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 March 31, 2017

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, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth 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  ☐
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

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 May 5, 2017, the number of shares outstanding of the Registrant’s Common Stock was 4,088,025.

 

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.		36
	Item 4. Controls and Procedures.		36
PART II - OTHER INFORMATION
	Item 1. Legal Proceedings.		37
	Item 1A. Risk Factors.		37
	Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.		37
	Item 3.  Defaults Upon Senior Securities.		37
	Item 4. Mine Safety Disclosures.		37
	Item 5. Other Information.		37
	Item 6. Exhibits		37
SIGNATURES			38

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

	(Unaudited)
(Dollars in thousands, except share data)	March 31, 2017			December 31, 2016
ASSETS
Cash and Due From Banks:
Interest Bearing	$	19,193		$	7,699
Non-Interest Bearing		16,402			6,583
Total Cash and Due From Banks		35,595			14,282
Investment Securities:
Available-for-Sale		114,521			106,208
Loans, Net		666,798			674,094
Premises and Equipment, Net		15,505			14,132
Bank-Owned Life Insurance		18,803			18,687
Goodwill		4,953			4,953
Core Deposit Intangible, Net		3,685			3,819
Accrued Interest and Other Assets		8,963			9,900
TOTAL ASSETS	$	868,823		$	846,075
LIABILITIES
Deposits:
Demand Deposits	$	175,194		$	165,400
NOW Accounts		117,301			105,962
Money Market Accounts		140,149			141,674
Savings Accounts		127,623			121,520
Time Deposits		157,656			155,028
Brokered Deposits		7,538			8,634
Total Deposits		725,461			698,218
Short-Term Borrowings		24,828			27,027
Other Borrowed Funds		24,500			28,000
Accrued Interest and Other Liabilities		3,460			3,361
TOTAL LIABILITIES		778,249			756,606
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 4,088,025 and 4,086,625 Shares Outstanding at March 31, 2017 and December 31, 2016, Respectively		1,818			1,818
Capital Surplus		41,955			41,863
Retained Earnings		52,518			51,713
Treasury Stock, at Cost (275,321 and 276,721 Shares at March 31, 2017 and December 31, 2016, Respectively)		(4,722	)		(4,746	)
Accumulated Other Comprehensive Loss		(995	)		(1,179	)
TOTAL STOCKHOLDERS' EQUITY		90,574			89,469
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	868,823		$	846,075

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

1

 

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

	Three Months Ended March 31,
(Dollars in thousands, except share and per share data)	2017		2016
INTEREST AND DIVIDEND INCOME
Loans, Including Fees	$	7,142	$	7,497
Federal Funds Sold		15		4
Investment Securities:
Taxable		361		324
Exempt From Federal Income Tax		217		260
Other Interest and Dividend Income		56		37
TOTAL INTEREST AND DIVIDEND INCOME		7,791		8,122
INTEREST EXPENSE
Deposits		655		561
Federal Funds Purchased		-		1
Short-Term Borrowings		19		14
Other Borrowed Funds		122		127
TOTAL INTEREST EXPENSE		796		703
NET INTEREST INCOME		6,995		7,419
Provision For Loan Losses		420		850
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,575		6,569
NONINTEREST INCOME
Service Fees on Deposit Accounts		584		586
Insurance Commissions		1,086		872
Other Commissions		104		117
Net Gains on Sales of Loans		90		125
Net Gains on Sales of Investments		52		-
Net Gains on Purchased Tax Credits		14		-
Income from Bank-Owned Life Insurance		116		120
Other		30		28
TOTAL NONINTEREST INCOME		2,076		1,848
NONINTEREST EXPENSE
Salaries and Employee Benefits		3,489		3,369
Occupancy		548		474
Equipment		439		422
FDIC Assessment		81		126
PA Shares Tax		190		202
Contracted Services		132		133
Legal and Professional Fees		141		141
Advertising		125		165
Bankcard Processing Expense		123		112
Other Real Estate Owned Expense (Income)		5		(545	)
Amortization of Core Deposit Intangible		134		134
Other		810		781
TOTAL NONINTEREST EXPENSE		6,217		5,514
Income Before Income Taxes		2,434		2,903
Income Taxes		730		858
NET INCOME	$	1,704	$	2,045
EARNINGS PER SHARE
Basic	$	0.42	$	0.50
Diluted		0.42		0.50
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		4,087,289		4,081,017
Diluted		4,098,276		4,081,869

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

2

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended March 31,
(Dollars in thousands)	2017			2016
Net Income	$	1,704		$	2,045
Other Comprehensive Income:
Unrealized Gains on Available-for-Sale Securities Net of Income Tax of $113 and $135  for the Three Months Ended March 31, 2017 and 2016, Respectively		218			261
Reclassification Adjustment for Gains on Securities:
Included in Net Income, Net of Income Tax of $18 for the Three Months Ended March 31, 2017 (1)		(34	)		-
Other Comprehensive Income, Net of Income Tax		184			261
Total Comprehensive Income	$	1,888		$	2,306

⁽¹⁾ The gross amount of gains on securities of $52 for the Three Months Ended March 31, 2017, are reported as Net Gains on Sales of Investments on the Consolidated Statement of Income. The income tax effect is included in Income Taxes on the Consolidated Statement of Income.

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, 2015		4,363,346	$	1,818	$	41,614	$	47,725		$	(4,836	)	$	575	$	86,896
Comprehensive Income:
Net Income		-		-		-		2,045			-			-		2,045
Other Comprehensive Income		-		-		-		-			-			261		261
Stock-Based Compensation Expense		-		-		87		-			-			-		87
Dividends Paid ($0.22 Per Share)		-		-		-		(898	)		-			-		(898	)
March 31, 2016		4,363,346	$	1,818	$	41,701	$	48,872		$	(4,836	)	$	836	$	88,391

(Dollars in thousands, except share and per share data)	Shares Issued		Common Stock		Capital Surplus		Retained  Earnings			Treasury  Stock			Accumulated Other Comprehensive  Loss			Total Stockholders  Equity
December 31, 2016		4,363,346	$	1,818	$	41,863	$	51,713		$	(4,746	)	$	(1,179	)	$	89,469
Comprehensive Income:
Net Income		-		-		-		1,704			-			-			1,704
Other Comprehensive Income		-		-		-		-			-			184			184
Stock-Based Compensation Expense		-		-		85		-			-			-			85
Exercise of stock options		-		-		7		-			24			-			31
Dividends Paid ($0.22 Per Share)		-		-		-		(899	)		-			-			(899	)
March 31, 2017		4,363,346	$	1,818	$	41,955	$	52,518		$	(4,722	)	$	(995	)	$	90,574

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

3

 

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

	Three Months Ended March 31,
(Dollars in thousands)	2017			2016
OPERATING ACTIVITIES
Net Income	$	1,704		$	2,045
Αdjustmеnts to Rеconcilе Net Income to Net Cash Provided By Operating Activities:
Net Amortization on Investments		84			56
Depreciation and Amortization		673			764
Provision for Loan Losses		420			850
Income from Bank-Owned Life Insurance		(116	)		(120	)
Proceeds From Mortgage Loans Sold		3,937			5,513
Originations of Mortgage Loans for Sale		(3,847	)		(5,388	)
Gains on Sales of Loans		(90	)		(125	)
Gains on Sales of Investment Securities		(52	)		-
Gains on Sales of Other Real Estate Owned and Repossessed Assets		-			(19	)
Noncash Expense for Stock-Based Compensation		85			87
Decrease in Accrued Interest Receivable		77			185
Valuation Adjustment on Foreclosed Real Estate		-			(566	)
(Decrease) Increase in Taxes Payable		(2,485	)		947
Increase in Accrued Interest Payable		40			4
Net Payment of Federal/State Income Taxes		(30	)		(20	)
Other, Net		3,433			(1,411	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		3,833			2,802
INVESTING ACTIVITIES
Investment Securities Available for Sale:
Proceeds From Principal Repayments and Maturities		3,131			17,191
Purchases of Securities		(14,391	)		(14,651	)
Proceeds from Sales of Securities		3,194			-
Net Decrease (Increase) in Loans		6,434			(4,648	)
Purchase of Premises and Equipment		(1,661	)		(106	)
Proceeds From Sales of Other Real Estate Owned and Repossessed Assets		-			175
Decrease in Restricted Equity Securities		97			590
NET CASH USED IN INVESTING ACTIVITIES		(3,196	)		(1,449	)
FINANCING ACTIVITIES
Net Increase in Deposits		27,243			10,651
Net Decrease in Short-Term Borrowings		(2,199	)		(9,865	)
Principal Payments on Other Borrowed Funds		(3,500	)		-
Cash Dividends Paid		(899	)		(898	)
Exercise of Stock Options		31			-
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		20,676			(112	)
INCREASE IN CASH AND CASH EQUIVALENTS		21,313			1,241
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR		14,282			11,340
CASH AND DUE FROM BANKS AT END OF PERIOD	$	35,595		$	12,581
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest on deposits and borrowings (including interest credited
to deposit accounts of $610 and $556 respectively)	$	755		$	699
Income taxes		30			20
Real estate acquired in settlement of loans		155			3,236
Transfer of real estate acquired in settlement of loans to premise and equipment		-			2,350
Securities purchased not settled		791			-

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” or “EU”). 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 (“SEC”) 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 any material respect. 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, 2016. Interim results are not necessarily indicative of results for a full year.

The Company is currently evaluating the provisions of Accounting Standards Codification (“ASC”) Topic 280 for segment reporting information related to Exchange Underwriters. During the current quarter, Exchange Underwriters insurance commissions comprised of approximately 11% of combined interest and noninterest income but less than 10% of the combined assets of the Company. While EU exceeded the 10% threshold of total interest and noninterest income, this was primarily related to a unique income event of increased contingency income. Contingency fees are commissions that are contingent upon several factors including, but not limited to, eligible written premiums, earned premiums, incurred losses and stop loss charges.

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.

For performing loans acquired in the merger, 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. For purchased credit impaired (“PCI”) loans acquired in the merger, 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 March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2017-08, Receivables- Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchases Callable Debt Securities. ASU 2017-08 amends guidance on the amortization period of premiums on certain purchases callable debt securities. The amendments shorten the amortization period of premiums on certain purchases callable debt securities to the earliest call date. ASU 2017-08 is effective for public business entities that are SEC filers for annual periods beginning after December 15, 2018, and interim periods within those annual periods, for public entities that are not SEC filers for annual periods beginning after December 15, 2019 and for all other entities for annual periods beginning after December 15, 2020 with early adoption permitted. The Company is evaluating the provisions of ASU 2017-08 but believes that its adoption will not have a material impact on the Company's consolidated financial condition or results of operations.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the second step of the goodwill impairment test. Instead, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. ASU 2017-04 is effective for public business entities that are SEC filers for annual periods beginning after December 15, 2019, and interim periods within those annual periods, with early adoption permitted, and is to be applied on a prospective basis. The Company is currently evaluating the provisions of ASU 2017-04, but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flow (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted and the amendments should be applied using a retrospective transition method to each period presented.  The Company is currently evaluating the provisions of ASU 2016-15, but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

In June 2016, the FASB issued 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 provisions of ASU 2016-13, but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

6

 

Recent Accounting Standards (continued)

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 adoption of ASU 2016-09 as of January 1, 2017, had no effect on the Company's consolidated 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 provisions of ASU 2016-02, but expects to report increased assets and liabilities as a result of reporting additional leases on the Company's consolidated statement of financial condition.

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 currently evaluating the provisions of ASU 2016-01, but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

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. The guidance is effective for the Company’s financial statements beginning January 1, 2018. The guidance allows an entity to apply the new standard either retrospectively or through a cumulative effect adjustment as of January 1, 2018. This guidance does not apply to revenue associated with financial instruments, including loans, securities, and derivatives that are accounted for under other U.S. GAAP guidance. For that reason, we do not expect it to have a material impact on our consolidated results of operations for elements of the statement of income associated with financial instruments, including securities gains, interest income, and interest expense. However, we do believe the new standard will result in new disclosure requirements. We are currently in the process of reviewing contracts to assess the impact of the new guidance on our service offerings that are in the scope of the guidance included in non-interest income, such as insurance commission fees, service charges, payment processing fees, trust services fees and brokerage services fees. The Company is continuing to evaluate the effect of the new guidance on revenue sources other than financial instruments on its consolidated financial position and results of operations.

7

 

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 March 31,
	2017			2016
Weighted-Average Common Shares Outstanding		4,363,346			4,363,346
Average Treasury Stock Shares		(276,057	)		(282,329	)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share		4,087,289			4,081,017
Additional Common Stock Equivalents (Stock Options and Restricted Stock) Used to Calculate Diluted Earnings Per Share		10,987			852
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share		4,098,276			4,081,869
Earnings per share:
Basic	$	0.42		$	0.50
Diluted		0.42			0.50

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)
	March 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	66,638	$	1	$	(1,666	)	$	64,973
Obligations of States and Political Subdivisions		34,285		350		(270	)		34,365
Mortgage-Backed Securities - Government-Sponsored Enterprises		13,443		14		(49	)		13,408
Equity Securities - Mutual Funds		500		4		-			504
Equity Securities - Other		1,162		120		(11	)		1,271
Total	$	116,028	$	489	$	(1,996	)	$	114,521

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	67,944	$	18	$	(1,806	)	$	66,156
Obligations of States and Political Subdivisions		35,856		366		(487	)		35,735
Mortgage-Backed Securities - Government-Sponsored Enterprises		2,588		31		-			2,619
Equity Securities - Mutual Funds		500		7		-			507
Equity Securities - Other		1,106		91		(6	)		1,191
Total	$	107,994	$	513	$	(2,299	)	$	106,208

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)
	March 31, 2017
	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		22	$	59,950	$	(1,666	)		-	$	-	$	-			22	$	59,950	$	(1,666	)
Obligations of States and Political Subdivisions		30		16,213		(269	)		1		260		(1	)		31		16,473		(270	)
Mortgage-Backed Securities - Government Sponsored Enterprises		5		10,991		(49	)		-		-		-			5		10,991		(49	)
Equity Securities - Other		3		226		(11	)		-		-		-			3		226		(11	)
Total		60	$	87,380	$	(1,995	)		1	$	260	$	(1	)		61	$	87,640	$	(1,996	)

	December 31, 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		23	$	62,853	$	(1,806	)		-	$	-	$	-			23	$	62,853	$	(1,806	)
Obligations of States and Political Subdivisions		39		19,749		(485	)		1		260		(2	)		40		20,009		(487	)
Equity Securities - Other		2		160		(6	)		-		-		-			2		160		(6	)
Total		64	$	82,762	$	(2,297	)		1	$	260	$	(2	)		65	$	83,022	$	(2,299	)

For debt securities, the Company does not believe any individual unrealized loss as of March 31, 2017 and December 31, 2016 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 March 31, 2017 and December 31, 2016 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)
	March 31, 2017
	Available-for-Sale
	Amortized Cost		Fair Value
Due in One Year or Less	$	3,044	$	3,194
Due after One Year through Five Years		13,528		13,478
Due after Five Years through Ten Years		87,796		86,105
Due after Ten Years		11,660		11,744
Total	$	116,028	$	114,521

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 classifications: 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)
	March 31, 2017						December 31, 2016
	Amount			Percent			Amount			Percent
Originated Loans
Real Estate:
Residential	$	188,583			35.9	%	$	186,077			35.4	%
Commercial		136,405			26.0			139,894			26.7
Construction		13,338			2.5			10,646			2.0
Commercial and Industrial		74,469			14.2			71,091			13.5
Consumer		108,817			20.7			114,007			21.7
Other		3,580			0.7			3,637			0.7
Total Originated Loans		525,192			100.0	%		525,352			100.0	%
Allowance for Loan Losses		(7,206	)					(7,283	)
Loans, Net	$	517,986					$	518,069
Loans Acquired at Fair Value
Real Estate:
Residential	$	82,580			55.3	%	$	85,511			54.7	%
Commercial		57,299			38.4			61,116			39.0
Commercial and Industrial		9,318			6.2			9,721			6.2
Consumer		194			0.1			197			0.1
Total Loans Acquired at Fair Value		149,391			100.0	%		156,545			100.0	%
Allowance for Loan Losses		(579	)					(520	)
Loans, Net	$	148,812					$	156,025
Total Loans
Real Estate:
Residential	$	271,163			40.2	%	$	271,588			39.8	%
Commercial		193,704			28.7			201,010			29.5
Construction		13,338			2.0			10,646			1.6
Commercial and Industrial		83,787			12.4			80,812			11.9
Consumer		109,011			16.2			114,204			16.7
Other		3,580			0.5			3,637			0.5
Total Loans		674,583			100.0	%		681,897			100.0	%
Allowance for Loan Losses		(7,785	)					(7,803	)
Loans, Net	$	666,798					$	674,094

Total unamortized net deferred loan fees were $826,000 and $818,000 at March 31, 2017 and December 31, 2016, respectively.

Real estate loans serviced for others, which are not included in the Consolidated Statement of Financial Condition, totaled $86.2 million and $83.9 million at March 31, 2017 and December 31, 2016, 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 March 31, 2017 and December 31, 2016, there were no loans in the criticized category of Loss within the internal risk rating system.

	(Dollars in thousands)
	March 31, 2017
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	187,194	$	980	$	409	$	-	$	188,583
Commercial		119,538		13,725		2,220		922		136,405
Construction		12,699		-		580		59		13,338
Commercial and Industrial		67,430		4,182		1,450		1,407		74,469
Consumer		108,787		-		30		-		108,817
Other		3,580		-		-		-		3,580
Total Originated Loans	$	499,228	$	18,887	$	4,689	$	2,388	$	525,192
Loans Acquired at Fair Value
Real Estate:
Residential	$	80,083	$	-	$	2,497	$	-	$	82,580
Commercial		54,019		2,225		852		203		57,299
Commercial and Industrial		8,771		58		379		110		9,318
Consumer		194		-		-		-		194
Total Loans Acquired at Fair Value	$	143,067	$	2,283	$	3,728	$	313	$	149,391
Total Loans
Real Estate:
Residential	$	267,277	$	980	$	2,906	$	-	$	271,163
Commercial		173,557		15,950		3,072		1,125		193,704
Construction		12,699		-		580		59		13,338
Commercial and Industrial		76,201		4,240		1,829		1,517		83,787
Consumer		108,981		-		30		-		109,011
Other		3,580		-		-		-		3,580
Total Loans	$	642,295	$	21,170	$	8,417	$	2,701	$	674,583

11

 

	December 31, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	184,721	$	1,050	$	306	$	-	$	186,077
Commercial		122,811		14,118		2,035		930		139,894
Construction		9,944		-		595		107		10,646
Commercial and Industrial		65,612		2,720		1,322		1,437		71,091
Consumer		113,847		-		160		-		114,007
Other		3,637		-		-		-		3,637
Total Originated Loans	$	500,572	$	17,888	$	4,418	$	2,474	$	525,352
Loans Acquired at Fair Value
Real Estate:
Residential	$	83,044	$	-	$	2,467	$	-	$	85,511
Commercial		58,411		2,358		347		-		61,116
Commercial and Industrial		9,117		42		441		121		9,721
Consumer		197		-		-		-		197
Total Loans Acquired at Fair Value	$	150,769	$	2,400	$	3,255	$	121	$	156,545
Total Loans
Real Estate:
Residential	$	267,765	$	1,050	$	2,773	$	-	$	271,588
Commercial		181,222		16,476		2,382		930		201,010
Construction		9,944		-		595		107		10,646
Commercial and Industrial		74,729		2,762		1,763		1,558		80,812
Consumer		114,044		-		160		-		114,204
Other		3,637		-		-		-		3,637
Total Loans	$	651,341	$	20,288	$	7,673	$	2,595	$	681,897

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)
	March 31, 2017
	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	$	186,493	$	1,612	$	68	$	-	$	1,680	$	410	$	188,583
Commercial		136,317		88		-		-		88		-		136,405
Construction		13,279		-		-		-		-		59		13,338
Commercial and Industrial		72,432		556		74		-		630		1,407		74,469
Consumer		107,970		764		40		13		817		30		108,817
Other		3,580		-		-		-		-		-		3,580
Total Originated Loans	$	520,071	$	3,020	$	182	$	13	$	3,215	$	1,906	$	525,192
Loans Acquired at Fair Value
Real Estate:
Residential	$	80,658	$	321	$	-	$	-	$	321	$	1,601	$	82,580
Commercial		56,760		-		-		-		-		539		57,299
Commercial and Industrial		8,889		407		-		-		407		22		9,318
Consumer		194		-		-		-		-		-		194
Total Loans Acquired at Fair Value	$	146,501	$	728	$	-	$	-	$	728	$	2,162	$	149,391
Total Loans
Real Estate:
Residential	$	267,151	$	1,933	$	68	$	-	$	2,001	$	2,011	$	271,163
Commercial		193,077		88		-		-		88		539		193,704
Construction		13,279		-		-		-		-		59		13,338
Commercial and Industrial		81,321		963		74		-		1,037		1,429		83,787
Consumer		108,164		764		40		13		817		30		109,011
Other		3,580		-		-		-		-		-		3,580
Total Loans	$	666,572	$	3,748	$	182	$	13	$	3,943	$	4,068	$	674,583

