FINANCING ACTIVITIES
Net Decrease in Deposits		(4,033	)		(2,039	)
Net Decrease in Short-Term Borrowings		(918	)		(23,867	)
Principal Payments on Other Borrowed Funds		-			(1,112	)
Proceeds from Other Borrowed Funds		-			15,000
Cash Dividends Paid		(1,796	)		(1,710	)
NET CASH USED IN FINANCING ACTIVITIES		(6,747	)		(13,728	)
INCREASE IN CASH AND CASH EQUIVALENTS		1,873			23,679
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR		11,340			11,751
CASH AND DUE FROM BANKS AT END OF PERIOD	$	13,213		$	35,430
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest on deposits and borrowings (including interest credited to deposit accounts of $576 and $1,198 respectively)	$	720		$	1,378
Income taxes		1,450			203
Real estate acquired in settlement of loans		3,236			431
Transfer of real estate acquired in settlement of loans to premise and equipment		2,350			-
Securities sold not settled		(70	)		-
Securities purchased not settled		60			-

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

 4

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of CB Financial Services, Inc. (“CB Financial”) and its wholly owned subsidiary, Community Bank, (the “Bank”), and the Bank’s wholly-owned subsidiary, Exchange Underwriters, Inc. (“Exchange Underwriters”). CB Financial and the Bank are collectively referred to as the “Company”. All intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for losses on loans, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, evaluation of securities for other-than-temporary impairment including related cash flow projections, goodwill impairment, and the valuation of deferred tax assets.

In the opinion of management, the accompanying unaudited interim financial statements include all adjustments considered necessary for a fair presentation of the Company’s financial position and results of operations at the dates and for the periods presented. All of these adjustments are of a normal, recurring nature, and they are the only adjustments included in the accompanying unaudited interim financial statements. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Interim results are not necessarily indicative of results for a full year.

The Company evaluated the provisions of Accounting Standards Codification (“ASC”) Topic 280 and determined that segment reporting information related to Exchange Underwriters was not required to be presented because the segment comprises less than 10% of total interest and noninterest income and less than 10% of the combined assets of the Company.

The Company evaluated subsequent events through the date the consolidated financial statements were filed with the Securities and Exchange Commission and incorporated into the consolidated financial statements the effect of all material known events determined by ASC Topic 855, Subsequent Events, to be recognizable events.

Nature of Operations

The Company derives substantially all its income from banking and bank-related services which include interest earnings on commercial, commercial mortgage, residential real estate and consumer loan financing, as well as interest earnings on investment securities and fees generated from deposit services to its customers. The Company provides banking services primarily to communities in Greene, Allegheny, Washington, Fayette, and Westmoreland Counties located in southwestern Pennsylvania. The Company also conducts insurance brokerage activities through Exchange Underwriters.

Acquired Loans

Loans that were acquired in the merger with FedFirst Financial Corporation were recorded at fair value with no carryover of the related allowance for credit losses. The fair value of the acquired loans was estimated by management with the assistance of a third party valuation specialist.

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. The nonaccretable discount represents estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases to the expected cash flows require an evaluation to determine the need for an allowance for loan losses. Subsequent improvements in expected cash flows result in the reversal of a corresponding amount of the nonaccretable discount which is then reclassified as accretable discount that is recognized into interest income over the remaining life of the loan using the interest method. The evaluation of the amount of future cash flows that is expected to be collected is performed in a similar manner as that used to determine our allowance for credit losses. Charge-offs of the principal amount on acquired loans would be first applied to the nonaccretable discount portion of the fair value adjustment.

 5

 

Reclassifications

Certain comparative amounts for the prior year have been reclassified to conform to the current year presentation. Such reclassifications did not affect net income or stockholders’ equity.

Recent Accounting Standards

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this ASU will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects companies holding financial assets and net investment in leases that are not accounted for at fair value through net income. The ASU 2016-13 amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted.  The Company is currently evaluating the impact that the amendments of ASU 2016-13, will have on the Company’s financial condition and results of operations.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.  ASU 2016-09 introduces amendments intended to simplify the accounting for stock compensation.  ASU 2016-09 requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement.  The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur.  An entity should also recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether the benefit reduces taxes payable in the current period.  The ASU also requires excess tax benefits be classified along with other income tax cash flows as an operating activity in the statement of cash flows.  ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted.  The Company is evaluating the provisions of ASU 2016-09, but, believes that its adoption will not have a material impact on the Company’s financial condition or results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 will require lessees to recognize a right-of-use (ROU) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation for leases with terms of more than twelve months. Both the ROU asset and lease liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. Accounting by lessors will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact that the provisions of ASU 2016-02, will have on the Company’s financial condition and results of operations.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10), which enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. ASU 2016-01 (i) requires equity investments (except those accounted for under the equity method or that are consolidated) to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost; (iv) requires an entity to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and (v) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is evaluating the provisions of ASU 2016-01, but does not believe that its adoption will have a material impact on the Company’s financial condition and results of operations.

 6

 

Recent Accounting Standards (continued)

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which establishes a comprehensive revenue recognition standard for virtually all industries under GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. ASU 2014-09 specifies that an entity shall recognize revenue when, or as, the entity satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when, or as, the customer obtains control of the asset. Entities are required to disclose qualitative and quantitative information on the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company may elect, to early adopt the standard, but not before fiscal years beginning after December 15, 2016. The amendments may be applied retrospectively to each period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is evaluating the provisions of ASUs 2014-09 and 2015-14, but does not believe that their adoption will have a material impact on the Company’s financial condition and results of operations.

Note 2. Earnings Per Share

There are no convertible securities which would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statement of Income is used as the numerator.

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation.

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Weighted-Average Common Shares Outstanding		4,363,346			4,363,346			4,363,346			4,363,346
Average Treasury Stock Shares		(282,329	)		(291,884	)		(282,329	)		(291,884	)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share		4,081,017			4,071,462			4,081,017			4,071,462
Additional Common Stock Equivalents (Restricted Stock) Used to Calculate Diluted Earnings Per Share		3,678			-			2,296			-
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share		4,084,695			4,071,462			4,083,313			4,071,462
Earnings per share:
Basic	$	0.48		$	0.55		$	0.98		$	1.11
Diluted		0.48			0.55			0.98			1.11

 7

 

Note 3. Investment Securities

The following table presents the amortized cost and fair value of investment securities available-for-sale at the dates indicated:

	(Dollars in thousands)
	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	49,309	$	306	$	(3	)	$	49,612
Obligations of States and Political Subdivisions		39,642		882		(6	)		40,518
Mortgage-Backed Securities - Government-Sponsored Enterprises		2,987		75		-			3,062
Equity Securities - Mutual Funds		500		17		-			517
Equity Securities - Other		688		28		(6	)		710
Total	$	93,126	$	1,308	$	(15	)	$	94,419

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	51,151	$	147	$	(110	)	$	51,188
Obligations of States and Political Subdivisions		39,351		760		(37	)		40,074
Mortgage-Backed Securities - Government-Sponsored Enterprises		3,390		13		-			3,403
Equity Securities - Mutual Funds		500		13		-			513
Equity Securities - Other		600		85		-			685
Total	$	94,992	$	1,018	$	(147	)	$	95,863

 8

 

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at the dates indicated:

	(Dollars in thousands)
	June 30, 2016
	Less than 12 months							12 Months or Greater							Total
	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
U.S. Government Agencies		2	$	5,502	$	(3	)		-	$	-	$	-			2	$	5,502	$	(3	)
Obligations of States and
Political Subdivisions		3		1,389		(4	)		2		762		(2	)		5		2,151		(6	)
Equity Securities - Other		5		235		(6	)		-		-		-			5		235		(6	)
Total		10	$	7,126	$	(13	)		2	$	762	$	(2	)		12	$	7,888	$	(15	)

	December 31, 2015
	Less than 12 months							12 Months or Greater							Total
	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
U.S. Government Agencies		6	$	14,928	$	(110	)		-	$	-	$	-			6	$	14,928	$	(110	)
Obligations of States and
Political Subdivisions		11		5,333		(25	)		8		4,549		(12	)		19		9,882		(37	)
Total		17	$	20,261	$	(135	)		8	$	4,549	$	(12	)		25	$	24,810	$	(147	)

For debt securities, the Company does not believe any individual unrealized loss as of June 30, 2016 and December 31, 2015 represents an other-than-temporary impairment. The Company performs a review of the entire securities portfolio on a quarterly basis to identify securities that may indicate an other-than-temporary impairment. The Company’s management considers the length of time and the extent to which the fair value has been less than cost, and the financial condition of the issuer. The securities that are temporarily impaired at June 30, 2016 and December 31, 2015 relate principally to changes in interest rates subsequent to the acquisition of the specific securities. The Company does not intend to sell or it is not more likely than not that it will be required to sell any of the securities in an unrealized loss position before recovery of its amortized cost or maturity of the security.

The following table presents the scheduled maturities of investment securities as of the date indicated:

	(Dollars in thousands)
	June 30, 2016
	Available-for-Sale
	Amortized Cost		Fair Value
Due in One Year or Less	$	11,372	$	11,473
Due after One Year through Five Years		16,718		17,032
Due after Five Years through Ten Years		59,302		59,953
Due after Ten Years		5,734		5,961
Total	$	93,126	$	94,419

Equity Securities – Mutual Funds and Equity Securities – Other do not have a scheduled maturity date, but have been included in the Due After Ten Years category.

 9

 

Note 4. Loans and Related Allowance for Loan Loss

The Company’s loan portfolio is made up of four segments: real estate loans, commercial and industrial loans, consumer loans and other loans. These segments are further segregated between loans accounted for under the amortized cost method (“Originated Loans”) and acquired loans that were originally recorded at fair value with no carryover of the related pre-merger allowance for loan losses (“Loans Acquired at Fair Value”). The following table presents the major classifications of loans as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016						December 31, 2015
	Amount			Percent			Amount			Percent
Originated Loans
Real Estate:
Residential	$	173,734			34.8	%	$	170,169			35.2	%
Commercial		131,147			26.2			127,614			26.4
Construction		11,918			2.4			17,343			3.6
Commercial and Industrial		67,636			13.5			60,487			12.5
Consumer		109,250			21.9			103,605			21.4
Other		6,203			1.2			4,592			0.9
Total Originated Loans		499,888			100.0	%		483,810			100.0	%
Allowance for Loan Losses		(7,055	)					(6,490	)
Loans, Net	$	492,833					$	477,320
Loans Acquired at Fair Value
Real Estate:
Residential	$	95,753			53.5	%	$	103,058			51.7	%
Commercial		68,030			38.0			75,406			37.8
Construction		1,878			1.0			3,870			1.9
Commercial and Industrial		13,230			7.4			16,660			8.3
Consumer		196			0.1			550			0.3
Total Loans Acquired at Fair Value		179,087			100.0	%		199,544			100.0	%
Allowance for Loan Losses		(136	)					-
Loans, Net	$	178,951					$	199,544
Total Loans
Real Estate:
Residential	$	269,487			39.7	%	$	273,227			40.0	%
Commercial		199,177			29.3			203,020			29.7
Construction		13,796			2.1			21,213			3.1
Commercial and Industrial		80,866			11.9			77,147			11.3
Consumer		109,446			16.1			104,155			15.2
Other		6,203			0.9			4,592			0.7
Total Loans		678,975			100.0	%		683,354			100.0	%
Allowance for Loan Losses		(7,191	)					(6,490	)
Loans, Net	$	671,784					$	676,864

Total unamortized net deferred loan fees were $733,000 and $705,000 at June 30, 2016 and December 31, 2015, respectively.

Real estate loans serviced for others, which are not included in the Consolidated Statement of Financial Condition, totaled $78.8 million and $73.1 million at June 30, 2016 and December 31, 2015, respectively.

 10

 

The following table presents loans summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of the dates indicated. At June 30, 2016 and December 31, 2015, there were no loans in the criticized category of Loss within the internal risk rating system.

	(Dollars in thousands)
	June 30, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	172,910	$	452	$	372	$	-	$	173,734
Commercial		112,025		13,725		4,317		1,080		131,147
Construction		11,038		699		-		181		11,918
Commercial and Industrial		63,782		1,730		2,124		-		67,636
Consumer		109,174		-		76		-		109,250
Other		6,203		-		-		-		6,203
Total Originated Loans	$	475,132	$	16,606	$	6,889	$	1,261	$	499,888
Loans Acquired at Fair Value
Real Estate:
Residential	$	93,123	$	-	$	2,630	$	-	$	95,753
Commercial		63,357		1,522		3,151		-		68,030
Construction		1,878		-		-		-		1,878
Commercial and Industrial		12,623		45		562		-		13,230
Consumer		196		-		-		-		196
Total Loans Acquired at Fair Value	$	171,177	$	1,567	$	6,343	$	-	$	179,087
Total Loans
Real Estate:
Residential	$	266,033	$	452	$	3,002	$	-	$	269,487
Commercial		175,382		15,247		7,468		1,080		199,177
Construction		12,916		699		-		181		13,796
Commercial and Industrial		76,405		1,775		2,686		-		80,866
Consumer		109,370		-		76		-		109,446
Other		6,203		-		-		-		6,203
Total Loans	$	646,309	$	18,173	$	13,232	$	1,261	$	678,975

 11

 

	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	169,233	$	249	$	682	$	5	$	170,169
Commercial		113,087		6,870		6,565		1,092		127,614
Construction		16,384		729		-		230		17,343
Commercial and Industrial		57,586		2,145		756		-		60,487
Consumer		103,591		-		14		-		103,605
Other		4,592		-		-		-		4,592
Total Originated Loans	$	464,473	$	9,993	$	8,017	$	1,327	$	483,810
Loans Acquired at Fair Value
Real Estate:
Residential	$	100,633	$	-	$	2,425	$	-	$	103,058
Commercial		69,539		2,252		3,615		-		75,406
Construction		3,870		-		-		-		3,870
Commercial and Industrial		15,601		996		63		-		16,660
Consumer		550		-		-		-		550
Total Loans Acquired at Fair Value	$	190,193	$	3,248	$	6,103	$	-	$	199,544
Total Loans
Real Estate:
Residential	$	269,866	$	249	$	3,107	$	5	$	273,227
Commercial		182,626		9,122		10,180		1,092		203,020
Construction		20,254		729		-		230		21,213
Commercial and Industrial		73,187		3,141		819		-		77,147
Consumer		104,141		-		14		-		104,155
Other		4,592		-		-		-		4,592
Total Loans	$	654,666	$	13,241	$	14,120	$	1,327	$	683,354

 12

 

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016
	Loans Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Non- Accrual		Total Loans
Originated Loans
Real Estate:
Residential	$	173,215	$	-	$	144	$	-	$	144	$	375	$	173,734
Commercial		130,564		266		-		-		266		317		131,147
Construction		11,737		-		-		-		-		181		11,918
Commercial and Industrial		67,381		255		-		-		255		-		67,636
Consumer		108,288		813		73		-		886		76		109,250
Other		6,203		-		-		-		-		-		6,203
Total Originated Loans	$	497,388	$	1,334	$	217	$	-	$	1,551	$	949	$	499,888
Loans Acquired at Fair Value
Real Estate:
Residential	$	93,824	$	82	$	131	$	-	$	213	$	1,716	$	95,753
Commercial		67,021		-		652		-		652		357		68,030
Construction		1,878		-		-		-		-		-		1,878
Commercial and Industrial		13,085		-		145		-		145		-		13,230
Consumer		195		-		-		1		1		-		196
Total Loans Acquired at Fair Value	$	176,003	$	82	$	928	$	1	$	1,011	$	2,073	$	179,087
Total Loans
Real Estate:
Residential	$	267,039	$	82	$	275	$	-	$	357	$	2,091	$	269,487
Commercial		197,585		266		652		-		918		674		199,177
Construction		13,615		-		-		-		-		181		13,796
Commercial and Industrial		80,466		255		145		-		400		-		80,866
Consumer		108,483		813		73		1		887		76		109,446
Other		6,203		-		-		-		-		-		6,203
Total Loans	$	673,391	$	1,416	$	1,145	$	1	$	2,562	$	3,022	$	678,975

 13

 

	December 31, 2015
	Loans Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Non- Accrual		Total Loans
Originated Loans
Real Estate:
Residential	$	168,786	$	563	$	133	$	-	$	696	$	687	$	170,169
Commercial		124,037		114		-		-		114		3,463		127,614
Construction		17,113		-		-		-		-		230		17,343
Commercial and Industrial		60,442		45		-		-		45		-		60,487
Consumer		102,629		923		39		-		962		14		103,605
Other		4,592		-		-		-		-		-		4,592
Total Originated Loans	$	477,599	$	1,645	$	172	$	-	$	1,817	$	4,394	$	483,810
Loans Acquired at Fair Value
Real Estate:
Residential	$	99,794	$	1,308	$	263	$	193	$	1,764	$	1,500	$	103,058
Commercial		73,988		1,019		-		-		1,019		399		75,406
Construction		3,870		-		-		-		-		-		3,870
Commercial and Industrial		16,450		38		130		-		168		42		16,660
Consumer		542		8		-		-		8		-		550
Total Loans Acquired at Fair Value	$	194,644	$	2,373	$	393	$	193	$	2,959	$	1,941	$	199,544
Total Loans
Real Estate:
Residential	$	268,580	$	1,871	$	396	$	193	$	2,460	$	2,187	$	273,227
Commercial		198,025		1,133		-		-		1,133		3,862		203,020
Construction		20,983		-		-		-		-		230		21,213
Commercial and Industrial		76,892		83		130		-		213		42		77,147
Consumer		103,171		931		39		-		970		14		104,155
Other		4,592		-		-		-		-		-		4,592
Total Loans	$	672,243	$	4,018	$	565	$	193	$	4,776	$	6,335	$	683,354

 14

 

The following table sets forth the amounts and categories of our nonperforming assets at the dates indicated. Included in nonperforming loans and assets are troubled debt restructurings (“TDRs”), which are loans whose contractual terms have been restructured in a manner which grants a concession to a borrower experiencing financial difficulties. Nonaccrual TDRs are included in their specific loan category in the nonaccrual loans section.

	(Dollars in Thousands)
	June 30, 2016			December 31, 2015
Nonaccrual Loans:
Real Estate:
Residential	$	2,091		$	2,187
Commercial		674			3,862
Construction		181			230
Commercial and Industrial		-			42
Consumer		76			14
Total Nonaccrual Loans		3,022			6,335
Accruing Loans Past Due 90 Days or More:
Real Estate:
Residential		-			193
Consumer		1			-
Total Accruing Loans 90 Days or More Past Due		1			193
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		3,023			6,528
Troubled Debt Restructurings, Accruing:
Originated Loans:
Real Estate - Commercial		1,352			1,375
Commercial and Industrial		7			7
Other		6			-
Total Originated Loans		1,365			1,382
Loans Acquired at Fair Value:
Real Estate - Residential		1,320			1,296
Real Estate - Commercial		698			1,488
Commercial and Industrial		518			-
Total Loans Acquired at Fair Value		2,536			2,784
Total Troubled Debt Restructurings, Accruing		3,901			4,166
Total Nonperforming Loans		6,924			10,694
Real Estate Owned:
Residential		78			138
Commercial		174			174
Total Real Estate Owned		252			312
Total Nonperforming Assets	$	7,176		$	11,006
Nonperforming Loans to Total Loans		1.02	%		1.56	%
Nonperforming Assets to Total Assets		0.87			1.32

The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction was $1.8 million and $3.8 million at June 30, 2016 and December 31, 2015, respectively.

TDRs typically are the result of our loss mitigation activities whereby concessions are granted to minimize loss and avoid foreclosure or repossession of collateral. The concessions granted for the TDRs in our portfolio primarily consist of, but are not limited to, modification of payment or other terms, temporary rate modification and extension of maturity date. Loans classified as TDRs consisted of 15 loans totaling $3.9 million and 13 loans totaling $4.2 million at June 30, 2016 and December 31, 2015, respectively. Originated loans classified as TDRs consisted of 5 loans totaling $1.4 million and 4 loans totaling $1.4 million at June 30, 2016 and December 31, 2015, respectively. Loans acquired at fair value as TDRs consisted of 10 loans totaling $2.5 million and 9 loans totaling $2.8 million at June 30, 2016 and December 31, 2015, respectively.

 15

 

During the three months ended June 30, 2015, one commercial loan previously identified as an originated TDR and two other commercial loans were consolidated into one loan in a new TDR transaction. During the six months ended June 30, 2016, one commercial loan previously identified as an acquired loan at fair value TDR paid off, an originated consumer loan modified terms in a new TDR transaction and one commercial and one residential real estate loan that were acquired at fair value modified terms into new TDR transactions. During the six months ended June 30, 2015, two commercial loans previously identified as originated TDRs were refinanced in new TDR transactions. During the three and six months ended June 30, 2015, one commercial loan TDR acquired at fair value paid off. No TDRs have subsequently defaulted during the three or six months ended June 30, 2016 and 2015, respectively.

The following table presents information at the time of modification related to loans modified as TDRs during the periods indicated. No loans were modified in a TDR during the three months ended June 30, 2016.

	(Dollars in thousands)
	Three Months Ended June 30, 2015
	Pre- Modification Number of Contracts		Post- Modification Outstanding Recorded Investment		Outstanding Recorded Investment		Related Allowance
Originated Loans
Real Estate
Commercial		1	$	675	$	705	$	108
Total		1	$	675	$	705	$	108

	Six Months Ended June 30, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Related Allowance
Originated Loans
Other		1	$	7	$	7	$	-
Total		1	$	7	$	7	$	-
Loans Acquired at Fair Value
Real Estate
Residential		1	$	37	$	45	$	-
Commercial		1		539		539		-
Total		2	$	576	$	584	$	-

	Six Months Ended June 30, 2015
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Related Allowance
Originated Loans
Real Estate
Commercial		2	$	912	$	1,135	$	108
Total		2	$	912	$	1,135	$	108

 16

 

The following table presents a summary of the loans considered to be impaired as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	4,390	$	-	$	4,390	$	4,479	$	94
Construction		181		-		181		194		-
Commercial and Industrial		685		-		685		682		15
Other		6		-		6		6		-
Total With No Related Allowance Recorded	$	5,262	$	-	$	5,262	$	5,361	$	109
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,276	$	-	$	1,276	$	1,285	$	33
Commercial		3,022		-		3,131		3,213		73
Commercial and Industrial		562		-		562		591		12
Total With No Related Allowance Recorded	$	4,860	$	-	$	4,969	$	5,089	$	118
Total Loans
Real Estate:
Residential	$	1,276	$	-	$	1,276	$	1,285	$	33
Commercial		7,412		-		7,521		7,692		167
Construction		181		-		181		194		-
Commercial and Industrial		1,247		-		1,247		1,273		27
Other		6		-		6		6		-
Total With No Related Allowance Recorded	$	10,122	$	-	$	10,231	$	10,450	$	227
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,412	$	392	$	1,417	$	1,423	$	33
Commercial and Industrial		1,445		647		1,445		1,453		26
Total With A Related Allowance Recorded	$	2,857	$	1,039	$	2,862	$	2,876	$	59
Loans Acquired at Fair Value
Real Estate:
Residential	$	161	$	81	$	168	$	226	$	2
Commercial		652		133		652		657		-
Total With A Related Allowance Recorded	$	813	$	214	$	820	$	883	$	2
Total Loans
Real Estate:
Residential	$	161	$	81	$	168	$	226	$	2
Commercial		2,064		525		2,069		2,080		33
Construction		-		-		-		-		-
Commercial and Industrial		1,445		647		1,445		1,453		26
Other		-		-		-		-		-
Total With A Related Allowance Recorded	$	3,670	$	1,253	$	3,682	$	3,759	$	61

 17

 

	June 30, 2016 (cont.)
Total Impaired Loans:
Originated Loans
Real Estate:
Commercial	$	5,802	$	392	$	5,807	$	5,902	$	127
Construction		181		-		181		194		-
Commercial and Industrial		2,130		647		2,130		2,135		41
Other		6		-		6		6		-
Total Impaired Loans	$	8,119	$	1,039	$	8,124	$	8,237	$	168
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,437	$	81	$	1,444	$	1,511	$	35
Commercial		3,674		133		3,783		3,870		73
Construction		-		-		-		-		-
Commercial and Industrial		562		-		562		591		12
Other		-		-		-		-		-
Total Impaired Loans	$	5,673	$	214	$	5,789	$	5,972	$	120
Total Loans
Real Estate:
Residential	$	1,437	$	81	$	1,444	$	1,511	$	35
Commercial		9,476		525		9,590		9,772		200
Construction		181		-		181		194		-
Commercial and Industrial		2,692		647		2,692		2,726		53
Other		6		-		6		6		-
Total Impaired Loans	$	13,792	$	1,253	$	13,913	$	14,209	$	288

 18

 

	December 31, 2015
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Residential	$	5	$	-	$	17	$	6	$	-
Commercial		6,636		-		6,636		7,095		232
Construction		229		-		230		292		-
Commercial and Industrial		627		-		627		756		35
Total With No Related Allowance Recorded	$	7,497	$	-	$	7,510	$	8,149	$	267
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,296	$	-	$	1,296	$	1,315	$	67
Commercial		4,188		-		4,263		4,449		214
Commercial and Industrial		63		-		63		79		3
Total With No Related Allowance Recorded	$	5,547	$	-	$	5,622	$	5,843	$	284
Total Loans
Real Estate:
Residential	$	1,301	$	-	$	1,313	$	1,321	$	67
Commercial		10,824		-		10,899		11,544		446
Construction		229		-		230		292		-
Commercial and Industrial		690		-		690		835		38
Total With No Related Allowance Recorded	$	13,044	$	-	$	13,132	$	13,992	$	551
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,436	$	408	$	1,441	$	1,457	$	37
Commercial and Industrial		136		9		137		128		5
Total With A Related Allowance Recorded	$	1,572	$	417	$	1,578	$	1,585	$	42
Total Impaired Loans
Originated Loans
Real Estate:
Residential	$	5	$	-	$	17	$	6	$	-
Commercial		8,072		408		8,077		8,552		269
Construction		229		-		230		292		-
Commercial and Industrial		763		9		764		884		40
Total Impaired Loans	$	9,069	$	417	$	9,088	$	9,734	$	309
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,296	$	-	$	1,296	$	1,315	$	67
Commercial		4,188		-		4,263		4,449		214
Commercial and Industrial		63		-		63		79		3
Total Impaired Loans	$	5,547	$	-	$	5,622	$	5,843	$	284
Total Loans
Real Estate:
Residential	$	1,301	$	-	$	1,313	$	1,321	$	67
Commercial		12,260		408		12,340		13,001		483
Construction		229		-		230		292		-
Commercial and Industrial		826		9		827		963		43
Total Impaired Loans	$	14,616	$	417	$	14,710	$	15,577	$	593

 19

 

The following table presents the activity in the allowance for loan losses summarized by major classifications and segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for potential impairment for the periods indicated.