13

 

	December 31, 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	$	183,939	$	1,638	$	72	$	120	$	1,830	$	308	$	186,077
Commercial		139,821		-		-		-		-		73		139,894
Construction		10,539		-		-		-		-		107		10,646
Commercial and Industrial		68,310		952		-		-		952		1,829		71,091
Consumer		112,232		1,311		296		8		1,615		160		114,007
Other		3,637		-		-		-		-		-		3,637
Total Originated Loans	$	518,478	$	3,901	$	368	$	128	$	4,397	$	2,477	$	525,352
Loans Acquired at Fair Value
Real Estate:
Residential	$	82,523	$	893	$	307	$	223	$	1,423	$	1,565	$	85,511
Commercial		60,437		332		-		-		332		347		61,116
Commercial and Industrial		9,577		121		23		-		144		-		9,721
Consumer		197		-		-		-		-		-		197
Total Loans Acquired at Fair Value	$	152,734	$	1,346	$	330	$	223	$	1,899	$	1,912	$	156,545
Total Loans
Real Estate:
Residential	$	266,462	$	2,531	$	379	$	343	$	3,253	$	1,873	$	271,588
Commercial		200,258		332		-		-		332		420		201,010
Construction		10,539		-		-		-		-		107		10,646
Commercial and Industrial		77,887		1,073		23		-		1,096		1,829		80,812
Consumer		112,429		1,311		296		8		1,615		160		114,204
Other		3,637		-		-		-		-		-		3,637
Total Loans	$	671,212	$	5,247	$	698	$	351	$	6,296	$	4,389	$	681,897

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)
	March 31,  2017			December 31,  2016
Nonaccrual Loans:
Originated Loans:
Real Estate:
Residential	$	410		$	308
Commercial		-			73
Construction		59			107
Commercial and Industrial		1,407			1,829
Consumer		30			160
Total Originated Nonaccrual Loans		1,906			2,477
Loans Acquired at Fair Value:
Real Estate:
Residential		1,601			1,565
Commercial		539			347
Commercial and Industrial		22			-
Total Loans Acquired at Fair Value Nonaccrual Loans		2,162			1,912
Total Nonaccrual Loans		4,068			4,389
Accruing Loans Past Due 90 Days or More:
Originated Loans:
Real Estate:
Residential		-			120
Consumer		13			8
Total Originated Accruing Loans 90 Days or More Past Due		13			128
Loans Acquired at Fair Value:
Real Estate:
Residential		-			223
Total Loans Acquired at Fair Value Accruing Loans 90 Days or More Past Due		-			223
Total Accruing Loans 90 Days or More Past Due		13			351
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		4,081			4,740
Troubled Debt Restructurings, Accruing:
Originated Loans:
Real Estate - Commercial		1,312			1,325
Commercial and Industrial		6			6
Other		4			4
Total Originated Loans		1,322			1,335
Loans Acquired at Fair Value:
Real Estate - Residential		1,289			1,299
Real Estate - Commercial		471			660
Commercial and Industrial		357			393
Total Loans Acquired at Fair Value		2,117			2,352
Total Troubled Debt Restructurings, Accruing		3,439			3,687
Total Nonperforming Loans		7,520			8,427
Real Estate Owned:
Residential		155			-
Commercial		174			174
Total Real Estate Owned		329			174
Total Nonperforming Assets	$	7,849		$	8,601
Nonperforming Loans to Total Loans		1.11	%		1.24	%
Nonperforming Assets to Total Assets		0.90			1.02

15

 

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 $1.1 million and $2.2 million at March 31, 2017 and December 31, 2016, 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 14 loans totaling $4.4 million and 15 loans totaling $4.7 million at March 31, 2017 and December 31, 2016, respectively. Originated loans classified as TDRs consisted of 6 loans totaling $2.3 million at March 31, 2017 and December 31, 2016, respectively. Loans acquired at fair value classified as TDRs consisted of 8 loans totaling $2.1 million and 9 loans totaling $2.4 million at March 31, 2017 and December 31, 2016, respectively.

During the three months ended March 31, 2017, one commercial real estate loan previously identified as an acquired loan at fair value TDR paid off. During the three months ended March 31, 2016, one commercial loan previously identified as an acquired loan at fair value TDR paid off. No TDRs have subsequently defaulted during the three months ended March 31, 2017 and 2016, 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 for the three months ended March 31, 2017. The following table presents information at the time of modification related to loans modified in a TDR during the three months ended March 31, 2016.

	(Dollars in thousands)
	Three Months Ended March 31, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Related Allowance
Originated Loans
Real Estate
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	$	-

16

 

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

	(Dollars in thousands)
	March 31, 2017
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	2,009	$	-	$	2,009	$	2,033	$	23
Construction		639		-		639		674		7
Commercial and Industrial		632		-		632		619		8
Other		4		-		4		4		-
Total With No Related Allowance Recorded	$	3,284	$	-	$	3,284	$	3,330	$	38
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		987		-		987		997		13
Commercial and Industrial		379		-		379		407		4
Total With No Related Allowance Recorded	$	2,655	$	-	$	2,655	$	2,698	$	33
Total Loans
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		2,996		-		2,996		3,030		36
Construction		639		-		639		674		7
Commercial and Industrial		1,011		-		1,011		1,026		12
Other		4		-		4		4		-
Total With No Related Allowance Recorded	$	5,939	$	-	$	5,939	$	6,028	$	71
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,523	$	402	$	1,523	$	1,531	$	20
Commercial and Industrial		2,231		703		2,255		2,232		27
Total With A Related Allowance Recorded	$	3,754	$	1,105	$	3,778	$	3,763	$	47
Loans Acquired at Fair Value
Real Estate:
Commercial	$	539	$	-	$	630	$	674	$	(2	)
Commercial and Industrial		110		24		110		114		1
Total With A Related Allowance Recorded	$	649	$	24	$	740	$	788	$	(1	)
Total Loans
Real Estate:
Commercial	$	2,062	$	402	$	2,153	$	2,205	$	18
Commercial and Industrial		2,341		727		2,365		2,346		28
Total With A Related Allowance Recorded	$	4,403	$	1,129	$	4,518	$	4,551	$	46

17

 

	March 31, 2017 (cont.)
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
Total Impaired Loans:
Originated Loans
Real Estate:
Commercial	$	3,532	$	402	$	3,532	$	3,564	$	43
Construction		639		-		639		674		7
Commercial and Industrial		2,863		703		2,887		2,851		35
Other		4		-		4		4		-
Total Impaired Loans	$	7,038	$	1,105	$	7,062	$	7,093	$	85
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		1,526		-		1,617		1,671		11
Commercial and Industrial		489		24		489		521		5
Total Impaired Loans	$	3,304	$	24	$	3,395	$	3,486	$	32
Total Loans
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		5,058		402		5,149		5,235		54
Construction		639		-		639		674		7
Commercial and Industrial		3,352		727		3,376		3,372		40
Other		4		-		4		4		-
Total Impaired Loans	$	10,342	$	1,129	$	10,457	$	10,579	$	117

18

 

	December 31, 2016
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	2,112	$	-	$	2,112	$	2,228	$	100
Construction		702		-		702		843		28
Commercial and Industrial		825		-		825		891		45
Other		4		-		4		6		1
Total With No Related Allowance Recorded	$	3,643	$	-	$	3,643	$	3,968	$	174
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		660		-		660		763		47
Commercial and Industrial		441		-		441		543		21
Total With No Related Allowance Recorded	$	2,401	$	-	$	2,401	$	2,626	$	136
Total Loans
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		2,772		-		2,772		2,991		147
Construction		702		-		702		843		28
Commercial and Industrial		1,266		-		1,266		1,434		66
Other		4		-		4		6		1
Total With No Related Allowance Recorded	$	6,044	$	-	$	6,044	$	6,594	$	310
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,249	$	360	$	1,249	$	1,277	$	66
Commercial and Industrial		1,940		655		1,946		1,951		27
Total With A Related Allowance Recorded	$	3,189	$	1,015	$	3,195	$	3,228	$	93
Loans Acquired at Fair Value
Real Estate:
Commercial	$	347	$	114	$	437	$	367	$	-
Commercial and Industrial		121		31		121		141		6
Total With A Related Allowance Recorded	$	468	$	145	$	558	$	508	$	6
Total Loans
Real Estate:
Commercial	$	1,596	$	474	$	1,686	$	1,644	$	66
Commercial and Industrial		2,061		686		2,067		2,092		33
Total With A Related Allowance Recorded	$	3,657	$	1,160	$	3,753	$	3,736	$	99

19

 

	December 31, 2016 (cont.)
	Recorded  Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
Total Impaired Loans
Originated Loans
Real Estate:
Commercial	$	3,361	$	360	$	3,361	$	3,505	$	166
Construction		702		-		702		843		28
Commercial and Industrial		2,765		655		2,771		2,842		72
Other		4		-		4		6		1
Total Impaired Loans	$	6,832	$	1,015	$	6,838	$	7,196	$	267
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		1,007		114		1,097		1,130		47
Commercial and Industrial		562		31		562		684		27
Total Impaired Loans	$	2,869	$	145	$	2,959	$	3,134	$	142
Total Loans
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		4,368		474		4,458		4,635		213
Construction		702		-		702		843		28
Commercial and Industrial		3,327		686		3,333		3,526		99
Other		4		-		4		6		1
Total Impaired Loans	$	9,701	$	1,160	$	9,797	$	10,330	$	409

20

 

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)
	March 31, 2017
	Real Estate Residential			Real Estate Commercial			Real Estate Construction		Commercial and Industrial			Consumer			Other		Unallocated			Total
Originated Loans
December 31, 2016	$	1,106		$	1,942		$	65	$	1,579		$	2,463		$	-	$	128		$	7,283
Charge-offs		-			-			-		-			(327	)		-		-			(327	)
Recoveries		4			-			-		11			65			-		-			80
Provision		(21	)		(44	)		18		8			55			-		154			170
March 31, 2017	$	1,089		$	1,898		$	83	$	1,598		$	2,256		$	-	$	282		$	7,206
Loans Acquired at Fair Value
December 31, 2016	$	-		$	365		$	-	$	120		$	-		$	-	$	35		$	520
Charge-offs		(64	)		(129	)		-		-			-			-		-			(193	)
Recoveries		-			1			-		-			1			-		-			2
Provision		64			234			-		(6	)		(1	)		-		(41	)		250
March 31, 2017	$	-		$	471		$	-	$	114		$	-		$	-	$	(6	)	$	579
Total Allowance for Loan Losses
December 31, 2016	$	1,106		$	2,307		$	65	$	1,699		$	2,463		$	-	$	163		$	7,803
Charge-offs		(64	)		(129	)		-		-			(327	)		-		-			(520	)
Recoveries		4			1			-		11			66			-		-			82
Provision		43			190			18		2			54			-		113			420
March 31, 2017	$	1,089		$	2,369		$	83	$	1,712		$	2,256		$	-	$	276		$	7,785

	March 31, 2017
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated			Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	402	$	-	$	703	$	-	$	-	$	-		$	1,105
Collectively Evaluated for Potential Impairment	$	1,089	$	1,496	$	83	$	895	$	2,256	$	-	$	282		$	6,101
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	-	$	-	$	-	$	24	$	-	$	-	$	-		$	24
Collectively Evaluated for Potential Impairment	$	-	$	471	$	-	$	90	$	-	$	-	$	(6	)	$	555
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	-	$	402	$	-	$	727	$	-	$	-	$	-		$	1,129
Collectively Evaluated for Potential Impairment	$	1,089	$	1,967	$	83	$	985	$	2,256	$	-	$	276		$	6,656

21

 

	March 31, 2016
	Real Estate Residential			Real Estate Commercial			Real Estate Construction			Commercial and Industrial		Consumer			Other			Unallocated		Total
Originated Loans
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14	$	6,490
Charge-offs		(20	)		-			-			-		(185	)		(17	)		-		(222	)
Recoveries		1			-			-			-		24			9			-		34
Provision		(345	)		(9	)		(20	)		319		450			10			230		635
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	244	$	6,937
Loans Acquired at Fair Value
December 31, 2015	$	-		$	-		$	-		$	-	$	-		$	-		$	-	$	-
Charge-offs		-			(180	)		-			-		(5	)		-			-		(185	)
Recoveries		2			1			-			-		3			-			-		6
Provision		(2	)		179			-			-		2			-			36		215
March 31, 2016	$	-		$	-		$	-		$	-	$	-		$	-		$	36	$	36
Total Allowance for Loan Losses
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14	$	6,490
Charge-offs		(20	)		(180	)		-			-		(190	)		(17	)		-		(407	)
Recoveries		3			1			-			-		27			9			-		40
Provision		(347	)		170			(20	)		319		452			10			266		850
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	280	$	6,973

	March 31, 2016
	Real Estate Residential			Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Originated Loans
Individually Evaluated for Impairment	$	-		$	377	$	-	$	322	$	-	$	-	$	-	$	699
Collectively Evaluated for Potential Impairment	$	1,259		$	1,659	$	117	$	781	$	2,176	$	2	$	244	$	6,238
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	52		$	-	$	-	$	-	$	-	$	-	$	-	$	52
Collectively Evaluated for Potential Impairment	$	(52	)	$	-	$	-	$	-	$	-	$	-	$	36	$	(16	)
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	52		$	377	$	-	$	322	$	-	$	-	$	-	$	751
Collectively Evaluated for Potential Impairment	$	1,207		$	1,659	$	117	$	781	$	2,176	$	2	$	280	$	6,222

	December 31, 2016
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	360	$	-	$	655	$	-	$	-	$	-	$	1,015
Collectively Evaluated for Potential Impairment	$	1,106	$	1,582	$	65	$	924	$	2,463	$	-	$	128	$	6,268
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	-	$	114	$	-	$	31	$	-	$	-	$	-	$	145
Collectively Evaluated for Potential Impairment	$	-	$	251	$	-	$	89	$	-	$	-	$	35	$	375
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	-	$	474	$	-	$	686	$	-	$	-	$	-	$	1,160
Collectively Evaluated for Potential Impairment	$	1,106	$	1,833	$	65	$	1,013	$	2,463	$	-	$	163	$	6,643

22

 

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, 2016	$	1,640
Accretable Yield		(234	)
Balance at March 31, 2017	$	1,406

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)
	March 31, 2017
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	3,532	$	639	$	2,863	$	-	$	4	$	7,038
Collectively Evaluated for Potential Impairment		188,583		132,873		12,699		71,606		108,817		3,576		518,154
	$	188,583	$	136,405	$	13,338	$	74,469	$	108,817	$	3,580	$	525,192
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,289	$	1,526	$	-	$	489	$	-	$	-	$	3,304
Collectively Evaluated for Potential Impairment		81,291		55,773		-		8,829		194		-		146,087
	$	82,580	$	57,299	$	-	$	9,318	$	194	$	-	$	149,391
Total Loans
Individually Evaluated for Impairment	$	1,289	$	5,058	$	639	$	3,352	$	-	$	4	$	10,342
Collectively Evaluated for Potential Impairment		269,874		188,646		12,699		80,435		109,011		3,576		664,241
	$	271,163	$	193,704	$	13,338	$	83,787	$	109,011	$	3,580	$	674,583

	December 31, 2016
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	3,361	$	702	$	2,765	$	-	$	4	$	6,832
Collectively Evaluated for Potential Impairment		186,077		136,533		9,944		68,326		114,007		3,633		518,520
	$	186,077	$	139,894	$	10,646	$	71,091	$	114,007	$	3,637	$	525,352
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,300	$	1,007	$	-	$	562	$	-	$	-	$	2,869
Collectively Evaluated for Potential Impairment		84,211		60,109		-		9,159		197		-		153,676
	$	85,511	$	61,116	$	-	$	9,721	$	197	$	-	$	156,545
Total Loans
Individually Evaluated for Impairment	$	1,300	$	4,368	$	702	$	3,327	$	-	$	4	$	9,701
Collectively Evaluated for Potential Impairment		270,288		196,642		9,944		77,485		114,204		3,633		672,196
	$	271,588	$	201,010	$	10,646	$	80,812	$	114,204	$	3,637	$	681,897

23

 

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:	2017
One Year or Less	$	49,215
Over One Through Two Years		55,404
Over Two Through Three Years		18,564
Over Three Through Four Years		14,930
Over Four Through Five Years		11,060
Over Five Years		8,483
Total	$	157,656

The balance in time deposits that meet or exceed the FDIC insurance limit of $250,000 totaled $45.7 million and $46.0 million as of March 31, 2017 and December 31, 2016, 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)
	March 31, 2017					December 31, 2016
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Short-term Borrowings
Federal Funds Purchased:
Average Balance Outstanding During the Period	$	34		-	%	$	307		0.65	%
Maximum Amount Outstanding at any Month End		550					6,000
FHLB Borrowings:
Balance at Period End		-		-			-		-
Average Balance Outstanding During the Period		-		-			596		0.67
Maximum Amount Outstanding at any Month End		-					6,160
Securities Sold Under Agreements to Repurchase:
Balance at Period End		24,828		0.24			27,027		0.24
Average Balance Outstanding During the Period		26,092		0.30			26,311		0.26
Maximum Amount Outstanding at any Month End		25,575					30,095
Securities Collaterizing the Agreements at Period-End:
Carrying Value		32,501					33,785
Market Value		31,684					32,931

24

 

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)
	March 31, 2017					December 31, 2016
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Due in One Year	$	3,500		1.35	%	$	-		-	%
Due After One Year to Two Years		4,000		1.67			3,500		0.94
Due After Two Years to Three Years		6,000		1.88			4,500		1.41
Due After Three Years to Four Years		5,000		2.09			6,000		1.78
Due After Four Years to Five Years		3,000		2.23			6,000		1.97
Due After Five Years		3,000		2.41			8,000		2.27
Total	$	24,500		1.92		$	28,000		1.80

As of March 31, 2017, the Company maintained a credit arrangement with a maximum borrowing limit of approximately $286.1 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 $148.5 million as of March 31, 2017 and December 31, 2016, respectively.

The Company maintains a Borrower-In-Custody of Collateral line of credit agreement with the Federal Reserve Bank (“FRB”) for $86.0 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 March 31, 2017 and December 31, 2016, no draws had been taken on these facilities.

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.

25

 

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)
	March 31, 2017		December 31, 2016
Standby Letters of Credit	$	42,564	$	36,657
Performance Letters of Credit		1,962		2,471
Construction Mortgages		28,968		21,363
Personal Lines of Credit		6,138		5,905
Overdraft Protection Lines		5,692		5,680
Home Equity Lines of Credit		15,205		14,722
Commercial Lines of Credit		64,296		51,725
	$	164,825	$	138,523

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.

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 transaction 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.

26

 

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 Hierarchy	March 31, 2017		December 31, 2016
Available for Sales Securities:
U.S. Government Agencies	Level II	$	64,973	$	66,156
Obligations of States and Political Subdivisions	Level II		34,365		35,735
Mortgage-Backed Securities - Government-Sponsored Enterprises	Level II		13,408		2,619
Equity Securities - Mutual Funds	Level I		504		507
Equity Securities - Other	Level I		1,271		1,191
Total Available for Sale Securities		$	114,521	$	106,208

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 Hierarchy	March 31, 2017		December 31, 2016		Valuation Techniques	Significant Unobservable Inputs	Unobservable  Input Value
Impaired Loans	Level III	$	3,274	$	2,497	Market Comparable Properties	Marketability Discount	10%	to	30%
OREO	Level III		155		-	Market Comparable Properties	Marketability Discount	10%	to	50%

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

Impaired loans are evaluated when a 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 March 31, 2017 and December 31, 2016, the fair value of impaired loans consists of the loan balances of $4.4 million and $3.7 million, respectively, less their specific valuation allowances of $1.1 million and $1.2, 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. During the three months ended March 31, 2017, one mortgage real estate loan moved into OREO. During the three months ended March 31, 2016, two commercial real estate properties for $3.2 million were foreclosed on, moved into OREO, evaluated for fair value and recorded a prior first 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 subject to a tentative sales agreement with a current customer which closed in the prior year. The other property was transferred into premises and equipment of the Company due to the location and the Company’s need of a new location for company headquarters. At March 31, 2017, one residential real estate loan for $155,000 was moved into OREO.