	(Dollars in thousands)
	June 30, 2016
	Real Estate Residential			Real Estate Commercial			Real Estate Construction			Commercial and Industrial		Consumer			Other			Unallocated			Total
Originated Loans
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	244			6,937
Charge-offs		-			-			-			-		(120	)		(14	)		-			(134	)
Recoveries		3			-			-			-		53			5			-			61
Provision		(152	)		(80	)		(35	)		365		34			8			51			191
June 30, 2016	$	1,110		$	1,956		$	82		$	1,468	$	2,143		$	1		$	295		$	7,055
Loans Acquired at Fair Value
March 31, 2016	$	-		$	-		$	-		$	-	$	-		$	-		$	36		$	36
Charge-offs		(14	)		-			-			-		-			-			-			(14	)
Recoveries		3			1			-			-		1			-			-			5
Provision		11			10			-			115		(1	)		-			(26	)		109
June 30, 2016	$	-		$	11		$	-		$	115	$	-		$	-		$	10		$	136
Total Allowance for Loan Losses
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	280		$	6,973
Charge-offs		(14	)		-			-			-		(120	)		(14	)		-			(148	)
Recoveries		6			1			-			-		54			5			-			66
Provision		(141	)		(70	)		(35	)		480		33			8			25			300
June 30, 2016	$	1,110		$	1,967		$	82		$	1,583	$	2,143		$	1		$	305		$	7,191
Originated Loans
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14			6,490
Charge-offs		(20	)		-			-			-		(310	)		(26	)		-			(356	)
Recoveries		4			-			-			-		80			11			-			95
Provision		(497	)		(89	)		(55	)		684		486			16			281			826
June 30, 2016	$	1,110		$	1,956		$	82		$	1,468	$	2,143		$	1		$	295		$	7,055
Loans Acquired at Fair Value
December 31, 2015	$	-		$	-		$	-		$	-	$	-		$	-		$	-		$	-
Charge-offs		(16	)		(180	)		-			-		(4	)		-			-			(200	)
Recoveries		5			2			-			-		5			-			-			12
Provision		11			189			-			115		(1	)		-			10			324
June 30, 2016	$	-		$	11		$	-		$	115	$	-		$	-		$	10		$	136
Total Allowance for Loan Losses
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14		$	6,490
Charge-offs		(36	)		(180	)		-			-		(314	)		(26	)		-			(556	)
Recoveries		9			2			-			-		85			11			-			107
Provision		(486	)		100			(55	)		799		485			16			291			1,150
June 30, 2016	$	1,110		$	1,967		$	82		$	1,583	$	2,143		$	1		$	305		$	7,191

 20

 

	June 30, 2016 (cont.)
	Real Estate Residential			Real Estate Commercial			Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Originated Loans
Individually Evaluated for Impairment	$	-		$	392		$	-	$	647	$	-	$	-	$	-	$	1,039
Collectively Evaluated for Potential Impairment	$	1,110		$	1,564		$	82	$	821	$	2,143	$	1	$	295	$	6,016
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	81		$	133		$	-	$	-	$	-	$	-	$	-	$	214
Collectively Evaluated for Potential Impairment	$	(81	)	$	(122	)	$	-	$	115	$	-	$	-	$	10	$	(78	)
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	81		$	525		$	-	$	647	$	-	$	-	$	-	$	1,253
Collectively Evaluated for Potential Impairment	$	1,029		$	1,442		$	82	$	936	$	2,143	$	1	$	305	$	5,938

	June 30, 2015
	Real Estate Residential			Real Estate Commercial			Real Estate Construction			Commercial and Industrial			Consumer			Other		Unallocated			Total
Originated Loans
March 31, 2015	$	2,513		$	608		$	145		$	913		$	1,011		$	-	$	288		$	5,478
Charge-offs		(111	)		(12	)		-			-			(69	)		-		-			(192	)
Recoveries		2			1			-			10			12			-		-			25
Provision		(737	)		1,149			(58	)		(6	)		384			-		(357	)		375
June 30, 2015	$	1,667		$	1,746		$	87		$	917		$	1,338		$	-	$	(69	)	$	5,686
December 31, 2014	$	2,690		$	582		$	122		$	684		$	1,015		$	-	$	102		$	5,195
Charge-offs		(111	)		(18	)		-			-			(116	)		-		-			(245	)
Recoveries		5			3			-			10			43			-		-			61
Provision		(917	)		1,179			(35	)		223			396			-		(171	)		675
June 30, 2015	$	1,667		$	1,746		$	87		$	917		$	1,338		$	-	$	(69	)	$	5,686
Originated Loans
Individually Evaluated for Impairment	$	-		$	370		$	5		$	159		$	-		$	-	$	-		$	534
Collectively Evaluated for Potential Impairment	$	1,667		$	1,376		$	82		$	758		$	1,338		$	-	$	(69	)	$	5,152

	December 31, 2015
Originated Loans	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Individually Evaluated for Impairment	$	-	$	408	$	-	$	9	$	-	$	-	$	-	$	417
Collectively Evaluated for Potential Impairment	$	1,623	$	1,637	$	137	$	775	$	1,887	$	-	$	14	$	6,073

The following table presents changes in the accretable discount on the loans acquired at fair value for the dates indicated.

	Accretable Discount
Balance at December 31, 2015	$	3,302
Accretable yield		(1,223	)
Nonaccretable premium		225
Balance at June 30, 2016	$	2,304

 21

 

The following table presents the major classifications of loans summarized by individually evaluated for impairment and collectively evaluated for potential impairment as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	5,802	$	181	$	2,130	$	-	$	6	$	8,119
Collectively Evaluated for Potential Impairment		173,734		125,345		11,737		65,506		109,250		6,197		491,769
	$	173,734	$	131,147	$	11,918	$	67,636	$	109,250	$	6,203	$	499,888
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,437	$	3,674	$	-	$	562	$	-	$	-	$	5,673
Collectively Evaluated for Potential Impairment		94,316		64,356		1,878		12,668		196		-		173,414
	$	95,753	$	68,030	$	1,878	$	13,230	$	196	$	-	$	179,087
Total Loans
Individually Evaluated for Impairment	$	1,437	$	9,476	$	181	$	2,692	$	-	$	6	$	13,792
Collectively Evaluated for Potential Impairment		268,050		189,701		13,615		78,174		109,446		6,197		665,183
	$	269,487	$	199,177	$	13,796	$	80,866	$	109,446	$	6,203	$	678,975

	December 31, 2015
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	5	$	8,072	$	229	$	763	$	-	$	-	$	9,069
Collectively Evaluated for Potential Impairment		170,164		119,542		17,114		59,724		103,605		4,592		474,741
	$	170,169	$	127,614	$	17,343	$	60,487	$	103,605	$	4,592	$	483,810
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,296	$	4,188	$	-	$	63	$	-	$	-	$	5,547
Collectively Evaluated for Potential Impairment		101,762		71,218		3,870		16,597		550		-		193,997
	$	103,058	$	75,406	$	3,870	$	16,660	$	550	$	-	$	199,544
Total Loans
Individually Evaluated for Impairment	$	1,301	$	12,260	$	229	$	826	$	-	$	-	$	14,616
Collectively Evaluated for Potential Impairment		271,926		190,760		20,984		76,321		104,155		4,592		668,738
	$	273,227	$	203,020	$	21,213	$	77,147	$	104,155	$	4,592	$	683,354

 22

 

Note 5. Deposits

The following table shows the maturities of time deposits for the next five years and beyond at the date indicated (dollars in thousands).

Maturity Period:	June 30, 2016
One Year or Less	$	55,698
Over One Through Two Years		25,293
Over Two Through Three Years		14,136
Over Three Through Four Years		17,580
Over Four Through Five Years		12,920
Over Five Years		8,659
Total	$	134,286

The balance in time deposits that meet or exceed the FDIC insurance limit of $250,000 totaled $27.6 million and $33.1 million as of June 30, 2016 and December 31, 2015, respectively.

Note 6. Short-Term Borrowings

The following table sets forth the components of short-term borrowings as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016					December 31, 2015
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Short-term Borrowings
Federal Funds Purchased:
Balance at Period End	$	6,000		0.70	%	$	-		-	%
Average Balance Outstanding During the Period		259		0.78			485		0.41
Maximum Amount Outstanding at any Month End		6,000					5,900
FHLB Borrowings:
Balance at Period End		-		-			9,360		0.51
Average Balance Outstanding During the Period		291		0.69			7,347		0.37
Maximum Amount Outstanding at any Month End		-					30,950
Securities Sold Under Agreements to Repurchase:
Balance at Period End		25,530		0.19			23,088		0.18
Average Balance Outstanding During the Period		24,336		0.23			23,303		0.24
Maximum Amount Outstanding at any Month End		26,373					27,908
Securities Collaterizing the Agreements at Period-End:
Carrying Value		28,765					26,033
Market Value		28,913					26,063

 23

 

Note 7. Other Borrowed Funds

Other borrowed funds consist of fixed rate advances from the Federal Home Loan Bank of Pittsburgh (“FHLB”). The following table sets forth the scheduled maturities of other borrowed funds at the dates indicated.

	(Dollars in thousands)
	June 30, 2016					December 31, 2015
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Due in One Year	$	3,500		0.94	%	$	-		-	%
Due After One Year to Two Years		3,500		1.35			3,500		0.94
Due After Two Years to Three Years		4,000		1.67			4,500		1.41
Due After Three Years to Four Years		6,000		1.88			6,000		1.78
Due After Four Years to Five Years		5,000		2.09			6,000		1.97
Due After Five Years		6,000		2.32			8,000		2.27
Total	$	28,000		1.80		$	28,000		1.80

As of June 30, 2016, the Company maintained a credit arrangement with a maximum borrowing limit of approximately $293.0 million with the FHLB. This arrangement is subject to annual renewal, incurs no service charge, and is secured by a blanket security agreement on outstanding residential mortgage loans and the Company’s investment in FHLB stock. Under this arrangement the Company had available a variable rate Line of Credit in the amount of $20.0 million as of June 30, 2016 and December 31, 2015.

The Company maintains a Borrower-In-Custody of Collateral line of credit agreement with the Federal Reserve Bank for $84.1 million that requires quarterly certification of collateral, is subject to annual renewal, incurs no service charge and is secured by commercial and consumer indirect auto loans. The Company also maintains multiple line of credit arrangements with various banks totaling $40.0 million. As of June 30, 2016 and December 31, 2015, no draws had been taken on these facilities.

 24

 

Note 8. Commitments and Contingent Liabilities

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business primarily to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and performance letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Statement of Financial Condition. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby and performance letters of credit written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Commitments and conditional obligations are evaluated the same as on-balance-sheet instruments but do not have a corresponding reserve recorded. The Company’s opinion on not implementing a corresponding reserve for off-balance-sheet instruments is supported by historical factors of no losses recorded due to these items. The Company is continually evaluating these items for credit quality and any future need for the corresponding reserve.

The following table presents the unused and available credit balances of financial instruments whose contracts represent credit risk at the dates indicated.

	(Dollars in thousands)
	June 30, 2016		December 31, 2015
Standby Letters of Credit	$	10,844	$	18,316
Performance Letters of Credit		2,359		1,358
Construction Mortgages		22,580		21,144
Personal Lines of Credit		5,990		5,810
Overdraft Protection Lines		5,839		6,051
Home Equity Lines of Credit		14,449		14,491
Commercial Lines of Credit		46,663		45,584
	$	108,724	$	112,754

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

Performance letters of credit represent conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments are issued primarily to support bid or performance-related contracts. The coverage period for these instruments is typically a one-year period with an annual renewal option subject to prior approval by management. Fees earned from the issuance of these letters are recognized upon expiration of the letter. For secured letters of credit, the collateral is typically Company deposit instruments or customer business assets.

 25

 

Note 9. Fair Value Disclosure

FASB ASC 820 “Fair Value Measurement” defines fair value and provides the framework for measuring fair value and required disclosures about fair value measurements. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability at the market date. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used in valuation methods to determine fair value.

The three levels of fair value hierarchy are as follows:

Level I –	Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets. These generally provide the most reliable evidence and are used to measure fair value whenever available.
Level II –	Fair value is based on significant inputs, other than Level I inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data. Level II inputs include quoted market prices in active markets for similar assets, quoted market prices in markets that are not active for identical or similar assets, and other observable inputs.
Level III –	Fair value would be based on significant unobservable inputs. Examples of valuation methodologies that would result in Level III classification include option pricing models, discounted cash flows, and other similar techniques.

This hierarchy requires the use of observable market data when available. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

The following table presents the financial assets measured at fair value on a recurring basis and reported on the Consolidated Statement of Financial Condition as of the dates indicated, by level within the fair value hierarchy. The majority of the Company’s securities are included in Level II of the fair value hierarchy. Fair values for Level II securities were primarily determined by a third party pricing service using both quoted prices for similar assets, when available, and model-based valuation techniques that derive fair value based on market-corroborated data, such as instruments with similar prepayment speeds and default interest rates. The standard inputs that are normally used include benchmark yields of like securities, reportable trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications.

		(Dollars in thousands)
	Fair Value Heirarchy	June 30, 2016		December 31, 2015
Available for Sales Securities:
U.S. Government Agencies	Level II	$	49,612	$	51,188
Obligations of States and Political Subdivisions	Level II		40,518		40,074
Mortgage-Backed Securities - Government-Sponsored Enterprises	Level II		3,062		3,403
Equity Securities - Mutual Funds	Level I		517		513
Equity Securities - Other	Level I		710		685
Total Available for Sale Securities		$	94,419	$	95,863

The following table presents the financial assets measured at fair value on a nonrecurring basis on the Consolidated Statement of Financial Condition as of the dates indicated by level within the fair value hierarchy. The table also presents the significant unobservable inputs used in the fair value measurements. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loans include quoted market prices for identical assets classified as Level I inputs or observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

 26

 

		(Dollars in thousands)
		Fair Value at						Significant
Financial Asset	Fair Value Heirarchy	June 30, 2016		December 31, 2015		Valuation Techniques	Significant Unobservable Inputs	Unobservable Input Value
Impaired Loans	Level III	$	2,417	$	1,155	Market Comparable Properties	Marketability Discount	10%	to	30%	(1)
OREO	Level III		-		111	Market Comparable Properties	Marketability Discount	10%	to	50%	(1)

  ⁽¹⁾ Range includes discounts taken since appraisal and estimated values.          

Impaired loans are evaluated when the loan is identified as impaired and valued at the lower of cost or fair value at that time. Fair value is measured based on the value of the collateral securing these loans and is classified as Level III in the fair value hierarchy. At June 30, 2016 and December 31, 2015, the fair value of impaired loans consists of the loan balances of $3.7 million and $1.6 million, respectively, less their specific valuation allowances of $1.3 million and $417,000, respectively.

Other real estate owned (OREO), properties are evaluated at the time of acquisition and recorded at fair value less estimated selling costs. After acquisition, other real estate owned is recorded at the lower of cost or fair value less estimated selling costs. The fair value of an other real estate owned property is determined from a qualified independent appraisal and is classified as Level III in the fair value hierarchy. In the six months ended June 30, 2016, two commercial real estate properties for $3.2 million were foreclosed on, moved into OREO, evaluated for fair value and recorded a prior quarter gain on the valuation adjustment on foreclosed real estate for approximately $566,000. This recognized gain on the valuation adjustment was supported by independent appraisals of the two properties. One property was entered into a tentative sales agreement with a current customer which closed in the current period The other property was transferred into premise and equipment of the Company due to the location and the Company’s need of a new location for company headquarters. At December 31, 2015, two residential real estate loans for $111,000 were moved into OREO and at June 30, 2016, one has since been sold at a loss of approximately $5,000.

Financial instruments are defined as cash, evidence of an ownership in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses and other factors, as determined through various option pricing formulas or simulation modeling. As many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in the assumptions on which the estimated fair values are based may have significant impact on the resulting estimated fair values.

As certain assets such as deferred tax assets and premises and equipment are not considered financial instruments, the estimated fair value of financial instruments would not represent the full value of the Company.

The Company employs simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices are not available, based upon the following assumptions:

Cash and Due From Banks, Restricted Stock, Bank-Owned Life Insurance, Accrued Interest Receivable, Short-Term Borrowings, and Accrued Interest Payable

The fair value is equal to the current carrying value.

Investment Securities

The fair value of investment securities is equal to the available quoted market price. If no quoted market price is available, fair value is estimated using the quoted market price for similar securities or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted prices.

Loans Receivable

For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. Fair values for other loans are estimated using discounted cash flow analyses, using market interest rates for comparable loans. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

 27

 

Deposit Liabilities

The fair values disclosed for demand deposits, are, by definition, equal to the amount payable on demand at the reporting date. The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits.

Borrowed Funds

Fair values of borrowed funds are estimated using discounted cash flow analyses based on current market rates for similar types of borrowing arrangements.

Commitments to Extend Credit

These financial instruments are generally not subject to sale and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure. The contractual amounts of unfunded commitments and letters of credit are presented in Note 8.

The following table presents the estimated fair values of the Company’s financial instruments at the dates indicated.

		(Dollars in thousands)
		June 30, 2016				December 31, 2015
	Fair Value Heirarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and Due From Banks:
Interest Bearing	Level I	$	6,935	$	6,935	$	2,316	$	2,316
Non-Interest Bearing	Level I		6,278		6,278		9,024		9,024
Investment Securities:
Available for Sale	See Above		94,419		94,419		95,863		95,863
Loans, Net	Level III		671,784		690,824		676,864		692,373
Restricted Stock	Level II		3,253		3,253		3,824		3,824
Bank-Owned Life Insurance	Level II		18,448		18,448		18,209		18,209
Accrued Interest Receivable	Level II		2,387		2,387		2,419		2,419
Financial Liabilities:
Deposits	Level II		675,266		672,356		679,299		678,921
Short-term Borrowings	Level II		31,530		31,530		32,448		32,448
Other Borrowed Funds	Level II		28,000		28,648		28,000		27,830
Accrued Interest Payable	Level II		287		287		305		305

 28

 

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

This discussion should be read in conjunction with the unaudited consolidated financial statements, notes and tables included in this report. For further information, refer to the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Forward-Looking Statements

This report contains certain “forward-looking statements” within the meaning of the federal securities laws. These statements are not historical facts, but rather statements based on the Company’s current expectations regarding its business strategies, intended results and future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions. Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors which could affect actual results include the following:

· General and local economic conditions;

· Changes in interest rates, deposit flows, demand for loans, real estate values and competition;

· Competitive products and pricing;

· The ability of our customers to make scheduled loan payments;

· Loan delinquency rates;

· Our ability to manage the risks involved in our business;

· Our ability to integrate the operations of businesses we acquire;

· Inflation, market and monetary fluctuations;

· Our ability to control costs and expenses;

· Changes in federal and state legislation and regulation (i.e. the effect of new capital standards imposed by banking regulators and the implementation of the Dodd-Frank Act).

The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.

General

CB Financial Services, Inc. (“CB Financial”) is a bank holding company established in 2006. CB Financial’s business activity is conducted through its wholly owned banking subsidiary Community Bank (“the Bank”). CB Financial and the Bank are collectively referred to as the “Company.” All significant intercompany transactions have been eliminated.

The Bank is a Pennsylvania-chartered commercial bank headquartered in Carmichaels, Pennsylvania. The Bank operates from 16 offices in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania. The Bank is a community-oriented institution offering residential and commercial real estate loans, commercial and industrial loans, and consumer loans as well as a variety of deposit products for individuals and businesses in its market area. Property and casualty, commercial liability, surety and other insurance products are offered through Exchange Underwriters, Inc, the Bank’s wholly-owned subsidiary that is a full-service, independent insurance agency.

On October 31, 2014, the Company completed its merger with FedFirst Financial Corporation (“FedFirst” or the “merger”), the holding company for First Federal Savings Bank, a community bank based in Monessen, Pennsylvania. The merger resulted in the addition of five branches and expanded the Company’s reach into Fayette and Westmoreland counties in southwestern Pennsylvania.

The Bank’s website address is www.communitybank.tv. Information on the website is not and should not be considered a part of this Form 10-Q.

Overview

The following discussion and analysis is presented to assist in the understanding and evaluation of our consolidated financial condition and results of operations. It is intended to complement the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and should be read in conjunction therewith. The detailed discussion focuses on our consolidated financial condition as of June 30, 2016 compared to the financial condition as of December 31, 2015 and the consolidated results of operations for the three and six months ended June 30, 2016 and 2015.

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provisions for loan losses, noninterest income and noninterest expense. Noninterest income consists primarily of fees and service charges on deposit accounts, fees and charges on loans, insurance commissions, income from bank-owned life insurance and other income. Noninterest expense consists primarily of expenses related to salaries and employee benefits, occupancy and equipment, contracted services, legal fees, other real estate owned, advertising and promotion, stationery and supplies, deposit and general insurance and other expenses.

 29

 

Financial institutions like us, in general, are significantly affected by economic conditions, competition, and the monetary and fiscal policies of the federal government. Lending activities are influenced by the demand for and supply of housing, competition among lenders, interest rate conditions, and funds availability. Our operations and lending are principally concentrated in the southwestern Pennsylvania market area.

Statement of Financial Condition Analysis

Assets. Total assets decreased $2.7 million, or 0.3%, to $828.0 million at June 30, 2016 compared to $830.7 million at December 31, 2015.

Investment securities classified as available-for-sale decreased $1.4 million, or 1.5%, to $94.4 million at June 30, 2016 compared to $95.9 million at December 31, 2015. This decrease was primarily the result of calls and maturities of U.S. government agencies and obligations of states and political subdivisions that were utilized to pay down short-term borrowings and were partially reinvested in U.S. government agencies and obligations of states and political subdivisions.

Loans, net, decreased $5.1 million, or 0.8%, to $671.8 million at June 30, 2016 compared to $676.9 million at December 31, 2015. This was due to $7.4 million of net paydowns on construction loans, $3.8 million on commercial real estate loans and $3.7 million on residential mortgage loans, partially offset by increases of $5.3 million in consumer loans (mainly indirect auto loans), $3.7 million in commercial and industrial loans and $1.6 million in other loans. The net loan payoffs were utilized to fund loan originations and deposit runoff during the current period.

Premises and equipment, net, increased $2.2 million, or 21.2%, to $12.5 million at June 30, 2016 compared to $10.3 million at December 31, 2015. This was mainly due to the prior quarter other real estate owned property being reclassified into fixed assets in process. This property will undergo an extensive renovation and will be placed into Bank operations.

Liabilities. Total liabilities decreased $5.3 million, or 0.7%, to $738.5 million at June 30, 2016 compared to $743.8 million at December 31, 2015.

Total deposits decreased $4.0 million, or 0.6%, to $675.3 million at June 30, 2016 compared to $679.3 million at December 31, 2015. There were decreases of $11.4 million in time deposits, $959,000 in NOW accounts and $832,000 in brokered deposits, partially offset by increases of $5.5 million in money market accounts, $2.5 million in demand deposits and $1.1 million in savings accounts. The decrease in deposit balances is partly attributable to maturing time deposits seeking a higher renewal rate outside of the Bank in an ever low competitive interest rate environment and a decline in oil and gas industry-related deposits. In addition, school district and municipal deposits decreased due to utilization of funds as a result of the prior year impact of the State of Pennsylvania budget impasse. Due to the low interest rate environment, the Bank has been selective on offering promotional interest rates and has concentrated its efforts on increasing noninterest-bearing accounts by building strong customer relationships.

Short-term borrowings decreased $918,000, or 2.8%, to $31.5 million at June 30, 2016 compared to $32.4 million at December 31, 2015. Other borrowed funds remained constant at $28.0 million at June 30, 2016 and December 31, 2015. At June 30, 2016, short-term borrowings were comprised of $25.5 million of securities sold under agreements to repurchase, compared to $23.1 million at December 31, 2015. The increase is related to business deposit customers whose funds, above designated target balances, are transferred into an overnight interest-earning investment account by purchasing securities from the Bank’s investment portfolio under an agreement to repurchase. Short-term borrowings decreased by $3.4 million, to $6.0 million at June 30, 2016 compared to $9.4 million at December 31, 2015. In the prior year, a portion of FHLB short-term borrowings were replaced with $28.0 million in long-term borrowings with laddered maturities designed to mitigate the Company’s interest rate risk in the event of rising interest rates. Funds generated from security maturities and calls and loans sales in the current period were utilized for loan funding and liquidity needs. As a result of prior year activity, the weighted average interest rate on long-term borrowings remained constant at 1.80%.

Stockholders’ Equity. Stockholders’ equity increased $2.6 million, or 3.0%, to $89.5 million at June 30, 2016 compared to $86.9 million at December 31, 2015. During the period, net income was $4.0 million and the Company paid $1.8 million in dividends to stockholders.

 30

 

Results of Operations for the Three Months Ended June 30, 2016 and 2015

Overview. Net income decreased $302,000, to $1.9 million, for the three months ended June 30, 2016 compared to $2.2 million for the three months ended June 30, 2015. The quarterly results were largely impacted by a decrease of $436,000 in pre-tax income, primarily related to increases in non-interest expense.

Net Interest Income. Net interest income decreased $20,000, or 0.3%, to $7.2 million for the three months ended June 30, 2016 compared to $7.3 million for the three months ended June 30, 2015.

Interest and dividend income increased $11,000, or 0.1%, to $8.0 million for the three months ended June 30, 2016 compared to $7.9 million for the three months ended June 30, 2015. Despite a decrease of $989,000 in the average balance, interest income on taxable securities increased $82,000 due to an increase of 64 basis points in yield from new purchases and from higher yields on the remaining securities in the portfolio. Interest income on loans decreased $62,000 due to a decrease in average loans outstanding of $4.4 million primarily due to mortgage and installment loan payoffs. In addition, $38.2 million of residential loans were sold in the second quarter of the prior year. The loan sales were primarily comprised of 30-year fixed rate mortgage loans that were acquired in the merger and were secured by properties located outside the Bank’s traditional lending area within the five counties it conducts business. Interest income on securities exempt from federal tax decreased $8,000 due to deploying proceeds from security calls and maturities into loan funding and liquidity needs. There was a decrease of $2.8 million in the average balance on securities exempt from federal tax and an increase of 15 basis points in yield as a result of purchasing securities with higher earning yields.

Interest expense increased $31,000, or 4.6%, to $702,000 for the three months ended June 30, 2016 compared to $671,000 for the three months ended June 30, 2015. Interest expense on other borrowed funds increased $65,000 primarily due to an increase in long-term borrowings resulting from the Bank laddering $13.0 million of FHLB borrowings in late 2015 to mitigate the Company’s interest rate risk in the event of rising interest rates. Interest expense on deposits decreased $34,000 due to a decrease in average interest-bearing deposits of $15.1 million, primarily due to deposit runoff from municipalities and school districts utilizing funds recently released from the State of Pennsylvania budget impasse. Decreases in average deposit balances and the Bank holding rates constant throughout 2016 resulted in the average cost of interest-bearing deposits decreasing 1 basis point, primarily related to the repricing of maturing certificates of deposit to lower rates.

 31

 

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Tax-equivalent yield adjustments have been made for tax exempt loan and securities income utilizing a marginal federal tax rate of 34%. As such, amounts will not agree to income as reported in the consolidated financial statements. Average balances for loans are net of the allowance for loan losses, but include non-accrual loans. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented and are expressed in annualized rates.

	(Dollars in thousands)
	Three Months Ended June 30,
	2016							2015
	Average Balance		Interest and Dividends		Yield/ Cost (1)			Average Balance		Interest and Dividends		Yield/ Cost (1)
Assets:
Interest-Earning Assets:
Loans, Net	$	669,534	$	7,352		4.42	%	$	673,922	$	7,413		4.41	%
Investment Securities
Taxable		53,716		307		2.29			54,705		225		1.65
Exempt From Federal Tax		39,016		396		4.06			41,776		408		3.91
Other Interest-Earning Assets		16,579		54		1.31			18,912		55		1.17
Total Interest-Earning Assets		778,845		8,109		4.19			789,315		8,101		4.12
Noninterest-Earning Assets		52,616							55,577
Total Assets	$	831,461						$	844,892
Liabilities and Stockholders' equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits	$	114,549		49		0.17	%	$	101,105		40		0.16	%
Savings		124,473		57		0.18			124,267		56		0.18
Money Market		144,195		91		0.25			157,657		91		0.23
Time Deposits		137,174		363		1.06			152,430		407		1.07
Total Interest-Bearing Deposits		520,391		560		0.43			535,459		594		0.44
Borrowings		53,443		142		1.07			54,212		77		0.57
Total Interest-Bearing Liabilities		573,834		702		0.49			589,671		671		0.46
Noninterest-Bearing Demand Deposits		164,750							164,967
Other Liabilities		3,765							5,701
Total Liabilities		742,349							760,339
Stockholders' Equity		89,112							84,553
Total Liabilities and Stockholders' Equity	$	831,461						$	844,892
Net Interest Income			$	7,407						$	7,430
Net Interest Rate Spread (2)						3.70	%						3.66	%
Net Interest-Earning Assets (3)	$	205,011						$	199,644
Net Interest Margin (4)						3.82							3.78
Return on Average Assets						0.94							1.06
Return on Average Equity						8.75							10.63
Average Equity to Average Assets						10.72							10.01
Average Interest-Earning Assets to Average Interest-Bearing Liabilities						135.73							133.86

 _________________

(1) Annualized.

(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

 32

 

Rate/Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. Tax-equivalent yield adjustments have been made for tax exempt loan and securities income utilizing a marginal federal tax rate of 34%. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.

	(Dollars in thousands)
	Three Months Ended June 30, 2016 Compared To Three Months Ended June 30, 2015
	Increase (Decrease) Due to
	Volume			Rate			Total
Interest and Dividend Income:
Loans, net	$	(78	)	$	17		$	(61	)
Investment Securities:
Taxable		(4	)		86			82
Exempt From Federal Tax		(28	)		16			(12	)
Other Interest-Earning Assets		(8	)		7			(1	)
Total Interest-Earning Assets		(118	)		126			8
Interest Expense:
Deposits		(21	)		(13	)		(34	)
Borrowings		(1	)		66			65
Total Interest-Bearing Liabilities		(22	)		53			31
Change in Net Interest Income	$	(96	)	$	73		$	(23	)

Provision for Loan Losses. The provision for loan losses was $300,000 for the three months ended June 30, 2016 compared to $375,000 for the three months ended June 30, 2015. The originated loan portfolio had $190,000 of provision applied and the acquired at fair value loan portfolio had $110,000 of provision applied for the three months ended June 30, 2016. This compared to the entire $375,000 provision for the three months ended June 30, 2015 being applied to the originated loan portfolio. Net charge-offs for the three months ended June 30, 2016 were $83,000 compared to net charge-offs of $167,000 for the three months ended June 30, 2015. Management analyzes the loan portfolio on a quarterly basis to determine the adequacy of the allowance for loan losses and the need for additional provisions for loan losses and determined the current quarter provision was necessary due to an increase in special mention loans, quarterly charge-offs and commercial and indirect auto loan growth.

Noninterest Income. Noninterest income increased $62,000, or 3.4% to $1.9 million for the three months ended June 30, 2016 compared to $1.8 million for the three months ended June 30, 2015, primarily due to an increase in the net gains on the sales of residential mortgage loans of $213,000. The increase in gains was primarily due an increase in the number of loans originated and subsequently sold to the FHLB as part of the Mortgage Partnership Finance® (“MPF®”) program. The MPF® program enables member financial institutions to offer competitive interest rates for fixed-rate mortgage loans without assuming any of the interest rate risk associated with a long-term asset. This was compared to the prior period net losses on the sales of loans of $28,000 that the Company incurred mainly due to approximately $38.2 million of residential loans that were acquired in the merger. In addition, net gains on the sales of investments increased $58,000 due to the sale of equity securities. These sales were transacted to recognize capital gains that will be offset by a capital loss carry forward deferred tax asset that was acquired in the merger. These increases were partially offset by a $194,000 decrease in insurance commission from Exchange Underwriters due to reduced contingency fees received in the current period, which are commissions that are contingent upon several factors including, but not limited to, eligible written premiums, earned premiums, incurred losses and stop loss charges. Service fees on deposit accounts decreased $19,000 primarily due to a first-year incentive for a check card brand change and an increase in check card fees from deposit accounts acquired in the merger recognized in the prior period.

 33

 

Noninterest Expense. Noninterest expense increased $553,000, or 10.0%, to $6.1 million for the three months ended June 30, 2016 compared to $5.5 million for the three months ended June 30, 2015. Other real estate owned expense increased $272,000 primarily due to gains from the sales of other real estate owned properties in the prior period only. Other noninterest expense increased $114,000 primarily due to current period expenses related to non-employee stock options and restricted stock awards, and an increase in various miscellaneous expenses, such as supplies, charitable contributions and telephone expense. Salaries and employee benefits increased $98,000 primarily due to employee stock options and restricted stock awards expense as well as normal salary increases. Occupancy and equipment increased $11,000 and $33,000, respectively, primarily due to the opening of the Uniontown Business Center in the current period. PA shares tax, which is calculated based on the Bank’s stockholders’ equity, increased $38,000 due to an anticipated rate increase by the State of Pennsylvania. As of July 1, 2016, the PA Shares Tax rate of 0.95% has been ratified by the state legislature, becoming effective for tax years starting January 1, 2017. Advertising decreased $32,000 related to the termination of a cooperative marketing agreement at Exchange Underwriters.

Income Tax Expense. Income taxes decreased $134,000 to $790,000 for the three months ended June 30, 2016 compared to $924,000 for the three months ended June 30, 2015. The effective tax rate for the three months ended June 30, 2016 was 29.0% compared to 29.2% for the three months ended June 30, 2015. The decrease in income taxes was due to a decrease of $436,000 in net income before income tax expense. The decrease in the effective tax rate was related to an increase in tax-exempt yield in the current period.

Results of Operations for the Six Months Ended June 30, 2016 and 2015

Overview. Net income decreased $552,000, to $4.0 million, for the six months ended June 30, 2016 compared to $4.5 million for the six months ended June 30, 2015.

Net Interest Income. Net interest income decreased $56,000 , or 0.4%, to $14.7 million and remained constant for the six months ended June 30, 2016 and June 30, 2015.

Interest and dividend income decreased $41,000, or 0.3%, to $16.1 million and remained constant for the six months ended June 30, 2016 and June 30, 2015. Other interest and dividend income decreased $121,000 primarily due to a decrease in FHLB stock dividends which included the payment of a special dividend in the first quarter of 2015 of $56,000. As a result of receiving no special dividend in the current period and a decrease in short-term borrowings compared to the prior period, the Bank was required to hold less FHLB stock. Interest income on loans decreased $46,000 due to a decrease in average loans outstanding of $3.6 million primarily due to loan payoffs for mortgage and installment loans. Interest income on securities exempt from federal tax decreased $44,000 due to deploying proceeds from security calls and maturities into loan funding and liquidity needs in the current period. There was a decrease of $3.3 million in average balance on securities exempt from federal tax and an increase of 1 basis point in yield as a result of purchasing securities with higher earning yields. Despite a decrease of $3.3 million in average balance, interest income on taxable securities increased $164,000 due to an increase of 70 basis points in yield from new purchases and from higher yields on the remaining securities in the portfolio.

Interest expense increased $15,000, or 1.1%, to $1.4 million to remain constant for the six months ended June 30, 2016 and June 30, 2015. Non deposit interest expense on other borrowed funds increased $102,000, and average other borrowed funds increased $3.1 million. This was primarily due to the Bank laddering $15.0 million in short-term borrowings in the first quarter of 2015 and $13.0 million in short-term borrowings in late 2015 into a series of long-term FHLB borrowings to mitigate the Company’s interest rate risk in the event of rising interest rates. Interest expense on deposits decreased $71,000 due to a decrease in average interest-bearing deposits of $8.5 million primarily due to deposit runoff. The average cost of interest-bearing deposits decreased 2 basis points, primarily related to the repricing of maturing certificates of deposit to lower rates. In addition, short-term borrowings decreased $16,000 in the current period due to the laddering of FHLB long-term borrowings.

 34

 

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Tax-equivalent yield adjustments have been made for tax exempt loan and securities income utilizing a marginal federal tax rate of 34%. Average balances for loans are net of the allowance for loan losses, but include non-accrual loans. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented and are expressed in annualized rates.

	(Dollars in thousands)
	Six Months Ended June 30,
	2016							2015
(Dollars in thousands)	Average Balance		Interest and Dividends		Yield/ Cost (1)			Average Balance		Interest and Dividends		Yield/ Cost (1)
Assets:
Interest-Earning Assets:
Loans, Net	$	674,513	$	14,878		4.44	%	$	678,084	$	14,917		4.44	%
Investment Securities
Taxable		54,651		631		2.31			57,985		467		1.61
Exempt From Federal Tax		38,636		784		4.06			41,924		850		4.05
Other Interest-Earning Assets		12,664		96		1.52			13,964		211		3.05
Total Interest-Earning Assets		780,464		16,389		4.22			791,957		16,445		4.19
Noninterest-Earning Assets		53,463							55,967
Total Assets	$	833,927						$	847,924
Liabilities and Stockholders' equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits	$	116,112		97		0.17	%	$	100,533		80		0.16	%
Savings		123,908		113		0.18			122,623		110		0.18
Money Market		145,240		181		0.25			158,375		181		0.23
Time Deposits		140,260		730		1.05			152,443		821		1.09
Total Interest-Bearing Deposits		525,520		1,121		0.43			533,974		1,192		0.45
Borrowings		52,886		284		1.08			58,436		198		0.68
Total Interest-Bearing Liabilities		578,406		1,405		0.49			592,410		1,390		0.47
Noninterest-Bearing Demand Deposits		163,002							165,416
Other Liabilities		4,028							6,256
Total Liabilities		745,436							764,082
Stockholders' Equity		88,491							83,842
Total Liabilities and Stockholders' Equity	$	833,927						$	847,924
Net interest income			$	14,984						$	15,055
Net Interest Rate Spread (2)						3.73	%						3.72	%
Net Interest-Earning Assets (3)	$	202,058						$	199,547
Net Interest Margin (4)						3.86							3.83
Return on Average Assets						0.96							1.08
Return on Average Equity						9.05							10.91
Average Equity to Average Assets						10.61							9.89
Average Interest-Earning Assets to Average Interest-Bearing Liabilities						134.93							133.68

______________

(1) Annualized.

(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average total interest-earning assets. Interest income and yields are on a fully tax equivalent basis utilizing a marginal tax rate of 34%.

 35

 

Rate/Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.

	(Dollars in thousands)
	Six Months Ended June 30, 2016 Compared To Six Months Ended June 30, 2015
	Increase (Decrease) Due to
(Dollars in thousands)	Volume			Rate			Total
Interest and Dividend Income:
Loans, net	$	(39	)	$	-		$	(39	)
Investment Securities:
Taxable		(28	)		192			164
Exempt From Federal Tax		(68	)		2			(66	)
Other Interest-Earning Assets		(17	)		(98	)		(115	)
Total Interest-Earning Assets		(152	)		96			(56	)
Interest Expense:
Deposits		(19	)		(52	)		(71	)
Borrowings		(21	)		107			86
Total Interest-Bearing Liabilities		(40	)		55			15
Change in Net Interest Income	$	(112	)	$	41		$	(71	)

Provision for Loan Losses. The provision for loan losses was $1.2 million for the six months ended June 30, 2016 compared to $675,000 in the six months ended June 30, 2015. Net charge-offs for the six months ended June 30, 2016 were $450,000 compared to net charge-offs of $184,000 for the six months ended June 30, 2015. Management analyzes the loan portfolio on a quarterly basis to determine the adequacy of the allowance for loan losses and the need for additional provisions for loan losses and determined the current provision was necessary due to an increase in special mention loans, current period charge-offs and commercial and indirect auto loan growth.

Noninterest Income. Noninterest income increased $83,000, or 2.3% to $3.7 million for the six months ended June 30, 2016 compared to $3.6 million for the six months ended June 30, 2015 primarily due to an increase in the net gains on sale of residential mortgage loans of $266,000. The increase in gains was primarily due to an increase in the number of loans originated and subsequently sold to the FHLB as part of the MPF® programs. This offset prior period losses on the sales of $38.2 million of residential loans that were acquired in the merger. In addition, net gains on the sales of investments increased $58,000 due to the sale of equity securities. These sales were transacted to recognize capital gains that will be offset by a capital loss carry forward deferred tax asset that was acquired in the merger. Other miscellaneous income increased $26,000 primarily due to an increase in the servicing income received from mortgage loans sold to the FHLB as part of the MPF® program and a decline in amortization on mortgage servicing rights related to loans sold to the FHLB. These increases were partially offset by a $253,000 decrease in insurance commission from Exchange Underwriters due to reduced contingency fees received in the current period. Service fees on deposit accounts decreased $10,000 primarily due to check card fees from deposit accounts acquired in the merger and a first-year incentive for a check card brand change recognized in the prior period.

Noninterest Expense. Noninterest expense increased $320,000, or 2.8%, to $11.6 million for the six months ended June 30, 2016 compared to $11.3 million for the six months ended June 30, 2015. Salaries and employee benefits increased $319,000, primarily due to additional employees as well as normal salary increases and employee stock options and restricted stock awards expense. Other noninterest expense increased $251,000 primarily due to an increase in various miscellaneous expenses, such as non-employee stock options and restricted stock awards, supplies, telephone, other losses attributable to debit card fraud losses and charitable contributions. Occupancy and equipment increased $14,000 and $50,000, respectively, primarily due to the opening of the Uniontown Business Center in the current period. PA shares tax, which is calculated based on the Bank’s stockholders’ equity, increased $57,000 due to the above mentioned rate increase by the State of Pennsylvania. Other real estate owned income was $535,000 in the current period compared to $242,000 in the prior period resulting in a decrease of $293,000 in expense. This change is primarily due to the $566,000 pre-tax gain recognized due to the foreclosure procedures on two commercial real estate loans that moved into other real estate owned properties in the first quarter of 2016. Advertising decreased $92,000 related to the termination of a cooperative marketing agreement at Exchange Underwriters, partially offset by advertising initiatives to promote the Bank.

 36

 

Income Tax Expense. Income taxes decreased $216,000 to $1.6 million for the six months ended June 30, 2016 compared to $1.9 million for the six months ended June 30, 2015. The effective tax rate for the six months ended June 30, 2016 was 29.3% compared to 29.1% for the six months ended June 30, 2015. The decrease in income taxes was due to a decrease of $768,000 in net income before income tax expense. The increase in the effective tax rate was due to a decrease in tax-exempt income.

Off-Balance Sheet Arrangements.

Other than loan commitments and standby and performance letters of credit, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a significant current or future effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. Refer to Note 8 in the Notes to Consolidated Financial Statements for a summary of commitments outstanding as of June 30, 2016.

Liquidity and Capital Management

Liquidity. Liquidity is the ability to meet current and future financial obligations of a short-term nature. The Company’s primary sources of funds consist of deposit inflows, loan repayments and maturities, calls and sales of securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

The Company regularly adjusts its investments in liquid assets based upon its assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, and the objectives of its asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits with other banks and short- and intermediate-term securities. The Company believes that it had sufficient liquidity at June 30, 2016 to satisfy its short- and long-term liquidity needs at that date.

The Company’s most liquid assets are cash and due from banks, which totaled $13.2 million at June 30, 2016. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. Unpledged securities, which provide an additional source of liquidity, totaled $19.6 million at June 30, 2016. In addition, at June 30, 2016, the Company had the ability to borrow up to $293.0 million from the FHLB of Pittsburgh, of which $28.0 million was outstanding and $9.8 million was utilized toward a standby letter of credit. The Company also has the ability to borrow up to $84.1 million from the Federal Reserve Bank through its Borrower-In-Custody line of credit agreement and $40.0 million from multiple line of credit arrangements with various banks, none of which were outstanding.

At June 30, 2016, time deposits due within one year of that date totaled $55.7 million, or 41.5% of total time deposits. If these time deposits do not remain with the Company, the Company will be required to seek other sources of funds. Depending on market conditions, the Company may be required to pay higher rates on such deposits or other borrowings than it currently pays on these certificates of deposit. The Company believes, however, based on past experience that a significant portion of its certificates of deposit will remain with it, either as certificates of deposit or as other deposit products. The Company has the ability to attract and retain deposits by adjusting the interest rates offered.

CB Financial is a separate legal entity from the Bank and must provide for its own liquidity to pay any dividends to its shareholders and for other corporate purposes. Its primary source of liquidity is dividend payments it receives from the Bank. The Bank’s ability to pay dividends to CB Financial is subject to regulatory limitations. At June 30, 2016, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of $1.1 million.

We are committed to maintaining a strong liquidity position; therefore, we monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. The marginal cost of new funding, however, whether from deposits or borrowings from the Federal Home Loan Bank, will be carefully considered as we monitor our liquidity needs. Therefore, in order to minimize our cost of funds, we may consider additional borrowings from the Federal Home Loan Bank in the future.

Capital Management. The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, each must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

 37

 

Under the Regulatory Capital Rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity Tier I capital above its minimum risk-based capital requirements in an amount greater than 2.5% of total risk-weighted assets. The capital conservation buffer, which is composed of common equity Tier I capital, began on January 1, 2016 at the 0.625% level and will be phased in over a three year period (increasing by that amount on each January 1, until it reaches 2.5% on January 1, 2019).

At June 30, 2016 and December 31, 2015, the Company was categorized as well capitalized under the regulatory framework for prompt corrective action. The following table presents the Bank’s regulatory capital amounts and ratios, as well as the minimum amounts and ratios required to be well capitalized as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016					December 31, 2015
	Amount		Ratio			Amount		Ratio
Common Equity Tier 1 (to risk weighted assets)
Actual	$	79,953		13.09	%	$	78,702		12.83	%
For Capital Adequacy Purposes		27,486		4.50			27,597		4.50
To Be Well Capitalized		39,702		6.50			39,862		6.50
Tier 1 Capital (to risk weighted assets)
Actual		79,953		13.09			78,702		12.83
For Capital Adequacy Purposes		36,648		6.00			36,795		6.00
To Be Well Capitalized		48,864		8.00			49,060		8.00
Total Capital (to risk weighted assets)
Actual		87,151		14.27			85,192		13.89
For Capital Adequacy Purposes		48,864		8.00			49,060		8.00
To Be Well Capitalized		61,080		10.00			61,326		10.00
Tier 1 Leverage (to adjusted total assets)
Actual		79,953		9.70			78,702		9.60
For Capital Adequacy Purposes		32,959		4.00			32,777		4.00
To Be Well Capitalized		41,199		5.00			40,972		5.00

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

The Company believes that as of June 30, 2016, there was no material change in the quantitative and qualitative disclosure about market risk data as of December 31, 2015, as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Item 4. Controls and Procedures.

CB Financial’s management, including CB Financial’s principal executive officer and principal financial officer, have evaluated the effectiveness of CB Financial’s “disclosure controls and procedures” as such term is defined in Rule 13a-15(c) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, CB Financial’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that CB Financial files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to CB Financial’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures.

There have been no changes in CB Financial’s internal control over financial reporting during the quarter ended June 30, 2016, that has materially affected, or is reasonably likely to materially affect, CB Financial’s internal control over financial reporting.

 38

 

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, claims seeking damages for improper collection procedures or misrepresentations, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any other pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results.

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

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

31.1 Rule 13a-14(a) / 15d-14(a) Certification (President and Chief Executive Officer)

31.2 Rule 13a-14(a) / 15d-14(a) Certification (Chief Financial Officer)

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

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

101.0 The following materials for the quarter ended June 30, 2016, formatted in XBRL (Extensible Business Reporting Language); (i) the Consolidated Statement of Financial Condition, (ii) the Consolidated Statement of Operations, (iii) the Consolidated Statement of Comprehensive Income, (iv) the Consolidated Statement of Stockholders’ Equity, (v) the Consolidated Statement of Cash Flows and (vi) the Notes to the Unaudited Consolidated Financial Statements

 39

 

SIGNATURES

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

	CB FINANCIAL SERVICES, INC.
	(Registrant)
Date:       August 9, 2016	/s/ Barron P. McCune, Jr.
	Barron P. McCune, Jr.
	President and Chief Executive Officer
Date:       August 9, 2016	/s/ Kevin D. Lemley
	Kevin D. Lemley
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer and Chief Accounting Officer)

40

EX-31.1

EXHIBIT 31.1

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

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Barron P. McCune, Jr., President, Chief Executive Officer and Director of CB Financial Services, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 of CB Financial Services, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date:        August 9, 2016	/s/ Barron P. McCune, Jr.
	Barron P. McCune, Jr.
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

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

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Kevin D. Lemley, Executive Vice President and Chief Financial Officer of CB Financial Services, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 of CB Financial Services, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date:        August 9, 2016	/s/ Kevin D. Lemley
	Kevin D. Lemley
	Executive Vice President and 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 CB Financial Services, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2016 as filed with the Securities and Exchange Commission (the “Report”), I, Barron P. McCune, Jr., the President, Chief Executive Officer and Director 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; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:        August 9, 2016	/s/ Barron P. McCune, Jr.
	Barron P. McCune, Jr.
	President and Chief Executive Officer

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 CB Financial Services, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2016 as filed with the Securities and Exchange Commission (the “Report”), I, Kevin D. Lemley, the Executive Vice President and 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; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company

Date:        August 9, 2016	/s/ Kevin D. Lemley
	Kevin D. Lemley
	Executive Vice President and Chief Financial Officer

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 09, 2016
Document Information [Line Items]
Entity Registrant Name	CB Financial Services, Inc.
Entity Central Index Key	0001605301
Trading Symbol	cbfv
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		4,081,017
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Statement of Financial Condition (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
ASSETS
Interest Bearing	$ 6,935	$ 2,316
Non-Interest Bearing	6,278	9,024
Total Cash and Due From Banks	13,213	11,340
Available-for-Sale	94,419	95,863
Loans, Net	671,784	676,864
Premises and Equipment, Net	12,453	10,277
Bank-Owned Life Insurance	18,448	18,209
Goodwill	4,953	4,953
Core Deposit Intangible, Net	4,086	4,353
Accrued Interest and Other Assets	8,670	8,818
TOTAL ASSETS	828,026	830,677
LIABILITIES
Demand Deposits	163,564	161,053
NOW Accounts	98,555	99,514
Money Market Accounts	139,834	134,294
Savings Accounts	122,487	121,415
Time Deposits	134,286	145,651
Brokered Deposits	16,540	17,372
Total Deposits	675,266	679,299
Short-Term Borrowings	31,530	32,448
Other Borrowed Funds	28,000	28,000
Accrued Interest and Other Liabilities	3,695	4,034
TOTAL LIABILITIES	738,491	743,781
STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value; 5,000,000 Shares Authorized
Common Stock, $0.4167 Par Value; 35,000,000 Shares Authorized, 4,363,346 Shares Issued and 4,081,017 Shares Outstanding at June 30, 2016 and December 31, 2015, Respectively	1,818	1,818
Capital Surplus	41,788	41,614
Retained Earnings	49,912	47,725
Treasury Stock, at Cost (282,329 Shares at June 30, 2016 and December 31, 2015, Respectively)	(4,836)	(4,836)
Accumulated Other Comprehensive Income	853	575
TOTAL STOCKHOLDERS' EQUITY	89,535	86,896
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 828,026	$ 830,677

XML

Consolidated Statement of Financial Condition (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Common stock, par value (in dollars per share)	$ 0.4167	$ 0.4167
Common stock, shares authorized (in shares)	35,000,000	35,000,000
Common stock, shares issued (in shares)	4,363,346	4,363,346
Common stock, shares outstanding (in shares)	4,081,017	4,081,017
Treasury stock, at cost (in shares)	282,329	282,329

XML

Consolidated Statement of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
INTEREST AND DIVIDEND INCOME
Loans, Including Fees	$ 7,323	$ 7,385	$ 14,820	$ 14,866
Federal Funds Sold	8	6	13	7
Taxable	307	225	631	467
Exempt From Federal Income Tax	266	274	526	570
Other Interest and Dividend Income	46	49	83	204
TOTAL INTEREST AND DIVIDEND INCOME	7,950	7,939	16,073	16,114
INTEREST EXPENSE
Deposits	560	594	1,121	1,192
Federal Funds Purchased			1	1
Short-Term Borrowings	15	15	29	45
Other Borrowed Funds	127	62	254	152
TOTAL INTEREST EXPENSE	702	671	1,405	1,390
NET INTEREST INCOME	7,248	7,268	14,668	14,724
Provision For Loan Losses	300	375	1,150	675
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	6,948	6,893	13,518	14,049
NONINTEREST INCOME
Service Fees on Deposit Accounts	606	625	1,192	1,202
Insurance Commissions	743	937	1,615	1,868
Other Commissions	112	116	229	237
Net Gains (Losses) on Sales of Loans	185	(28)	309	43
Net Gains on Sales of Investments	58		58
Income from Bank-Owned Life Insurance	119	117	239	235
Other	45	39	73	47
TOTAL NONINTEREST INCOME	1,868	1,806	3,715	3,632
Salaries and Employee Benefits	3,285	3,187	6,654	6,335
Occupancy	438	427	912	898
Equipment	432	399	854	804
FDIC Assessment	115	115	241	253
PA Shares Tax	203	165	405	348
Contracted Services	156	147	289	284
Legal and Professional Fees	114	110	255	241
Advertising	189	221	354	446
Bankcard Processing Expense	122	116	234	227
Other Real Estate Owned Expense (Income)	10	(262)	(535)	(242)
Amortization of Core Deposit Intangible	133	133	267	267
Other	891	777	1,672	1,421
TOTAL NONINTEREST EXPENSE	6,088	5,535	11,602	11,282
Income Before Income Taxes	2,728	3,164	5,631	6,399
Income Taxes	790	924	1,648	1,864
NET INCOME	$ 1,938	$ 2,240	$ 3,983	$ 4,535
Earnings per share:
Basic (in dollars per share)	$ 0.48	$ 0.55	$ 0.98	$ 1.11
Diluted (in dollars per share)	$ 0.48	$ 0.55	$ 0.98	$ 1.11
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic (in shares)	4,081,017	4,071,462	4,081,017	4,071,462
Diluted (in shares)	4,084,695	4,071,462	4,083,313	4,071,462