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.

27

 

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.

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

		(Dollars in thousands)
		March 31, 2017				December 31, 2016
	Fair Value Heirarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and Due From Banks:
Interest Bearing	Level I	$	19,193	$	19,193	$	7,699	$	7,699
Non-Interest Bearing	Level I		16,402		16,402		6,583		6,583
Investment Securities:
Available for Sale	See Above		114,521		114,521		106,208		106,208
Loans, Net	Level III		666,798		677,172		674,094		684,777
Restricted Stock	Level II		3,567		3,567		3,665		3,665
Bank-Owned Life Insurance	Level II		18,803		18,803		18,687		18,687
Accrued Interest Receivable	Level II		2,364		2,364		2,441		2,441
Financial Liabilities:
Deposits	Level II		725,461		696,110		698,218		697,806
Short-term Borrowings	Level II		24,828		24,828		27,027		27,027
Other Borrowed Funds	Level II		24,500		24,567		28,000		28,098
Accrued Interest Payable	Level II		375		375		334		334

Note 10. Other Noninterest Expense

In accordance with SEC Regulation S-X, other noninterest expense that exceeds 10% of total noninterest expense is required to be disclosed by detailed expenses. The details for other noninterest expense for the Company’s consolidated statement of income for the three months ended March 31, 2017and 2016, are as follows:

	(Dollars in thousands)
	Three Months Ended March 31,
	2017		2016
Other Noninterest Expense
Non-employee compensation	$	100	$	133
Printing and supplies		103		74
Postage		66		59
Telephone		88		84
Charitable contributions		24		28
Dues and subscriptions		63		47
Loan expenses		74		70
Meals and entertainment		24		25
Travel		26		30
Training		11		12
Miscellaneous		231		219
Total Other Noninterest Expense	$	810	$	781

29

 

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, 2016.

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, but are not limited to, 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; and

· 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 uses the current statutory tax rate of 34.0% to value its deferred tax assets and liabilities. On April 26, 2017, the Trump Administration announced a comprehensive tax reform proposal that includes a reduction in the U.S. corporate income tax rate to 15.0%. If corporate tax rates were reduced, management expects the Company would be required to record an initial charge against earnings to lower the carrying amount of its net deferred tax asset, and then, going forward, would record lower tax provisions on an ongoing basis. The proposal is at the beginning stages of negotiations and will need to be addressed by both houses of Congress. It is too early in the process to determine if any of the proposals are actionable. Accordingly, management cannot assess the effect a change in the corporate tax rate would have on Company’s operating results or financial position at the present time.

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. 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 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 March 31, 2017 compared to the financial condition as of December 31, 2016 and the consolidated results of operations for the three months ended March 31, 2017 and 2016.

30

 

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.

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 increased $22.7 million, or 2.7%, to $868.8 million at March 31, 2017 compared to $846.1 million at December 31, 2016.

Investment securities classified as available-for-sale increased $8.3 million, or 7.8%, to $114.5 million at March 31, 2017 compared to $106.2 million at December 31, 2016. This increase was primarily the result of new security purchases to invest deposit growth and replace calls and maturities of U.S. government agencies and obligations of states and political subdivisions. These security activities were mainly funded by deposit growth, calls, maturities and loan portfolio payoffs.

Loans, net, decreased $7.3 million, or 1.1%, to $666.8 million at March 31, 2017 compared to $674.1 million at December 31, 2016. This was primarily due to net paydowns of $7.3 million in commercial real estate loans and $5.2 million in consumer loans (mainly indirect auto loans), partially offset by net originations of $2.8 million in commercial and industrial and $2.7 million in construction loans. The net loan payoffs were utilized to fund loan originations and security purchases during the current period.

Premises and equipment, net, increased $1.4 million, or 9.7%, to $15.5 million at March 31, 2017 compared to $14.1 million at December 31, 2016. This was mainly due to additions related to the new Operations Center currently under construction for the Bank.

Liabilities. Total liabilities increased $21.6 million, or 2.9%, to $778.2 million at March 31, 2017 compared to $756.6 million at December 31, 2016.

Total deposits increased $27.2 million, or 3.9%, to $725.5 million at March 31, 2017 compared to $698.2 million at December 31, 2016. There were increases of $11.3 million in NOW accounts, $9.8 million in demand deposits, $6.1 million in savings accounts and $2.6 million in time deposits, partially offset by decreases of $1.5 million in money market accounts and $1.1 million in brokered deposits. Due to the evolving interest rate environment and recent interest rate hikes by the Federal Reserve Board (“FRB”) over the past year, the Bank continues to monitor the portfolio of deposit products by being selective on offering promotional interest rates and has concentrated its efforts on increasing noninterest-bearing accounts by building strong customer relationships. To stimulate deposit growth and keep maturing certificates from leaving the Bank, the Chairman’s Challenge promotional deposit program has continued in the current period. The Chairman’s Challenge offers the promotional rate of 1.25% for a 25-month certificate of deposit.

Short-term borrowings decreased $2.2 million, or 8.1%, to $24.8 million at March 31, 2017 compared to $27.0 million at December 31, 2016. At March 31, 2017, short-term borrowings were comprised of $24.8 million of securities sold under agreements to repurchase compared to $27.0 million at December 31, 2016. The decrease 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. Other borrowed funds decreased $3.5 million due to a FHLB long-term borrowing maturing and being retired during the current period. As a result of the FHLB matured long-term borrowing, the weighted average interest rate on long-term borrowings increased 12 basis points from 1.80% to 1.92% in the current period.

Stockholders’ Equity. Stockholders’ equity increased $1.1 million, or 1.2%, to $90.6 million at March 31, 2017 compared to $89.5 million at December 31, 2016. During the period, net income was $1.7 million and the Company paid $899,000 million in dividends to stockholders.

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Results of Operations for the Three Months Ended March 31, 2017 and 2016

Overview. Net income decreased $341,000, to $1.7 million, for the three months ended March 31, 2017 compared to $2.0 million for the three months ended March 31, 2016. The quarterly results benefited from an increase in noninterest income related to additional commissions and fees, and contingency fees received by Exchange Underwriters, Quarterly pre-tax income decreased by $469,000 due in part by the pre-tax gain recognized in the first quarter of 2016 because of the successful resolution of two problem commercial real estate loans. In the case of each of these loans, the Bank took ownership of the collateral, then sold one property at a gain and took the other property into fixed assets based on an appraised fair market value. As a result of these two events OREO expense decreased by $566,000 in the first quarter of 2016.

Net Interest Income. Net interest income decreased $424,000, or 5.7%, to $7.0 million for the three months ended March 31, 2017 compared to $7.4 million for the three months ended March 31, 2016.

Interest and dividend income decreased $331,000, or 4.1%, to $7.8 million for the three months ended March 31, 2017 compared to $8.1 million for the three months ended March 31, 2016. Interest income on loans decreased $355,000 due to a decrease in average loans outstanding of $12.5 million for the three months ended March 31, 2017 compared to the three months ended March 31, 2016. The decrease in average loans was due to loan payoffs within the commercial and installment loan portfolios, partially offset by increases in indirect auto loans, lines of credit, mortgage and student loans mainly due to loan originations. The decrease in higher yielding average loans resulted in an overall decrease of 10 basis points in yield on the loan portfolio. Contributing to the yield decrease this quarter was the reduced accretion on the acquired loan portfolio credit mark. The impact of the accretion for the three months ended March 31, 2017 was 14 basis points compared to 23 basis points for the three months ended March 31, 2016. The remaining credit mark balance for acquired loans was $1.4 million as of March 31, 2017. Since the prior and current quarter interest rate hikes by the FRB of 25 basis points each in the discount rate, loan demand was deficient in the first quarter. Interest income on securities exempt from federal tax decreased $43,000 due to deploying proceeds from security calls and maturities into higher yielding taxable security purchases in the current period. There was a decrease of $2.7 million in the average balance on securities exempt from federal tax and a decrease of 43 basis points in yield as a result of security calls and maturities that had higher yields. Interest income on taxable securities increased $37,000 mainly due to an increase of $20.5 million in the average balance for taxable securities in the current period. The increase in the average balance offset a decrease of 43 basis points in yield on taxable securities. This is a result of new purchases with lower prevailing yields replacing security calls and maturities with higher yields within the portfolio. In addition, other interest and dividend income increased $19,000 as a result of increased interest earned with correspondent deposit banks and FHLB dividends in the current period.

Interest expense increased $93,000, or 13.2%, to $796,000 for the three months ended March 31, 2017 compared to $703,000 for the three months ended March 31, 2016. Interest expense on deposits increased $94,000 due to an increase in average interest-bearing deposits of $12.9 million, primarily due to increases in time deposits, savings and interest-bearing demand deposit accounts. Associated with the increases in the average deposit balances, the average cost of interest-bearing deposits increased 6 basis points. This was related to time deposit growth, a direct result of the Bank’s promotional deposit program, the Chairman’s Challenge, which increased new growth and retained maturing certificates of deposit. Interest expense on short-term borrowings increased $5,000 mainly due to securities sold under agreements to repurchase. Interest expense on other borrowed funds decreased $5,000 primarily due to a maturing FHLB long-term borrowing for $3.5 million that was retired in the current period.

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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.

	(Dollars in thousands) (Unaudited)
	Three Months Ended March 31,
	2017							2016
	Average Balance		Interest and Dividends		Yield/ Cost (1)			Average Balance		Interest and Dividends		Yield/ Cost (1)
Assets:
Interest-Earning Assets:
Loans, Net	$	666,961	$	7,164		4.36	%	$	679,494	$	7,527		4.46	%
Investment Securities
Taxable		76,044		361		1.90			55,585		324		2.33
Exempt From Federal Tax		35,593		322		3.62			38,255		387		4.05
Other Interest-Earning Assets		19,567		71		1.47			8,750		41		1.88
Total Interest-Earning Assets		798,165		7,918		4.02			782,084		8,279		4.26
Noninterest-Earning Assets		56,302							54,310
Total Assets	$	854,467						$	836,394
Liabilities and Stockholders' equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits	$	118,548		70		0.24	%	$	117,675		49		0.17	%
Savings		124,533		56		0.18			123,344		56		0.18
Money Market		142,557		93		0.26			146,286		89		0.24
Time Deposits		157,903		436		1.12			143,346		367		1.03
Total Interest-Bearing Deposits		543,541		655		0.49			530,651		561		0.43
Borrowings		52,727		141		1.08			52,329		142		1.09
Total Interest-Bearing Liabilities		596,268		796		0.54			582,980		703		0.48
Noninterest-Bearing Demand Deposits		164,459							161,255
Other Liabilities		3,482							4,288
Total Liabilities		764,209							748,523
Stockholders' Equity		90,258							87,871
Total Liabilities and
Stockholders' Equity	$	854,467						$	836,394
Net Interest Income			$	7,122						$	7,576
Net Interest Rate Spread (2)						3.48	%						3.78	%
Net Interest-Earning Assets (3)	$	201,897						$	199,104
Net Interest Margin (4)						3.62							3.90
Return on Average Assets						0.81							0.98
Return on Average Equity						7.66							9.36
Average Equity to Average Assets						10.56							10.51
Average Interest-Earning Assets to Average Interest-Bearing Liabilities						133.86							134.15

___________________

(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%.

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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 March 31, 2017
	Compared To
	Three Months Ended March 31, 2016
	Increase (Decrease) Due to
	Volume			Rate			Total
Interest and Dividend Income:
Loans, net	$	(197	)	$	(166	)	$	(363	)
Investment Securities:
Taxable		104			(67	)		37
Exempt From Federal Tax		(26	)		(39	)		(65	)
Other Interest-Earning Assets		41			(11	)		30
Total Interest-Earning Assets		(78	)		(283	)		(361	)
Interest Expense:
Deposits		13			81			94
Borrowings		-			(1	)		(1	)
Total Interest-Bearing Liabilities		13			80			93
Change in Net Interest Income	$	(91	)	$	(363	)	$	(454	)

Provision for Loan Losses. The provision for loan losses was $420,000 for the three months ended March 31, 2017 compared to $850,000 for the three months ended March 31, 2016. Net charge-offs for the three months ended March 31, 2017 were $438,000, which includes $237,000 of net charge-offs on automobile loans, compared to $367,000 of net charge-offs, which includes $163,000 of net charge-offs on automobile loans, for the three months ended March 31, 2016. The increase in net charge-offs during the current period was due to partial charge-offs of $129,000 for a commercial real estate relationship and $64,000 for a residential mortgage loan. The provision for loan losses was impacted in the current quarter by the recording of $250,000 of provision for the acquired loan portfolio. This was due to the above-mentioned partial loan charge-offs and to appropriately reflect risk associated with the acquired loan portfolio in the current quarter. 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. It was determined that a decrease in the current quarter provision was needed for the three months ended March 31, 2017 compared to the three months ended March 31, 2016. This was due to improvements in the loan portfolio and the local economy which had a positive impact on the quantitative factors within the allowance calculation. In addition, average loan balances decreased during the current period compared to the prior period, which was a contributing factor in reducing the provision.

Noninterest Income. Noninterest income increased $228,000, or 12.3% to $2.1 million for the three months ended March 31, 2017 compared to $1.8 million for the three months ended March 31, 2016. Insurance commissions from Exchange Underwriters increased $214,000 due to increased commercial lines commission and fee income of $109,000 and $99,000 of contingency fees received in the current period. Net gains on the sales of investments increased $52,000 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. Partially offsetting these increases was a decrease in the net gains on the sales of residential mortgage loans of $35,000. The decrease in gains was primarily due to a decrease in the number of loans originated and subsequently sold to the FHLB as part of the MPF® program due to recent increases in the 10 year treasury rate.

Noninterest Expense. Noninterest expense increased $703,000, or 12.7%, to $6.2 million for the three months ended March 31, 2017 compared to $5.5 million for the three months ended March 31, 2016. Other real estate owned expense increased $550,000 due to prior period recognition of the $566,000 pre-tax gain on the foreclosure procedures of two commercial real estate loans that transferred in into other real estate owned properties in the prior period. This was partially offset by other real estate owned expenses in the current period. Salaries and employee benefits increased $120,000 primarily due to normal salary increases, employee stock options and retirement benefits expense. This increase was partially offset by decreases in group health insurance and restricted stock awards expense. Occupancy increased $74,000 primarily due to accelerated depreciation taken on leasehold improvements in the Bank’s current operation center that will not transfer over to the new Ralph J. Sommers Jr. Operations Center (“Operations Center”) currently under construction for the Bank. Other increases in occupancy expense were related to property insurance expense. Other noninterest expense increased $29,000 primarily due to overdraft and debit card fraud losses, customer supplies related to the Bank-wide issuance of embedded “chip” debit cards, and dues and subscriptions in the current period. These were partially offset by decreases in the “CB Cares” loan program donation expenses directly related to decreased loan originations, other insurance, non-employee restricted stock awards and travel expense. Equipment increased $17,000 related to equipment maintenance contact expense. The Federal Deposit Insurance Corporation (“FDIC”) assessment expense decreased $45,000 due to a factor reduction by the FDIC in the computation of the insurance assessment. Advertising decreased $40,000 due to current marketing and advertising initiatives.

34

 

Income Tax Expense. Income taxes decreased $128,000 to $730,000 for the three months ended March 31, 2017 compared to $858,000 for the three months ended March 31, 2016. The effective tax rate for the three months ended March 31, 2017 was 30.0% compared to 29.6% for the three months ended March 31, 2016. The decrease in income taxes was due to a decrease of $469,000 in pre-tax income. The increase in the effective tax rate was related to the increase in taxable securities income due to new purchases and a decrease in tax exempt income from calls and maturities in the current period.

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 March 31, 2017.

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 March 31, 2017 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 $35.6 million at March 31, 2017. 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 $38.3 million at March 31, 2017. In addition, at March 31, 2017, the Company had the ability to borrow up to $286.1 million from the FHLB of Pittsburgh, of which $24.5 million was outstanding and $41.6 million was utilized toward standby letters of credit. The Company also has the ability to borrow up to $86.0 million from the FRB 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 March 31, 2017, time deposits due within one year of that date totaled $49.2 million, or 31.2% 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 March 31, 2017, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of $1.8 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 FHLB, 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 FHLB in the future.

35

 

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.

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, 2017 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 March 31, 2017 and December 31, 2016, 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)
	March 31, 2017					December 31, 2016
	Amount		Ratio			Amount		Ratio
Common Equity Tier 1 (to risk weighted assets)
Actual	$	82,175		13.48	%	$	81,845		13.38	%
For Capital Adequacy Purposes		27,432		4.50			27,533		4.50
To Be Well Capitalized		39,625		6.50			39,770		6.50
Tier 1 Capital (to risk weighted assets)
Actual		82,175		13.48			81,845		13.38
For Capital Adequacy Purposes		36,576		6.00			36,711		6.00
To Be Well Capitalized		48,769		8.00			48,947		8.00
Total Capital (to risk weighted assets)
Actual		89,799		14.73			89,497		14.63
For Capital Adequacy Purposes		48,769		8.00			48,947		8.00
To Be Well Capitalized		60,961		10.00			61,184		10.00
Tier 1 Leverage (to adjusted total assets)
Actual		82,175		9.70			81,845		9.80
For Capital Adequacy Purposes		33,871		4.00			33,390		4.00
To Be Well Capitalized		42,339		5.00			41,738		5.00

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

The Company believes that as of March 31, 2017, there was no material change in the quantitative and qualitative disclosure about market risk data as of December 31, 2016, as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

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.

36

 

There have been no changes in CB Financial’s internal control over financial reporting during the quarter ended March 31, 2017, that has materially affected, or is reasonably likely to materially affect, CB Financial’s internal control over financial reporting.