XML

Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net Income	$ 1,938	$ 2,240	$ 3,983	$ 4,535
Other Comprehensive Income (Loss)
Unrealized Gains (Losses) on Available-for-Sale Securities Net of Income Tax of $28 and $(194) for the Three Months Ended June 30, 2016 and 2015, Respectively, and $164 and $(22) for the Six Months Ended June 30, 2016 and 2015, Respectively	55	(376)	316	(45)
Reclassification Adjustment for Gains on Securities Included in Net Income, Net of Income Tax of $20 for the Three and Six Months Ended June 30,2016, Respectively	(38)		(38)
Other Comprehensive Income (Loss), Net of Income Tax	17	(376)	278	(45)
Total Comprehensive Income	$ 1,955	$ 1,864	$ 4,261	$ 4,490

XML

Consolidated Statement of Comprehensive Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Unrealized Gains (Losses) on Available-for-Sale Securities, Tax	$ 28	$ (194)	$ 164	$ (22)
Reclassification adjustment for gains on securities, tax	$ 20		$ 20

XML

Consolidated Statement of Changes In Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2014	4,363,346
Balance at Dec. 31, 2014	$ 1,818	$ 41,762	$ 42,766	$ (4,999)	$ 565	$ 81,912
Net income			4,535			4,535
Other comprehensive income (loss)					(45)	(45)
Dividends paid			(1,710)			(1,710)
Balance (in shares) at Jun. 30, 2015	4,363,346
Balance at Jun. 30, 2015	$ 1,818	41,762	45,591	(4,999)	520	84,692
Balance (in shares) at Dec. 31, 2015	4,363,346
Balance at Dec. 31, 2015	$ 1,818	41,614	47,725	(4,836)	575	86,896
Net income			3,983			3,983
Other comprehensive income (loss)					278	278
Dividends paid			(1,796)			(1,796)
Balance (in shares) at Jun. 30, 2016	4,363,346
Balance at Jun. 30, 2016	$ 1,818	41,788	$ 49,912	$ (4,836)	$ 853	89,535
Stock-based compensation expense		$ 174				$ 174

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Consolidated Statement of Changes In Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Retained Earnings [Member]
Dividends paid (in dollars per share)	$ 0.44	$ 0.42

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Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
OPERATING ACTIVITIES
Net income	$ 3,983	$ 4,535
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Net Amortization on Investments	116	366
Depreciation and Amortization	1,510	1,221
Provision for Loan Losses	1,150	675
Income from Bank-Owned Life Insurance	(239)	(235)
Proceeds From Mortgage Loans Sold	11,574	45,801
Originations of Mortgage Loans for Sale	(11,265)	(7,509)
Gains on Sales of Loans	(309)	(43)
Gains on Sales of Investment Securities	(58)
Gains on Sales of Other Real Estate Owned and Repossessed Assets	(49)	(284)
Noncash Expense for Stock-Based Compensation	174
Decrease in Accrued Interest Receivable	32	135
Valuation Adjustment on Foreclosed Real Estate	(566)
Increase (Decrease) in Taxes Payable	1,605	(91)
(Decrease) Increase in Accrued Interest Payable	(19)	13
Net (Payment) Refund of Federal/State Income Taxes	(1,450)	1,218
Other, Net	237	223
NET CASH PROVIDED BY OPERATING ACTIVITIES	6,426	46,025
INVESTING ACTIVITIES
Proceeds From Principal Repayments and Maturities	36,894	21,418
Purchases of Securities	(35,388)	(13,789)
Proceeds from Sales of Securities	302
Proceeds From Principal Repayments and Maturities		500
Net Increase in Loans	(79)	(16,845)
Purchase of Premises and Equipment	(281)	(237)
Proceeds From Sales of Other Real Estate Owned and Repossessed Assets	175	15
Decrease in Restricted Equity Securities	571	320
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	2,194	(8,618)
Net Decrease in Deposits	(4,033)	(2,039)
Net Decrease in Short-Term Borrowings	(918)	(23,867)
Principal Payments on Other Borrowed Funds		(1,112)
Proceeds from Other Borrowed Funds		15,000
Cash Dividends Paid	(1,796)	(1,710)
NET CASH USED IN FINANCING ACTIVITIES	(6,747)	(13,728)
INCREASE IN CASH AND CASH EQUIVALENTS	1,873	23,679
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR	11,340	11,751
CASH AND DUE FROM BANKS AT END OF PERIOD	13,213	35,430
Cash paid for:
Interest on deposits and borrowings (including interest credited to deposit accounts of $576 and $1,198 respectively)	720	1,378
Income taxes	1,450	203
Real estate acquired in settlement of loans	3,236	431
Transfer of real estate acquired in settlement of loans to premise and equipment	2,350
Securities sold not settled	(70)
Securities purchased not settled	$ 60

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Consolidated Statement of Cash Flows (Unaudited) (Parentheticals) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Interest credited to deposit accounts	$ 576	$ 1,198

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Note 1 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Significant Accounting Policies [Text Block]

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of CB Financial Services, Inc. (“CB Financial”) and its wholly owned subsidiary, Community Bank, (the “Bank”), and the Bank’s wholly-owned subsidiary, Exchange Underwriters, Inc. (“Exchange Underwriters”). CB Financial and the Bank are collectively referred to as the “Company”. All intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for losses on loans, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, evaluation of securities for other-than-temporary impairment including related cash flow projections, goodwill impairment, and the valuation of deferred tax assets.

In the opinion of management, the accompanying unaudited interim financial statements include all adjustments considered necessary for a fair presentation of the Company’s financial position and results of operations at the dates and for the periods presented. All of these adjustments are of a normal, recurring nature, and they are the only adjustments included in the accompanying unaudited interim financial statements. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Interim results are not necessarily indicative of results for a full year.

The Company evaluated the provisions of Accounting Standards Codification (“ASC”) Topic 280 and determined that segment reporting information related to Exchange Underwriters was not required to be presented because the segment comprises less than 10% of total interest and noninterest income and less than 10% of the combined assets of the Company.

The Company evaluated subsequent events through the date the consolidated financial statements were filed with the Securities and Exchange Commission and incorporated into the consolidated financial statements the effect of all material known events determined by ASC Topic 855,

Subsequent Events

, to be recognizable events.

Nature of Operations

The Company derives substantially all its income from banking and bank-related services which include interest earnings on commercial, commercial mortgage, residential real estate and consumer loan financing, as well as interest earnings on investment securities and fees generated from deposit services to its customers. The Company provides banking services primarily to communities in Greene, Allegheny, Washington, Fayette, and Westmoreland Counties located in southwestern Pennsylvania. The Company also conducts insurance brokerage activities through Exchange Underwriters.

Acquired Loans

Loans that were acquired in the merger with FedFirst Financial Corporation were recorded at fair value with no carryover of the related allowance for credit losses. The fair value of the acquired loans was estimated by management with the assistance of a third party valuation specialist.

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. The nonaccretable discount represents estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases to the expected cash flows require an evaluation to determine the need for an allowance for loan losses. Subsequent improvements in expected cash flows result in the reversal of a corresponding amount of the nonaccretable discount which is then reclassified as accretable discount that is recognized into interest income over the remaining life of the loan using the interest method. The evaluation of the amount of future cash flows that is expected to be collected is performed in a similar manner as that used to determine our allowance for credit losses. Charge-offs of the principal amount on acquired loans would be first applied to the nonaccretable discount portion of the fair value adjustment.

Reclassifications

Certain comparative amounts for the prior year have been reclassified to conform to the current year presentation. Such reclassifications did not affect net income or stockholders’ equity.

Recent Accounting Standards

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

. ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this ASU will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects companies holding financial assets and net investment in leases that are not accounted for at fair value through net income. The ASU 2016-13 amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted.  The Company is currently evaluating the impact that the amendments of ASU 2016-13, will have on the Company’s financial condition and results of operations.

In March 2016, the FASB issued ASU 2016-09,

Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting

.  ASU 2016-09 introduces amendments intended to simplify the accounting for stock compensation.  ASU 2016-09 requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement.  The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur.  An entity should also recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether the benefit reduces taxes payable in the current period.  The ASU also requires excess tax benefits be classified along with other income tax cash flows as an operating activity in the statement of cash flows.  ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted.  The Company is evaluating the provisions of ASU 2016-09, but, believes that its adoption will not have a material impact on the Company’s financial condition or results of operations.

In February 2016, the FASB issued ASU 2016-02,

Leases

(Topic 842)

, which increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 will require lessees to recognize a right-of-use (ROU) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation for leases with terms of more than twelve months. Both the ROU asset and lease liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. Accounting by lessors will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact that the provisions of ASU 2016-02, will have on the Company’s financial condition and results of operations.

In January 2016, the FASB issued ASU 2016-01,

Financial Instruments – Overall (Subtopic 825-10)

, which enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. ASU 2016-01 (i) requires equity investments (except those accounted for under the equity method or that are consolidated) to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost; (iv) requires an entity to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and (v) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is evaluating the provisions of ASU 2016-01, but does not believe that its adoption will have a material impact on the Company’s financial condition and results of operations.

Recent Accounting Standards (continued)

In May 2014, the FASB issued ASU 2014-09,

Revenue from Contracts with Customers

, which establishes a comprehensive revenue recognition standard for virtually all industries under GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. ASU 2014-09 specifies that an entity shall recognize revenue when, or as, the entity satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when, or as, the customer obtains control of the asset. Entities are required to disclose qualitative and quantitative information on the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company may elect, to early adopt the standard, but not before fiscal years beginning after December 15, 2016. The amendments may be applied retrospectively to each period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is evaluating the provisions of ASUs 2014-09 and 2015-14, but does not believe that their adoption will have a material impact on the Company’s financial condition and results of operations.

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Note 2 - Earnings Per Share

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Earnings Per Share [Text Block]

Note 2. Earnings Per Share

There are no convertible securities which would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statement of Income is used as the numerator.

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation.

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Weighted-Average Common Shares Outstanding		4,363,346			4,363,346			4,363,346			4,363,346
Average Treasury Stock Shares		(282,329	)		(291,884	)		(282,329	)		(291,884	)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share		4,081,017			4,071,462			4,081,017			4,071,462
Additional Common Stock Equivalents (Restricted Stock) Used to Calculate Diluted Earnings Per Share		3,678			-			2,296			-
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share		4,084,695			4,071,462			4,083,313			4,071,462
Earnings per share:
Basic	$	0.48		$	0.55		$	0.98		$	1.11
Diluted		0.48			0.55			0.98			1.11

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Note 3 - Investment Securities

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

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

Note 3. Investment Securities

The following table presents the amortized cost and fair value of investment securities available-for-sale at the dates indicated:

	(Dollars in thousands)
	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	49,309	$	306	$	(3	)	$	49,612
Obligations of States and Political Subdivisions		39,642		882		(6	)		40,518
Mortgage-Backed Securities - Government-Sponsored Enterprises		2,987		75		-			3,062
Equity Securities - Mutual Funds		500		17		-			517
Equity Securities - Other		688		28		(6	)		710
Total	$	93,126	$	1,308	$	(15	)	$	94,419

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	51,151	$	147	$	(110	)	$	51,188
Obligations of States and Political Subdivisions		39,351		760		(37	)		40,074
Mortgage-Backed Securities - Government-Sponsored Enterprises		3,390		13		-			3,403
Equity Securities - Mutual Funds		500		13		-			513
Equity Securities - Other		600		85		-			685
Total	$	94,992	$	1,018	$	(147	)	$	95,863

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at the dates indicated:

	(Dollars in thousands)
	June 30, 2016
	Less than 12 months							12 Months or Greater							Total
	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
U.S. Government Agencies		2	$	5,502	$	(3	)		-	$	-	$	-			2	$	5,502	$	(3	)
Obligations of States and
Political Subdivisions		3		1,389		(4	)		2		762		(2	)		5		2,151		(6	)
Equity Securities - Other		5		235		(6	)		-		-		-			5		235		(6	)
Total		10	$	7,126	$	(13	)		2	$	762	$	(2	)		12	$	7,888	$	(15	)

	December 31, 2015
	Less than 12 months							12 Months or Greater							Total
	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
U.S. Government Agencies		6	$	14,928	$	(110	)		-	$	-	$	-			6	$	14,928	$	(110	)
Obligations of States and
Political Subdivisions		11		5,333		(25	)		8		4,549		(12	)		19		9,882		(37	)
Total		17	$	20,261	$	(135	)		8	$	4,549	$	(12	)		25	$	24,810	$	(147	)

For debt securities, the Company does not believe any individual unrealized loss as of June 30, 2016 and December 31, 2015 represents an other-than-temporary impairment. The Company performs a review of the entire securities portfolio on a quarterly basis to identify securities that may indicate an other-than-temporary impairment. The Company’s management considers the length of time and the extent to which the fair value has been less than cost, and the financial condition of the issuer. The securities that are temporarily impaired at June 30, 2016 and December 31, 2015 relate principally to changes in interest rates subsequent to the acquisition of the specific securities. The Company does not intend to sell or it is not more likely than not that it will be required to sell any of the securities in an unrealized loss position before recovery of its amortized cost or maturity of the security.

The following table presents the scheduled maturities of investment securities as of the date indicated:

	(Dollars in thousands)
	June 30, 2016
	Available-for-Sale
	Amortized Cost		Fair Value
Due in One Year or Less	$	11,372	$	11,473
Due after One Year through Five Years		16,718		17,032
Due after Five Years through Ten Years		59,302		59,953
Due after Ten Years		5,734		5,961
Total	$	93,126	$	94,419

Equity Securities – Mutual Funds and Equity Securities – Other do not have a scheduled maturity date, but have been included in the Due After Ten Years category.

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Note 4 - Loans and Related Allowance for Loan Loss

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

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

Note 4. Loans and Related Allowance for Loan Loss

The Company’s loan portfolio is made up of four segments: real estate loans, commercial and industrial loans, consumer loans and other loans. These segments are further segregated between loans accounted for under the amortized cost method (“Originated Loans”) and acquired loans that were originally recorded at fair value with no carryover of the related pre-merger allowance for loan losses (“Loans Acquired at Fair Value”). The following table presents the major classifications of loans as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016						December 31, 2015
	Amount			Percent			Amount			Percent
Originated Loans
Real Estate:
Residential	$	173,734			34.8	%	$	170,169			35.2	%
Commercial		131,147			26.2			127,614			26.4
Construction		11,918			2.4			17,343			3.6
Commercial and Industrial		67,636			13.5			60,487			12.5
Consumer		109,250			21.9			103,605			21.4
Other		6,203			1.2			4,592			0.9
Total Originated Loans		499,888			100.0	%		483,810			100.0	%
Allowance for Loan Losses		(7,055	)					(6,490	)
Loans, Net	$	492,833					$	477,320
Loans Acquired at Fair Value
Real Estate:
Residential	$	95,753			53.5	%	$	103,058			51.7	%
Commercial		68,030			38.0			75,406			37.8
Construction		1,878			1.0			3,870			1.9
Commercial and Industrial		13,230			7.4			16,660			8.3
Consumer		196			0.1			550			0.3
Total Loans Acquired at Fair Value		179,087			100.0	%		199,544			100.0	%
Allowance for Loan Losses		(136	)					-
Loans, Net	$	178,951					$	199,544
Total Loans
Real Estate:
Residential	$	269,487			39.7	%	$	273,227			40.0	%
Commercial		199,177			29.3			203,020			29.7
Construction		13,796			2.1			21,213			3.1
Commercial and Industrial		80,866			11.9			77,147			11.3
Consumer		109,446			16.1			104,155			15.2
Other		6,203			0.9			4,592			0.7
Total Loans		678,975			100.0	%		683,354			100.0	%
Allowance for Loan Losses		(7,191	)					(6,490	)
Loans, Net	$	671,784					$	676,864

Total unamortized net deferred loan fees were $733,000 and $705,000 at June 30, 2016 and December 31, 2015, respectively.

Real estate loans serviced for others, which are not included in the Consolidated Statement of Financial Condition, totaled $78.8 million and $73.1 million at June 30, 2016 and December 31, 2015, respectively.

The following table presents loans summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of the dates indicated. At June 30, 2016 and December 31, 2015, there were no loans in the criticized category of Loss within the internal risk rating system.

	(Dollars in thousands)
	June 30, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	172,910	$	452	$	372	$	-	$	173,734
Commercial		112,025		13,725		4,317		1,080		131,147
Construction		11,038		699		-		181		11,918
Commercial and Industrial		63,782		1,730		2,124		-		67,636
Consumer		109,174		-		76		-		109,250
Other		6,203		-		-		-		6,203
Total Originated Loans	$	475,132	$	16,606	$	6,889	$	1,261	$	499,888
Loans Acquired at Fair Value
Real Estate:
Residential	$	93,123	$	-	$	2,630	$	-	$	95,753
Commercial		63,357		1,522		3,151		-		68,030
Construction		1,878		-		-		-		1,878
Commercial and Industrial		12,623		45		562		-		13,230
Consumer		196		-		-		-		196
Total Loans Acquired at Fair Value	$	171,177	$	1,567	$	6,343	$	-	$	179,087
Total Loans
Real Estate:
Residential	$	266,033	$	452	$	3,002	$	-	$	269,487
Commercial		175,382		15,247		7,468		1,080		199,177
Construction		12,916		699		-		181		13,796
Commercial and Industrial		76,405		1,775		2,686		-		80,866
Consumer		109,370		-		76		-		109,446
Other		6,203		-		-		-		6,203
Total Loans	$	646,309	$	18,173	$	13,232	$	1,261	$	678,975

	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	169,233	$	249	$	682	$	5	$	170,169
Commercial		113,087		6,870		6,565		1,092		127,614
Construction		16,384		729		-		230		17,343
Commercial and Industrial		57,586		2,145		756		-		60,487
Consumer		103,591		-		14		-		103,605
Other		4,592		-		-		-		4,592
Total Originated Loans	$	464,473	$	9,993	$	8,017	$	1,327	$	483,810
Loans Acquired at Fair Value
Real Estate:
Residential	$	100,633	$	-	$	2,425	$	-	$	103,058
Commercial		69,539		2,252		3,615		-		75,406
Construction		3,870		-		-		-		3,870
Commercial and Industrial		15,601		996		63		-		16,660
Consumer		550		-		-		-		550
Total Loans Acquired at Fair Value	$	190,193	$	3,248	$	6,103	$	-	$	199,544
Total Loans
Real Estate:
Residential	$	269,866	$	249	$	3,107	$	5	$	273,227
Commercial		182,626		9,122		10,180		1,092		203,020
Construction		20,254		729		-		230		21,213
Commercial and Industrial		73,187		3,141		819		-		77,147
Consumer		104,141		-		14		-		104,155
Other		4,592		-		-		-		4,592
Total Loans	$	654,666	$	13,241	$	14,120	$	1,327	$	683,354

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016
	Loans Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Non- Accrual		Total Loans
Originated Loans
Real Estate:
Residential	$	173,215	$	-	$	144	$	-	$	144	$	375	$	173,734
Commercial		130,564		266		-		-		266		317		131,147
Construction		11,737		-		-		-		-		181		11,918
Commercial and Industrial		67,381		255		-		-		255		-		67,636
Consumer		108,288		813		73		-		886		76		109,250
Other		6,203		-		-		-		-		-		6,203
Total Originated Loans	$	497,388	$	1,334	$	217	$	-	$	1,551	$	949	$	499,888
Loans Acquired at Fair Value
Real Estate:
Residential	$	93,824	$	82	$	131	$	-	$	213	$	1,716	$	95,753
Commercial		67,021		-		652		-		652		357		68,030
Construction		1,878		-		-		-		-		-		1,878
Commercial and Industrial		13,085		-		145		-		145		-		13,230
Consumer		195		-		-		1		1		-		196
Total Loans Acquired at Fair Value	$	176,003	$	82	$	928	$	1	$	1,011	$	2,073	$	179,087
Total Loans
Real Estate:
Residential	$	267,039	$	82	$	275	$	-	$	357	$	2,091	$	269,487
Commercial		197,585		266		652		-		918		674		199,177
Construction		13,615		-		-		-		-		181		13,796
Commercial and Industrial		80,466		255		145		-		400		-		80,866
Consumer		108,483		813		73		1		887		76		109,446
Other		6,203		-		-		-		-		-		6,203
Total Loans	$	673,391	$	1,416	$	1,145	$	1	$	2,562	$	3,022	$	678,975

	December 31, 2015
	Loans Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Non- Accrual		Total Loans
Originated Loans
Real Estate:
Residential	$	168,786	$	563	$	133	$	-	$	696	$	687	$	170,169
Commercial		124,037		114		-		-		114		3,463		127,614
Construction		17,113		-		-		-		-		230		17,343
Commercial and Industrial		60,442		45		-		-		45		-		60,487
Consumer		102,629		923		39		-		962		14		103,605
Other		4,592		-		-		-		-		-		4,592
Total Originated Loans	$	477,599	$	1,645	$	172	$	-	$	1,817	$	4,394	$	483,810
Loans Acquired at Fair Value
Real Estate:
Residential	$	99,794	$	1,308	$	263	$	193	$	1,764	$	1,500	$	103,058
Commercial		73,988		1,019		-		-		1,019		399		75,406
Construction		3,870		-		-		-		-		-		3,870
Commercial and Industrial		16,450		38		130		-		168		42		16,660
Consumer		542		8		-		-		8		-		550
Total Loans Acquired at Fair Value	$	194,644	$	2,373	$	393	$	193	$	2,959	$	1,941	$	199,544
Total Loans
Real Estate:
Residential	$	268,580	$	1,871	$	396	$	193	$	2,460	$	2,187	$	273,227
Commercial		198,025		1,133		-		-		1,133		3,862		203,020
Construction		20,983		-		-		-		-		230		21,213
Commercial and Industrial		76,892		83		130		-		213		42		77,147
Consumer		103,171		931		39		-		970		14		104,155
Other		4,592		-		-		-		-		-		4,592
Total Loans	$	672,243	$	4,018	$	565	$	193	$	4,776	$	6,335	$	683,354

The following table sets forth the amounts and categories of our nonperforming assets at the dates indicated. Included in nonperforming loans and assets are troubled debt restructurings (“TDRs”), which are loans whose contractual terms have been restructured in a manner which grants a concession to a borrower experiencing financial difficulties. Nonaccrual TDRs are included in their specific loan category in the nonaccrual loans section.

	(Dollars in Thousands)
	June 30, 2016			December 31, 2015
Nonaccrual Loans:
Real Estate:
Residential	$	2,091		$	2,187
Commercial		674			3,862
Construction		181			230
Commercial and Industrial		-			42
Consumer		76			14
Total Nonaccrual Loans		3,022			6,335
Accruing Loans Past Due 90 Days or More:
Real Estate:
Residential		-			193
Consumer		1			-
Total Accruing Loans 90 Days or More Past Due		1			193
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		3,023			6,528
Troubled Debt Restructurings, Accruing:
Originated Loans:
Real Estate - Commercial		1,352			1,375
Commercial and Industrial		7			7
Other		6			-
Total Originated Loans		1,365			1,382
Loans Acquired at Fair Value:
Real Estate - Residential		1,320			1,296
Real Estate - Commercial		698			1,488
Commercial and Industrial		518			-
Total Loans Acquired at Fair Value		2,536			2,784
Total Troubled Debt Restructurings, Accruing		3,901			4,166
Total Nonperforming Loans		6,924			10,694
Real Estate Owned:
Residential		78			138
Commercial		174			174
Total Real Estate Owned		252			312
Total Nonperforming Assets	$	7,176		$	11,006
Nonperforming Loans to Total Loans		1.02	%		1.56	%
Nonperforming Assets to Total Assets		0.87			1.32

The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction was $1.8 million and $3.8 million at June 30, 2016 and December 31, 2015, respectively.

TDRs typically are the result of our loss mitigation activities whereby concessions are granted to minimize loss and avoid foreclosure or repossession of collateral. The concessions granted for the TDRs in our portfolio primarily consist of, but are not limited to, modification of payment or other terms, temporary rate modification and extension of maturity date. Loans classified as TDRs consisted of 15 loans totaling $3.9 million and 13 loans totaling $4.2 million at June 30, 2016 and December 31, 2015, respectively. Originated loans classified as TDRs consisted of 5 loans totaling $1.4 million and 4 loans totaling $1.4 million at June 30, 2016 and December 31, 2015, respectively. Loans acquired at fair value as TDRs consisted of 10 loans totaling $2.5 million and 9 loans totaling $2.8 million at June 30, 2016 and December 31, 2015, respectively.

During the three months ended June 30, 2015, one commercial loan previously identified as an originated TDR and two other commercial loans were consolidated into one loan in a new TDR transaction. During the six months ended June 30, 2016, one commercial loan previously identified as an acquired loan at fair value TDR paid off, an originated consumer loan modified terms in a new TDR transaction and one commercial and one residential real estate loan that were acquired at fair value modified terms into new TDR transactions. During the six months ended June 30, 2015, two commercial loans previously identified as originated TDRs were refinanced in new TDR transactions. During the three and six months ended June 30, 2015, one commercial loan TDR acquired at fair value paid off. No TDRs have subsequently defaulted during the three or six months ended June 30, 2016 and 2015, respectively.

The following table presents information at the time of modification related to loans modified as TDRs during the periods indicated. No loans were modified in a TDR during the three months ended June 30, 2016.

	(Dollars in thousands)
	Three Months Ended June 30, 2015
	Pre- Modification Number of Contracts		Post- Modification Outstanding Recorded Investment		Outstanding Recorded Investment		Related Allowance
Originated Loans
Real Estate
Commercial		1	$	675	$	705	$	108
Total		1	$	675	$	705	$	108

	Six Months Ended June 30, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Related Allowance
Originated Loans
Other		1	$	7	$	7	$	-
Total		1	$	7	$	7	$	-
Loans Acquired at Fair Value
Real Estate
Residential		1	$	37	$	45	$	-
Commercial		1		539		539		-
Total		2	$	576	$	584	$	-

	Six Months Ended June 30, 2015
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Related Allowance
Originated Loans
Real Estate
Commercial		2	$	912	$	1,135	$	108
Total		2	$	912	$	1,135	$	108

The following table presents a summary of the loans considered to be impaired as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	4,390	$	-	$	4,390	$	4,479	$	94
Construction		181		-		181		194		-
Commercial and Industrial		685		-		685		682		15
Other		6		-		6		6		-
Total With No Related Allowance Recorded	$	5,262	$	-	$	5,262	$	5,361	$	109
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,276	$	-	$	1,276	$	1,285	$	33
Commercial		3,022		-		3,131		3,213		73
Commercial and Industrial		562		-		562		591		12
Total With No Related Allowance Recorded	$	4,860	$	-	$	4,969	$	5,089	$	118
Total Loans
Real Estate:
Residential	$	1,276	$	-	$	1,276	$	1,285	$	33
Commercial		7,412		-		7,521		7,692		167
Construction		181		-		181		194		-
Commercial and Industrial		1,247		-		1,247		1,273		27
Other		6		-		6		6		-
Total With No Related Allowance Recorded	$	10,122	$	-	$	10,231	$	10,450	$	227
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,412	$	392	$	1,417	$	1,423	$	33
Commercial and Industrial		1,445		647		1,445		1,453		26
Total With A Related Allowance Recorded	$	2,857	$	1,039	$	2,862	$	2,876	$	59
Loans Acquired at Fair Value
Real Estate:
Residential	$	161	$	81	$	168	$	226	$	2
Commercial		652		133		652		657		-
Total With A Related Allowance Recorded	$	813	$	214	$	820	$	883	$	2
Total Loans
Real Estate:
Residential	$	161	$	81	$	168	$	226	$	2
Commercial		2,064		525		2,069		2,080		33
Construction		-		-		-		-		-
Commercial and Industrial		1,445		647		1,445		1,453		26
Other		-		-		-		-		-
Total With A Related Allowance Recorded	$	3,670	$	1,253	$	3,682	$	3,759	$	61

	June 30, 2016 (cont.)
Total Impaired Loans:
Originated Loans
Real Estate:
Commercial	$	5,802	$	392	$	5,807	$	5,902	$	127
Construction		181		-		181		194		-
Commercial and Industrial		2,130		647		2,130		2,135		41
Other		6		-		6		6		-
Total Impaired Loans	$	8,119	$	1,039	$	8,124	$	8,237	$	168
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,437	$	81	$	1,444	$	1,511	$	35
Commercial		3,674		133		3,783		3,870		73
Construction		-		-		-		-		-
Commercial and Industrial		562		-		562		591		12
Other		-		-		-		-		-
Total Impaired Loans	$	5,673	$	214	$	5,789	$	5,972	$	120
Total Loans
Real Estate:
Residential	$	1,437	$	81	$	1,444	$	1,511	$	35
Commercial		9,476		525		9,590		9,772		200
Construction		181		-		181		194		-
Commercial and Industrial		2,692		647		2,692		2,726		53
Other		6		-		6		6		-
Total Impaired Loans	$	13,792	$	1,253	$	13,913	$	14,209	$	288

	December 31, 2015
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Residential	$	5	$	-	$	17	$	6	$	-
Commercial		6,636		-		6,636		7,095		232
Construction		229		-		230		292		-
Commercial and Industrial		627		-		627		756		35
Total With No Related Allowance Recorded	$	7,497	$	-	$	7,510	$	8,149	$	267
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,296	$	-	$	1,296	$	1,315	$	67
Commercial		4,188		-		4,263		4,449		214
Commercial and Industrial		63		-		63		79		3
Total With No Related Allowance Recorded	$	5,547	$	-	$	5,622	$	5,843	$	284
Total Loans
Real Estate:
Residential	$	1,301	$	-	$	1,313	$	1,321	$	67
Commercial		10,824		-		10,899		11,544		446
Construction		229		-		230		292		-
Commercial and Industrial		690		-		690		835		38
Total With No Related Allowance Recorded	$	13,044	$	-	$	13,132	$	13,992	$	551
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,436	$	408	$	1,441	$	1,457	$	37
Commercial and Industrial		136		9		137		128		5
Total With A Related Allowance Recorded	$	1,572	$	417	$	1,578	$	1,585	$	42
Total Impaired Loans
Originated Loans
Real Estate:
Residential	$	5	$	-	$	17	$	6	$	-
Commercial		8,072		408		8,077		8,552		269
Construction		229		-		230		292		-
Commercial and Industrial		763		9		764		884		40
Total Impaired Loans	$	9,069	$	417	$	9,088	$	9,734	$	309
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,296	$	-	$	1,296	$	1,315	$	67
Commercial		4,188		-		4,263		4,449		214
Commercial and Industrial		63		-		63		79		3
Total Impaired Loans	$	5,547	$	-	$	5,622	$	5,843	$	284
Total Loans
Real Estate:
Residential	$	1,301	$	-	$	1,313	$	1,321	$	67
Commercial		12,260		408		12,340		13,001		483
Construction		229		-		230		292		-
Commercial and Industrial		826		9		827		963		43
Total Impaired Loans	$	14,616	$	417	$	14,710	$	15,577	$	593

The following table presents the activity in the allowance for loan losses summarized by major classifications and segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for potential impairment for the periods indicated.

	(Dollars in thousands)
	June 30, 2016
	Real Estate Residential			Real Estate Commercial			Real Estate Construction			Commercial and Industrial		Consumer			Other			Unallocated			Total
Originated Loans
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	244			6,937
Charge-offs		-			-			-			-		(120	)		(14	)		-			(134	)
Recoveries		3			-			-			-		53			5			-			61
Provision		(152	)		(80	)		(35	)		365		34			8			51			191
June 30, 2016	$	1,110		$	1,956		$	82		$	1,468	$	2,143		$	1		$	295		$	7,055
Loans Acquired at Fair Value
March 31, 2016	$	-		$	-		$	-		$	-	$	-		$	-		$	36		$	36
Charge-offs		(14	)		-			-			-		-			-			-			(14	)
Recoveries		3			1			-			-		1			-			-			5
Provision		11			10			-			115		(1	)		-			(26	)		109
June 30, 2016	$	-		$	11		$	-		$	115	$	-		$	-		$	10		$	136
Total Allowance for Loan Losses
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	280		$	6,973
Charge-offs		(14	)		-			-			-		(120	)		(14	)		-			(148	)
Recoveries		6			1			-			-		54			5			-			66
Provision		(141	)		(70	)		(35	)		480		33			8			25			300
June 30, 2016	$	1,110		$	1,967		$	82		$	1,583	$	2,143		$	1		$	305		$	7,191
Originated Loans
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14			6,490
Charge-offs		(20	)		-			-			-		(310	)		(26	)		-			(356	)
Recoveries		4			-			-			-		80			11			-			95
Provision		(497	)		(89	)		(55	)		684		486			16			281			826
June 30, 2016	$	1,110		$	1,956		$	82		$	1,468	$	2,143		$	1		$	295		$	7,055
Loans Acquired at Fair Value
December 31, 2015	$	-		$	-		$	-		$	-	$	-		$	-		$	-		$	-
Charge-offs		(16	)		(180	)		-			-		(4	)		-			-			(200	)
Recoveries		5			2			-			-		5			-			-			12
Provision		11			189			-			115		(1	)		-			10			324
June 30, 2016	$	-		$	11		$	-		$	115	$	-		$	-		$	10		$	136
Total Allowance for Loan Losses
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14		$	6,490
Charge-offs		(36	)		(180	)		-			-		(314	)		(26	)		-			(556	)
Recoveries		9			2			-			-		85			11			-			107
Provision		(486	)		100			(55	)		799		485			16			291			1,150
June 30, 2016	$	1,110		$	1,967		$	82		$	1,583	$	2,143		$	1		$	305		$	7,191

	June 30, 2016 (cont.)
	Real Estate Residential			Real Estate Commercial			Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Originated Loans
Individually Evaluated for Impairment	$	-		$	392		$	-	$	647	$	-	$	-	$	-	$	1,039
Collectively Evaluated for Potential Impairment	$	1,110		$	1,564		$	82	$	821	$	2,143	$	1	$	295	$	6,016
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	81		$	133		$	-	$	-	$	-	$	-	$	-	$	214
Collectively Evaluated for Potential Impairment	$	(81	)	$	(122	)	$	-	$	115	$	-	$	-	$	10	$	(78	)
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	81		$	525		$	-	$	647	$	-	$	-	$	-	$	1,253
Collectively Evaluated for Potential Impairment	$	1,029		$	1,442		$	82	$	936	$	2,143	$	1	$	305	$	5,938

	June 30, 2015
	Real Estate Residential			Real Estate Commercial			Real Estate Construction			Commercial and Industrial			Consumer			Other		Unallocated			Total
Originated Loans
March 31, 2015	$	2,513		$	608		$	145		$	913		$	1,011		$	-	$	288		$	5,478
Charge-offs		(111	)		(12	)		-			-			(69	)		-		-			(192	)
Recoveries		2			1			-			10			12			-		-			25
Provision		(737	)		1,149			(58	)		(6	)		384			-		(357	)		375
June 30, 2015	$	1,667		$	1,746		$	87		$	917		$	1,338		$	-	$	(69	)	$	5,686
December 31, 2014	$	2,690		$	582		$	122		$	684		$	1,015		$	-	$	102		$	5,195
Charge-offs		(111	)		(18	)		-			-			(116	)		-		-			(245	)
Recoveries		5			3			-			10			43			-		-			61
Provision		(917	)		1,179			(35	)		223			396			-		(171	)		675
June 30, 2015	$	1,667		$	1,746		$	87		$	917		$	1,338		$	-	$	(69	)	$	5,686
Originated Loans
Individually Evaluated for Impairment	$	-		$	370		$	5		$	159		$	-		$	-	$	-		$	534
Collectively Evaluated for Potential Impairment	$	1,667		$	1,376		$	82		$	758		$	1,338		$	-	$	(69	)	$	5,152

	December 31, 2015
Originated Loans	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Individually Evaluated for Impairment	$	-	$	408	$	-	$	9	$	-	$	-	$	-	$	417
Collectively Evaluated for Potential Impairment	$	1,623	$	1,637	$	137	$	775	$	1,887	$	-	$	14	$	6,073

The following table presents changes in the accretable discount on the loans acquired at fair value for the dates indicated.

	Accretable Discount
Balance at December 31, 2015	$	3,302
Accretable yield		(1,223	)
Nonaccretable premium		225
Balance at June 30, 2016	$	2,304

The following table presents the major classifications of loans summarized by individually evaluated for impairment and collectively evaluated for potential impairment as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	5,802	$	181	$	2,130	$	-	$	6	$	8,119
Collectively Evaluated for Potential Impairment		173,734		125,345		11,737		65,506		109,250		6,197		491,769
	$	173,734	$	131,147	$	11,918	$	67,636	$	109,250	$	6,203	$	499,888
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,437	$	3,674	$	-	$	562	$	-	$	-	$	5,673
Collectively Evaluated for Potential Impairment		94,316		64,356		1,878		12,668		196		-		173,414
	$	95,753	$	68,030	$	1,878	$	13,230	$	196	$	-	$	179,087
Total Loans
Individually Evaluated for Impairment	$	1,437	$	9,476	$	181	$	2,692	$	-	$	6	$	13,792
Collectively Evaluated for Potential Impairment		268,050		189,701		13,615		78,174		109,446		6,197		665,183
	$	269,487	$	199,177	$	13,796	$	80,866	$	109,446	$	6,203	$	678,975

	December 31, 2015
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	5	$	8,072	$	229	$	763	$	-	$	-	$	9,069
Collectively Evaluated for Potential Impairment		170,164		119,542		17,114		59,724		103,605		4,592		474,741
	$	170,169	$	127,614	$	17,343	$	60,487	$	103,605	$	4,592	$	483,810
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,296	$	4,188	$	-	$	63	$	-	$	-	$	5,547
Collectively Evaluated for Potential Impairment		101,762		71,218		3,870		16,597		550		-		193,997
	$	103,058	$	75,406	$	3,870	$	16,660	$	550	$	-	$	199,544
Total Loans
Individually Evaluated for Impairment	$	1,301	$	12,260	$	229	$	826	$	-	$	-	$	14,616
Collectively Evaluated for Potential Impairment		271,926		190,760		20,984		76,321		104,155		4,592		668,738
	$	273,227	$	203,020	$	21,213	$	77,147	$	104,155	$	4,592	$	683,354

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Note 5 - Deposits

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Deposit Liabilities Disclosures [Text Block]

Note 5. Deposits

The following table shows the maturities of time deposits for the next five years and beyond at the date indicated (dollars in thousands).

Maturity Period:	June 30, 2016
One Year or Less	$	55,698
Over One Through Two Years		25,293
Over Two Through Three Years		14,136
Over Three Through Four Years		17,580
Over Four Through Five Years		12,920
Over Five Years		8,659
Total	$	134,286

The balance in time deposits that meet or exceed the FDIC insurance limit of $250,000 totaled $27.6 million and $33.1 million as of June 30, 2016 and December 31, 2015, respectively.

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Note 6 - Short-term Borrowings

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Short-term Debt [Text Block]

Note 6. Short-Term Borrowings

The following table sets forth the components of short-term borrowings as of the dates indicated.

	(Dollars in thousands)
	June 30, 2016					December 31, 2015
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Short-term Borrowings
Federal Funds Purchased:
Balance at Period End	$	6,000		0.70	%	$	-		-	%
Average Balance Outstanding During the Period		259		0.78			485		0.41
Maximum Amount Outstanding at any Month End		6,000					5,900
FHLB Borrowings:
Balance at Period End		-		-			9,360		0.51
Average Balance Outstanding During the Period		291		0.69			7,347		0.37
Maximum Amount Outstanding at any Month End		-					30,950
Securities Sold Under Agreements to Repurchase:
Balance at Period End		25,530		0.19			23,088		0.18
Average Balance Outstanding During the Period		24,336		0.23			23,303		0.24
Maximum Amount Outstanding at any Month End		26,373					27,908
Securities Collaterizing the Agreements at Period-End:
Carrying Value		28,765					26,033
Market Value		28,913					26,063

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Note 7 - Other Borrowed Funds

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 7. Other Borrowed Funds

Other borrowed funds consist of fixed rate advances from the Federal Home Loan Bank of Pittsburgh (“FHLB”). The following table sets forth the scheduled maturities of other borrowed funds at the dates indicated.

	(Dollars in thousands)
	June 30, 2016					December 31, 2015
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Due in One Year	$	3,500		0.94	%	$	-		-	%
Due After One Year to Two Years		3,500		1.35			3,500		0.94
Due After Two Years to Three Years		4,000		1.67			4,500		1.41
Due After Three Years to Four Years		6,000		1.88			6,000		1.78
Due After Four Years to Five Years		5,000		2.09			6,000		1.97
Due After Five Years		6,000		2.32			8,000		2.27
Total	$	28,000		1.80		$	28,000		1.80

As of June 30, 2016, the Company maintained a credit arrangement with a maximum borrowing limit of approximately $293.0 million with the FHLB. This arrangement is subject to annual renewal, incurs no service charge, and is secured by a blanket security agreement on outstanding residential mortgage loans and the Company’s investment in FHLB stock. Under this arrangement the Company had available a variable rate Line of Credit in the amount of $20.0 million as of June 30, 2016 and December 31, 2015.

The Company maintains a Borrower-In-Custody of Collateral line of credit agreement with the Federal Reserve Bank for $84.1 million that requires quarterly certification of collateral, is subject to annual renewal, incurs no service charge and is secured by commercial and consumer indirect auto loans. The Company also maintains multiple line of credit arrangements with various banks totaling $40.0 million. As of June 30, 2016 and December 31, 2015, no draws had been taken on these facilities.

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Note 8 - Commitments and Contingent Liabilities

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 8. Commitments and Contingent Liabilities

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business primarily to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and performance letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Statement of Financial Condition. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby and performance letters of credit written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Commitments and conditional obligations are evaluated the same as on-balance-sheet instruments but do not have a corresponding reserve recorded. The Company’s opinion on not implementing a corresponding reserve for off-balance-sheet instruments is supported by historical factors of no losses recorded due to these items. The Company is continually evaluating these items for credit quality and any future need for the corresponding reserve.

The following table presents the unused and available credit balances of financial instruments whose contracts represent credit risk at the dates indicated.

	(Dollars in thousands)
	June 30, 2016		December 31, 2015
Standby Letters of Credit	$	10,844	$	18,316
Performance Letters of Credit		2,359		1,358
Construction Mortgages		22,580		21,144
Personal Lines of Credit		5,990		5,810
Overdraft Protection Lines		5,839		6,051
Home Equity Lines of Credit		14,449		14,491
Commercial Lines of Credit		46,663		45,584
	$	108,724	$	112,754

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

Performance letters of credit represent conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments are issued primarily to support bid or performance-related contracts. The coverage period for these instruments is typically a one-year period with an annual renewal option subject to prior approval by management. Fees earned from the issuance of these letters are recognized upon expiration of the letter. For secured letters of credit, the collateral is typically Company deposit instruments or customer business assets.

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Note 9 - Fair Value Disclosure

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 9. Fair Value Disclosure

FASB ASC 820 “Fair Value Measurement” defines fair value and provides the framework for measuring fair value and required disclosures about fair value measurements. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability at the market date. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used in valuation methods to determine fair value.

The three levels of fair value hierarchy are as follows:

Level I –	Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets. These generally provide the most reliable evidence and are used to measure fair value whenever available.
Level II –	Fair value is based on significant inputs, other than Level I inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data. Level II inputs include quoted market prices in active markets for similar assets, quoted market prices in markets that are not active for identical or similar assets, and other observable inputs.
Level III –	Fair value would be based on significant unobservable inputs. Examples of valuation methodologies that would result in Level III classification include option pricing models, discounted cash flows, and other similar techniques.

This hierarchy requires the use of observable market data when available. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

The following table presents the financial assets measured at fair value on a recurring basis and reported on the Consolidated Statement of Financial Condition as of the dates indicated, by level within the fair value hierarchy. The majority of the Company’s securities are included in Level II of the fair value hierarchy. Fair values for Level II securities were primarily determined by a third party pricing service using both quoted prices for similar assets, when available, and model-based valuation techniques that derive fair value based on market-corroborated data, such as instruments with similar prepayment speeds and default interest rates. The standard inputs that are normally used include benchmark yields of like securities, reportable trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications.

		(Dollars in thousands)
	Fair Value Heirarchy	June 30, 2016		December 31, 2015
Available for Sales Securities:
U.S. Government Agencies	Level II	$	49,612	$	51,188
Obligations of States and Political Subdivisions	Level II		40,518		40,074
Mortgage-Backed Securities - Government-Sponsored Enterprises	Level II		3,062		3,403
Equity Securities - Mutual Funds	Level I		517		513
Equity Securities - Other	Level I		710		685
Total Available for Sale Securities		$	94,419	$	95,863

The following table presents the financial assets measured at fair value on a nonrecurring basis on the Consolidated Statement of Financial Condition as of the dates indicated by level within the fair value hierarchy. The table also presents the significant unobservable inputs used in the fair value measurements. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loans include quoted market prices for identical assets classified as Level I inputs or observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

		(Dollars in thousands)
		Fair Value at						Significant
Financial Asset	Fair Value Heirarchy	June 30, 2016		December 31, 2015		Valuation Techniques	Significant Unobservable Inputs	Unobservable Input Value
Impaired Loans	Level III	$	2,417	$	1,155	Market Comparable Properties	Marketability Discount	10%	to	30%	(1)
OREO	Level III		-		111	Market Comparable Properties	Marketability Discount	10%	to	50%	(1)

 

(1)

Range includes discounts taken since appraisal and estimated values.

         

Impaired loans are evaluated when the loan is identified as impaired and valued at the lower of cost or fair value at that time. Fair value is measured based on the value of the collateral securing these loans and is classified as Level III in the fair value hierarchy. At June 30, 2016 and December 31, 2015, the fair value of impaired loans consists of the loan balances of $3.7 million and $1.6 million, respectively, less their specific valuation allowances of $1.3 million and $417,000, respectively.

Other real estate owned (OREO), properties are evaluated at the time of acquisition and recorded at fair value less estimated selling costs. After acquisition, other real estate owned is recorded at the lower of cost or fair value less estimated selling costs. The fair value of an other real estate owned property is determined from a qualified independent appraisal and is classified as Level III in the fair value hierarchy. In the six months ended June 30, 2016, two commercial real estate properties for $3.2 million were foreclosed on, moved into OREO, evaluated for fair value and recorded a prior quarter gain on the valuation adjustment on foreclosed real estate for approximately $566,000. This recognized gain on the valuation adjustment was supported by independent appraisals of the two properties. One property was entered into a tentative sales agreement with a current customer which closed in the current period The other property was transferred into premise and equipment of the Company due to the location and the Company’s need of a new location for company headquarters. At December 31, 2015, two residential real estate loans for $111,000 were moved into OREO and at June 30, 2016, one has since been sold at a loss of approximately $5,000.

Financial instruments are defined as cash, evidence of an ownership in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses and other factors, as determined through various option pricing formulas or simulation modeling. As many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in the assumptions on which the estimated fair values are based may have significant impact on the resulting estimated fair values.

As certain assets such as deferred tax assets and premises and equipment are not considered financial instruments, the estimated fair value of financial instruments would not represent the full value of the Company.

The Company employs simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices are not available, based upon the following assumptions:

Cash and Due From Banks, Restricted Stock, Bank-Owned Life Insurance, Accrued Interest Receivable, Short-Term Borrowings, and Accrued Interest Payable

The fair value is equal to the current carrying value.

Investment Securities

The fair value of investment securities is equal to the available quoted market price. If no quoted market price is available, fair value is estimated using the quoted market price for similar securities or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted prices.

Loans Receivable

For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. Fair values for other loans are estimated using discounted cash flow analyses, using market interest rates for comparable loans. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Deposit Liabilities

The fair values disclosed for demand deposits, are, by definition, equal to the amount payable on demand at the reporting date. The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits.

Borrowed Funds

Fair values of borrowed funds are estimated using discounted cash flow analyses based on current market rates for similar types of borrowing arrangements.

Commitments to Extend Credit

These financial instruments are generally not subject to sale and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure. The contractual amounts of unfunded commitments and letters of credit are presented in Note 8.

The following table presents the estimated fair values of the Company’s financial instruments at the dates indicated.

		(Dollars in thousands)
		June 30, 2016				December 31, 2015
	Fair Value Heirarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and Due From Banks:
Interest Bearing	Level I	$	6,935	$	6,935	$	2,316	$	2,316
Non-Interest Bearing	Level I		6,278		6,278		9,024		9,024
Investment Securities:
Available for Sale	See Above		94,419		94,419		95,863		95,863
Loans, Net	Level III		671,784		690,824		676,864		692,373
Restricted Stock	Level II		3,253		3,253		3,824		3,824
Bank-Owned Life Insurance	Level II		18,448		18,448		18,209		18,209
Accrued Interest Receivable	Level II		2,387		2,387		2,419		2,419
Financial Liabilities:
Deposits	Level II		675,266		672,356		679,299		678,921
Short-term Borrowings	Level II		31,530		31,530		32,448		32,448
Other Borrowed Funds	Level II		28,000		28,648		28,000		27,830
Accrued Interest Payable	Level II		287		287		305		305

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of CB Financial Services, Inc. (“CB Financial”) and its wholly owned subsidiary, Community Bank, (the “Bank”), and the Bank’s wholly-owned subsidiary, Exchange Underwriters, Inc. (“Exchange Underwriters”). CB Financial and the Bank are collectively referred to as the “Company”. All intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for losses on loans, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, evaluation of securities for other-than-temporary impairment including related cash flow projections, goodwill impairment, and the valuation of deferred tax assets.

In the opinion of management, the accompanying unaudited interim financial statements include all adjustments considered necessary for a fair presentation of the Company’s financial position and results of operations at the dates and for the periods presented. All of these adjustments are of a normal, recurring nature, and they are the only adjustments included in the accompanying unaudited interim financial statements. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Interim results are not necessarily indicative of results for a full year.

The Company evaluated the provisions of Accounting Standards Codification (“ASC”) Topic 280 and determined that segment reporting information related to Exchange Underwriters was not required to be presented because the segment comprises less than 10% of total interest and noninterest income and less than 10% of the combined assets of the Company.

The Company evaluated subsequent events through the date the consolidated financial statements were filed with the Securities and Exchange Commission and incorporated into the consolidated financial statements the effect of all material known events determined by ASC Topic 855,

Subsequent Events

, to be recognizable events.

Nature of Operations [Policy Text Block]

Nature of Operations

The Company derives substantially all its income from banking and bank-related services which include interest earnings on commercial, commercial mortgage, residential real estate and consumer loan financing, as well as interest earnings on investment securities and fees generated from deposit services to its customers. The Company provides banking services primarily to communities in Greene, Allegheny, Washington, Fayette, and Westmoreland Counties located in southwestern Pennsylvania. The Company also conducts insurance brokerage activities through Exchange Underwriters.

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

Acquired Loans

Loans that were acquired in the merger with FedFirst Financial Corporation were recorded at fair value with no carryover of the related allowance for credit losses. The fair value of the acquired loans was estimated by management with the assistance of a third party valuation specialist.

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. The nonaccretable discount represents estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases to the expected cash flows require an evaluation to determine the need for an allowance for loan losses. Subsequent improvements in expected cash flows result in the reversal of a corresponding amount of the nonaccretable discount which is then reclassified as accretable discount that is recognized into interest income over the remaining life of the loan using the interest method. The evaluation of the amount of future cash flows that is expected to be collected is performed in a similar manner as that used to determine our allowance for credit losses. Charge-offs of the principal amount on acquired loans would be first applied to the nonaccretable discount portion of the fair value adjustment.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain comparative amounts for the prior year have been reclassified to conform to the current year presentation. Such reclassifications did not affect net income or stockholders’ equity.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Standards

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

. ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this ASU will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects companies holding financial assets and net investment in leases that are not accounted for at fair value through net income. The ASU 2016-13 amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted.  The Company is currently evaluating the impact that the amendments of ASU 2016-13, will have on the Company’s financial condition and results of operations.

In March 2016, the FASB issued ASU 2016-09,

Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting

.  ASU 2016-09 introduces amendments intended to simplify the accounting for stock compensation.  ASU 2016-09 requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement.  The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur.  An entity should also recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether the benefit reduces taxes payable in the current period.  The ASU also requires excess tax benefits be classified along with other income tax cash flows as an operating activity in the statement of cash flows.  ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted.  The Company is evaluating the provisions of ASU 2016-09, but, believes that its adoption will not have a material impact on the Company’s financial condition or results of operations.

In February 2016, the FASB issued ASU 2016-02,

Leases

(Topic 842)

, which increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 will require lessees to recognize a right-of-use (ROU) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation for leases with terms of more than twelve months. Both the ROU asset and lease liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. Accounting by lessors will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact that the provisions of ASU 2016-02, will have on the Company’s financial condition and results of operations.

In January 2016, the FASB issued ASU 2016-01,

Financial Instruments – Overall (Subtopic 825-10)

, which enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. ASU 2016-01 (i) requires equity investments (except those accounted for under the equity method or that are consolidated) to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost; (iv) requires an entity to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and (v) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is evaluating the provisions of ASU 2016-01, but does not believe that its adoption will have a material impact on the Company’s financial condition and results of operations.