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, 2016, 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 March 31, 2017, 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

37

 

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:	May  8, 2017	/s/ Barron P. McCune, Jr.
		Barron P. McCune, Jr.
		President and Chief Executive Officer
Date:	May 8, 2017	/s/ Kevin D. Lemley
		Kevin D. Lemley
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer and Chief Accounting Officer)

38

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 March 31, 2017 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:	May 8, 2017	/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 March 31, 2017 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:	May 8, 2017	/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 March 31, 2017 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:	May 8, 2017	/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 March 31, 2017 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:	May 8, 2017	/s/ Kevin D. Lemley
		Kevin D. Lemley
		Executive Vice President and Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 05, 2017
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)		4,088,025
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Statement of Financial Condition (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
ASSETS
Interest Bearing	$ 19,193	$ 7,699
Non-Interest Bearing	16,402	6,583
Total Cash and Due From Banks	35,595	14,282
Available-for-Sale	114,521	106,208
Loans, Net	666,798	674,094
Premises and Equipment, Net	15,505	14,132
Bank-Owned Life Insurance	18,803	18,687
Goodwill	4,953	4,953
Core Deposit Intangible, Net	3,685	3,819
Accrued Interest and Other Assets	8,963	9,900
TOTAL ASSETS	868,823	846,075
LIABILITIES
Demand Deposits	175,194	165,400
NOW Accounts	117,301	105,962
Money Market Accounts	140,149	141,674
Savings Accounts	127,623	121,520
Time Deposits	157,656	155,028
Brokered Deposits	7,538	8,634
Total Deposits	725,461	698,218
Short-Term Borrowings	24,828	27,027
Other Borrowed Funds	24,500	28,000
Accrued Interest and Other Liabilities	3,460	3,361
TOTAL LIABILITIES	778,249	756,606
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 4,088,025 and 4,086,625 Shares Outstanding at March 31, 2017 and December 31, 2016, Respectively	1,818	1,818
Capital Surplus	41,955	41,863
Retained Earnings	52,518	51,713
Treasury Stock, at Cost (275,321 and 276,721 Shares at March 31, 2017 and December 31, 2016, Respectively)	(4,722)	(4,746)
Accumulated Other Comprehensive Loss	(995)	(1,179)
TOTAL STOCKHOLDERS' EQUITY	90,574	89,469
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 868,823	$ 846,075

XML

Consolidated Statement of Financial Condition (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
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)	4,088,025	4,086,625
Treasury stock, at cost (in shares)	275,321	276,721

XML

Consolidated Statement of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
INTEREST AND DIVIDEND INCOME
Loans, Including Fees	$ 7,142	$ 7,497
Federal Funds Sold	15	4
Taxable	361	324
Exempt From Federal Income Tax	217	260
Other Interest and Dividend Income	56	37
TOTAL INTEREST AND DIVIDEND INCOME	7,791	8,122
INTEREST EXPENSE
Deposits	655	561
Federal Funds Purchased		1
Short-Term Borrowings	19	14
Other Borrowed Funds	122	127
TOTAL INTEREST EXPENSE	796	703
NET INTEREST INCOME	6,995	7,419
Provision For Loan Losses	420	850
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	6,575	6,569
NONINTEREST INCOME
Service Fees on Deposit Accounts	584	586
Insurance Commissions	1,086	872
Other Commissions	104	117
Net Gains on Sales of Loans	90	125
Net Gains on Sales of Investments	52
Net Gains on Purchased Tax Credits	14
Income from Bank-Owned Life Insurance	116	120
Other	30	28
TOTAL NONINTEREST INCOME	2,076	1,848
Salaries and Employee Benefits	3,489	3,369
Occupancy	548	474
Equipment	439	422
FDIC Assessment	81	126
PA Shares Tax	190	202
Contracted Services	132	133
Legal and Professional Fees	141	141
Advertising	125	165
Bankcard Processing Expense	123	112
Other Real Estate Owned Expense (Income)	5	(545)
Amortization of Core Deposit Intangible	134	134
Other	810	781
TOTAL NONINTEREST EXPENSE	6,217	5,514
Income Before Income Taxes	2,434	2,903
Income Taxes	730	858
NET INCOME	$ 1,704	$ 2,045
EARNINGS PER SHARE
Basic (in dollars per share)	$ 0.42	$ 0.50
Diluted (in dollars per share)	$ 0.42	$ 0.50
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic (in shares)	4,087,289	4,081,017
Diluted (in shares)	4,098,276	4,081,869

XML

Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Net Income		$ 1,704	$ 2,045
Other Comprehensive Income:
Unrealized Gains on Available-for-Sale Securities Net of Income Tax of $113 and $135 for the Three Months Ended March 31, 2017 and 2016, Respectively		218	261
Included in Net Income, Net of Income Tax of $18 for the Three Months Ended March 31, 2017 (1)	[1]	(34)
Other Comprehensive Income, Net of Income Tax		184	261
Total Comprehensive Income		$ 1,888	$ 2,306

[1] The gross amount of gains on securities of $52 for the Three Months Ended March 31, 2017, are reported as Net Gains on Sales of Investments on the Consolidated Statement of Income. The income tax effect is included in Income Taxes on the Consolidated Statement of Income.

XML

Consolidated Statement of Comprehensive Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Unrealized Gains, on Available-for-Sale Securities, Tax	$ 113	$ 135
Reclassification Adjustment for Gains on Securities, Tax	$ 18

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, 2015	4,363,346
Balance at Dec. 31, 2015	$ 1,818	$ 41,614	$ 47,725	$ (4,836)	$ 575	$ 86,896
Net Income			2,045			2,045
Other Comprehensive Income (Loss)					261	261
Stock-Based Compensation Expense		87				87
Dividends Paid			(898)			(898)
Balance (in shares) at Mar. 31, 2016	4,363,346
Balance at Mar. 31, 2016	$ 1,818	41,701	48,872	(4,836)	836	88,391
Balance (in shares) at Dec. 31, 2016	4,363,346
Balance at Dec. 31, 2016	$ 1,818	41,863	51,713	(4,746)	(1,179)	89,469
Net Income			1,704			1,704
Other Comprehensive Income (Loss)					184	184
Stock-Based Compensation Expense		85				85
Dividends Paid			(899)			(899)
Balance (in shares) at Mar. 31, 2017	4,363,346
Balance at Mar. 31, 2017	$ 1,818	41,955	$ 52,518	(4,722)	$ (995)	90,574
Exercise of stock options		$ 7		$ 24		$ 31

XML

Consolidated Statement of Changes In Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Retained Earnings [Member]
Dividends paid (in dollars per share)	$ 0.22	$ 0.22

XML

Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
OPERATING ACTIVITIES
Net Income	$ 1,704	$ 2,045
Adjustments to Reconcil Net Income to Net Cash Provided By Operating Activities:
Net Amortization on Investments	84	56
Depreciation and Amortization	673	764
Provision for Loan Losses	420	850
Income from Bank-Owned Life Insurance	(116)	(120)
Proceeds From Mortgage Loans Sold	3,937	5,513
Originations of Mortgage Loans for Sale	(3,847)	(5,388)
Gains on Sales of Loans	(90)	(125)
Gains on Sales of Investment Securities	(52)
Gains on Sales of Other Real Estate Owned and Repossessed Assets		(19)
Noncash Expense for Stock-Based Compensation	85	87
Decrease in Accrued Interest Receivable	77	185
Valuation Adjustment on Foreclosed Real Estate		(566)
(Decrease) Increase in Taxes Payable	(2,485)	947
Increase in Accrued Interest Payable	40	4
Net Payment of Federal/State Income Taxes	(30)	(20)
Other, Net	3,433	(1,411)
NET CASH PROVIDED BY OPERATING ACTIVITIES	3,833	2,802
INVESTING ACTIVITIES
Proceeds From Principal Repayments and Maturities	3,131	17,191
Purchases of Securities	(14,391)	(14,651)
Proceeds from Sales of Securities	3,194
Net Decrease (Increase) in Loans	6,434	(4,648)
Purchase of Premises and Equipment	(1,661)	(106)
Proceeds From Sales of Other Real Estate Owned and Repossessed Assets		175
Decrease in Restricted Equity Securities	97	590
NET CASH USED IN INVESTING ACTIVITIES	(3,196)	(1,449)
FINANCING ACTIVITIES
Net Increase in Deposits	27,243	10,651
Net Decrease in Short-Term Borrowings	(2,199)	(9,865)
Principal Payments on Other Borrowed Funds	(3,500)
Cash Dividends Paid	(899)	(898)
Exercise of Stock Options	31
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	20,676	(112)
INCREASE IN CASH AND CASH EQUIVALENTS	21,313	1,241
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR	14,282	11,340
CASH AND DUE FROM BANKS AT END OF PERIOD	35,595	12,581
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest on deposits and borrowings (including interest credited to deposit accounts of $610 and $556 respectively)	755	699
Income taxes	30	20
Real estate acquired in settlement of loans	155	3,236
Transfer of real estate acquired in settlement of loans to premise and equipment		2,350
Securities purchased not settled	$ 791

XML

Consolidated Statement of Cash Flows (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Interest credited to deposit accounts	$ 610	$ 556

XML

Note 1 - Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

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” or “EU”). 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 (“SEC”) 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 any material respect. 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,

2016.

Interim results are not necessarily indicative of results for a full year.

The Company is currently evaluating the provisions of Accounting Standards Codification (“ASC”) Topic

280

for segment reporting information related to Exchange Underwriters. During the current quarter, Exchange Underwriters insurance commissions comprised of approximately

11%

of combined interest and noninterest income but less than

10%

of the combined assets of the Company. While EU exceeded the

10%

threshold of total interest and noninterest income, this was primarily related to a unique income event of increased contingency income. Contingency fees are commissions that are contingent upon several factors including, but not limited to, eligible written premiums, earned premiums, incurred losses and stop loss charges.

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.

For performing loans acquired in the merger, 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. For purchased credit impaired (“PCI”) loans acquired in the merger, 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

March

2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU")

2017

-

08,

Receivables- Nonrefundable Fees and Other Costs (Subtopic

310

-

20):

Premium Amortization on Purchases Callable Debt Securities.

ASU

2017

-

08

amends guidance on the amortization period of premiums on certain purchases callable debt securities. The amendments shorten the amortization period of premiums on certain purchases callable debt securities to the earliest call date. ASU

2017

-

08

is effective for public business entities that are SEC filers for annual periods beginning after

December

15,

2018,

and interim periods within those annual periods, for public entities that are not SEC filers for annual periods beginning after

December

15,

2019

and for all other entities for annual periods beginning after

December

15,

2020

with early adoption permitted. The Company is evaluating the provisions of ASU

2017

-

08

but believes that its adoption will not have a material impact on the Company's consolidated financial condition or results of operations.

In

January

2017,

the FASB issued ASU

2017

-

04,

Intangibles - Goodwill and Other (Topic

350):

Simplifying the Test for Goodwill Impairment

. ASU

2017

-

04

simplifies the accounting for goodwill impairments by eliminating the

second

step of the goodwill impairment test. Instead, an entity will apply a

one

-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. ASU

2017

-

04

is effective for public business entities that are SEC filers for annual periods beginning after

December

15,

2019,

and interim periods within those annual periods, with early adoption permitted, and is to be applied on a prospective basis. The Company is currently evaluating the provisions of ASU

2017

-

04,

but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

In

August

2016,

the FASB issued ASU

2016

-

15,

Statement of Cash Flow (Topic

230):

Classification of Certain Cash Receipts and Cash Payments

. ASU

2016

-

15

addresses the following

eight

specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of

zero

-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU

2016

-

15

is effective for fiscal years beginning after

December

15,

2017,

and interim periods within those fiscal years. Early adoption is permitted and the amendments should be applied using a retrospective transition method to each period presented.  The Company is currently evaluating the provisions of ASU

2016

-

15,

but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

In

June

2016,

the FASB issued 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 provisions of ASU

2016

-

13,

but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or 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 adoption of ASU

2016

-

09

as of

January

1,

2017,

had no effect on the Company's consolidated 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 provisions of ASU

2016

-

02,

but expects to report increased assets and liabilities as a result of reporting additional leases on the Company's consolidated statement of financial condition.

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 currently evaluating the provisions of ASU

2016

-

01,

but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

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.

The guidance is effective for the Company’s financial statements beginning

January

1,

2018.

The guidance allows an entity to apply the new standard either retrospectively or through a cumulative effect adjustment as of

January

1,

2018.

This guidance does not apply to revenue associated with financial instruments, including loans, securities, and derivatives that are accounted for under other U.S. GAAP guidance. For that reason, we do not expect it to have a material impact on our consolidated results of operations for elements of the statement of income associated with financial instruments, including securities gains, interest income, and interest expense. However, we do believe the new standard will result in new disclosure requirements. We are currently in the process of reviewing contracts to assess the impact of the new guidance on our service offerings that are in the scope of the guidance included in non-interest income, such as insurance commission fees, service charges, payment processing fees, trust services fees and brokerage services fees. The Company is continuing to evaluate the effect of the new guidance on revenue sources other than financial instruments on its consolidated financial position and results of operations.

XML

Note 2 - Earnings Per Share

3 Months Ended

Mar. 31, 2017

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 March 31,
	2017			2016
Weighted-Average Common Shares Outstanding		4,363,346			4,363,346
Average Treasury Stock Shares		(276,057	)		(282,329	)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share		4,087,289			4,081,017
Additional Common Stock Equivalents (Stock Options and Restricted Stock) Used to Calculate Diluted Earnings Per Share		10,987			852
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share		4,098,276			4,081,869
Earnings per share:
Basic	$	0.42		$	0.50
Diluted		0.42			0.50

XML

Note 3 - Investment Securities

3 Months Ended

Mar. 31, 2017

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)
	March 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	66,638	$	1	$	(1,666	)	$	64,973
Obligations of States and Political Subdivisions		34,285		350		(270	)		34,365
Mortgage-Backed Securities - Government-Sponsored Enterprises		13,443		14		(49	)		13,408
Equity Securities - Mutual Funds		500		4		-			504
Equity Securities - Other		1,162		120		(11	)		1,271
Total	$	116,028	$	489	$	(1,996	)	$	114,521

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	67,944	$	18	$	(1,806	)	$	66,156
Obligations of States and Political Subdivisions		35,856		366		(487	)		35,735
Mortgage-Backed Securities - Government-Sponsored Enterprises		2,588		31		-			2,619
Equity Securities - Mutual Funds		500		7		-			507
Equity Securities - Other		1,106		91		(6	)		1,191
Total	$	107,994	$	513	$	(2,299	)	$	106,208

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)
	March 31, 2017
	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		22	$	59,950	$	(1,666	)		-	$	-	$	-			22	$	59,950	$	(1,666	)
Obligations of States and Political Subdivisions		30		16,213		(269	)		1		260		(1	)		31		16,473		(270	)
Mortgage-Backed Securities - Government Sponsored Enterprises		5		10,991		(49	)		-		-		-			5		10,991		(49	)
Equity Securities - Other		3		226		(11	)		-		-		-			3		226		(11	)
Total		60	$	87,380	$	(1,995	)		1	$	260	$	(1	)		61	$	87,640	$	(1,996	)

	December 31, 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		23	$	62,853	$	(1,806	)		-	$	-	$	-			23	$	62,853	$	(1,806	)
Obligations of States and Political Subdivisions		39		19,749		(485	)		1		260		(2	)		40		20,009		(487	)
Equity Securities - Other		2		160		(6	)		-		-		-			2		160		(6	)
Total		64	$	82,762	$	(2,297	)		1	$	260	$	(2	)		65	$	83,022	$	(2,299	)

For debt securities, the Company does

not

believe any individual unrealized loss as of

March

31,

2017

and

December

31,

2016

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

March

31,

2017

and

December

31,

2016

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)
	March 31, 2017
	Available-for-Sale
	Amortized Cost		Fair Value
Due in One Year or Less	$	3,044	$	3,194
Due after One Year through Five Years		13,528		13,478
Due after Five Years through Ten Years		87,796		86,105
Due after Ten Years		11,660		11,744
Total	$	116,028	$	114,521

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.

XML

Note 4 - Loans and Related Allowance for Loan Losses

3 Months Ended

Mar. 31, 2017

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

classifications: 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)
	March 31, 2017						December 31, 2016
	Amount			Percent			Amount			Percent
Originated Loans
Real Estate:
Residential	$	188,583			35.9	%	$	186,077			35.4	%
Commercial		136,405			26.0			139,894			26.7
Construction		13,338			2.5			10,646			2.0
Commercial and Industrial		74,469			14.2			71,091			13.5
Consumer		108,817			20.7			114,007			21.7
Other		3,580			0.7			3,637			0.7
Total Originated Loans		525,192			100.0	%		525,352			100.0	%
Allowance for Loan Losses		(7,206	)					(7,283	)
Loans, Net	$	517,986					$	518,069
Loans Acquired at Fair Value
Real Estate:
Residential	$	82,580			55.3	%	$	85,511			54.7	%
Commercial		57,299			38.4			61,116			39.0
Commercial and Industrial		9,318			6.2			9,721			6.2
Consumer		194			0.1			197			0.1
Total Loans Acquired at Fair Value		149,391			100.0	%		156,545			100.0	%
Allowance for Loan Losses		(579	)					(520	)
Loans, Net	$	148,812					$	156,025
Total Loans
Real Estate:
Residential	$	271,163			40.2	%	$	271,588			39.8	%
Commercial		193,704			28.7			201,010			29.5
Construction		13,338			2.0			10,646			1.6
Commercial and Industrial		83,787			12.4			80,812			11.9
Consumer		109,011			16.2			114,204			16.7
Other		3,580			0.5			3,637			0.5
Total Loans		674,583			100.0	%		681,897			100.0	%
Allowance for Loan Losses		(7,785	)					(7,803	)
Loans, Net	$	666,798					$	674,094

Total unamortized net deferred loan fees were

$826,000

and

$818,000

at

March

31,

2017

and

December

31,

2016,

respectively.

Real estate loans serviced for others, which are not included in the Consolidated Statement of Financial Condition, totaled

$86.2

million and

$83.9

million at

March

31,

2017

and

December

31,

2016,

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

March

31,

2017

and

December

31,

2016,

there were

no

loans in the criticized category of Loss within the internal risk rating system.

	(Dollars in thousands)
	March 31, 2017
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	187,194	$	980	$	409	$	-	$	188,583
Commercial		119,538		13,725		2,220		922		136,405
Construction		12,699		-		580		59		13,338
Commercial and Industrial		67,430		4,182		1,450		1,407		74,469
Consumer		108,787		-		30		-		108,817
Other		3,580		-		-		-		3,580
Total Originated Loans	$	499,228	$	18,887	$	4,689	$	2,388	$	525,192
Loans Acquired at Fair Value
Real Estate:
Residential	$	80,083	$	-	$	2,497	$	-	$	82,580
Commercial		54,019		2,225		852		203		57,299
Commercial and Industrial		8,771		58		379		110		9,318
Consumer		194		-		-		-		194
Total Loans Acquired at Fair Value	$	143,067	$	2,283	$	3,728	$	313	$	149,391
Total Loans
Real Estate:
Residential	$	267,277	$	980	$	2,906	$	-	$	271,163
Commercial		173,557		15,950		3,072		1,125		193,704
Construction		12,699		-		580		59		13,338
Commercial and Industrial		76,201		4,240		1,829		1,517		83,787
Consumer		108,981		-		30		-		109,011
Other		3,580		-		-		-		3,580
Total Loans	$	642,295	$	21,170	$	8,417	$	2,701	$	674,583

	December 31, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	184,721	$	1,050	$	306	$	-	$	186,077
Commercial		122,811		14,118		2,035		930		139,894
Construction		9,944		-		595		107		10,646
Commercial and Industrial		65,612		2,720		1,322		1,437		71,091
Consumer		113,847		-		160		-		114,007
Other		3,637		-		-		-		3,637
Total Originated Loans	$	500,572	$	17,888	$	4,418	$	2,474	$	525,352
Loans Acquired at Fair Value
Real Estate:
Residential	$	83,044	$	-	$	2,467	$	-	$	85,511
Commercial		58,411		2,358		347		-		61,116
Commercial and Industrial		9,117		42		441		121		9,721
Consumer		197		-		-		-		197
Total Loans Acquired at Fair Value	$	150,769	$	2,400	$	3,255	$	121	$	156,545
Total Loans
Real Estate:
Residential	$	267,765	$	1,050	$	2,773	$	-	$	271,588
Commercial		181,222		16,476		2,382		930		201,010
Construction		9,944		-		595		107		10,646
Commercial and Industrial		74,729		2,762		1,763		1,558		80,812
Consumer		114,044		-		160		-		114,204
Other		3,637		-		-		-		3,637
Total Loans	$	651,341	$	20,288	$	7,673	$	2,595	$	681,897

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)
	March 31, 2017
	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	$	186,493	$	1,612	$	68	$	-	$	1,680	$	410	$	188,583
Commercial		136,317		88		-		-		88		-		136,405
Construction		13,279		-		-		-		-		59		13,338
Commercial and Industrial		72,432		556		74		-		630		1,407		74,469
Consumer		107,970		764		40		13		817		30		108,817
Other		3,580		-		-		-		-		-		3,580
Total Originated Loans	$	520,071	$	3,020	$	182	$	13	$	3,215	$	1,906	$	525,192
Loans Acquired at Fair Value
Real Estate:
Residential	$	80,658	$	321	$	-	$	-	$	321	$	1,601	$	82,580
Commercial		56,760		-		-		-		-		539		57,299
Commercial and Industrial		8,889		407		-		-		407		22		9,318
Consumer		194		-		-		-		-		-		194
Total Loans Acquired at Fair Value	$	146,501	$	728	$	-	$	-	$	728	$	2,162	$	149,391
Total Loans
Real Estate:
Residential	$	267,151	$	1,933	$	68	$	-	$	2,001	$	2,011	$	271,163
Commercial		193,077		88		-		-		88		539		193,704
Construction		13,279		-		-		-		-		59		13,338
Commercial and Industrial		81,321		963		74		-		1,037		1,429		83,787
Consumer		108,164		764		40		13		817		30		109,011
Other		3,580		-		-		-		-		-		3,580
Total Loans	$	666,572	$	3,748	$	182	$	13	$	3,943	$	4,068	$	674,583

	December 31, 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	$	183,939	$	1,638	$	72	$	120	$	1,830	$	308	$	186,077
Commercial		139,821		-		-		-		-		73		139,894
Construction		10,539		-		-		-		-		107		10,646
Commercial and Industrial		68,310		952		-		-		952		1,829		71,091
Consumer		112,232		1,311		296		8		1,615		160		114,007
Other		3,637		-		-		-		-		-		3,637
Total Originated Loans	$	518,478	$	3,901	$	368	$	128	$	4,397	$	2,477	$	525,352
Loans Acquired at Fair Value
Real Estate:
Residential	$	82,523	$	893	$	307	$	223	$	1,423	$	1,565	$	85,511
Commercial		60,437		332		-		-		332		347		61,116
Commercial and Industrial		9,577		121		23		-		144		-		9,721
Consumer		197		-		-		-		-		-		197
Total Loans Acquired at Fair Value	$	152,734	$	1,346	$	330	$	223	$	1,899	$	1,912	$	156,545
Total Loans
Real Estate:
Residential	$	266,462	$	2,531	$	379	$	343	$	3,253	$	1,873	$	271,588
Commercial		200,258		332		-		-		332		420		201,010
Construction		10,539		-		-		-		-		107		10,646
Commercial and Industrial		77,887		1,073		23		-		1,096		1,829		80,812
Consumer		112,429		1,311		296		8		1,615		160		114,204
Other		3,637		-		-		-		-		-		3,637
Total Loans	$	671,212	$	5,247	$	698	$	351	$	6,296	$	4,389	$	681,897

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)
	March 31,  2017			December 31,  2016
Nonaccrual Loans:
Originated Loans:
Real Estate:
Residential	$	410		$	308
Commercial		-			73
Construction		59			107
Commercial and Industrial		1,407			1,829
Consumer		30			160
Total Originated Nonaccrual Loans		1,906			2,477
Loans Acquired at Fair Value:
Real Estate:
Residential		1,601			1,565
Commercial		539			347
Commercial and Industrial		22			-
Total Loans Acquired at Fair Value Nonaccrual Loans		2,162			1,912
Total Nonaccrual Loans		4,068			4,389
Accruing Loans Past Due 90 Days or More:
Originated Loans:
Real Estate:
Residential		-			120
Consumer		13			8
Total Originated Accruing Loans 90 Days or More Past Due		13			128
Loans Acquired at Fair Value:
Real Estate:
Residential		-			223
Total Loans Acquired at Fair Value Accruing Loans 90 Days or More Past Due		-			223
Total Accruing Loans 90 Days or More Past Due		13			351
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		4,081			4,740
Troubled Debt Restructurings, Accruing:
Originated Loans:
Real Estate - Commercial		1,312			1,325
Commercial and Industrial		6			6
Other		4			4
Total Originated Loans		1,322			1,335
Loans Acquired at Fair Value:
Real Estate - Residential		1,289			1,299
Real Estate - Commercial		471			660
Commercial and Industrial		357			393
Total Loans Acquired at Fair Value		2,117			2,352
Total Troubled Debt Restructurings, Accruing		3,439			3,687
Total Nonperforming Loans		7,520			8,427
Real Estate Owned:
Residential		155			-
Commercial		174			174
Total Real Estate Owned		329			174
Total Nonperforming Assets	$	7,849		$	8,601
Nonperforming Loans to Total Loans		1.11	%		1.24	%
Nonperforming Assets to Total Assets		0.90			1.02

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

$1.1

million and

$2.2

million at

March

31,

2017

and

December

31,

2016,

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

14

loans totaling

$4.4

million and

15

loans totaling

$4.7

million at

March

31,

2017

and

December

31,

2016,

respectively. Originated loans classified as TDRs consisted of

6

loans totaling

$2.3

million at

March

31,

2017

and

December

31,

2016,

respectively. Loans acquired at fair value classified as TDRs consisted of

8

loans totaling

$2.1

million and

9

loans totaling

$2.4

million at

March

31,

2017

and

December

31,

2016,

respectively.

During the

three

months ended

March

31,

2017,

one

commercial real estate loan previously identified as an acquired loan at fair value TDR paid off. During the

three

months ended

March

31,

2016,

one

commercial loan previously identified as an acquired loan at fair value TDR paid off.

No

TDRs have subsequently defaulted during the

three

months ended

March

31,

2017

and

2016,

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 for the

three

months ended

March

31,

2017.

The following table presents information at the time of modification related to loans modified in a TDR during the

three

months ended

March

31,

2016.

	(Dollars in thousands)
	Three Months Ended March 31, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Related Allowance
Originated Loans
Real Estate
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	$	-

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

	(Dollars in thousands)
	March 31, 2017
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	2,009	$	-	$	2,009	$	2,033	$	23
Construction		639		-		639		674		7
Commercial and Industrial		632		-		632		619		8
Other		4		-		4		4		-
Total With No Related Allowance Recorded	$	3,284	$	-	$	3,284	$	3,330	$	38
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		987		-		987		997		13
Commercial and Industrial		379		-		379		407		4
Total With No Related Allowance Recorded	$	2,655	$	-	$	2,655	$	2,698	$	33
Total Loans
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		2,996		-		2,996		3,030		36
Construction		639		-		639		674		7
Commercial and Industrial		1,011		-		1,011		1,026		12
Other		4		-		4		4		-
Total With No Related Allowance Recorded	$	5,939	$	-	$	5,939	$	6,028	$	71
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,523	$	402	$	1,523	$	1,531	$	20
Commercial and Industrial		2,231		703		2,255		2,232		27
Total With A Related Allowance Recorded	$	3,754	$	1,105	$	3,778	$	3,763	$	47
Loans Acquired at Fair Value
Real Estate:
Commercial	$	539	$	-	$	630	$	674	$	(2	)
Commercial and Industrial		110		24		110		114		1
Total With A Related Allowance Recorded	$	649	$	24	$	740	$	788	$	(1	)
Total Loans
Real Estate:
Commercial	$	2,062	$	402	$	2,153	$	2,205	$	18
Commercial and Industrial		2,341		727		2,365		2,346		28
Total With A Related Allowance Recorded	$	4,403	$	1,129	$	4,518	$	4,551	$	46

	March 31, 2017 (cont.)
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
Total Impaired Loans:
Originated Loans
Real Estate:
Commercial	$	3,532	$	402	$	3,532	$	3,564	$	43
Construction		639		-		639		674		7
Commercial and Industrial		2,863		703		2,887		2,851		35
Other		4		-		4		4		-
Total Impaired Loans	$	7,038	$	1,105	$	7,062	$	7,093	$	85
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		1,526		-		1,617		1,671		11
Commercial and Industrial		489		24		489		521		5
Total Impaired Loans	$	3,304	$	24	$	3,395	$	3,486	$	32
Total Loans
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		5,058		402		5,149		5,235		54
Construction		639		-		639		674		7
Commercial and Industrial		3,352		727		3,376		3,372		40
Other		4		-		4		4		-
Total Impaired Loans	$	10,342	$	1,129	$	10,457	$	10,579	$	117

	December 31, 2016
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	2,112	$	-	$	2,112	$	2,228	$	100
Construction		702		-		702		843		28
Commercial and Industrial		825		-		825		891		45
Other		4		-		4		6		1
Total With No Related Allowance Recorded	$	3,643	$	-	$	3,643	$	3,968	$	174
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		660		-		660		763		47
Commercial and Industrial		441		-		441		543		21
Total With No Related Allowance Recorded	$	2,401	$	-	$	2,401	$	2,626	$	136
Total Loans
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		2,772		-		2,772		2,991		147
Construction		702		-		702		843		28
Commercial and Industrial		1,266		-		1,266		1,434		66
Other		4		-		4		6		1
Total With No Related Allowance Recorded	$	6,044	$	-	$	6,044	$	6,594	$	310
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,249	$	360	$	1,249	$	1,277	$	66
Commercial and Industrial		1,940		655		1,946		1,951		27
Total With A Related Allowance Recorded	$	3,189	$	1,015	$	3,195	$	3,228	$	93
Loans Acquired at Fair Value
Real Estate:
Commercial	$	347	$	114	$	437	$	367	$	-
Commercial and Industrial		121		31		121		141		6
Total With A Related Allowance Recorded	$	468	$	145	$	558	$	508	$	6
Total Loans
Real Estate:
Commercial	$	1,596	$	474	$	1,686	$	1,644	$	66
Commercial and Industrial		2,061		686		2,067		2,092		33
Total With A Related Allowance Recorded	$	3,657	$	1,160	$	3,753	$	3,736	$	99

	December 31, 2016 (cont.)
	Recorded  Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
Total Impaired Loans
Originated Loans
Real Estate:
Commercial	$	3,361	$	360	$	3,361	$	3,505	$	166
Construction		702		-		702		843		28
Commercial and Industrial		2,765		655		2,771		2,842		72
Other		4		-		4		6		1
Total Impaired Loans	$	6,832	$	1,015	$	6,838	$	7,196	$	267
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		1,007		114		1,097		1,130		47
Commercial and Industrial		562		31		562		684		27
Total Impaired Loans	$	2,869	$	145	$	2,959	$	3,134	$	142
Total Loans
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		4,368		474		4,458		4,635		213
Construction		702		-		702		843		28
Commercial and Industrial		3,327		686		3,333		3,526		99
Other		4		-		4		6		1
Total Impaired Loans	$	9,701	$	1,160	$	9,797	$	10,330	$	409

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)
	March 31, 2017
	Real Estate Residential			Real Estate Commercial			Real Estate Construction		Commercial and Industrial			Consumer			Other		Unallocated			Total
Originated Loans
December 31, 2016	$	1,106		$	1,942		$	65	$	1,579		$	2,463		$	-	$	128		$	7,283
Charge-offs		-			-			-		-			(327	)		-		-			(327	)
Recoveries		4			-			-		11			65			-		-			80
Provision		(21	)		(44	)		18		8			55			-		154			170
March 31, 2017	$	1,089		$	1,898		$	83	$	1,598		$	2,256		$	-	$	282		$	7,206
Loans Acquired at Fair Value
December 31, 2016	$	-		$	365		$	-	$	120		$	-		$	-	$	35		$	520
Charge-offs		(64	)		(129	)		-		-			-			-		-			(193	)
Recoveries		-			1			-		-			1			-		-			2
Provision		64			234			-		(6	)		(1	)		-		(41	)		250
March 31, 2017	$	-		$	471		$	-	$	114		$	-		$	-	$	(6	)	$	579
Total Allowance for Loan Losses
December 31, 2016	$	1,106		$	2,307		$	65	$	1,699		$	2,463		$	-	$	163		$	7,803
Charge-offs		(64	)		(129	)		-		-			(327	)		-		-			(520	)
Recoveries		4			1			-		11			66			-		-			82
Provision		43			190			18		2			54			-		113			420
March 31, 2017	$	1,089		$	2,369		$	83	$	1,712		$	2,256		$	-	$	276		$	7,785

	March 31, 2017
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated			Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	402	$	-	$	703	$	-	$	-	$	-		$	1,105
Collectively Evaluated for Potential Impairment	$	1,089	$	1,496	$	83	$	895	$	2,256	$	-	$	282		$	6,101
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	-	$	-	$	-	$	24	$	-	$	-	$	-		$	24
Collectively Evaluated for Potential Impairment	$	-	$	471	$	-	$	90	$	-	$	-	$	(6	)	$	555
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	-	$	402	$	-	$	727	$	-	$	-	$	-		$	1,129
Collectively Evaluated for Potential Impairment	$	1,089	$	1,967	$	83	$	985	$	2,256	$	-	$	276		$	6,656

	March 31, 2016
	Real Estate Residential			Real Estate Commercial			Real Estate Construction			Commercial and Industrial		Consumer			Other			Unallocated		Total
Originated Loans
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14	$	6,490
Charge-offs		(20	)		-			-			-		(185	)		(17	)		-		(222	)
Recoveries		1			-			-			-		24			9			-		34
Provision		(345	)		(9	)		(20	)		319		450			10			230		635
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	244	$	6,937
Loans Acquired at Fair Value
December 31, 2015	$	-		$	-		$	-		$	-	$	-		$	-		$	-	$	-
Charge-offs		-			(180	)		-			-		(5	)		-			-		(185	)
Recoveries		2			1			-			-		3			-			-		6
Provision		(2	)		179			-			-		2			-			36		215
March 31, 2016	$	-		$	-		$	-		$	-	$	-		$	-		$	36	$	36
Total Allowance for Loan Losses
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14	$	6,490
Charge-offs		(20	)		(180	)		-			-		(190	)		(17	)		-		(407	)
Recoveries		3			1			-			-		27			9			-		40
Provision		(347	)		170			(20	)		319		452			10			266		850
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	280	$	6,973

	March 31, 2016
	Real Estate Residential			Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Originated Loans
Individually Evaluated for Impairment	$	-		$	377	$	-	$	322	$	-	$	-	$	-	$	699
Collectively Evaluated for Potential Impairment	$	1,259		$	1,659	$	117	$	781	$	2,176	$	2	$	244	$	6,238
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	52		$	-	$	-	$	-	$	-	$	-	$	-	$	52
Collectively Evaluated for Potential Impairment	$	(52	)	$	-	$	-	$	-	$	-	$	-	$	36	$	(16	)
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	52		$	377	$	-	$	322	$	-	$	-	$	-	$	751
Collectively Evaluated for Potential Impairment	$	1,207		$	1,659	$	117	$	781	$	2,176	$	2	$	280	$	6,222

	December 31, 2016
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	360	$	-	$	655	$	-	$	-	$	-	$	1,015
Collectively Evaluated for Potential Impairment	$	1,106	$	1,582	$	65	$	924	$	2,463	$	-	$	128	$	6,268
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	-	$	114	$	-	$	31	$	-	$	-	$	-	$	145
Collectively Evaluated for Potential Impairment	$	-	$	251	$	-	$	89	$	-	$	-	$	35	$	375
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	-	$	474	$	-	$	686	$	-	$	-	$	-	$	1,160
Collectively Evaluated for Potential Impairment	$	1,106	$	1,833	$	65	$	1,013	$	2,463	$	-	$	163	$	6,643

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, 2016	$	1,640
Accretable Yield		(234	)
Balance at March 31, 2017	$	1,406

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)
	March 31, 2017
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	3,532	$	639	$	2,863	$	-	$	4	$	7,038
Collectively Evaluated for Potential Impairment		188,583		132,873		12,699		71,606		108,817		3,576		518,154
	$	188,583	$	136,405	$	13,338	$	74,469	$	108,817	$	3,580	$	525,192
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,289	$	1,526	$	-	$	489	$	-	$	-	$	3,304
Collectively Evaluated for Potential Impairment		81,291		55,773		-		8,829		194		-		146,087
	$	82,580	$	57,299	$	-	$	9,318	$	194	$	-	$	149,391
Total Loans
Individually Evaluated for Impairment	$	1,289	$	5,058	$	639	$	3,352	$	-	$	4	$	10,342
Collectively Evaluated for Potential Impairment		269,874		188,646		12,699		80,435		109,011		3,576		664,241
	$	271,163	$	193,704	$	13,338	$	83,787	$	109,011	$	3,580	$	674,583

	December 31, 2016
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	3,361	$	702	$	2,765	$	-	$	4	$	6,832
Collectively Evaluated for Potential Impairment		186,077		136,533		9,944		68,326		114,007		3,633		518,520
	$	186,077	$	139,894	$	10,646	$	71,091	$	114,007	$	3,637	$	525,352
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,300	$	1,007	$	-	$	562	$	-	$	-	$	2,869
Collectively Evaluated for Potential Impairment		84,211		60,109		-		9,159		197		-		153,676
	$	85,511	$	61,116	$	-	$	9,721	$	197	$	-	$	156,545
Total Loans
Individually Evaluated for Impairment	$	1,300	$	4,368	$	702	$	3,327	$	-	$	4	$	9,701
Collectively Evaluated for Potential Impairment		270,288		196,642		9,944		77,485		114,204		3,633		672,196
	$	271,588	$	201,010	$	10,646	$	80,812	$	114,204	$	3,637	$	681,897

XML

Note 5 - Deposits

3 Months Ended

Mar. 31, 2017

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:	2017
One Year or Less	$	49,215
Over One Through Two Years		55,404
Over Two Through Three Years		18,564
Over Three Through Four Years		14,930
Over Four Through Five Years		11,060
Over Five Years		8,483
Total	$	157,656

The balance in time deposits that meet or exceed the FDIC insurance limit of

$250,000

totaled

$45.7

million and

$46.0

million as of

March

31,

2017

and

December

31,

2016,

respectively.

XML

Note 6 - Short-term Borrowings

3 Months Ended

Mar. 31, 2017

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)
	March 31, 2017					December 31, 2016
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Short-term Borrowings
Federal Funds Purchased:
Average Balance Outstanding During the Period	$	34		-	%	$	307		0.65	%
Maximum Amount Outstanding at any Month End		550					6,000
FHLB Borrowings:
Balance at Period End		-		-			-		-
Average Balance Outstanding During the Period		-		-			596		0.67
Maximum Amount Outstanding at any Month End		-					6,160
Securities Sold Under Agreements to Repurchase:
Balance at Period End		24,828		0.24			27,027		0.24
Average Balance Outstanding During the Period		26,092		0.30			26,311		0.26
Maximum Amount Outstanding at any Month End		25,575					30,095
Securities Collaterizing the Agreements at Period-End:
Carrying Value		32,501					33,785
Market Value		31,684					32,931

XML

Note 7 - Other Borrowed Funds

3 Months Ended

Mar. 31, 2017

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)
	March 31, 2017					December 31, 2016
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Due in One Year	$	3,500		1.35	%	$	-		-	%
Due After One Year to Two Years		4,000		1.67			3,500		0.94
Due After Two Years to Three Years		6,000		1.88			4,500		1.41
Due After Three Years to Four Years		5,000		2.09			6,000		1.78
Due After Four Years to Five Years		3,000		2.23			6,000		1.97
Due After Five Years		3,000		2.41			8,000		2.27
Total	$	24,500		1.92		$	28,000		1.80

As of

March

31,

2017,

the Company maintained a credit arrangement with a maximum borrowing limit of approximately

$286.1

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

$148.5

million as of

March

31,

2017

and

December

31,

2016,

respectively.

The Company maintains a Borrower-In-Custody of Collateral line of credit agreement with the Federal Reserve Bank (“FRB”) for

$86.0

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

March

31,

2017

and

December

31,

2016,

no

draws had been taken on these facilities.

XML

Note 8 - Commitments and Contingent Liabilities

3 Months Ended

Mar. 31, 2017

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)
	March 31, 2017		December 31, 2016
Standby Letters of Credit	$	42,564	$	36,657
Performance Letters of Credit		1,962		2,471
Construction Mortgages		28,968		21,363
Personal Lines of Credit		6,138		5,905
Overdraft Protection Lines		5,692		5,680
Home Equity Lines of Credit		15,205		14,722
Commercial Lines of Credit		64,296		51,725
	$	164,825	$	138,523

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.

XML

Note 9 - Fair Value Disclosure

3 Months Ended

Mar. 31, 2017

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 transaction 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 Hierarchy	March 31, 2017		December 31, 2016
Available for Sales Securities:
U.S. Government Agencies	Level II	$	64,973	$	66,156
Obligations of States and Political Subdivisions	Level II		34,365		35,735
Mortgage-Backed Securities - Government-Sponsored Enterprises	Level II		13,408		2,619
Equity Securities - Mutual Funds	Level I		504		507
Equity Securities - Other	Level I		1,271		1,191
Total Available for Sale Securities		$	114,521	$	106,208

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 Hierarchy	March 31, 2017		December 31, 2016		Valuation Techniques	Significant Unobservable Inputs	Unobservable  Input Value
Impaired Loans	Level III	$	3,274	$	2,497	Market Comparable Properties	Marketability Discount	10%	to	30%
OREO	Level III		155		-	Market Comparable Properties	Marketability Discount	10%	to	50%

(1)

Range includes discounts taken since appraisal and estimated values.

       

Impaired loans are evaluated when a 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

March

31,

2017

and

December

31,

2016,

the fair value of impaired loans consists of the loan balances of

$4.4

million and

$3.7

million, respectively, less their specific valuation allowances of

$1.1

million and

$1.2,

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. During the

three

months ended

March

31,

2017,

one

mortgage real estate loan moved into OREO. During the

three

months ended

March

31,

2016,

two

commercial real estate properties for

$3.2

million were foreclosed on, moved into OREO, evaluated for fair value and recorded a prior

first

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 subject to a

tentative

sales agreement with a current customer which closed in the prior year. The other property was transferred into premises and equipment of the Company due to the location and the Company’s need of a new location for company headquarters. At

March

31,

2017,

one

residential real estate loan for

$155,000

was moved into OREO.