Recent Accounting Standards (continued)

In May 2014, the FASB issued ASU 2014-09,

Revenue from Contracts with Customers

, which establishes a comprehensive revenue recognition standard for virtually all industries under GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. ASU 2014-09 specifies that an entity shall recognize revenue when, or as, the entity satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when, or as, the customer obtains control of the asset. Entities are required to disclose qualitative and quantitative information on the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company may elect, to early adopt the standard, but not before fiscal years beginning after December 15, 2016. The amendments may be applied retrospectively to each period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is evaluating the provisions of ASUs 2014-09 and 2015-14, but does not believe that their adoption will have a material impact on the Company’s financial condition and results of operations.

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Note 2 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Weighted-Average Common Shares Outstanding		4,363,346			4,363,346			4,363,346			4,363,346
Average Treasury Stock Shares		(282,329	)		(291,884	)		(282,329	)		(291,884	)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share		4,081,017			4,071,462			4,081,017			4,071,462
Additional Common Stock Equivalents (Restricted Stock) Used to Calculate Diluted Earnings Per Share		3,678			-			2,296			-
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share		4,084,695			4,071,462			4,083,313			4,071,462
Earnings per share:
Basic	$	0.48		$	0.55		$	0.98		$	1.11
Diluted		0.48			0.55			0.98			1.11

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Note 3 - Investment Securities (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Available-for-sale Securities [Table Text Block]

	(Dollars in thousands)
	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	49,309	$	306	$	(3	)	$	49,612
Obligations of States and Political Subdivisions		39,642		882		(6	)		40,518
Mortgage-Backed Securities - Government-Sponsored Enterprises		2,987		75		-			3,062
Equity Securities - Mutual Funds		500		17		-			517
Equity Securities - Other		688		28		(6	)		710
Total	$	93,126	$	1,308	$	(15	)	$	94,419

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	51,151	$	147	$	(110	)	$	51,188
Obligations of States and Political Subdivisions		39,351		760		(37	)		40,074
Mortgage-Backed Securities - Government-Sponsored Enterprises		3,390		13		-			3,403
Equity Securities - Mutual Funds		500		13		-			513
Equity Securities - Other		600		85		-			685
Total	$	94,992	$	1,018	$	(147	)	$	95,863

Schedule of Unrealized Loss on Investments [Table Text Block]

	(Dollars in thousands)
	June 30, 2016
	Less than 12 months							12 Months or Greater							Total
	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
U.S. Government Agencies		2	$	5,502	$	(3	)		-	$	-	$	-			2	$	5,502	$	(3	)
Obligations of States and
Political Subdivisions		3		1,389		(4	)		2		762		(2	)		5		2,151		(6	)
Equity Securities - Other		5		235		(6	)		-		-		-			5		235		(6	)
Total		10	$	7,126	$	(13	)		2	$	762	$	(2	)		12	$	7,888	$	(15	)

	December 31, 2015
	Less than 12 months							12 Months or Greater							Total
	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
U.S. Government Agencies		6	$	14,928	$	(110	)		-	$	-	$	-			6	$	14,928	$	(110	)
Obligations of States and
Political Subdivisions		11		5,333		(25	)		8		4,549		(12	)		19		9,882		(37	)
Total		17	$	20,261	$	(135	)		8	$	4,549	$	(12	)		25	$	24,810	$	(147	)

Investments Classified by Contractual Maturity Date [Table Text Block]

	(Dollars in thousands)
	June 30, 2016
	Available-for-Sale
	Amortized Cost		Fair Value
Due in One Year or Less	$	11,372	$	11,473
Due after One Year through Five Years		16,718		17,032
Due after Five Years through Ten Years		59,302		59,953
Due after Ten Years		5,734		5,961
Total	$	93,126	$	94,419

XML

Note 4 - Loans and Related Allowance for Loan Loss (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

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

	(Dollars in thousands)
	June 30, 2016						December 31, 2015
	Amount			Percent			Amount			Percent
Originated Loans
Real Estate:
Residential	$	173,734			34.8	%	$	170,169			35.2	%
Commercial		131,147			26.2			127,614			26.4
Construction		11,918			2.4			17,343			3.6
Commercial and Industrial		67,636			13.5			60,487			12.5
Consumer		109,250			21.9			103,605			21.4
Other		6,203			1.2			4,592			0.9
Total Originated Loans		499,888			100.0	%		483,810			100.0	%
Allowance for Loan Losses		(7,055	)					(6,490	)
Loans, Net	$	492,833					$	477,320
Loans Acquired at Fair Value
Real Estate:
Residential	$	95,753			53.5	%	$	103,058			51.7	%
Commercial		68,030			38.0			75,406			37.8
Construction		1,878			1.0			3,870			1.9
Commercial and Industrial		13,230			7.4			16,660			8.3
Consumer		196			0.1			550			0.3
Total Loans Acquired at Fair Value		179,087			100.0	%		199,544			100.0	%
Allowance for Loan Losses		(136	)					-
Loans, Net	$	178,951					$	199,544
Total Loans
Real Estate:
Residential	$	269,487			39.7	%	$	273,227			40.0	%
Commercial		199,177			29.3			203,020			29.7
Construction		13,796			2.1			21,213			3.1
Commercial and Industrial		80,866			11.9			77,147			11.3
Consumer		109,446			16.1			104,155			15.2
Other		6,203			0.9			4,592			0.7
Total Loans		678,975			100.0	%		683,354			100.0	%
Allowance for Loan Losses		(7,191	)					(6,490	)
Loans, Net	$	671,784					$	676,864

Financing Receivable Credit Quality Indicators [Table Text Block]

	(Dollars in thousands)
	June 30, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	172,910	$	452	$	372	$	-	$	173,734
Commercial		112,025		13,725		4,317		1,080		131,147
Construction		11,038		699		-		181		11,918
Commercial and Industrial		63,782		1,730		2,124		-		67,636
Consumer		109,174		-		76		-		109,250
Other		6,203		-		-		-		6,203
Total Originated Loans	$	475,132	$	16,606	$	6,889	$	1,261	$	499,888
Loans Acquired at Fair Value
Real Estate:
Residential	$	93,123	$	-	$	2,630	$	-	$	95,753
Commercial		63,357		1,522		3,151		-		68,030
Construction		1,878		-		-		-		1,878
Commercial and Industrial		12,623		45		562		-		13,230
Consumer		196		-		-		-		196
Total Loans Acquired at Fair Value	$	171,177	$	1,567	$	6,343	$	-	$	179,087
Total Loans
Real Estate:
Residential	$	266,033	$	452	$	3,002	$	-	$	269,487
Commercial		175,382		15,247		7,468		1,080		199,177
Construction		12,916		699		-		181		13,796
Commercial and Industrial		76,405		1,775		2,686		-		80,866
Consumer		109,370		-		76		-		109,446
Other		6,203		-		-		-		6,203
Total Loans	$	646,309	$	18,173	$	13,232	$	1,261	$	678,975

	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	169,233	$	249	$	682	$	5	$	170,169
Commercial		113,087		6,870		6,565		1,092		127,614
Construction		16,384		729		-		230		17,343
Commercial and Industrial		57,586		2,145		756		-		60,487
Consumer		103,591		-		14		-		103,605
Other		4,592		-		-		-		4,592
Total Originated Loans	$	464,473	$	9,993	$	8,017	$	1,327	$	483,810
Loans Acquired at Fair Value
Real Estate:
Residential	$	100,633	$	-	$	2,425	$	-	$	103,058
Commercial		69,539		2,252		3,615		-		75,406
Construction		3,870		-		-		-		3,870
Commercial and Industrial		15,601		996		63		-		16,660
Consumer		550		-		-		-		550
Total Loans Acquired at Fair Value	$	190,193	$	3,248	$	6,103	$	-	$	199,544
Total Loans
Real Estate:
Residential	$	269,866	$	249	$	3,107	$	5	$	273,227
Commercial		182,626		9,122		10,180		1,092		203,020
Construction		20,254		729		-		230		21,213
Commercial and Industrial		73,187		3,141		819		-		77,147
Consumer		104,141		-		14		-		104,155
Other		4,592		-		-		-		4,592
Total Loans	$	654,666	$	13,241	$	14,120	$	1,327	$	683,354

Past Due Financing Receivables [Table Text Block]

	(Dollars in thousands)
	June 30, 2016
	Loans Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Non- Accrual		Total Loans
Originated Loans
Real Estate:
Residential	$	173,215	$	-	$	144	$	-	$	144	$	375	$	173,734
Commercial		130,564		266		-		-		266		317		131,147
Construction		11,737		-		-		-		-		181		11,918
Commercial and Industrial		67,381		255		-		-		255		-		67,636
Consumer		108,288		813		73		-		886		76		109,250
Other		6,203		-		-		-		-		-		6,203
Total Originated Loans	$	497,388	$	1,334	$	217	$	-	$	1,551	$	949	$	499,888
Loans Acquired at Fair Value
Real Estate:
Residential	$	93,824	$	82	$	131	$	-	$	213	$	1,716	$	95,753
Commercial		67,021		-		652		-		652		357		68,030
Construction		1,878		-		-		-		-		-		1,878
Commercial and Industrial		13,085		-		145		-		145		-		13,230
Consumer		195		-		-		1		1		-		196
Total Loans Acquired at Fair Value	$	176,003	$	82	$	928	$	1	$	1,011	$	2,073	$	179,087
Total Loans
Real Estate:
Residential	$	267,039	$	82	$	275	$	-	$	357	$	2,091	$	269,487
Commercial		197,585		266		652		-		918		674		199,177
Construction		13,615		-		-		-		-		181		13,796
Commercial and Industrial		80,466		255		145		-		400		-		80,866
Consumer		108,483		813		73		1		887		76		109,446
Other		6,203		-		-		-		-		-		6,203
Total Loans	$	673,391	$	1,416	$	1,145	$	1	$	2,562	$	3,022	$	678,975

	December 31, 2015
	Loans Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Non- Accrual		Total Loans
Originated Loans
Real Estate:
Residential	$	168,786	$	563	$	133	$	-	$	696	$	687	$	170,169
Commercial		124,037		114		-		-		114		3,463		127,614
Construction		17,113		-		-		-		-		230		17,343
Commercial and Industrial		60,442		45		-		-		45		-		60,487
Consumer		102,629		923		39		-		962		14		103,605
Other		4,592		-		-		-		-		-		4,592
Total Originated Loans	$	477,599	$	1,645	$	172	$	-	$	1,817	$	4,394	$	483,810
Loans Acquired at Fair Value
Real Estate:
Residential	$	99,794	$	1,308	$	263	$	193	$	1,764	$	1,500	$	103,058
Commercial		73,988		1,019		-		-		1,019		399		75,406
Construction		3,870		-		-		-		-		-		3,870
Commercial and Industrial		16,450		38		130		-		168		42		16,660
Consumer		542		8		-		-		8		-		550
Total Loans Acquired at Fair Value	$	194,644	$	2,373	$	393	$	193	$	2,959	$	1,941	$	199,544
Total Loans
Real Estate:
Residential	$	268,580	$	1,871	$	396	$	193	$	2,460	$	2,187	$	273,227
Commercial		198,025		1,133		-		-		1,133		3,862		203,020
Construction		20,983		-		-		-		-		230		21,213
Commercial and Industrial		76,892		83		130		-		213		42		77,147
Consumer		103,171		931		39		-		970		14		104,155
Other		4,592		-		-		-		-		-		4,592
Total Loans	$	672,243	$	4,018	$	565	$	193	$	4,776	$	6,335	$	683,354

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

	(Dollars in Thousands)
	June 30, 2016			December 31, 2015
Nonaccrual Loans:
Real Estate:
Residential	$	2,091		$	2,187
Commercial		674			3,862
Construction		181			230
Commercial and Industrial		-			42
Consumer		76			14
Total Nonaccrual Loans		3,022			6,335
Accruing Loans Past Due 90 Days or More:
Real Estate:
Residential		-			193
Consumer		1			-
Total Accruing Loans 90 Days or More Past Due		1			193
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		3,023			6,528
Troubled Debt Restructurings, Accruing:
Originated Loans:
Real Estate - Commercial		1,352			1,375
Commercial and Industrial		7			7
Other		6			-
Total Originated Loans		1,365			1,382
Loans Acquired at Fair Value:
Real Estate - Residential		1,320			1,296
Real Estate - Commercial		698			1,488
Commercial and Industrial		518			-
Total Loans Acquired at Fair Value		2,536			2,784
Total Troubled Debt Restructurings, Accruing		3,901			4,166
Total Nonperforming Loans		6,924			10,694
Real Estate Owned:
Residential		78			138
Commercial		174			174
Total Real Estate Owned		252			312
Total Nonperforming Assets	$	7,176		$	11,006
Nonperforming Loans to Total Loans		1.02	%		1.56	%
Nonperforming Assets to Total Assets		0.87			1.32

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	(Dollars in thousands)
	Three Months Ended June 30, 2015
	Pre- Modification Number of Contracts		Post- Modification Outstanding Recorded Investment		Outstanding Recorded Investment		Related Allowance
Originated Loans
Real Estate
Commercial		1	$	675	$	705	$	108
Total		1	$	675	$	705	$	108

	Six Months Ended June 30, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Related Allowance
Originated Loans
Other		1	$	7	$	7	$	-
Total		1	$	7	$	7	$	-
Loans Acquired at Fair Value
Real Estate
Residential		1	$	37	$	45	$	-
Commercial		1		539		539		-
Total		2	$	576	$	584	$	-

	Six Months Ended June 30, 2015
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Related Allowance
Originated Loans
Real Estate
Commercial		2	$	912	$	1,135	$	108
Total		2	$	912	$	1,135	$	108

Impaired Financing Receivables [Table Text Block]

	(Dollars in thousands)
	June 30, 2016
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	4,390	$	-	$	4,390	$	4,479	$	94
Construction		181		-		181		194		-
Commercial and Industrial		685		-		685		682		15
Other		6		-		6		6		-
Total With No Related Allowance Recorded	$	5,262	$	-	$	5,262	$	5,361	$	109
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,276	$	-	$	1,276	$	1,285	$	33
Commercial		3,022		-		3,131		3,213		73
Commercial and Industrial		562		-		562		591		12
Total With No Related Allowance Recorded	$	4,860	$	-	$	4,969	$	5,089	$	118
Total Loans
Real Estate:
Residential	$	1,276	$	-	$	1,276	$	1,285	$	33
Commercial		7,412		-		7,521		7,692		167
Construction		181		-		181		194		-
Commercial and Industrial		1,247		-		1,247		1,273		27
Other		6		-		6		6		-
Total With No Related Allowance Recorded	$	10,122	$	-	$	10,231	$	10,450	$	227
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,412	$	392	$	1,417	$	1,423	$	33
Commercial and Industrial		1,445		647		1,445		1,453		26
Total With A Related Allowance Recorded	$	2,857	$	1,039	$	2,862	$	2,876	$	59
Loans Acquired at Fair Value
Real Estate:
Residential	$	161	$	81	$	168	$	226	$	2
Commercial		652		133		652		657		-
Total With A Related Allowance Recorded	$	813	$	214	$	820	$	883	$	2
Total Loans
Real Estate:
Residential	$	161	$	81	$	168	$	226	$	2
Commercial		2,064		525		2,069		2,080		33
Construction		-		-		-		-		-
Commercial and Industrial		1,445		647		1,445		1,453		26
Other		-		-		-		-		-
Total With A Related Allowance Recorded	$	3,670	$	1,253	$	3,682	$	3,759	$	61

	June 30, 2016 (cont.)
Total Impaired Loans:
Originated Loans
Real Estate:
Commercial	$	5,802	$	392	$	5,807	$	5,902	$	127
Construction		181		-		181		194		-
Commercial and Industrial		2,130		647		2,130		2,135		41
Other		6		-		6		6		-
Total Impaired Loans	$	8,119	$	1,039	$	8,124	$	8,237	$	168
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,437	$	81	$	1,444	$	1,511	$	35
Commercial		3,674		133		3,783		3,870		73
Construction		-		-		-		-		-
Commercial and Industrial		562		-		562		591		12
Other		-		-		-		-		-
Total Impaired Loans	$	5,673	$	214	$	5,789	$	5,972	$	120
Total Loans
Real Estate:
Residential	$	1,437	$	81	$	1,444	$	1,511	$	35
Commercial		9,476		525		9,590		9,772		200
Construction		181		-		181		194		-
Commercial and Industrial		2,692		647		2,692		2,726		53
Other		6		-		6		6		-
Total Impaired Loans	$	13,792	$	1,253	$	13,913	$	14,209	$	288

	December 31, 2015
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Residential	$	5	$	-	$	17	$	6	$	-
Commercial		6,636		-		6,636		7,095		232
Construction		229		-		230		292		-
Commercial and Industrial		627		-		627		756		35
Total With No Related Allowance Recorded	$	7,497	$	-	$	7,510	$	8,149	$	267
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,296	$	-	$	1,296	$	1,315	$	67
Commercial		4,188		-		4,263		4,449		214
Commercial and Industrial		63		-		63		79		3
Total With No Related Allowance Recorded	$	5,547	$	-	$	5,622	$	5,843	$	284
Total Loans
Real Estate:
Residential	$	1,301	$	-	$	1,313	$	1,321	$	67
Commercial		10,824		-		10,899		11,544		446
Construction		229		-		230		292		-
Commercial and Industrial		690		-		690		835		38
Total With No Related Allowance Recorded	$	13,044	$	-	$	13,132	$	13,992	$	551
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,436	$	408	$	1,441	$	1,457	$	37
Commercial and Industrial		136		9		137		128		5
Total With A Related Allowance Recorded	$	1,572	$	417	$	1,578	$	1,585	$	42
Total Impaired Loans
Originated Loans
Real Estate:
Residential	$	5	$	-	$	17	$	6	$	-
Commercial		8,072		408		8,077		8,552		269
Construction		229		-		230		292		-
Commercial and Industrial		763		9		764		884		40
Total Impaired Loans	$	9,069	$	417	$	9,088	$	9,734	$	309
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,296	$	-	$	1,296	$	1,315	$	67
Commercial		4,188		-		4,263		4,449		214
Commercial and Industrial		63		-		63		79		3
Total Impaired Loans	$	5,547	$	-	$	5,622	$	5,843	$	284
Total Loans
Real Estate:
Residential	$	1,301	$	-	$	1,313	$	1,321	$	67
Commercial		12,260		408		12,340		13,001		483
Construction		229		-		230		292		-
Commercial and Industrial		826		9		827		963		43
Total Impaired Loans	$	14,616	$	417	$	14,710	$	15,577	$	593

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

	(Dollars in thousands)
	June 30, 2016
	Real Estate Residential			Real Estate Commercial			Real Estate Construction			Commercial and Industrial		Consumer			Other			Unallocated			Total
Originated Loans
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	244			6,937
Charge-offs		-			-			-			-		(120	)		(14	)		-			(134	)
Recoveries		3			-			-			-		53			5			-			61
Provision		(152	)		(80	)		(35	)		365		34			8			51			191
June 30, 2016	$	1,110		$	1,956		$	82		$	1,468	$	2,143		$	1		$	295		$	7,055
Loans Acquired at Fair Value
March 31, 2016	$	-		$	-		$	-		$	-	$	-		$	-		$	36		$	36
Charge-offs		(14	)		-			-			-		-			-			-			(14	)
Recoveries		3			1			-			-		1			-			-			5
Provision		11			10			-			115		(1	)		-			(26	)		109
June 30, 2016	$	-		$	11		$	-		$	115	$	-		$	-		$	10		$	136
Total Allowance for Loan Losses
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	280		$	6,973
Charge-offs		(14	)		-			-			-		(120	)		(14	)		-			(148	)
Recoveries		6			1			-			-		54			5			-			66
Provision		(141	)		(70	)		(35	)		480		33			8			25			300
June 30, 2016	$	1,110		$	1,967		$	82		$	1,583	$	2,143		$	1		$	305		$	7,191
Originated Loans
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14			6,490
Charge-offs		(20	)		-			-			-		(310	)		(26	)		-			(356	)
Recoveries		4			-			-			-		80			11			-			95
Provision		(497	)		(89	)		(55	)		684		486			16			281			826
June 30, 2016	$	1,110		$	1,956		$	82		$	1,468	$	2,143		$	1		$	295		$	7,055
Loans Acquired at Fair Value
December 31, 2015	$	-		$	-		$	-		$	-	$	-		$	-		$	-		$	-
Charge-offs		(16	)		(180	)		-			-		(4	)		-			-			(200	)
Recoveries		5			2			-			-		5			-			-			12
Provision		11			189			-			115		(1	)		-			10			324
June 30, 2016	$	-		$	11		$	-		$	115	$	-		$	-		$	10		$	136
Total Allowance for Loan Losses
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14		$	6,490
Charge-offs		(36	)		(180	)		-			-		(314	)		(26	)		-			(556	)
Recoveries		9			2			-			-		85			11			-			107
Provision		(486	)		100			(55	)		799		485			16			291			1,150
June 30, 2016	$	1,110		$	1,967		$	82		$	1,583	$	2,143		$	1		$	305		$	7,191

	June 30, 2016 (cont.)
	Real Estate Residential			Real Estate Commercial			Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Originated Loans
Individually Evaluated for Impairment	$	-		$	392		$	-	$	647	$	-	$	-	$	-	$	1,039
Collectively Evaluated for Potential Impairment	$	1,110		$	1,564		$	82	$	821	$	2,143	$	1	$	295	$	6,016
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	81		$	133		$	-	$	-	$	-	$	-	$	-	$	214
Collectively Evaluated for Potential Impairment	$	(81	)	$	(122	)	$	-	$	115	$	-	$	-	$	10	$	(78	)
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	81		$	525		$	-	$	647	$	-	$	-	$	-	$	1,253
Collectively Evaluated for Potential Impairment	$	1,029		$	1,442		$	82	$	936	$	2,143	$	1	$	305	$	5,938

	June 30, 2015
	Real Estate Residential			Real Estate Commercial			Real Estate Construction			Commercial and Industrial			Consumer			Other		Unallocated			Total
Originated Loans
March 31, 2015	$	2,513		$	608		$	145		$	913		$	1,011		$	-	$	288		$	5,478
Charge-offs		(111	)		(12	)		-			-			(69	)		-		-			(192	)
Recoveries		2			1			-			10			12			-		-			25
Provision		(737	)		1,149			(58	)		(6	)		384			-		(357	)		375
June 30, 2015	$	1,667		$	1,746		$	87		$	917		$	1,338		$	-	$	(69	)	$	5,686
December 31, 2014	$	2,690		$	582		$	122		$	684		$	1,015		$	-	$	102		$	5,195
Charge-offs		(111	)		(18	)		-			-			(116	)		-		-			(245	)
Recoveries		5			3			-			10			43			-		-			61
Provision		(917	)		1,179			(35	)		223			396			-		(171	)		675
June 30, 2015	$	1,667		$	1,746		$	87		$	917		$	1,338		$	-	$	(69	)	$	5,686
Originated Loans
Individually Evaluated for Impairment	$	-		$	370		$	5		$	159		$	-		$	-	$	-		$	534
Collectively Evaluated for Potential Impairment	$	1,667		$	1,376		$	82		$	758		$	1,338		$	-	$	(69	)	$	5,152

	December 31, 2015
Originated Loans	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Individually Evaluated for Impairment	$	-	$	408	$	-	$	9	$	-	$	-	$	-	$	417
Collectively Evaluated for Potential Impairment	$	1,623	$	1,637	$	137	$	775	$	1,887	$	-	$	14	$	6,073

Schedule of Accretable Discount on Loans Acquired at Fair Value [Table Text Block]

	Accretable Discount
Balance at December 31, 2015	$	3,302
Accretable yield		(1,223	)
Nonaccretable premium		225
Balance at June 30, 2016	$	2,304

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent [Table Text Block]

	(Dollars in thousands)
	June 30, 2016
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	5,802	$	181	$	2,130	$	-	$	6	$	8,119
Collectively Evaluated for Potential Impairment		173,734		125,345		11,737		65,506		109,250		6,197		491,769
	$	173,734	$	131,147	$	11,918	$	67,636	$	109,250	$	6,203	$	499,888
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,437	$	3,674	$	-	$	562	$	-	$	-	$	5,673
Collectively Evaluated for Potential Impairment		94,316		64,356		1,878		12,668		196		-		173,414
	$	95,753	$	68,030	$	1,878	$	13,230	$	196	$	-	$	179,087
Total Loans
Individually Evaluated for Impairment	$	1,437	$	9,476	$	181	$	2,692	$	-	$	6	$	13,792
Collectively Evaluated for Potential Impairment		268,050		189,701		13,615		78,174		109,446		6,197		665,183
	$	269,487	$	199,177	$	13,796	$	80,866	$	109,446	$	6,203	$	678,975

	December 31, 2015
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	5	$	8,072	$	229	$	763	$	-	$	-	$	9,069
Collectively Evaluated for Potential Impairment		170,164		119,542		17,114		59,724		103,605		4,592		474,741
	$	170,169	$	127,614	$	17,343	$	60,487	$	103,605	$	4,592	$	483,810
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,296	$	4,188	$	-	$	63	$	-	$	-	$	5,547
Collectively Evaluated for Potential Impairment		101,762		71,218		3,870		16,597		550		-		193,997
	$	103,058	$	75,406	$	3,870	$	16,660	$	550	$	-	$	199,544
Total Loans
Individually Evaluated for Impairment	$	1,301	$	12,260	$	229	$	826	$	-	$	-	$	14,616
Collectively Evaluated for Potential Impairment		271,926		190,760		20,984		76,321		104,155		4,592		668,738
	$	273,227	$	203,020	$	21,213	$	77,147	$	104,155	$	4,592	$	683,354

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Note 5 - Deposits (Tables)

6 Months Ended

Jun. 30, 2016

Time Deposits [Member]

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

Maturity Period:	June 30, 2016
One Year or Less	$	55,698
Over One Through Two Years		25,293
Over Two Through Three Years		14,136
Over Three Through Four Years		17,580
Over Four Through Five Years		12,920
Over Five Years		8,659
Total	$	134,286

Schedule of Long-term Debt Instruments [Table Text Block]

	(Dollars in thousands)
	June 30, 2016					December 31, 2015
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Due in One Year	$	3,500		0.94	%	$	-		-	%
Due After One Year to Two Years		3,500		1.35			3,500		0.94
Due After Two Years to Three Years		4,000		1.67			4,500		1.41
Due After Three Years to Four Years		6,000		1.88			6,000		1.78
Due After Four Years to Five Years		5,000		2.09			6,000		1.97
Due After Five Years		6,000		2.32			8,000		2.27
Total	$	28,000		1.80		$	28,000		1.80

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Note 6 - Short-term Borrowings (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Debt [Table Text Block]