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)
		March 31, 2017				December 31, 2016
	Fair Value Heirarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and Due From Banks:
Interest Bearing	Level I	$	19,193	$	19,193	$	7,699	$	7,699
Non-Interest Bearing	Level I		16,402		16,402		6,583		6,583
Investment Securities:
Available for Sale	See Above		114,521		114,521		106,208		106,208
Loans, Net	Level III		666,798		677,172		674,094		684,777
Restricted Stock	Level II		3,567		3,567		3,665		3,665
Bank-Owned Life Insurance	Level II		18,803		18,803		18,687		18,687
Accrued Interest Receivable	Level II		2,364		2,364		2,441		2,441
Financial Liabilities:
Deposits	Level II		725,461		696,110		698,218		697,806
Short-term Borrowings	Level II		24,828		24,828		27,027		27,027
Other Borrowed Funds	Level II		24,500		24,567		28,000		28,098
Accrued Interest Payable	Level II		375		375		334		334

XML

Note 10 - Other Noninterest Expense

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Other Operating Income and Expense [Text Block]

Note

10.

Other Noninterest Expense

In accordance with SEC Regulation S-X, other noninterest expense that exceeds

10%

of total noninterest expense is required to be disclosed by detailed expenses. The details for other noninterest expense for the Company’s consolidated statement of income for the

three

months ended

March

31,

2017and

2016,

are as follows:

	(Dollars in thousands)
	Three Months Ended March 31,
	2017		2016
Other Noninterest Expense
Non-employee compensation	$	100	$	133
Printing and supplies		103		74
Postage		66		59
Telephone		88		84
Charitable contributions		24		28
Dues and subscriptions		63		47
Loan expenses		74		70
Meals and entertainment		24		25
Travel		26		30
Training		11		12
Miscellaneous		231		219
Total Other Noninterest Expense	$	810	$	781

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

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” or “EU”). 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 (“SEC”) 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 any material respect. 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,

2016.

Interim results are not necessarily indicative of results for a full year.

The Company is currently evaluating the provisions of Accounting Standards Codification (“ASC”) Topic

280

for segment reporting information related to Exchange Underwriters. During the current quarter, Exchange Underwriters insurance commissions comprised of approximately

11%

of combined interest and noninterest income but less than

10%

of the combined assets of the Company. While EU exceeded the

10%

threshold of total interest and noninterest income, this was primarily related to a unique income event of increased contingency income. Contingency fees are commissions that are contingent upon several factors including, but not limited to, eligible written premiums, earned premiums, incurred losses and stop loss charges.

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.

For performing loans acquired in the merger, 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. For purchased credit impaired (“PCI”) loans acquired in the merger, 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

March

2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU")

2017

-

08,

Receivables- Nonrefundable Fees and Other Costs (Subtopic

310

-

20):

Premium Amortization on Purchases Callable Debt Securities.

ASU

2017

-

08

amends guidance on the amortization period of premiums on certain purchases callable debt securities. The amendments shorten the amortization period of premiums on certain purchases callable debt securities to the earliest call date. ASU

2017

-

08

is effective for public business entities that are SEC filers for annual periods beginning after

December

15,

2018,

and interim periods within those annual periods, for public entities that are not SEC filers for annual periods beginning after

December

15,

2019

and for all other entities for annual periods beginning after

December

15,

2020

with early adoption permitted. The Company is evaluating the provisions of ASU

2017

-

08

but believes that its adoption will not have a material impact on the Company's consolidated financial condition or results of operations.

In

January

2017,

the FASB issued ASU

2017

-

04,

Intangibles - Goodwill and Other (Topic

350):

Simplifying the Test for Goodwill Impairment

. ASU

2017

-

04

simplifies the accounting for goodwill impairments by eliminating the

second

step of the goodwill impairment test. Instead, an entity will apply a

one

-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. ASU

2017

-

04

is effective for public business entities that are SEC filers for annual periods beginning after

December

15,

2019,

and interim periods within those annual periods, with early adoption permitted, and is to be applied on a prospective basis. The Company is currently evaluating the provisions of ASU

2017

-

04,

but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

In

August

2016,

the FASB issued ASU

2016

-

15,

Statement of Cash Flow (Topic

230):

Classification of Certain Cash Receipts and Cash Payments

. ASU

2016

-

15

addresses the following

eight

specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of

zero

-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU

2016

-

15

is effective for fiscal years beginning after

December

15,

2017,

and interim periods within those fiscal years. Early adoption is permitted and the amendments should be applied using a retrospective transition method to each period presented.  The Company is currently evaluating the provisions of ASU

2016

-

15,

but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

In

June

2016,

the FASB issued 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 provisions of ASU

2016

-

13,

but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or 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 adoption of ASU

2016

-

09

as of

January

1,

2017,

had no effect on the Company's consolidated 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 provisions of ASU

2016

-

02,

but expects to report increased assets and liabilities as a result of reporting additional leases on the Company's consolidated statement of financial condition.

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 currently evaluating the provisions of ASU

2016

-

01,

but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

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.

The guidance is effective for the Company’s financial statements beginning

January

1,

2018.

The guidance allows an entity to apply the new standard either retrospectively or through a cumulative effect adjustment as of

January

1,

2018.

This guidance does not apply to revenue associated with financial instruments, including loans, securities, and derivatives that are accounted for under other U.S. GAAP guidance. For that reason, we do not expect it to have a material impact on our consolidated results of operations for elements of the statement of income associated with financial instruments, including securities gains, interest income, and interest expense. However, we do believe the new standard will result in new disclosure requirements. We are currently in the process of reviewing contracts to assess the impact of the new guidance on our service offerings that are in the scope of the guidance included in non-interest income, such as insurance commission fees, service charges, payment processing fees, trust services fees and brokerage services fees. The Company is continuing to evaluate the effect of the new guidance on revenue sources other than financial instruments on its consolidated financial position and results of operations.

XML

Note 2 - Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

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

	Three Months Ended March 31,
	2017			2016
Weighted-Average Common Shares Outstanding		4,363,346			4,363,346
Average Treasury Stock Shares		(276,057	)		(282,329	)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share		4,087,289			4,081,017
Additional Common Stock Equivalents (Stock Options and Restricted Stock) Used to Calculate Diluted Earnings Per Share		10,987			852
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share		4,098,276			4,081,869
Earnings per share:
Basic	$	0.42		$	0.50
Diluted		0.42			0.50

XML

Note 3 - Investment Securities (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Available-for-sale Securities [Table Text Block]

	(Dollars in thousands)
	March 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	66,638	$	1	$	(1,666	)	$	64,973
Obligations of States and Political Subdivisions		34,285		350		(270	)		34,365
Mortgage-Backed Securities - Government-Sponsored Enterprises		13,443		14		(49	)		13,408
Equity Securities - Mutual Funds		500		4		-			504
Equity Securities - Other		1,162		120		(11	)		1,271
Total	$	116,028	$	489	$	(1,996	)	$	114,521

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government Agencies	$	67,944	$	18	$	(1,806	)	$	66,156
Obligations of States and Political Subdivisions		35,856		366		(487	)		35,735
Mortgage-Backed Securities - Government-Sponsored Enterprises		2,588		31		-			2,619
Equity Securities - Mutual Funds		500		7		-			507
Equity Securities - Other		1,106		91		(6	)		1,191
Total	$	107,994	$	513	$	(2,299	)	$	106,208

Schedule of Unrealized Loss on Investments [Table Text Block]

	(Dollars in thousands)
	March 31, 2017
	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		22	$	59,950	$	(1,666	)		-	$	-	$	-			22	$	59,950	$	(1,666	)
Obligations of States and Political Subdivisions		30		16,213		(269	)		1		260		(1	)		31		16,473		(270	)
Mortgage-Backed Securities - Government Sponsored Enterprises		5		10,991		(49	)		-		-		-			5		10,991		(49	)
Equity Securities - Other		3		226		(11	)		-		-		-			3		226		(11	)
Total		60	$	87,380	$	(1,995	)		1	$	260	$	(1	)		61	$	87,640	$	(1,996	)

	December 31, 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		23	$	62,853	$	(1,806	)		-	$	-	$	-			23	$	62,853	$	(1,806	)
Obligations of States and Political Subdivisions		39		19,749		(485	)		1		260		(2	)		40		20,009		(487	)
Equity Securities - Other		2		160		(6	)		-		-		-			2		160		(6	)
Total		64	$	82,762	$	(2,297	)		1	$	260	$	(2	)		65	$	83,022	$	(2,299	)

Investments Classified by Contractual Maturity Date [Table Text Block]

	(Dollars in thousands)
	March 31, 2017
	Available-for-Sale
	Amortized Cost		Fair Value
Due in One Year or Less	$	3,044	$	3,194
Due after One Year through Five Years		13,528		13,478
Due after Five Years through Ten Years		87,796		86,105
Due after Ten Years		11,660		11,744
Total	$	116,028	$	114,521

XML

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

3 Months Ended

Mar. 31, 2017

Notes Tables

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

	(Dollars in thousands)
	March 31, 2017						December 31, 2016
	Amount			Percent			Amount			Percent
Originated Loans
Real Estate:
Residential	$	188,583			35.9	%	$	186,077			35.4	%
Commercial		136,405			26.0			139,894			26.7
Construction		13,338			2.5			10,646			2.0
Commercial and Industrial		74,469			14.2			71,091			13.5
Consumer		108,817			20.7			114,007			21.7
Other		3,580			0.7			3,637			0.7
Total Originated Loans		525,192			100.0	%		525,352			100.0	%
Allowance for Loan Losses		(7,206	)					(7,283	)
Loans, Net	$	517,986					$	518,069
Loans Acquired at Fair Value
Real Estate:
Residential	$	82,580			55.3	%	$	85,511			54.7	%
Commercial		57,299			38.4			61,116			39.0
Commercial and Industrial		9,318			6.2			9,721			6.2
Consumer		194			0.1			197			0.1
Total Loans Acquired at Fair Value		149,391			100.0	%		156,545			100.0	%
Allowance for Loan Losses		(579	)					(520	)
Loans, Net	$	148,812					$	156,025
Total Loans
Real Estate:
Residential	$	271,163			40.2	%	$	271,588			39.8	%
Commercial		193,704			28.7			201,010			29.5
Construction		13,338			2.0			10,646			1.6
Commercial and Industrial		83,787			12.4			80,812			11.9
Consumer		109,011			16.2			114,204			16.7
Other		3,580			0.5			3,637			0.5
Total Loans		674,583			100.0	%		681,897			100.0	%
Allowance for Loan Losses		(7,785	)					(7,803	)
Loans, Net	$	666,798					$	674,094

Financing Receivable Credit Quality Indicators [Table Text Block]

	(Dollars in thousands)
	March 31, 2017
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	187,194	$	980	$	409	$	-	$	188,583
Commercial		119,538		13,725		2,220		922		136,405
Construction		12,699		-		580		59		13,338
Commercial and Industrial		67,430		4,182		1,450		1,407		74,469
Consumer		108,787		-		30		-		108,817
Other		3,580		-		-		-		3,580
Total Originated Loans	$	499,228	$	18,887	$	4,689	$	2,388	$	525,192
Loans Acquired at Fair Value
Real Estate:
Residential	$	80,083	$	-	$	2,497	$	-	$	82,580
Commercial		54,019		2,225		852		203		57,299
Commercial and Industrial		8,771		58		379		110		9,318
Consumer		194		-		-		-		194
Total Loans Acquired at Fair Value	$	143,067	$	2,283	$	3,728	$	313	$	149,391
Total Loans
Real Estate:
Residential	$	267,277	$	980	$	2,906	$	-	$	271,163
Commercial		173,557		15,950		3,072		1,125		193,704
Construction		12,699		-		580		59		13,338
Commercial and Industrial		76,201		4,240		1,829		1,517		83,787
Consumer		108,981		-		30		-		109,011
Other		3,580		-		-		-		3,580
Total Loans	$	642,295	$	21,170	$	8,417	$	2,701	$	674,583

	December 31, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	184,721	$	1,050	$	306	$	-	$	186,077
Commercial		122,811		14,118		2,035		930		139,894
Construction		9,944		-		595		107		10,646
Commercial and Industrial		65,612		2,720		1,322		1,437		71,091
Consumer		113,847		-		160		-		114,007
Other		3,637		-		-		-		3,637
Total Originated Loans	$	500,572	$	17,888	$	4,418	$	2,474	$	525,352
Loans Acquired at Fair Value
Real Estate:
Residential	$	83,044	$	-	$	2,467	$	-	$	85,511
Commercial		58,411		2,358		347		-		61,116
Commercial and Industrial		9,117		42		441		121		9,721
Consumer		197		-		-		-		197
Total Loans Acquired at Fair Value	$	150,769	$	2,400	$	3,255	$	121	$	156,545
Total Loans
Real Estate:
Residential	$	267,765	$	1,050	$	2,773	$	-	$	271,588
Commercial		181,222		16,476		2,382		930		201,010
Construction		9,944		-		595		107		10,646
Commercial and Industrial		74,729		2,762		1,763		1,558		80,812
Consumer		114,044		-		160		-		114,204
Other		3,637		-		-		-		3,637
Total Loans	$	651,341	$	20,288	$	7,673	$	2,595	$	681,897

Past Due Financing Receivables [Table Text Block]

	(Dollars in thousands)
	March 31, 2017
	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	$	186,493	$	1,612	$	68	$	-	$	1,680	$	410	$	188,583
Commercial		136,317		88		-		-		88		-		136,405
Construction		13,279		-		-		-		-		59		13,338
Commercial and Industrial		72,432		556		74		-		630		1,407		74,469
Consumer		107,970		764		40		13		817		30		108,817
Other		3,580		-		-		-		-		-		3,580
Total Originated Loans	$	520,071	$	3,020	$	182	$	13	$	3,215	$	1,906	$	525,192
Loans Acquired at Fair Value
Real Estate:
Residential	$	80,658	$	321	$	-	$	-	$	321	$	1,601	$	82,580
Commercial		56,760		-		-		-		-		539		57,299
Commercial and Industrial		8,889		407		-		-		407		22		9,318
Consumer		194		-		-		-		-		-		194
Total Loans Acquired at Fair Value	$	146,501	$	728	$	-	$	-	$	728	$	2,162	$	149,391
Total Loans
Real Estate:
Residential	$	267,151	$	1,933	$	68	$	-	$	2,001	$	2,011	$	271,163
Commercial		193,077		88		-		-		88		539		193,704
Construction		13,279		-		-		-		-		59		13,338
Commercial and Industrial		81,321		963		74		-		1,037		1,429		83,787
Consumer		108,164		764		40		13		817		30		109,011
Other		3,580		-		-		-		-		-		3,580
Total Loans	$	666,572	$	3,748	$	182	$	13	$	3,943	$	4,068	$	674,583

	December 31, 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	$	183,939	$	1,638	$	72	$	120	$	1,830	$	308	$	186,077
Commercial		139,821		-		-		-		-		73		139,894
Construction		10,539		-		-		-		-		107		10,646
Commercial and Industrial		68,310		952		-		-		952		1,829		71,091
Consumer		112,232		1,311		296		8		1,615		160		114,007
Other		3,637		-		-		-		-		-		3,637
Total Originated Loans	$	518,478	$	3,901	$	368	$	128	$	4,397	$	2,477	$	525,352
Loans Acquired at Fair Value
Real Estate:
Residential	$	82,523	$	893	$	307	$	223	$	1,423	$	1,565	$	85,511
Commercial		60,437		332		-		-		332		347		61,116
Commercial and Industrial		9,577		121		23		-		144		-		9,721
Consumer		197		-		-		-		-		-		197
Total Loans Acquired at Fair Value	$	152,734	$	1,346	$	330	$	223	$	1,899	$	1,912	$	156,545
Total Loans
Real Estate:
Residential	$	266,462	$	2,531	$	379	$	343	$	3,253	$	1,873	$	271,588
Commercial		200,258		332		-		-		332		420		201,010
Construction		10,539		-		-		-		-		107		10,646
Commercial and Industrial		77,887		1,073		23		-		1,096		1,829		80,812
Consumer		112,429		1,311		296		8		1,615		160		114,204
Other		3,637		-		-		-		-		-		3,637
Total Loans	$	671,212	$	5,247	$	698	$	351	$	6,296	$	4,389	$	681,897

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

	(Dollars in Thousands)
	March 31,  2017			December 31,  2016
Nonaccrual Loans:
Originated Loans:
Real Estate:
Residential	$	410		$	308
Commercial		-			73
Construction		59			107
Commercial and Industrial		1,407			1,829
Consumer		30			160
Total Originated Nonaccrual Loans		1,906			2,477
Loans Acquired at Fair Value:
Real Estate:
Residential		1,601			1,565
Commercial		539			347
Commercial and Industrial		22			-
Total Loans Acquired at Fair Value Nonaccrual Loans		2,162			1,912
Total Nonaccrual Loans		4,068			4,389
Accruing Loans Past Due 90 Days or More:
Originated Loans:
Real Estate:
Residential		-			120
Consumer		13			8
Total Originated Accruing Loans 90 Days or More Past Due		13			128
Loans Acquired at Fair Value:
Real Estate:
Residential		-			223
Total Loans Acquired at Fair Value Accruing Loans 90 Days or More Past Due		-			223
Total Accruing Loans 90 Days or More Past Due		13			351
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		4,081			4,740
Troubled Debt Restructurings, Accruing:
Originated Loans:
Real Estate - Commercial		1,312			1,325
Commercial and Industrial		6			6
Other		4			4
Total Originated Loans		1,322			1,335
Loans Acquired at Fair Value:
Real Estate - Residential		1,289			1,299
Real Estate - Commercial		471			660
Commercial and Industrial		357			393
Total Loans Acquired at Fair Value		2,117			2,352
Total Troubled Debt Restructurings, Accruing		3,439			3,687
Total Nonperforming Loans		7,520			8,427
Real Estate Owned:
Residential		155			-
Commercial		174			174
Total Real Estate Owned		329			174
Total Nonperforming Assets	$	7,849		$	8,601
Nonperforming Loans to Total Loans		1.11	%		1.24	%
Nonperforming Assets to Total Assets		0.90			1.02

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	(Dollars in thousands)
	Three Months Ended March 31, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Related Allowance
Originated Loans
Real Estate
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	$	-

Impaired Financing Receivables [Table Text Block]

	(Dollars in thousands)
	March 31, 2017
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	2,009	$	-	$	2,009	$	2,033	$	23
Construction		639		-		639		674		7
Commercial and Industrial		632		-		632		619		8
Other		4		-		4		4		-
Total With No Related Allowance Recorded	$	3,284	$	-	$	3,284	$	3,330	$	38
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		987		-		987		997		13
Commercial and Industrial		379		-		379		407		4
Total With No Related Allowance Recorded	$	2,655	$	-	$	2,655	$	2,698	$	33
Total Loans
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		2,996		-		2,996		3,030		36
Construction		639		-		639		674		7
Commercial and Industrial		1,011		-		1,011		1,026		12
Other		4		-		4		4		-
Total With No Related Allowance Recorded	$	5,939	$	-	$	5,939	$	6,028	$	71
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,523	$	402	$	1,523	$	1,531	$	20
Commercial and Industrial		2,231		703		2,255		2,232		27
Total With A Related Allowance Recorded	$	3,754	$	1,105	$	3,778	$	3,763	$	47
Loans Acquired at Fair Value
Real Estate:
Commercial	$	539	$	-	$	630	$	674	$	(2	)
Commercial and Industrial		110		24		110		114		1
Total With A Related Allowance Recorded	$	649	$	24	$	740	$	788	$	(1	)
Total Loans
Real Estate:
Commercial	$	2,062	$	402	$	2,153	$	2,205	$	18
Commercial and Industrial		2,341		727		2,365		2,346		28
Total With A Related Allowance Recorded	$	4,403	$	1,129	$	4,518	$	4,551	$	46

	March 31, 2017 (cont.)
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
Total Impaired Loans:
Originated Loans
Real Estate:
Commercial	$	3,532	$	402	$	3,532	$	3,564	$	43
Construction		639		-		639		674		7
Commercial and Industrial		2,863		703		2,887		2,851		35
Other		4		-		4		4		-
Total Impaired Loans	$	7,038	$	1,105	$	7,062	$	7,093	$	85
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		1,526		-		1,617		1,671		11
Commercial and Industrial		489		24		489		521		5
Total Impaired Loans	$	3,304	$	24	$	3,395	$	3,486	$	32
Total Loans
Real Estate:
Residential	$	1,289	$	-	$	1,289	$	1,294	$	16
Commercial		5,058		402		5,149		5,235		54
Construction		639		-		639		674		7
Commercial and Industrial		3,352		727		3,376		3,372		40
Other		4		-		4		4		-
Total Impaired Loans	$	10,342	$	1,129	$	10,457	$	10,579	$	117

	December 31, 2016
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	2,112	$	-	$	2,112	$	2,228	$	100
Construction		702		-		702		843		28
Commercial and Industrial		825		-		825		891		45
Other		4		-		4		6		1
Total With No Related Allowance Recorded	$	3,643	$	-	$	3,643	$	3,968	$	174
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		660		-		660		763		47
Commercial and Industrial		441		-		441		543		21
Total With No Related Allowance Recorded	$	2,401	$	-	$	2,401	$	2,626	$	136
Total Loans
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		2,772		-		2,772		2,991		147
Construction		702		-		702		843		28
Commercial and Industrial		1,266		-		1,266		1,434		66
Other		4		-		4		6		1
Total With No Related Allowance Recorded	$	6,044	$	-	$	6,044	$	6,594	$	310
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,249	$	360	$	1,249	$	1,277	$	66
Commercial and Industrial		1,940		655		1,946		1,951		27
Total With A Related Allowance Recorded	$	3,189	$	1,015	$	3,195	$	3,228	$	93
Loans Acquired at Fair Value
Real Estate:
Commercial	$	347	$	114	$	437	$	367	$	-
Commercial and Industrial		121		31		121		141		6
Total With A Related Allowance Recorded	$	468	$	145	$	558	$	508	$	6
Total Loans
Real Estate:
Commercial	$	1,596	$	474	$	1,686	$	1,644	$	66
Commercial and Industrial		2,061		686		2,067		2,092		33
Total With A Related Allowance Recorded	$	3,657	$	1,160	$	3,753	$	3,736	$	99

	December 31, 2016 (cont.)
	Recorded  Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
Total Impaired Loans
Originated Loans
Real Estate:
Commercial	$	3,361	$	360	$	3,361	$	3,505	$	166
Construction		702		-		702		843		28
Commercial and Industrial		2,765		655		2,771		2,842		72
Other		4		-		4		6		1
Total Impaired Loans	$	6,832	$	1,015	$	6,838	$	7,196	$	267
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		1,007		114		1,097		1,130		47
Commercial and Industrial		562		31		562		684		27
Total Impaired Loans	$	2,869	$	145	$	2,959	$	3,134	$	142
Total Loans
Real Estate:
Residential	$	1,300	$	-	$	1,300	$	1,320	$	68
Commercial		4,368		474		4,458		4,635		213
Construction		702		-		702		843		28
Commercial and Industrial		3,327		686		3,333		3,526		99
Other		4		-		4		6		1
Total Impaired Loans	$	9,701	$	1,160	$	9,797	$	10,330	$	409

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

	(Dollars in thousands)
	March 31, 2017
	Real Estate Residential			Real Estate Commercial			Real Estate Construction		Commercial and Industrial			Consumer			Other		Unallocated			Total
Originated Loans
December 31, 2016	$	1,106		$	1,942		$	65	$	1,579		$	2,463		$	-	$	128		$	7,283
Charge-offs		-			-			-		-			(327	)		-		-			(327	)
Recoveries		4			-			-		11			65			-		-			80
Provision		(21	)		(44	)		18		8			55			-		154			170
March 31, 2017	$	1,089		$	1,898		$	83	$	1,598		$	2,256		$	-	$	282		$	7,206
Loans Acquired at Fair Value
December 31, 2016	$	-		$	365		$	-	$	120		$	-		$	-	$	35		$	520
Charge-offs		(64	)		(129	)		-		-			-			-		-			(193	)
Recoveries		-			1			-		-			1			-		-			2
Provision		64			234			-		(6	)		(1	)		-		(41	)		250
March 31, 2017	$	-		$	471		$	-	$	114		$	-		$	-	$	(6	)	$	579
Total Allowance for Loan Losses
December 31, 2016	$	1,106		$	2,307		$	65	$	1,699		$	2,463		$	-	$	163		$	7,803
Charge-offs		(64	)		(129	)		-		-			(327	)		-		-			(520	)
Recoveries		4			1			-		11			66			-		-			82
Provision		43			190			18		2			54			-		113			420
March 31, 2017	$	1,089		$	2,369		$	83	$	1,712		$	2,256		$	-	$	276		$	7,785

	March 31, 2017
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated			Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	402	$	-	$	703	$	-	$	-	$	-		$	1,105
Collectively Evaluated for Potential Impairment	$	1,089	$	1,496	$	83	$	895	$	2,256	$	-	$	282		$	6,101
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	-	$	-	$	-	$	24	$	-	$	-	$	-		$	24
Collectively Evaluated for Potential Impairment	$	-	$	471	$	-	$	90	$	-	$	-	$	(6	)	$	555
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	-	$	402	$	-	$	727	$	-	$	-	$	-		$	1,129
Collectively Evaluated for Potential Impairment	$	1,089	$	1,967	$	83	$	985	$	2,256	$	-	$	276		$	6,656

	March 31, 2016
	Real Estate Residential			Real Estate Commercial			Real Estate Construction			Commercial and Industrial		Consumer			Other			Unallocated		Total
Originated Loans
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14	$	6,490
Charge-offs		(20	)		-			-			-		(185	)		(17	)		-		(222	)
Recoveries		1			-			-			-		24			9			-		34
Provision		(345	)		(9	)		(20	)		319		450			10			230		635
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	244	$	6,937
Loans Acquired at Fair Value
December 31, 2015	$	-		$	-		$	-		$	-	$	-		$	-		$	-	$	-
Charge-offs		-			(180	)		-			-		(5	)		-			-		(185	)
Recoveries		2			1			-			-		3			-			-		6
Provision		(2	)		179			-			-		2			-			36		215
March 31, 2016	$	-		$	-		$	-		$	-	$	-		$	-		$	36	$	36
Total Allowance for Loan Losses
December 31, 2015	$	1,623		$	2,045		$	137		$	784	$	1,887		$	-		$	14	$	6,490
Charge-offs		(20	)		(180	)		-			-		(190	)		(17	)		-		(407	)
Recoveries		3			1			-			-		27			9			-		40
Provision		(347	)		170			(20	)		319		452			10			266		850
March 31, 2016	$	1,259		$	2,036		$	117		$	1,103	$	2,176		$	2		$	280	$	6,973

	March 31, 2016
	Real Estate Residential			Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Originated Loans
Individually Evaluated for Impairment	$	-		$	377	$	-	$	322	$	-	$	-	$	-	$	699
Collectively Evaluated for Potential Impairment	$	1,259		$	1,659	$	117	$	781	$	2,176	$	2	$	244	$	6,238
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	52		$	-	$	-	$	-	$	-	$	-	$	-	$	52
Collectively Evaluated for Potential Impairment	$	(52	)	$	-	$	-	$	-	$	-	$	-	$	36	$	(16	)
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	52		$	377	$	-	$	322	$	-	$	-	$	-	$	751
Collectively Evaluated for Potential Impairment	$	1,207		$	1,659	$	117	$	781	$	2,176	$	2	$	280	$	6,222

	December 31, 2016
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	360	$	-	$	655	$	-	$	-	$	-	$	1,015
Collectively Evaluated for Potential Impairment	$	1,106	$	1,582	$	65	$	924	$	2,463	$	-	$	128	$	6,268
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	-	$	114	$	-	$	31	$	-	$	-	$	-	$	145
Collectively Evaluated for Potential Impairment	$	-	$	251	$	-	$	89	$	-	$	-	$	35	$	375
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	-	$	474	$	-	$	686	$	-	$	-	$	-	$	1,160
Collectively Evaluated for Potential Impairment	$	1,106	$	1,833	$	65	$	1,013	$	2,463	$	-	$	163	$	6,643

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

	Accretable Discount
Balance at December 31, 2016	$	1,640
Accretable Yield		(234	)
Balance at March 31, 2017	$	1,406

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

	(Dollars in thousands)
	March 31, 2017
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	3,532	$	639	$	2,863	$	-	$	4	$	7,038
Collectively Evaluated for Potential Impairment		188,583		132,873		12,699		71,606		108,817		3,576		518,154
	$	188,583	$	136,405	$	13,338	$	74,469	$	108,817	$	3,580	$	525,192
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,289	$	1,526	$	-	$	489	$	-	$	-	$	3,304
Collectively Evaluated for Potential Impairment		81,291		55,773		-		8,829		194		-		146,087
	$	82,580	$	57,299	$	-	$	9,318	$	194	$	-	$	149,391
Total Loans
Individually Evaluated for Impairment	$	1,289	$	5,058	$	639	$	3,352	$	-	$	4	$	10,342
Collectively Evaluated for Potential Impairment		269,874		188,646		12,699		80,435		109,011		3,576		664,241
	$	271,163	$	193,704	$	13,338	$	83,787	$	109,011	$	3,580	$	674,583

	December 31, 2016
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	3,361	$	702	$	2,765	$	-	$	4	$	6,832
Collectively Evaluated for Potential Impairment		186,077		136,533		9,944		68,326		114,007		3,633		518,520
	$	186,077	$	139,894	$	10,646	$	71,091	$	114,007	$	3,637	$	525,352
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,300	$	1,007	$	-	$	562	$	-	$	-	$	2,869
Collectively Evaluated for Potential Impairment		84,211		60,109		-		9,159		197		-		153,676
	$	85,511	$	61,116	$	-	$	9,721	$	197	$	-	$	156,545
Total Loans
Individually Evaluated for Impairment	$	1,300	$	4,368	$	702	$	3,327	$	-	$	4	$	9,701
Collectively Evaluated for Potential Impairment		270,288		196,642		9,944		77,485		114,204		3,633		672,196
	$	271,588	$	201,010	$	10,646	$	80,812	$	114,204	$	3,637	$	681,897

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Note 5 - Deposits (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Time Deposit Maturities [Table Text Block]

Maturity Period:	2017
One Year or Less	$	49,215
Over One Through Two Years		55,404
Over Two Through Three Years		18,564
Over Three Through Four Years		14,930
Over Four Through Five Years		11,060
Over Five Years		8,483
Total	$	157,656

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Note 6 - Short-term Borrowings (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Debt [Table Text Block]

	(Dollars in thousands)
	March 31, 2017					December 31, 2016
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Short-term Borrowings
Federal Funds Purchased:
Average Balance Outstanding During the Period	$	34		-	%	$	307		0.65	%
Maximum Amount Outstanding at any Month End		550					6,000
FHLB Borrowings:
Balance at Period End		-		-			-		-
Average Balance Outstanding During the Period		-		-			596		0.67
Maximum Amount Outstanding at any Month End		-					6,160
Securities Sold Under Agreements to Repurchase:
Balance at Period End		24,828		0.24			27,027		0.24
Average Balance Outstanding During the Period		26,092		0.30			26,311		0.26
Maximum Amount Outstanding at any Month End		25,575					30,095
Securities Collaterizing the Agreements at Period-End:
Carrying Value		32,501					33,785
Market Value		31,684					32,931

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Note 7 - Other Borrowed Funds (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

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

	(Dollars in thousands)
	March 31, 2017					December 31, 2016
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
Due in One Year	$	3,500		1.35	%	$	-		-	%
Due After One Year to Two Years		4,000		1.67			3,500		0.94
Due After Two Years to Three Years		6,000		1.88			4,500		1.41
Due After Three Years to Four Years		5,000		2.09			6,000		1.78
Due After Four Years to Five Years		3,000		2.23			6,000		1.97
Due After Five Years		3,000		2.41			8,000		2.27
Total	$	24,500		1.92		$	28,000		1.80

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Note 8 - Commitments and Contingent Liabilities (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

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

	(Dollars in thousands)
	March 31, 2017		December 31, 2016
Standby Letters of Credit	$	42,564	$	36,657
Performance Letters of Credit		1,962		2,471
Construction Mortgages		28,968		21,363
Personal Lines of Credit		6,138		5,905
Overdraft Protection Lines		5,692		5,680
Home Equity Lines of Credit		15,205		14,722
Commercial Lines of Credit		64,296		51,725
	$	164,825	$	138,523

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Note 9 - Fair Value Disclosure (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

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

		(Dollars in thousands)
	Fair Value Hierarchy	March 31, 2017		December 31, 2016
Available for Sales Securities:
U.S. Government Agencies	Level II	$	64,973	$	66,156
Obligations of States and Political Subdivisions	Level II		34,365		35,735
Mortgage-Backed Securities - Government-Sponsored Enterprises	Level II		13,408		2,619
Equity Securities - Mutual Funds	Level I		504		507
Equity Securities - Other	Level I		1,271		1,191
Total Available for Sale Securities		$	114,521	$	106,208

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

		(Dollars in thousands)
		Fair Value at						Significant
Financial Asset	Fair Value Hierarchy	March 31, 2017		December 31, 2016		Valuation Techniques	Significant Unobservable Inputs	Unobservable  Input Value
Impaired Loans	Level III	$	3,274	$	2,497	Market Comparable Properties	Marketability Discount	10%	to	30%
OREO	Level III		155		-	Market Comparable Properties	Marketability Discount	10%	to	50%

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

		(Dollars in thousands)
		March 31, 2017				December 31, 2016
	Fair Value Heirarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and Due From Banks:
Interest Bearing	Level I	$	19,193	$	19,193	$	7,699	$	7,699
Non-Interest Bearing	Level I		16,402		16,402		6,583		6,583
Investment Securities:
Available for Sale	See Above		114,521		114,521		106,208		106,208
Loans, Net	Level III		666,798		677,172		674,094		684,777
Restricted Stock	Level II		3,567		3,567		3,665		3,665
Bank-Owned Life Insurance	Level II		18,803		18,803		18,687		18,687
Accrued Interest Receivable	Level II		2,364		2,364		2,441		2,441
Financial Liabilities:
Deposits	Level II		725,461		696,110		698,218		697,806
Short-term Borrowings	Level II		24,828		24,828		27,027		27,027
Other Borrowed Funds	Level II		24,500		24,567		28,000		28,098
Accrued Interest Payable	Level II		375		375		334		334

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Note 10 - Other Noninterest Expense (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Other Operating Cost and Expense, by Component [Table Text Block]

	(Dollars in thousands)
	Three Months Ended March 31,
	2017		2016
Other Noninterest Expense
Non-employee compensation	$	100	$	133
Printing and supplies		103		74
Postage		66		59
Telephone		88		84
Charitable contributions		24		28
Dues and subscriptions		63		47
Loan expenses		74		70
Meals and entertainment		24		25
Travel		26		30
Training		11		12
Miscellaneous		231		219
Total Other Noninterest Expense	$	810	$	781

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Note 1 - Summary of Significant Accounting Policies (Details Textual)	3 Months Ended
	Mar. 31, 2017
Product Concentration Risk [Member] | Total Interest and Noninterest Income [Member] | Exchange Underwriters Insurance Commissions [Member]
Concentration Risk, Percentage	11.00%

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Note 2 - Earnings Per Share - Basic and Diluted Earnings Per Common Share (Details) - $ / shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Weighted-Average Common Shares Outstanding (in shares)	4,363,346	4,363,346
Average Treasury Stock Shares (in shares)	(276,057)	(282,329)
Basic (in shares)	4,087,289	4,081,017
Additional Common Stock Equivalents (Stock Options and Restricted Stock) Used to Calculate Diluted Earnings Per Share (in shares)	10,987	852
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share (in shares)	4,098,276	4,081,869
EARNINGS PER SHARE
Basic (in dollars per share)	$ 0.42	$ 0.50
Diluted (in dollars per share)	$ 0.42	$ 0.50

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Note 3 - Investment Securities (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Credit Losses on Debt Securities Held	$ 0	$ 0

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Note 3 - Investment Securities - Amortized Cost and Fair Value of Investment Securities Available-for-sale (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Securities available-for-sale, amortized cost	$ 116,028	$ 107,994
Securities available-for-sale, gross unrealized gains	489	513
Securities available-for-sale, gross unrealized losses	(1,996)	(2,299)
Available for sale securities	114,521	106,208
US Government Agencies Debt Securities [Member]
Securities available-for-sale, amortized cost	66,638	67,944
Securities available-for-sale, gross unrealized gains	1	18
Securities available-for-sale, gross unrealized losses	(1,666)	(1,806)
Available for sale securities	64,973	66,156
US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale, amortized cost	34,285	35,856
Securities available-for-sale, gross unrealized gains	350	366
Securities available-for-sale, gross unrealized losses	(270)	(487)
Available for sale securities	34,365	35,735
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities available-for-sale, amortized cost	13,443	2,588
Securities available-for-sale, gross unrealized gains	14	31
Securities available-for-sale, gross unrealized losses	(49)
Available for sale securities	13,408	2,619
Equity Securities - Mutual Funds [Member]
Securities available-for-sale, amortized cost	500	500
Securities available-for-sale, gross unrealized gains	4	7
Securities available-for-sale, gross unrealized losses
Available for sale securities	504	507
Equity Securities [Member]
Securities available-for-sale, amortized cost	1,162	1,106
Securities available-for-sale, gross unrealized gains	120	91
Securities available-for-sale, gross unrealized losses	(11)	(6)
Available for sale securities	$ 1,271	$ 1,191

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Note 3 - Investment Securities - Gross Unrealized Losses and Fair Value by Investment Category and Continuous Unrealized Loss Position (Details) $ in Thousands	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Securities in continuous unrealized loss position, less than twelve months, number of securities	60	64
Securities in continuous unrealized loss position, less than twelve months, fair value	$ 87,380	$ 82,762
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (1,995)	$ (2,297)
Securities in continuous unrealized loss position, twelve months or more, number of securities	1	1
Securities in continuous unrealized loss position, twelve months or more, fair value	$ 260	$ 260
Securities in continuous unrealized loss position, twelve months or more, gross unrealized losses	$ (1)	$ (2)
Securities in continuous unrealized loss position, number of securities	61	65
Securities in continuous unrealized loss position, fair value	$ 87,640	$ 83,022
Securities in continuous unrealized loss position, gross unrealized losses	$ (1,996)	$ (2,299)
US Government Agencies Debt Securities [Member]
Securities in continuous unrealized loss position, less than twelve months, number of securities	22	23
Securities in continuous unrealized loss position, less than twelve months, fair value	$ 59,950	$ 62,853
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (1,666)	$ (1,806)
Securities in continuous unrealized loss position, twelve months or more, number of securities
Securities in continuous unrealized loss position, twelve months or more, fair value
Securities in continuous unrealized loss position, twelve months or more, gross unrealized losses
Securities in continuous unrealized loss position, number of securities	22	23
Securities in continuous unrealized loss position, fair value	$ 59,950	$ 62,853
Securities in continuous unrealized loss position, gross unrealized losses	$ (1,666)	$ (1,806)
US States and Political Subdivisions Debt Securities [Member]
Securities in continuous unrealized loss position, less than twelve months, number of securities	30	39
Securities in continuous unrealized loss position, less than twelve months, fair value	$ 16,213	$ 19,749
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (269)	$ (485)
Securities in continuous unrealized loss position, twelve months or more, number of securities	1	1
Securities in continuous unrealized loss position, twelve months or more, fair value	$ 260	$ 260
Securities in continuous unrealized loss position, twelve months or more, gross unrealized losses	$ (1)	$ (2)
Securities in continuous unrealized loss position, number of securities	31	40
Securities in continuous unrealized loss position, fair value	$ 16,473	$ 20,009
Securities in continuous unrealized loss position, gross unrealized losses	$ (270)	$ (487)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities in continuous unrealized loss position, less than twelve months, number of securities	5
Securities in continuous unrealized loss position, less than twelve months, fair value	$ 10,991
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (49)
Securities in continuous unrealized loss position, twelve months or more, number of securities
Securities in continuous unrealized loss position, twelve months or more, fair value
Securities in continuous unrealized loss position, twelve months or more, gross unrealized losses
Securities in continuous unrealized loss position, number of securities	5
Securities in continuous unrealized loss position, fair value	$ 10,991
Securities in continuous unrealized loss position, gross unrealized losses	$ (49)
Equity Securities [Member]
Securities in continuous unrealized loss position, less than twelve months, number of securities	3	2
Securities in continuous unrealized loss position, less than twelve months, fair value	$ 226	$ 160
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (11)	$ (6)
Securities in continuous unrealized loss position, twelve months or more, number of securities
Securities in continuous unrealized loss position, twelve months or more, fair value
Securities in continuous unrealized loss position, twelve months or more, gross unrealized losses
Securities in continuous unrealized loss position, number of securities	3	2
Securities in continuous unrealized loss position, fair value	$ 226	$ 160
Securities in continuous unrealized loss position, gross unrealized losses	$ (11)	$ (6)