	(Dollars in thousands)
	June 30, 2016					December 31, 2015
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Short-term Borrowings
Federal Funds Purchased:
Balance at Period End	$	6,000		0.70	%	$	-		-	%
Average Balance Outstanding During the Period		259		0.78			485		0.41
Maximum Amount Outstanding at any Month End		6,000					5,900
FHLB Borrowings:
Balance at Period End		-		-			9,360		0.51
Average Balance Outstanding During the Period		291		0.69			7,347		0.37
Maximum Amount Outstanding at any Month End		-					30,950
Securities Sold Under Agreements to Repurchase:
Balance at Period End		25,530		0.19			23,088		0.18
Average Balance Outstanding During the Period		24,336		0.23			23,303		0.24
Maximum Amount Outstanding at any Month End		26,373					27,908
Securities Collaterizing the Agreements at Period-End:
Carrying Value		28,765					26,033
Market Value		28,913					26,063

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Note 7 - Other Borrowed Funds (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	(Dollars in thousands)
	June 30, 2016					December 31, 2015
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Due in One Year	$	3,500		0.94	%	$	-		-	%
Due After One Year to Two Years		3,500		1.35			3,500		0.94
Due After Two Years to Three Years		4,000		1.67			4,500		1.41
Due After Three Years to Four Years		6,000		1.88			6,000		1.78
Due After Four Years to Five Years		5,000		2.09			6,000		1.97
Due After Five Years		6,000		2.32			8,000		2.27
Total	$	28,000		1.80		$	28,000		1.80

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Note 8 - Commitments and Contingent Liabilities (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

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

	(Dollars in thousands)
	June 30, 2016		December 31, 2015
Standby Letters of Credit	$	10,844	$	18,316
Performance Letters of Credit		2,359		1,358
Construction Mortgages		22,580		21,144
Personal Lines of Credit		5,990		5,810
Overdraft Protection Lines		5,839		6,051
Home Equity Lines of Credit		14,449		14,491
Commercial Lines of Credit		46,663		45,584
	$	108,724	$	112,754

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Note 9 - Fair Value Disclosure (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

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

		(Dollars in thousands)
	Fair Value Heirarchy	June 30, 2016		December 31, 2015
Available for Sales Securities:
U.S. Government Agencies	Level II	$	49,612	$	51,188
Obligations of States and Political Subdivisions	Level II		40,518		40,074
Mortgage-Backed Securities - Government-Sponsored Enterprises	Level II		3,062		3,403
Equity Securities - Mutual Funds	Level I		517		513
Equity Securities - Other	Level I		710		685
Total Available for Sale Securities		$	94,419	$	95,863

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

		(Dollars in thousands)
		Fair Value at						Significant
Financial Asset	Fair Value Heirarchy	June 30, 2016		December 31, 2015		Valuation Techniques	Significant Unobservable Inputs	Unobservable Input Value
Impaired Loans	Level III	$	2,417	$	1,155	Market Comparable Properties	Marketability Discount	10%	to	30%	(1)
OREO	Level III		-		111	Market Comparable Properties	Marketability Discount	10%	to	50%	(1)

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

		(Dollars in thousands)
		June 30, 2016				December 31, 2015
	Fair Value Heirarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and Due From Banks:
Interest Bearing	Level I	$	6,935	$	6,935	$	2,316	$	2,316
Non-Interest Bearing	Level I		6,278		6,278		9,024		9,024
Investment Securities:
Available for Sale	See Above		94,419		94,419		95,863		95,863
Loans, Net	Level III		671,784		690,824		676,864		692,373
Restricted Stock	Level II		3,253		3,253		3,824		3,824
Bank-Owned Life Insurance	Level II		18,448		18,448		18,209		18,209
Accrued Interest Receivable	Level II		2,387		2,387		2,419		2,419
Financial Liabilities:
Deposits	Level II		675,266		672,356		679,299		678,921
Short-term Borrowings	Level II		31,530		31,530		32,448		32,448
Other Borrowed Funds	Level II		28,000		28,648		28,000		27,830
Accrued Interest Payable	Level II		287		287		305		305

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Note 2 - Earnings Per Share (Details Textual)	6 Months Ended
	Jun. 30, 2016 shares
Number of Securities, Affect Net Income Approtioned to Common Stockholders in Calculating Basic and Diluted Earning Per Share	0

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Note 2 - Basic and Diluted Earnings Per Common Share (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Weighted-Average Common Shares Outstanding (in shares)	4,363,346	4,363,346	4,363,346	4,363,346
Average Treasury Stock Shares (in shares)	(282,329)	(291,884)	(282,329)	(291,884)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share (in shares)	4,081,017	4,071,462	4,081,017	4,071,462
Additional Common Stock Equivalents (Restricted Stock) Used to Calculate Diluted Earnings Per Share (in shares)	3,678		2,296
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share (in shares)	4,084,695	4,071,462	4,083,313	4,071,462
Earnings per share:
Basic (in dollars per share)	$ 0.48	$ 0.55	$ 0.98	$ 1.11
Diluted (in dollars per share)	$ 0.48	$ 0.55	$ 0.98	$ 1.11

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Note 3 - Investment Securities (Details Textual) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Credit Losses on Debt Securities Held	$ 0	$ 0

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Note 3 - Amortized Cost and Fair Value of Investment Securities Available-for-Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
US Government Agencies Debt Securities [Member]
Amortized Cost	$ 49,309	$ 51,151
Gross Unrealized Gains	306	147
Gross Unrealized Losses	(3)	(110)
Available for sale securities	49,612	51,188
US States and Political Subdivisions Debt Securities [Member]
Amortized Cost	39,642	39,351
Gross Unrealized Gains	882	760
Gross Unrealized Losses	(6)	(37)
Available for sale securities	40,518	40,074
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Amortized Cost	2,987	3,390
Gross Unrealized Gains	75	13
Available for sale securities	3,062	3,403
Equity Securities - Mutual Funds [Member]
Amortized Cost	500	500
Gross Unrealized Gains	17	13
Available for sale securities	517	513
Equity Securities [Member]
Amortized Cost	688	600
Gross Unrealized Gains	28	85
Gross Unrealized Losses	(6)
Available for sale securities	710	685
Amortized Cost	93,126	94,992
Gross Unrealized Gains	1,308	1,018
Gross Unrealized Losses	(15)	(147)
Available for sale securities	$ 94,419	$ 95,863

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Note 3 - Gross Unrealized Losses and Fair Value by Investment Category and Continuous Unrealized Loss Position (Details) $ in Thousands	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
US Government Agencies Debt Securities [Member]
Less than Twelve Months, Number of Securities	2	6
Less than Twelve Months, Fair Value	$ 5,502	$ 14,928
Less than Twelve Months, Gross Unrealized Losses	$ (3)	$ (110)
Twelve Months or More, Number of Securities
Twelve Months or More, Fair Value
Twelve Months or More, Gross Unrealized Losses
Number of Securities, Total	2	6
Fair Value, Total	$ 5,502	$ 14,928
Gross Unrealized Losses, Total	$ (3)	$ (110)
US States and Political Subdivisions Debt Securities [Member]
Less than Twelve Months, Number of Securities	3	11
Less than Twelve Months, Fair Value	$ 1,389	$ 5,333
Less than Twelve Months, Gross Unrealized Losses	$ (4)	$ (25)
Twelve Months or More, Number of Securities	2	8
Twelve Months or More, Fair Value	$ 762	$ 4,549
Twelve Months or More, Gross Unrealized Losses	$ (2)	$ (12)
Number of Securities, Total	5	19
Fair Value, Total	$ 2,151	$ 9,882
Gross Unrealized Losses, Total	$ (6)	$ (37)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Less than Twelve Months, Number of Securities	5
Less than Twelve Months, Fair Value	$ 235
Less than Twelve Months, Gross Unrealized Losses	$ (6)
Twelve Months or More, Number of Securities
Twelve Months or More, Fair Value
Twelve Months or More, Gross Unrealized Losses
Number of Securities, Total	5
Fair Value, Total	$ 235
Gross Unrealized Losses, Total	$ (6)
Less than Twelve Months, Number of Securities	10	17
Less than Twelve Months, Fair Value	$ 7,126	$ 20,261
Less than Twelve Months, Gross Unrealized Losses	$ (13)	$ (135)
Twelve Months or More, Number of Securities	2	8
Twelve Months or More, Fair Value	$ 762	$ 4,549
Twelve Months or More, Gross Unrealized Losses	$ (2)	$ (12)
Number of Securities, Total	12	25
Fair Value, Total	$ 7,888	$ 24,810
Gross Unrealized Losses, Total	$ (15)	$ (147)

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Note 3 - Maturities of Investment Securities Available-for-Sale and Held-to-maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Due in One Year or Less	$ 11,372
Due in One Year or Less	11,473
Due after One Year through Five Years	16,718
Due after One Year through Five Years	17,032
Due after Five Years through Ten Years	59,302
Due after Five Years through Ten Years	59,953
Due after Ten Years	5,734
Due after Ten Years	5,961
Amortized Cost	93,126	$ 94,992
Available for sale securities	$ 94,419	$ 95,863

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Note 4 - Loans and Related Allowance for Loan Loss (Details Textual)			3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015	Jun. 30, 2016 USD ($)	Jun. 30, 2015
Commercial Portfolio Segment [Member] | Originated Loans [Member]
Financing Receivable Modifications Number of Contracts Paid Off				1		1
Loans and Leases Receivable, Gross	$ 109,250,000	$ 103,605,000	$ 109,250,000		$ 109,250,000
Commercial Portfolio Segment [Member] | Acquired Loans [Member]
Financing Receivable Modifications Number of Contracts Paid Off				1	1
Loans and Leases Receivable, Gross	196,000	550,000	196,000		$ 196,000
Commercial Portfolio Segment [Member] | Commercial Loan [Member]
Financing Receivable Modifications Number of Contracts Paid Off				1	1	2
Commercial Portfolio Segment [Member] | Other Contract [Member]
Financing Receivable Modifications Number of Contracts Paid Off				2
Commercial Portfolio Segment [Member] | Residential Mortgage [Member]
Financing Receivable Modifications Number of Contracts Paid Off					1
Originated Loans [Member]
Loans and Leases Receivable, Gross	$ 499,888,000	$ 483,810,000	499,888,000		$ 499,888,000
Financing Receivable, Modifications, Number of Contracts	5	4		1	1	2
Financing Receivable, Modifications, Recorded Investment	$ 1,400,000	$ 1,400,000	1,400,000		$ 1,400,000
Acquired Loans [Member]
Loans and Leases Receivable, Gross	$ 179,087,000	$ 199,544,000	179,087,000		$ 179,087,000
Financing Receivable, Modifications, Number of Contracts	10	9			2
Financing Receivable, Modifications, Recorded Investment	$ 2,500,000	$ 2,800,000	2,500,000		$ 2,500,000
Unlikely to be Collected Financing Receivable [Member]
Loans and Leases Receivable, Gross	0	0	$ 0		$ 0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts			0	0	0	0
Loans and Leases Receivable, Gross	$ 678,975,000	683,354,000	$ 678,975,000		$ 678,975,000
Number of Loan Portfolio Segments	4		4		4
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums	$ 733,000	705,000	$ 733,000		$ 733,000
Real Estate Loans Serviced for Others	78,800,000	73,100,000	78,800,000		78,800,000
Mortgage Loans in Process of Foreclosure, Amount	$ 1,800,000	$ 3,800,000	1,800,000		1,800,000
Financing Receivable, Modifications, Number of Contracts	15	13
Financing Receivable, Modifications, Recorded Investment	$ 3,900,000	$ 4,200,000	$ 3,900,000		$ 3,900,000

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Note 4 - Composition of Loan Portfolio (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 173,734	$ 170,169
Originated and acquired loans, percent	34.80%	35.20%
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 95,753	$ 103,058
Originated and acquired loans, percent	53.50%	51.70%
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 269,487	$ 273,227
Originated and acquired loans, percent	39.70%	40.00%
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 131,147	$ 127,614
Originated and acquired loans, percent	26.20%	26.40%
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 68,030	$ 75,406
Originated and acquired loans, percent	38.00%	37.80%
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 199,177	$ 203,020
Originated and acquired loans, percent	29.30%	29.70%
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 67,636	$ 60,487
Originated and acquired loans, percent	13.50%	12.50%
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 13,230	$ 16,660
Originated and acquired loans, percent	7.40%	8.30%
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 80,866	$ 77,147
Originated and acquired loans, percent	11.90%	11.30%
Commercial Portfolio Segment [Member] | Originated Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 109,250	$ 103,605
Originated and acquired loans, percent	21.90%	21.40%
Commercial Portfolio Segment [Member] | Acquired Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 196	$ 550
Originated and acquired loans, percent	0.10%	0.30%
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 11,918	$ 17,343
Originated and acquired loans, percent	2.40%	3.60%
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 1,878	$ 3,870
Originated and acquired loans, percent	1.00%	1.90%
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 13,796	$ 21,213
Originated and acquired loans, percent	2.10%	3.10%
Other Portfolio Segment [Member] | Originated Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 6,203	$ 4,592
Originated and acquired loans, percent	1.20%	0.90%
Other Portfolio Segment [Member] | Acquired Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 6,203	$ 4,592
Originated and acquired loans, percent	0.90%	0.70%
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 109,250	$ 103,605
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	196	550
Consumer Portfolio Segment [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 109,446	$ 104,155
Originated and acquired loans, percent	16.10%	15.20%
Originated Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 499,888	$ 483,810
Originated and acquired loans, percent	100.00%	100.00%
Allowance for Loan Losses	$ (7,055)	$ (6,490)
Loans, Net	492,833	477,320
Acquired Loans [Member]
Real Estate:
Loans and Leases Receivable, Gross	$ 179,087	$ 199,544
Originated and acquired loans, percent	100.00%	100.00%
Allowance for Loan Losses	$ (136)
Loans, Net	178,951	199,544
Loans and Leases Receivable, Gross	$ 678,975	$ 683,354
Originated and acquired loans, percent	100.00%	100.00%
Allowance for Loan Losses	$ (7,191)	$ (6,490)
Loans, Net	$ 671,784	$ 676,864

XML

Note 4 - Credit Quality Information (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	$ 172,910	$ 169,233
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	452	249
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	372	682
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross		5
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	173,734	170,169
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	93,123	100,633
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	2,630	2,425
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	95,753	103,058
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	266,033	269,866
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	452	249
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	3,002	3,107
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross		5
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	269,487	273,227
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	112,025	113,087
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	13,725	6,870
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	4,317	6,565
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	1,080	1,092
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	131,147	127,614
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	63,357	69,539
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	1,522	2,252
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	3,151	3,615
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	68,030	75,406
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	175,382	182,626
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	15,247	9,122
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	7,468	10,180
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	1,080	1,092
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	199,177	203,020
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	63,782	57,586
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	1,730	2,145
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	2,124	756
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	67,636	60,487
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	12,623	15,601
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	45	996
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	562	63
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	13,230	16,660
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	76,405	73,187
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	1,775	3,141
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	2,686	819
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Loans and Leases Receivable, Gross	80,866	77,147
Commercial Portfolio Segment [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	109,250	103,605
Commercial Portfolio Segment [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	196	550
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	11,038	16,384
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	699	729
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	181	230
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	11,918	17,343
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	1,878	3,870
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	1,878	3,870
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	12,916	20,254
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	699	729
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	181	230
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	13,796	21,213
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	109,174	103,591
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	76	14
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	109,250	103,605
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	196	550
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	196	550
Consumer Portfolio Segment [Member] | Pass [Member]
Loans and Leases Receivable, Gross	109,370	104,141
Consumer Portfolio Segment [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	76	14
Consumer Portfolio Segment [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member]
Loans and Leases Receivable, Gross	109,446	104,155
Other Portfolio Segment [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	6,203	4,592
Other Portfolio Segment [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	6,203	4,592
Other Portfolio Segment [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member] | Pass [Member]
Loans and Leases Receivable, Gross	6,203	4,592
Other Portfolio Segment [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member] | Substandard [Member]
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member]
Loans and Leases Receivable, Gross	6,203	4,592
Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	475,132	464,473
Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	16,606	9,993
Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	6,889	8,017
Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	1,261	1,327
Originated Loans [Member]
Loans and Leases Receivable, Gross	499,888	483,810
Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	171,177	190,193
Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	1,567	3,248
Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	6,343	6,103
Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Acquired Loans [Member]
Loans and Leases Receivable, Gross	179,087	199,544
Pass [Member]
Loans and Leases Receivable, Gross	646,309	654,666
Special Mention [Member]
Loans and Leases Receivable, Gross	18,173	13,241
Substandard [Member]
Loans and Leases Receivable, Gross	13,232	14,120
Doubtful [Member]
Loans and Leases Receivable, Gross	1,261	1,327
Loans and Leases Receivable, Gross	$ 678,975	$ 683,354

XML

Note 4 - Delinquencies in the Loan (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		$ 563
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	144	133
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans current	173,215	168,786
Total past due	144	696
Nonaccrual loans	375	687
Loans and Leases Receivable, Gross	173,734	170,169
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	82	1,308
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	131	263
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		193
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans current	93,824	99,794
Total past due	213	1,764
Nonaccrual loans	1,716	1,500
Loans and Leases Receivable, Gross	95,753	103,058
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	82	1,871
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	275	396
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		193
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Loans current	267,039	268,580
Total past due	357	2,460
Nonaccrual loans	2,091	2,187
Loans and Leases Receivable, Gross	269,487	273,227
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	266	114
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans current	130,564	124,037
Total past due	266	114
Nonaccrual loans	317	3,463
Loans and Leases Receivable, Gross	131,147	127,614
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		1,019
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	652
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans current	67,021	73,988
Total past due	652	1,019
Nonaccrual loans	357	399
Loans and Leases Receivable, Gross	68,030	75,406
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	266	1,133
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	652
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Loans current	197,585	198,025
Total past due	918	1,133
Nonaccrual loans	674	3,862
Loans and Leases Receivable, Gross	199,177	203,020
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	255	45
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Loans current	67,381	60,442
Total past due	255	45
Nonaccrual loans
Loans and Leases Receivable, Gross	67,636	60,487
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		38
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	145	130
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Loans current	13,085	16,450
Total past due	145	168
Nonaccrual loans		42
Loans and Leases Receivable, Gross	13,230	16,660
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	255	83
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	145	130
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Loans current	80,466	76,892
Total past due	400	213
Nonaccrual loans		42
Loans and Leases Receivable, Gross	80,866	77,147
Commercial Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Commercial Portfolio Segment [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	109,250	103,605
Commercial Portfolio Segment [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	196	550
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans current	11,737	17,113
Total past due
Nonaccrual loans	181	230
Loans and Leases Receivable, Gross	11,918	17,343
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans current	1,878	3,870
Total past due
Nonaccrual loans
Loans and Leases Receivable, Gross	1,878	3,870
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Loans current	13,615	20,983
Total past due
Nonaccrual loans	181	230
Loans and Leases Receivable, Gross	13,796	21,213
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	813	923
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	73	39
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Loans current	108,288	102,629
Total past due	886	962
Nonaccrual loans	76	14
Loans and Leases Receivable, Gross	109,250	103,605
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		8
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	1
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Loans current	195	542
Total past due	1	8
Nonaccrual loans
Loans and Leases Receivable, Gross	196	550
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	813	931
Consumer Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	73	39
Consumer Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	1
Consumer Portfolio Segment [Member]
Loans current	108,483	103,171
Total past due	887	970
Nonaccrual loans	76	14
Loans and Leases Receivable, Gross	109,446	104,155
Other Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due
Other Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
Other Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Other Portfolio Segment [Member] | Originated Loans [Member]
Loans current	6,203	4,592
Total past due
Nonaccrual loans
Loans and Leases Receivable, Gross	6,203	4,592
Other Portfolio Segment [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due
Other Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
Other Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Other Portfolio Segment [Member]
Loans current	6,203	4,592
Total past due
Nonaccrual loans
Loans and Leases Receivable, Gross	6,203	4,592
Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	1,334	1,645
Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	217	172
Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due
Originated Loans [Member]
Loans current	497,388	477,599
Total past due	1,551	1,817
Nonaccrual loans	949	4,394
Loans and Leases Receivable, Gross	499,888	483,810
Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	82	2,373
Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	928	393
Acquired Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	1	193
Acquired Loans [Member]
Loans current	176,003	194,644
Total past due	1,011	2,959
Nonaccrual loans	2,073	1,941
Loans and Leases Receivable, Gross	179,087	199,544
Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	1,416	4,018
Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	1,145	565
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	1	193
Loans current	673,391	672,243
Total past due	2,562	4,776
Nonaccrual loans	3,022	6,335
Loans and Leases Receivable, Gross	$ 678,975	$ 683,354

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Note 4 - Nonperforming Assets (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Nonperforming Financial Instruments [Member] | Acquired Loans [Member]
Nonperforming loans		$ 1,320		$ 1,296
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Nonperforming Financial Instruments [Member]
Accruing loans past due 90 days or more				193
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Nonaccrual loans		375		687
Loans and Leases Receivable, Gross		173,734		170,169
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Nonaccrual loans		1,716		1,500
Nonperforming loans		45
Loans and Leases Receivable, Gross		95,753		103,058
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans		2,091		2,187
Loans and Leases Receivable, Gross		269,487		273,227
Residential Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Real Estate Owned		78		138
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Nonperforming Financial Instruments [Member] | Originated Loans [Member]
Nonperforming loans		1,352		1,375
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Nonperforming Financial Instruments [Member] | Acquired Loans [Member]
Nonperforming loans		698		1,488
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Nonaccrual loans		317		3,463
Nonperforming loans			$ 1,135
Loans and Leases Receivable, Gross		131,147		127,614
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Nonaccrual loans		357		399
Nonperforming loans	$ 705	539
Loans and Leases Receivable, Gross		68,030		75,406
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans		674		3,862
Loans and Leases Receivable, Gross		199,177		203,020
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Nonperforming Financial Instruments [Member] | Originated Loans [Member]
Nonperforming loans		518
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Nonaccrual loans
Loans and Leases Receivable, Gross		67,636		60,487
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Nonaccrual loans				42
Loans and Leases Receivable, Gross		13,230		16,660
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Nonaccrual loans				42
Loans and Leases Receivable, Gross		80,866		77,147
Commercial Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Nonperforming loans		7		7
Commercial Portfolio Segment [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross		109,250		103,605
Commercial Portfolio Segment [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross		196		550
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Nonaccrual loans		181		230
Loans and Leases Receivable, Gross		11,918		17,343
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Nonaccrual loans
Loans and Leases Receivable, Gross		1,878		3,870
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans		181		230
Loans and Leases Receivable, Gross		13,796		21,213
Consumer Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Originated Loans [Member]
Nonperforming loans		6
Consumer Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Accruing loans past due 90 days or more		1
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Nonaccrual loans		76		14
Loans and Leases Receivable, Gross		109,250		103,605
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Nonaccrual loans
Loans and Leases Receivable, Gross		196		550
Consumer Portfolio Segment [Member]
Nonaccrual loans		76		14
Loans and Leases Receivable, Gross		109,446		104,155
Other Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Real Estate Owned		174		174
Other Portfolio Segment [Member] | Originated Loans [Member]
Nonaccrual loans
Loans and Leases Receivable, Gross		6,203		4,592
Other Portfolio Segment [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member]
Nonaccrual loans
Loans and Leases Receivable, Gross		6,203		4,592
Nonperforming Financial Instruments [Member] | Originated Loans [Member]
Nonperforming loans		1,365		1,382
Nonperforming Financial Instruments [Member] | Acquired Loans [Member]
Nonperforming loans		2,536		2,784
Nonperforming Financial Instruments [Member]
Nonaccrual loans		3,022		6,335
Accruing loans past due 90 days or more		1		193
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		3,023		6,528
Nonperforming loans		3,901		4,166
Loans and Leases Receivable, Gross		6,924		10,694
Real Estate Owned		252		312
Total Nonperforming Assets		7,176		11,006
Originated Loans [Member]
Nonaccrual loans		949		4,394
Nonperforming loans	$ 705	7	$ 1,135
Loans and Leases Receivable, Gross		499,888		483,810
Acquired Loans [Member]
Nonaccrual loans		2,073		1,941
Nonperforming loans		584
Loans and Leases Receivable, Gross		179,087		199,544
Nonaccrual loans		3,022		6,335
Loans and Leases Receivable, Gross		678,975		683,354
Total Nonperforming Assets		$ 828,026		$ 830,677
Nonperforming Loans to Total Loans		1.02%		1.56%
Nonperforming Assets to Total Assets		0.87%		1.32%

XML

Note 4 - Loans Classified as TDRs (Details) $ in Thousands			3 Months Ended	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Financing Receivable, Modifications, Number of Contracts			1	1
Pre- Modification Outstanding Recorded Investment			$ 675	$ 539
Nonperforming loans			705	539
Related Allowance			$ 108
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Financing Receivable, Modifications, Number of Contracts					2
Pre- Modification Outstanding Recorded Investment					$ 912
Nonperforming loans					1,135
Related Allowance					$ 108
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Financing Receivable, Modifications, Number of Contracts				1
Pre- Modification Outstanding Recorded Investment				$ 37
Nonperforming loans				45
Related Allowance
Acquired Loans [Member]
Financing Receivable, Modifications, Number of Contracts	10	9		2
Pre- Modification Outstanding Recorded Investment				$ 576
Nonperforming loans				584
Related Allowance
Originated Loans [Member]
Financing Receivable, Modifications, Number of Contracts	5	4	1	1	2
Pre- Modification Outstanding Recorded Investment			$ 675	$ 7	$ 912
Nonperforming loans			705	7	1,135
Related Allowance			$ 108		$ 108
Financing Receivable, Modifications, Number of Contracts	15	13

XML

Note 4 - Impaired Loans (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Recorded investment - with no related allowance	$ 4,390,000	$ 6,636,000
Unpaid principal balance - with no related allowance	4,390,000	6,636,000
Average recorded investment - with no related allowance	4,479,000	7,095,000
Interest income recognized - with no related allowance	94,000	232,000
Recorded investment - with related allowance	1,412,000	1,436,000
Impaired Financing Receivable, Related Allowance	392,000	408,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	1,417,000	1,441,000
Average recorded investment - with related allowance	1,423,000	1,457,000
Interest income recognized - with related allowance	33,000	37,000
Impaired Loans	5,802,000	8,072,000
Unpaid principal balance	5,807,000	8,077,000
Average recorded investment	5,902,000	8,552,000
Interest income recognized	127,000	269,000
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Recorded investment - with no related allowance	3,022,000	4,188,000
Unpaid principal balance - with no related allowance	3,131,000	4,263,000
Average recorded investment - with no related allowance	3,213,000	4,449,000
Interest income recognized - with no related allowance	73,000	214,000
Impaired Financing Receivable, Related Allowance	133,000
Impaired Loans	3,674,000	4,188,000
Unpaid principal balance	3,783,000	4,263,000
Average recorded investment	3,870,000	4,449,000
Interest income recognized	73,000	214,000
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Recorded investment - with no related allowance	7,412,000	10,824,000
Unpaid principal balance - with no related allowance	7,521,000	10,899,000
Average recorded investment - with no related allowance	7,692,000	11,544,000
Interest income recognized - with no related allowance	167,000	446,000
Recorded investment - with related allowance	652,000
Impaired Financing Receivable, Related Allowance	525,000	408,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	652,000
Average recorded investment - with related allowance	657,000
Interest income recognized - with related allowance
Impaired Loans	9,476,000	12,260,000
Unpaid principal balance	9,590,000	12,340,000
Average recorded investment	9,772,000	13,001,000
Interest income recognized	200,000	483,000
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Recorded investment - with no related allowance	685,000	627,000
Unpaid principal balance - with no related allowance	685,000	627,000
Average recorded investment - with no related allowance	682,000	756,000
Interest income recognized - with no related allowance	15,000	35,000
Recorded investment - with related allowance	1,445,000	136,000
Impaired Financing Receivable, Related Allowance	647,000	9,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	1,445,000	137,000
Average recorded investment - with related allowance	1,453,000	128,000
Interest income recognized - with related allowance	26,000	5,000
Impaired Loans	2,130,000	763,000
Unpaid principal balance	2,130,000	764,000
Average recorded investment	2,135,000	884,000
Interest income recognized	41,000	40,000
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Recorded investment - with no related allowance	562,000	63,000
Unpaid principal balance - with no related allowance	562,000	63,000
Average recorded investment - with no related allowance	591,000	79,000
Interest income recognized - with no related allowance	12,000	3,000
Impaired Financing Receivable, Related Allowance
Impaired Loans	562,000	63,000
Unpaid principal balance	562,000	63,000
Average recorded investment	591,000	79,000
Interest income recognized	12,000	3,000
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Recorded investment - with no related allowance	1,247,000	690,000
Unpaid principal balance - with no related allowance	1,247,000	690,000
Average recorded investment - with no related allowance	1,273,000	835,000
Interest income recognized - with no related allowance	27,000	38,000
Recorded investment - with related allowance	1,445,000
Impaired Financing Receivable, Related Allowance	647,000	9,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	1,445,000
Average recorded investment - with related allowance	1,453,000
Interest income recognized - with related allowance	26,000
Impaired Loans	2,692,000	826,000
Unpaid principal balance	2,692,000	827,000
Average recorded investment	2,726,000	963,000
Interest income recognized	53,000	43,000
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Recorded investment - with no related allowance		5,000
Unpaid principal balance - with no related allowance		17,000
Average recorded investment - with no related allowance		6,000
Interest income recognized - with no related allowance
Impaired Financing Receivable, Related Allowance
Impaired Loans		5,000
Unpaid principal balance		17,000
Average recorded investment		6,000
Interest income recognized
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Recorded investment - with no related allowance	1,276,000	1,296,000
Unpaid principal balance - with no related allowance	1,276,000	1,296,000
Average recorded investment - with no related allowance	1,285,000	1,315,000
Interest income recognized - with no related allowance	33,000	67,000
Recorded investment - with related allowance	161,000
Impaired Financing Receivable, Related Allowance	81,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	168,000
Average recorded investment - with related allowance	226,000
Interest income recognized - with related allowance	2,000
Impaired Loans	1,437,000	1,296,000
Unpaid principal balance	1,444,000	1,296,000
Average recorded investment	1,511,000	1,315,000
Interest income recognized	35,000	67,000
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Recorded investment - with no related allowance	1,276,000	1,301,000
Unpaid principal balance - with no related allowance	1,276,000	1,313,000
Average recorded investment - with no related allowance	1,285,000	1,321,000
Interest income recognized - with no related allowance	33,000	67,000
Recorded investment - with related allowance	161,000
Impaired Financing Receivable, Related Allowance	81,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	168,000
Average recorded investment - with related allowance	226,000
Interest income recognized - with related allowance	2,000
Impaired Loans	1,437,000	1,301,000
Unpaid principal balance	1,444,000	1,313,000
Average recorded investment	1,511,000	1,321,000
Interest income recognized	35,000	67,000
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Recorded investment - with no related allowance	181,000	229,000
Unpaid principal balance - with no related allowance	181,000	230,000
Average recorded investment - with no related allowance	194,000	292,000
Interest income recognized - with no related allowance
Impaired Financing Receivable, Related Allowance
Impaired Loans	181,000	229,000
Unpaid principal balance	181,000	230,000
Average recorded investment	194,000	292,000
Interest income recognized
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Impaired Financing Receivable, Related Allowance
Impaired Loans
Unpaid principal balance
Average recorded investment
Interest income recognized
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Recorded investment - with no related allowance	181,000	229,000
Unpaid principal balance - with no related allowance	181,000	230,000
Average recorded investment - with no related allowance	194,000	292,000
Interest income recognized - with no related allowance
Recorded investment - with related allowance
Impaired Financing Receivable, Related Allowance
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance
Average recorded investment - with related allowance
Interest income recognized - with related allowance
Impaired Loans	181,000	229,000
Unpaid principal balance	181,000	230,000
Average recorded investment	194,000	292,000
Other Portfolio Segment [Member] | Originated Loans [Member]
Recorded investment - with no related allowance	6,000
Unpaid principal balance - with no related allowance	6,000
Average recorded investment - with no related allowance	6,000
Interest income recognized - with no related allowance
Impaired Financing Receivable, Related Allowance
Impaired Loans	6,000
Unpaid principal balance	6,000
Average recorded investment	6,000
Interest income recognized
Other Portfolio Segment [Member] | Acquired Loans [Member]
Impaired Financing Receivable, Related Allowance
Impaired Loans
Unpaid principal balance
Average recorded investment
Interest income recognized
Other Portfolio Segment [Member]
Recorded investment - with no related allowance	6,000
Unpaid principal balance - with no related allowance	6,000
Average recorded investment - with no related allowance	6,000
Interest income recognized - with no related allowance
Recorded investment - with related allowance
Impaired Financing Receivable, Related Allowance
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance
Average recorded investment - with related allowance
Interest income recognized - with related allowance
Impaired Loans	6,000
Unpaid principal balance	6,000
Average recorded investment	6,000
Interest income recognized
Consumer Portfolio Segment [Member] | Real Estate Sector [Member]
Recorded investment - with related allowance	2,064,000
Impaired Financing Receivable, Related Allowance	525,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	2,069,000
Average recorded investment - with related allowance	2,080,000
Interest income recognized - with related allowance	33,000
Originated Loans [Member]
Recorded investment - with no related allowance	5,262,000	7,497,000
Unpaid principal balance - with no related allowance	5,262,000	7,510,000
Average recorded investment - with no related allowance	5,361,000	8,149,000
Interest income recognized - with no related allowance	109,000	267,000
Recorded investment - with related allowance	2,857,000	1,572,000
Impaired Financing Receivable, Related Allowance	1,039,000	417,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	2,862,000	1,578,000
Average recorded investment - with related allowance	2,876,000	1,585,000
Interest income recognized - with related allowance	59,000	42,000
Impaired Loans	8,119,000	9,069,000
Unpaid principal balance	8,124,000	9,088,000
Average recorded investment	8,237,000	9,734,000
Interest income recognized	168,000	309,000
Acquired Loans [Member]
Recorded investment - with no related allowance	4,860,000	5,547,000
Unpaid principal balance - with no related allowance	4,969,000	5,622,000
Average recorded investment - with no related allowance	5,089,000	5,843,000
Interest income recognized - with no related allowance	118,000	284,000
Recorded investment - with related allowance	813,000
Impaired Financing Receivable, Related Allowance	214,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	820,000
Average recorded investment - with related allowance	883,000
Interest income recognized - with related allowance	2,000
Impaired Loans	5,673,000	5,547,000
Unpaid principal balance	5,789,000	5,622,000
Average recorded investment	5,972,000	5,843,000
Interest income recognized	120,000	284,000
Recorded investment - with no related allowance	10,122,000	13,044,000
Unpaid principal balance - with no related allowance	10,231,000	13,132,000
Average recorded investment - with no related allowance	10,450,000	13,992,000
Interest income recognized - with no related allowance	227,000	551,000
Recorded investment - with related allowance	3,670,000
Impaired Financing Receivable, Related Allowance	1,253,000	417,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	3,682,000	1,600,000
Average recorded investment - with related allowance	3,759,000
Interest income recognized - with related allowance	61,000
Impaired Loans	13,792,000	14,616,000
Unpaid principal balance	13,913,000	14,710,000
Average recorded investment	14,209,000	15,577,000
Interest income recognized	$ 288,000	$ 593,000

XML

Note 4 - Activity in the Allowance for Loan Losses (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Balance	$ 1,259,000	$ 2,513,000	$ 1,623,000	$ 2,690,000
Charge-offs		(111,000)	(20,000)	(111,000)
Recoveries	3,000	2,000	4,000	5,000
Provision	(152,000)	(737,000)	(497,000)	(917,000)
Balance	1,110,000	1,667,000	1,110,000	1,667,000
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	1,110	1,667	1,110	1,667	1,623
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	1,110	1,667	1,110	1,667	1,623
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Balance
Charge-offs	(14,000)		(16,000)
Recoveries	3,000		5,000
Provision	11,000		11,000
Balance
Individually Evaluated for Impairment	81		81
Collectively Evaluated for Potential Impairment	(81)		(81)
Individually Evaluated for Impairment	81		81
Collectively Evaluated for Potential Impairment	(81)		(81)
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	1,259,000		1,623,000
Charge-offs	(14,000)		(36,000)
Recoveries	6,000		9,000
Provision	(141,000)		(486,000)
Balance	1,110,000		1,110,000
Individually Evaluated for Impairment	81		81
Collectively Evaluated for Potential Impairment	1,029		1,029
Individually Evaluated for Impairment	81		81
Collectively Evaluated for Potential Impairment	1,029		1,029
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Balance	2,036,000	608,000	2,045,000	582,000
Charge-offs		(12,000)		(18,000)
Recoveries		1,000		3,000
Provision	(80,000)	1,149,000	(89,000)	1,179,000
Balance	1,956,000	1,746,000	1,956,000	1,746,000
Individually Evaluated for Impairment	392	370	392	370	408
Collectively Evaluated for Potential Impairment	1,564	1,376	1,564	1,376	1,637
Individually Evaluated for Impairment	392	370	392	370	408
Collectively Evaluated for Potential Impairment	1,564	1,376	1,564	1,376	1,637
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Balance
Charge-offs			(180,000)
Recoveries	1,000		2,000
Provision	10,000		189,000
Balance	11,000		11,000
Individually Evaluated for Impairment	133		133
Collectively Evaluated for Potential Impairment	(122)		(122)
Individually Evaluated for Impairment	133		133
Collectively Evaluated for Potential Impairment	(122)		(122)
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	2,036,000		2,045,000
Charge-offs			(180,000)
Recoveries	1,000		2,000
Provision	(70,000)		100,000
Balance	1,967,000		1,967,000
Individually Evaluated for Impairment	525		525
Collectively Evaluated for Potential Impairment	1,442		1,442
Individually Evaluated for Impairment	525		525
Collectively Evaluated for Potential Impairment	1,442		1,442
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Balance	1,103,000	913,000	784,000	684,000
Charge-offs
Recoveries		10,000		10,000
Provision	365,000	(6,000)	684,000	223,000
Balance	1,468,000	917,000	1,468,000	917,000
Individually Evaluated for Impairment	647	159	647	159	9
Collectively Evaluated for Potential Impairment	821	758	821	758	775
Individually Evaluated for Impairment	647	159	647	159	9
Collectively Evaluated for Potential Impairment	821	758	821	758	775
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Balance
Charge-offs
Recoveries
Provision	115,000		115,000
Balance	115,000		115,000
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	115		115
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	115		115
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Balance	1,103,000		784,000
Charge-offs
Recoveries
Provision	480,000		799,000
Balance	1,583,000		1,583,000
Individually Evaluated for Impairment	647		647
Collectively Evaluated for Potential Impairment	936		936
Individually Evaluated for Impairment	647		647
Collectively Evaluated for Potential Impairment	936		936
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Balance	117,000	145,000	137,000	122,000
Charge-offs
Recoveries
Provision	(35,000)	(58,000)	(55,000)	(35,000)
Balance	82,000	87,000	82,000	87,000
Individually Evaluated for Impairment		5		5
Collectively Evaluated for Potential Impairment	82	82	82	82	137
Individually Evaluated for Impairment		5		5
Collectively Evaluated for Potential Impairment	82	82	82	82	137
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Balance
Charge-offs
Recoveries
Provision
Balance
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	117,000		137,000
Charge-offs
Recoveries
Provision	(35,000)		(55,000)
Balance	82,000		82,000
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	82		82
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	82		82
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Balance	2,176,000	1,011,000	1,887,000	1,015,000
Charge-offs	(120,000)	(69,000)	(310,000)	(116,000)
Recoveries	53,000	12,000	80,000	43,000
Provision	34,000	384,000	486,000	396,000
Balance	2,143,000	1,338,000	2,143,000	1,338,000
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	2,143	1,338	2,143	1,338	1,887
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	2,143	1,338	2,143	1,338	1,887
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Balance
Charge-offs			(4,000)
Recoveries	1,000		5,000
Provision	(1,000)		(1,000)
Balance
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Consumer Portfolio Segment [Member]
Balance	2,176,000		1,887,000
Charge-offs	(120,000)		(314,000)
Recoveries	54,000		85,000
Provision	33,000		485,000
Balance	2,143,000		2,143,000
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	2,143		2,143
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	2,143		2,143
Other Portfolio Segment [Member] | Originated Loans [Member]
Balance	2,000
Charge-offs	(14,000)		(26,000)
Recoveries	5,000		11,000
Provision	8,000		16,000
Balance	1,000		1,000
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	1		1
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	1		1
Other Portfolio Segment [Member] | Acquired Loans [Member]
Balance
Charge-offs
Recoveries
Provision
Balance
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Other Portfolio Segment [Member]
Balance	2,000
Charge-offs	(14,000)		(26,000)
Recoveries	5,000		11,000
Provision	8,000		16,000
Balance	1,000		1,000
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	1		1
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	1		1
Unallocated Financing Receivables [Member] | Originated Loans [Member]
Balance	244,000	288,000	14,000	102,000
Charge-offs
Recoveries
Provision	51,000	(357,000)	281,000	(171,000)
Balance	295,000	(69,000)	295,000	(69,000)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	295	(69)	295	(69)	14
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	295	(69)	295	(69)	14
Unallocated Financing Receivables [Member] | Acquired Loans [Member]
Balance	36,000
Charge-offs
Recoveries
Provision	(26,000)		10,000
Balance	10,000		10,000
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	10		10
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	10		10
Unallocated Financing Receivables [Member]
Balance	280,000		14,000
Charge-offs
Recoveries
Provision	25,000		291,000
Balance	305,000		305,000
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	305		305
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	305		305
Originated Loans [Member]
Balance	6,937,000	5,478,000	6,490,000	5,195,000
Charge-offs	(134,000)	(192,000)	(356,000)	(245,000)
Recoveries	61,000	25,000	95,000	61,000
Provision	191,000	375,000	826,000	675,000
Balance	7,055,000	5,686,000	7,055,000	5,686,000
Individually Evaluated for Impairment	1,039	534	1,039	534	417
Collectively Evaluated for Potential Impairment	6,016	5,152	6,016	5,152	6,073
Individually Evaluated for Impairment	1,039	534	1,039	534	417
Collectively Evaluated for Potential Impairment	6,016	$ 5,152	6,016	$ 5,152	$ 6,073
Acquired Loans [Member]
Balance	36,000
Charge-offs	(14,000)		(200,000)
Recoveries	5,000		12,000
Provision	109,000		324,000
Balance	136,000		136,000
Individually Evaluated for Impairment	214		214
Collectively Evaluated for Potential Impairment	(78)		(78)
Individually Evaluated for Impairment	214		214
Collectively Evaluated for Potential Impairment	(78)		(78)
Balance	6,973,000		6,490,000
Charge-offs	(148,000)		(556,000)
Recoveries	66,000		107,000
Provision	300,000		1,150,000
Balance	7,191,000		7,191,000
Individually Evaluated for Impairment	1,253		1,253
Collectively Evaluated for Potential Impairment	5,938		5,938
Individually Evaluated for Impairment	1,253		1,253
Collectively Evaluated for Potential Impairment	$ 5,938		$ 5,938

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Note 4 - Accretable Discount on Loans Acquired at Fair Value (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Balance at December 31, 2015	$ 3,302
Accretable yield	(1,223)
Nonaccretable premium	225
Balance at June 30, 2016	$ 2,304

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Note 4 - Major Classifications of Loans Summarized by Individually Evaluated for Impairment and Collectively Evaluated for Potential Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Individually Evaluated for Impairment		$ 5
Collectively Evaluated for Potential Impairment	173,734	170,164
Loans and Leases Receivable, Gross	173,734	170,169
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment	1,437	1,296
Collectively Evaluated for Potential Impairment	94,316	101,762
Loans and Leases Receivable, Gross	95,753	103,058
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Individually Evaluated for Impairment	1,437	1,301
Collectively Evaluated for Potential Impairment	268,050	271,926
Loans and Leases Receivable, Gross	269,487	273,227
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Individually Evaluated for Impairment	5,802	8,072
Collectively Evaluated for Potential Impairment	125,345	119,542
Loans and Leases Receivable, Gross	131,147	127,614
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment	3,674	4,188
Collectively Evaluated for Potential Impairment	64,356	71,218
Loans and Leases Receivable, Gross	68,030	75,406
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Individually Evaluated for Impairment	9,476	12,260
Collectively Evaluated for Potential Impairment	189,701	190,760
Loans and Leases Receivable, Gross	199,177	203,020
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Individually Evaluated for Impairment	2,130	763
Collectively Evaluated for Potential Impairment	65,506	59,724
Loans and Leases Receivable, Gross	67,636	60,487
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment	562	63
Collectively Evaluated for Potential Impairment	12,668	16,597
Loans and Leases Receivable, Gross	13,230	16,660
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Individually Evaluated for Impairment	2,692	826
Collectively Evaluated for Potential Impairment	78,174	76,321
Loans and Leases Receivable, Gross	80,866	77,147
Commercial Portfolio Segment [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	109,250	103,605
Commercial Portfolio Segment [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	196	550
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Individually Evaluated for Impairment	181	229
Collectively Evaluated for Potential Impairment	11,737	17,114
Loans and Leases Receivable, Gross	11,918	17,343
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	1,878	3,870
Loans and Leases Receivable, Gross	1,878	3,870
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Individually Evaluated for Impairment	181	229
Collectively Evaluated for Potential Impairment	13,615	20,984
Loans and Leases Receivable, Gross	13,796	21,213
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	109,250	103,605
Loans and Leases Receivable, Gross	109,250	103,605
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	196	550
Loans and Leases Receivable, Gross	196	550
Consumer Portfolio Segment [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	109,446	104,155
Loans and Leases Receivable, Gross	109,446	104,155
Other Portfolio Segment [Member] | Originated Loans [Member]
Individually Evaluated for Impairment	6
Collectively Evaluated for Potential Impairment	6,197	4,592
Loans and Leases Receivable, Gross	6,203	4,592
Other Portfolio Segment [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Loans and Leases Receivable, Gross
Other Portfolio Segment [Member]
Individually Evaluated for Impairment	6
Collectively Evaluated for Potential Impairment	6,197	4,592
Loans and Leases Receivable, Gross	6,203	4,592
Originated Loans [Member]
Individually Evaluated for Impairment	8,119	9,069
Collectively Evaluated for Potential Impairment	491,769	474,741
Loans and Leases Receivable, Gross	499,888	483,810
Acquired Loans [Member]
Individually Evaluated for Impairment	5,673	5,547
Collectively Evaluated for Potential Impairment	173,414	193,997
Loans and Leases Receivable, Gross	179,087	199,544
Individually Evaluated for Impairment	13,792	14,616
Collectively Evaluated for Potential Impairment	665,183	668,738
Loans and Leases Receivable, Gross	$ 678,975	$ 683,354

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Note 5 - Deposits (Details Textual) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Time Deposits, at or Above FDIC Insurance Limit	$ 27.6	$ 33.1

XML

Note 5 - Maturities of Time Deposits (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
One Year or Less	$ 55,698
Over One Through Two Years	25,293
Over Two Through Three Years	14,136
Over Three Through Four Years	17,580
Over Four Through Five Years	12,920
Over Five Years	8,659
Total	$ 134,286	$ 145,651

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Note 6 - Federal Funds Purchased and Short-term Borrowings (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Federal Funds Purchased [Member]
Short-Term Borrowings	$ 6,000
Balance at Period End	0.70%
Average Balance Outstanding During the Period	$ 259	$ 485
Average Balance Outstanding During the Period	0.78%	0.41%
Maximum Amount Outstanding at any Month End	$ 6,000	$ 5,900
Other Short-term Debt [Member]
Short-Term Borrowings		$ 9,360
Balance at Period End		0.51%
Average Balance Outstanding During the Period	$ 291	$ 7,347
Average Balance Outstanding During the Period	0.69%	0.37%
Maximum Amount Outstanding at any Month End		$ 30,950
Securities Sold under Agreements to Repurchase [Member]
Short-Term Borrowings	$ 25,530	$ 23,088
Balance at Period End	0.19%	0.18%
Average Balance Outstanding During the Period	$ 24,336	$ 23,303
Average Balance Outstanding During the Period	0.23%	0.24%
Maximum Amount Outstanding at any Month End	$ 26,373	$ 27,908
Carrying Value	28,765	26,033
Market Value	28,913	26,063
Short-Term Borrowings	$ 31,530	$ 32,448

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Note 7 - Other Borrowed Funds (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Federal Reserve Bank [Member]
Line of Credit Facility, Commitment Fee Amount	$ 0
Line of Credit Facility, Maximum Borrowing Capacity	84,100,000
Various Banks [Member]
Long-term Line of Credit	0	$ 0
Line of Credit Facility, Maximum Borrowing Capacity	40,000,000
Line of Credit Facility, Commitment Fee Amount	0
Federal Home Loan Bank, Advances, General Debt Obligations, Amount of Available, Unused Funds	20,000,000	$ 20,000,000
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	$ 293,000,000

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Note 7 - Federal Home Loan Bank Advances (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Weighted Average [Member]
Total	1.80%	1.80%
Due in One Year	$ 3.5
Due in One Year	0.94%
Due After One Year to Two Years	$ 3.5	$ 3.5
Due After One Year to Two Years	1.35%	0.94%
Due After Two Years to Three Years	$ 4.0	$ 4.5
Due After Two Years to Three Years	1.67%	1.41%
Due After Three Years to Four Years	$ 6.0	$ 6.0
Due After Three Years to Four Years	1.88%	1.78%
Due After Four Years to Five Years	$ 5.0	$ 6.0
Due After Four Years to Five Years	2.09%	1.97%
Due After Five Years	$ 6.0	$ 8.0
Due After Five Years	2.32%	2.27%
Total	$ 28.0	$ 28.0

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Note 8 - Unused and Available Credit Balances of Financial Instruments Whose Contracts Represent Credit Risk (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financial Standby Letter of Credit [Member]
Financial instruments	$ 10,844	$ 18,316
Performance Guarantee [Member]
Financial instruments	2,359	1,358
Construction Mortgages [Member]
Financial instruments	22,580	21,144
Personal Line Of Credit [Member]
Financial instruments	5,990	5,810
Overdraft Protection Lines [Member]
Financial instruments	5,839	6,051
Home Equity Lines of Credit [Member]
Financial instruments	14,449	14,491
Commercial Lines Of Credit [Member]
Financial instruments	46,663	45,584
Financial instruments	$ 108,724	$ 112,754

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Note 9 - Fair Value Disclosure (Details Textual)	6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	$ 652,000
Impaired Financing Receivable, Related Allowance	525,000		$ 408,000
Real Estate Owned, Transfer to Real Estate Owned	3,200,000
Other Real Estate, Valuation Adjustments	$ (566,000)
Number of Properties Transferred to Other Real Estate Owned	2		2
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	$ 168,000
Impaired Financing Receivable, Related Allowance	$ 81,000
Real Estate Owned, Transfer to Real Estate Owned			111,000
Other Real Estate Owned, Number of Properties Sold	1
Gains (Losses) on Sales of Other Real Estate	$ (5,000)
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	3,682,000		1,600,000
Impaired Financing Receivable, Related Allowance	1,253,000		$ 417,000
Real Estate Owned, Transfer to Real Estate Owned	3,236,000	$ 431,000
Gains (Losses) on Sales of Other Real Estate	$ 49,000	$ 284,000

XML

Note 9 - Assets and Liabilities Reported Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Inputs, Level 2 [Member] | US Government Agencies Debt Securities [Member]
Available for sale securities	$ 49,612	$ 51,188
Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member]
Available for sale securities	40,518	40,074
Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for sale securities	3,062	3,403
Fair Value, Inputs, Level 1 [Member] | Equity Securities - Mutual Funds [Member]
Available for sale securities	517	513
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member]
Available for sale securities	710	685
Available for sale securities	$ 94,419	$ 95,863

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Note 9 - Significant Unobservable Inputs Used in the Fair Value Measurements (Details) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2016	Dec. 31, 2015
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member]
Impaired Loans		$ 2,417	$ 1,155
Fair Value, Inputs, Level 3 [Member] | OREO [Member] | Market Approach Valuation Technique [Member]
OREO			111
Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Significant Unobservable Input Value	[1]	10.00%
Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Significant Unobservable Input Value	[1]	30.00%
OREO [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Significant Unobservable Input Value	[1]	10.00%
OREO [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Significant Unobservable Input Value	[1]	50.00%
Impaired Loans		$ 13,792	$ 14,616

[1] Range includes discounts taken since appraisal and estimated values.

XML

Note 9 - Estimated Fair Value of the Company's Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Inputs, Level 1 [Member]
Interest Bearing	$ 6,935	$ 2,316
Interest Bearing	6,935	2,316
Non-Interest Bearing	6,278	9,024
Non-Interest Bearing	6,278	9,024
Fair Value, Inputs, Level 3 [Member]
Loans, Net	671,784	676,864
Loans, Net	690,824	692,373
Other Borrowed Funds	28,000	28,000
Other Borrowed Funds	28,648	27,830
Fair Value, Inputs, Level 2 [Member]
Restricted Stock	3,253	3,824
Restricted Stock	3,253	3,824
Bank-Owned Life Insurance	18,448	18,209
Bank-Owned Life Insurance	18,448	18,209
Accrued Interest Receivable	2,387	2,419
Accrued Interest Receivable	2,387	2,419
Deposits	675,266	679,299
Deposits	672,356	678,921
Short-Term Borrowings	31,530	32,448
Short-term Borrowings	31,530	32,448
Accrued Interest Payable	287	305
Accrued Interest Payable	287	305
Interest Bearing	6,935	2,316
Non-Interest Bearing	6,278	9,024
Available for sale securities	94,419	95,863
Bank-Owned Life Insurance	18,448	18,209
Deposits	675,266	679,299
Short-Term Borrowings	31,530	32,448
Other Borrowed Funds	$ 28,000	$ 28,000