XML

Note 3 - Investment Securities - Maturities of Investment Securities Available-for-sale and Held-to-maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Due in one year or less, amortized cost	$ 3,044
Due in one year or less, fair value	3,194
Due after one year through five years, amortized cost	13,528
Due after one year through five years, fair value	13,478
Due after five years through ten years, amortized cost	87,796
Due after five years through ten years, fair value	86,105
Due after ten years, amortized cost	11,660
Due after ten years, fair value	11,744
Total, amortized cost	116,028	$ 107,994
Total, fair value	$ 114,521	$ 106,208

XML

Note 4 - Loans and Related Allowance for Loan Losses (Details Textual)	3 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016	Dec. 31, 2016 USD ($)
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums	$ 826,000		$ 818,000
Real Estate Loans Serviced for Others	86,200,000		83,900,000
Mortgage Loans in Process of Foreclosure, Amount	$ 1,100,000		$ 2,200,000
Financing Receivable, TDRs, Number of Contracts	14		15
Financing Receivable, Modifications, Recorded Investment	$ 4,400,000		$ 4,700,000
Loans and Leases Receivable, Gross	$ 674,583,000		681,897,000
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0
Financing Receivable, Modifications, Number of Contracts	0
Unlikely to be Collected Financing Receivable [Member]
Loans and Leases Receivable, Gross	$ 0		0
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	$ 193,704,000		$ 201,010,000
Originated Loans [Member]
Financing Receivable, TDRs, Number of Contracts	6		6
Financing Receivable, Modifications, Recorded Investment	$ 2,300,000		$ 2,300,000
Loans and Leases Receivable, Gross	525,192,000		525,352,000
Financing Receivable, Modifications, Number of Contracts		1
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	$ 136,405,000		$ 139,894,000
Acquired Loans [Member]
Financing Receivable, TDRs, Number of Contracts	8		9
Financing Receivable, Modifications, Recorded Investment	$ 2,100,000		$ 2,400,000
Loans and Leases Receivable, Gross	$ 149,391,000		156,545,000
Financing Receivable, Modifications, Number of Contracts		2
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable Modifications Number of Contracts Paid Off	1	1
Loans and Leases Receivable, Gross	$ 57,299,000		$ 61,116,000
Financing Receivable, Modifications, Number of Contracts		1

XML

Note 4 - Loans and Related Allowance for Loan Loss - Composition of Loan Portfolio (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Originated and acquired loans	$ 674,583	$ 681,897
Originated and acquired loans, percent	100.00%	100.00%
Allowance for loan losses	$ (7,785)	$ (7,803)
Loans, Net	666,798	674,094
Originated Loans [Member]
Originated and acquired loans	$ 525,192	$ 525,352
Originated and acquired loans, percent	100.00%	100.00%
Allowance for loan losses	$ (7,206)	$ (7,283)
Loans, Net	517,986	518,069
Acquired Loans [Member]
Originated and acquired loans	$ 149,391	$ 156,545
Originated and acquired loans, percent	100.00%	100.00%
Allowance for loan losses	$ (579)	$ (520)
Loans, Net	148,812	156,025
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Originated and acquired loans	$ 271,163	$ 271,588
Originated and acquired loans, percent	40.20%	39.80%
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Originated and acquired loans	$ 188,583	$ 186,077
Originated and acquired loans, percent	35.90%	35.40%
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Originated and acquired loans	$ 82,580	$ 85,511
Originated and acquired loans, percent	55.30%	54.70%
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Originated and acquired loans	$ 193,704	$ 201,010
Originated and acquired loans, percent	28.70%	29.50%
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Originated and acquired loans	$ 136,405	$ 139,894
Originated and acquired loans, percent	26.00%	26.70%
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Originated and acquired loans	$ 57,299	$ 61,116
Originated and acquired loans, percent	38.40%	39.00%
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Originated and acquired loans	$ 83,787	$ 80,812
Originated and acquired loans, percent	12.40%	11.90%
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Originated and acquired loans	$ 74,469	$ 71,091
Originated and acquired loans, percent	14.20%	13.50%
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Originated and acquired loans	$ 9,318	$ 9,721
Originated and acquired loans, percent	6.20%	6.20%
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Originated and acquired loans	$ 13,338	$ 10,646
Originated and acquired loans, percent	2.00%	1.60%
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Originated and acquired loans	$ 13,338	$ 10,646
Originated and acquired loans, percent	2.50%	2.00%
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Originated and acquired loans
Consumer Portfolio Segment [Member]
Originated and acquired loans	$ 109,011	$ 114,204
Originated and acquired loans, percent	16.20%	16.70%
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Originated and acquired loans	$ 108,817	$ 114,007
Originated and acquired loans, percent	20.70%	21.70%
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Originated and acquired loans	$ 194	$ 197
Originated and acquired loans, percent	0.10%	0.10%
Unallocated Financing Receivables [Member]
Originated and acquired loans	$ 3,580	$ 3,637
Originated and acquired loans, percent	0.50%	0.50%
Unallocated Financing Receivables [Member] | Originated Loans [Member]
Originated and acquired loans	$ 3,580	$ 3,637
Originated and acquired loans, percent	0.70%	0.70%

XML

Note 4 - Loans and Related Allowance for Loan Loss - Credit Quality Information (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Loans and Leases Receivable, Gross	$ 674,583	$ 681,897
Pass [Member]
Loans and Leases Receivable, Gross	642,295	651,341
Special Mention [Member]
Loans and Leases Receivable, Gross	21,170	20,288
Substandard [Member]
Loans and Leases Receivable, Gross	8,417	7,673
Doubtful [Member]
Loans and Leases Receivable, Gross	2,701	2,595
Originated Loans [Member]
Loans and Leases Receivable, Gross	525,192	525,352
Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	499,228	500,572
Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	18,887	17,888
Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	4,689	4,418
Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	2,388	2,474
Acquired Loans [Member]
Loans and Leases Receivable, Gross	149,391	156,545
Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	143,067	150,769
Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	2,283	2,400
Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	3,728	3,255
Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	313	121
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	271,163	271,588
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	267,277	267,765
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	980	1,050
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	2,906	2,773
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	188,583	186,077
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	187,194	184,721
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	980	1,050
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	409	306
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated 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	82,580	85,511
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	80,083	83,044
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	2,497	2,467
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	193,704	201,010
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	173,557	181,222
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	15,950	16,476
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	3,072	2,382
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	1,125	930
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	136,405	139,894
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	119,538	122,811
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	13,725	14,118
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	2,220	2,035
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	922	930
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	57,299	61,116
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	54,019	58,411
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	2,225	2,358
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	852	347
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	203
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Loans and Leases Receivable, Gross	83,787	80,812
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	76,201	74,729
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	4,240	2,762
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	1,829	1,763
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	1,517	1,558
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	74,469	71,091
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	67,430	65,612
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	4,182	2,720
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	1,450	1,322
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	1,407	1,437
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	9,318	9,721
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	8,771	9,117
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	58	42
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	379	441
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	110	121
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	13,338	10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	12,699	9,944
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	580	595
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	59	107
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	13,338	10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	12,699	9,944
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	580	595
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	59	107
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member]
Loans and Leases Receivable, Gross	109,011	114,204
Consumer Portfolio Segment [Member] | Pass [Member]
Loans and Leases Receivable, Gross	108,981	114,044
Consumer Portfolio Segment [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	30	160
Consumer Portfolio Segment [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	108,817	114,007
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	108,787	113,847
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	30	160
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	194	197
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	194	197
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
Other Portfolio Segment [Member]
Loans and Leases Receivable, Gross	3,580	3,637
Other Portfolio Segment [Member] | Pass [Member]
Loans and Leases Receivable, Gross	3,580	3,637
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] | Originated Loans [Member]
Loans and Leases Receivable, Gross	3,580	3,637
Other Portfolio Segment [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	3,580	3,637
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] | Acquired Loans [Member]
Loans and Leases Receivable, Gross

XML

Note 4 - Loans and Related Allowance for Loan Loss - Delinquencies in the Loan (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Loans current	$ 666,572	$ 671,212
Total past due	3,943	6,296
Non-accrual	4,068	4,389
Loans and Leases Receivable, Gross	674,583	681,897
Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	3,748	5,247
Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	182	698
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	13	351
Originated Loans [Member]
Loans current	520,071	518,478
Total past due	3,215	4,397
Non-accrual	1,906	2,477
Loans and Leases Receivable, Gross	525,192	525,352
Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	3,020	3,901
Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	182	368
Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	13	128
Acquired Loans [Member]
Loans current	146,501	152,734
Total past due	728	1,899
Non-accrual	2,162	1,912
Loans and Leases Receivable, Gross	149,391	156,545
Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	728	1,346
Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		330
Acquired Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		223
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Loans current	267,151	266,462
Total past due	2,001	3,253
Non-accrual	2,011	1,873
Loans and Leases Receivable, Gross	271,163	271,588
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	1,933	2,531
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	68	379
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due		343
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans current	186,493	183,939
Total past due	1,680	1,830
Non-accrual	410	308
Loans and Leases Receivable, Gross	188,583	186,077
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	1,612	1,638
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	68	72
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		120
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans current	80,658	82,523
Total past due	321	1,423
Non-accrual	1,601	1,565
Loans and Leases Receivable, Gross	82,580	85,511
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	321	893
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		307
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		223
Commercial Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	13	8
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Loans current	193,077	200,258
Total past due	88	332
Non-accrual	539	420
Loans and Leases Receivable, Gross	193,704	201,010
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	88	332
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
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] | Originated Loans [Member]
Loans current	136,317	139,821
Total past due	88
Non-accrual		73
Loans and Leases Receivable, Gross	136,405	139,894
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	88
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] | Acquired Loans [Member]
Loans current	56,760	60,437
Total past due		332
Non-accrual	539	347
Loans and Leases Receivable, Gross	57,299	61,116
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		332
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due
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] | Commercial and Industrial Sector [Member]
Loans current	81,321	77,887
Total past due	1,037	1,096
Non-accrual	1,429	1,829
Loans and Leases Receivable, Gross	83,787	80,812
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	963	1,073
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	74	23
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] | Originated Loans [Member]
Loans current	72,432	68,310
Total past due	630	952
Non-accrual	1,407	1,829
Loans and Leases Receivable, Gross	74,469	71,091
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	556	952
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	74
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] | Acquired Loans [Member]
Loans current	8,889	9,577
Total past due	407	144
Non-accrual	22
Loans and Leases Receivable, Gross	9,318	9,721
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	407	121
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		23
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
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Loans current	13,279	10,539
Total past due
Non-accrual	59	107
Loans and Leases Receivable, Gross	13,338	10,646
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] | Originated Loans [Member]
Loans current	13,279	10,539
Total past due
Non-accrual	59	107
Loans and Leases Receivable, Gross	13,338	10,646
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] | Acquired Loans [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member]
Loans current	108,164	112,429
Total past due	817	1,615
Non-accrual	30	160
Loans and Leases Receivable, Gross	109,011	114,204
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	764	1,311
Consumer Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	40	296
Consumer Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	13	8
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Loans current	107,970	112,232
Total past due	817	1,615
Non-accrual	30	160
Loans and Leases Receivable, Gross	108,817	114,007
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	764	1,311
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	40	296
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Loans current	194	197
Total past due
Non-accrual
Loans and Leases Receivable, Gross	194	197
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due
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
Other Portfolio Segment [Member]
Loans current	3,580	3,637
Total past due
Non-accrual
Loans and Leases Receivable, Gross	3,580	3,637
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] | Originated Loans [Member]
Loans current	3,580	3,637
Total past due
Non-accrual
Loans and Leases Receivable, Gross	3,580	3,637
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] | Acquired Loans [Member]
Loans and Leases Receivable, Gross

XML

Note 4 - Loans and Related Allowance for Loan Loss - Nonperforming Assets (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Nonaccrual loans	$ 4,068		$ 4,389
Originated and acquired loans	674,583		681,897
Total Nonperforming Assets	$ 868,823		$ 846,075
Nonperforming Loans to Total Loans	1.11%		1.24%
Nonperforming Assets to Total Assets	0.90%		1.02%
Nonperforming Financial Instruments [Member]
Nonaccrual loans	$ 4,068		$ 4,389
Accruing loans past due 90 days or more	13		351
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due	4,081		4,740
Nonperforming loans	3,439		3,687
Originated and acquired loans	7,520		8,427
Total Real Estate Owned	329		174
Total Nonperforming Assets	7,849		8,601
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	2,011		1,873
Originated and acquired loans	271,163		271,588
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Nonperforming Financial Instruments [Member]
Total Real Estate Owned	155
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	539		420
Originated and acquired loans	193,704		201,010
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Nonperforming Financial Instruments [Member]
Total Real Estate Owned	174		174
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Nonaccrual loans	1,429		1,829
Originated and acquired loans	83,787		80,812
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	59		107
Originated and acquired loans	13,338		10,646
Consumer Portfolio Segment [Member]
Nonaccrual loans	30		160
Originated and acquired loans	109,011		114,204
Other Portfolio Segment [Member]
Nonaccrual loans
Originated and acquired loans	3,580		3,637
Originated Loans [Member]
Nonaccrual loans	1,906		2,477
Accruing loans past due 90 days or more	13		128
Nonperforming loans	1,322	$ 7	1,335
Originated and acquired loans	525,192		525,352
Originated Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	410		308
Accruing loans past due 90 days or more			120
Originated and acquired loans	188,583		186,077
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans			73
Nonperforming loans	1,312		1,325
Originated and acquired loans	136,405		139,894
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Nonaccrual loans	1,407		1,829
Nonperforming loans	6		6
Originated and acquired loans	74,469		71,091
Originated Loans [Member] | Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	59		107
Originated and acquired loans	13,338		10,646
Originated Loans [Member] | Consumer Portfolio Segment [Member]
Nonaccrual loans	30		160
Accruing loans past due 90 days or more	13		8
Originated and acquired loans	108,817		114,007
Originated Loans [Member] | Other Portfolio Segment [Member]
Nonaccrual loans
Nonperforming loans	4	7	4
Originated and acquired loans	3,580		3,637
Acquired Loans [Member]
Nonaccrual loans	2,162		1,912
Accruing loans past due 90 days or more			223
Nonperforming loans	2,117	584	2,352
Originated and acquired loans	149,391		156,545
Acquired Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	1,601		1,565
Accruing loans past due 90 days or more			223
Nonperforming loans	1,289	45	1,299
Originated and acquired loans	82,580		85,511
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	539		347
Nonperforming loans	471	$ 539	660
Originated and acquired loans	57,299		61,116
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Nonaccrual loans	22
Nonperforming loans	357		393
Originated and acquired loans	9,318		9,721
Acquired Loans [Member] | Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Originated and acquired loans
Acquired Loans [Member] | Consumer Portfolio Segment [Member]
Nonaccrual loans
Originated and acquired loans	194		197
Acquired Loans [Member] | Other Portfolio Segment [Member]
Originated and acquired loans

XML

Note 4 - Loans and Related Allowance for Loan Loss - Loans Classified as TDRs (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Number of contracts	0
Originated Loans [Member]
Number of contracts		1
Pre-modification outstanding recorded investment		$ 7
Nonperforming loans	$ 1,322	7	$ 1,335
Related allowance
Originated Loans [Member] | Other Portfolio Segment [Member]
Number of contracts		1
Pre-modification outstanding recorded investment		$ 7
Nonperforming loans	4	7	4
Related allowance
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Nonperforming loans	1,312		1,325
Acquired Loans [Member]
Number of contracts		2
Pre-modification outstanding recorded investment		$ 576
Nonperforming loans	2,117	584	2,352
Related allowance
Acquired Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Number of contracts		1
Pre-modification outstanding recorded investment		$ 37
Nonperforming loans	1,289	45	1,299
Related allowance
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Number of contracts		1
Pre-modification outstanding recorded investment		$ 539
Nonperforming loans	$ 471	539	$ 660
Related allowance

XML

Note 4 - Loans and Related Allowance for Loan Loss - Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Recorded investment - with no related allowance	$ 5,939	$ 6,044
Unpaid principal balance - with no related allowance	5,939	6,044
Average recorded investment - with no related allowance	6,028	6,594
Interest income recognized - with no related allowance	71	310
Recorded investment - with related allowance	4,403	3,657
Related allowance	1,129	1,160
Unpaid principal balance - with related allowance	4,518	3,753
Average recorded investment - with related allowance	4,551	3,736
Interest income recognized - with related allowance	46	99
Impaired Loans	10,342	9,701
Unpaid principal balance	10,457	9,797
Average recorded investment	10,579	10,330
Interest income recognized	117	409
Unpaid principal balance	10,457	9,797
Originated Loans [Member]
Recorded investment - with no related allowance	3,284	3,643
Unpaid principal balance - with no related allowance	3,284	3,643
Average recorded investment - with no related allowance	3,330	3,968
Interest income recognized - with no related allowance	38	174
Recorded investment - with related allowance	3,754	3,189
Related allowance	1,105	1,015
Unpaid principal balance - with related allowance	3,778	3,195
Average recorded investment - with related allowance	3,763	3,228
Interest income recognized - with related allowance	47	93
Impaired Loans	7,038	6,832
Unpaid principal balance	7,062	6,838
Average recorded investment	7,093	7,196
Interest income recognized	85	267
Unpaid principal balance	7,062	6,838
Acquired Loans [Member]
Recorded investment - with no related allowance	2,655	2,401
Unpaid principal balance - with no related allowance	2,655	2,401
Average recorded investment - with no related allowance	2,698	2,626
Interest income recognized - with no related allowance	33	136
Recorded investment - with related allowance	649	468
Related allowance	24	145
Unpaid principal balance - with related allowance	740	558
Average recorded investment - with related allowance	788	508
Interest income recognized - with related allowance		6
Interest income recognized - with related allowance	(1)
Impaired Loans	3,304	2,869
Unpaid principal balance	3,395	2,959
Average recorded investment	3,486	3,134
Interest income recognized	32	142
Unpaid principal balance	3,395	2,959
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Recorded investment - with no related allowance	2,996	2,772
Unpaid principal balance - with no related allowance	2,996	2,772
Average recorded investment - with no related allowance	3,030	2,991
Interest income recognized - with no related allowance	36	147
Recorded investment - with related allowance		1,596
Related allowance	402	474
Unpaid principal balance - with related allowance		1,686
Average recorded investment - with related allowance		1,644
Interest income recognized - with related allowance		66
Impaired Loans	5,058	4,368
Unpaid principal balance	5,149	4,458
Average recorded investment	5,235	4,635
Interest income recognized	54	213
Unpaid principal balance	5,149	4,458
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Recorded investment - with no related allowance	2,009	2,112
Unpaid principal balance - with no related allowance	2,009	2,112
Average recorded investment - with no related allowance	2,033	2,228
Interest income recognized - with no related allowance	23	100
Recorded investment - with related allowance	1,523	1,249
Related allowance	402	360
Unpaid principal balance - with related allowance	1,523	1,249
Average recorded investment - with related allowance	1,531	1,277
Interest income recognized - with related allowance	20	66
Impaired Loans	3,532	3,361
Unpaid principal balance	3,532	3,361
Average recorded investment	3,564	3,505
Interest income recognized	43	166
Unpaid principal balance	3,532	3,361
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Recorded investment - with no related allowance	987	660
Unpaid principal balance - with no related allowance	987	660
Average recorded investment - with no related allowance	997	763
Interest income recognized - with no related allowance	13	47
Recorded investment - with related allowance	539	347
Related allowance		114
Unpaid principal balance - with related allowance	630	437
Average recorded investment - with related allowance	674	367
Interest income recognized - with related allowance
Interest income recognized - with related allowance	(2)
Impaired Loans	1,526	1,007
Unpaid principal balance	1,617	1,097
Average recorded investment	1,671	1,130
Interest income recognized	11	47
Unpaid principal balance	1,617	1,097
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Recorded investment - with no related allowance	1,011	1,266
Unpaid principal balance - with no related allowance	1,011	1,266
Average recorded investment - with no related allowance	1,026	1,434
Interest income recognized - with no related allowance	12	66
Recorded investment - with related allowance	2,341	2,061
Related allowance	727	686
Unpaid principal balance - with related allowance	2,365	2,067
Average recorded investment - with related allowance	2,346	2,092
Interest income recognized - with related allowance	28	33
Impaired Loans	3,352	3,327
Unpaid principal balance	3,376	3,333
Average recorded investment	3,372	3,526
Interest income recognized	40	99
Unpaid principal balance	3,376	3,333
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Recorded investment - with no related allowance	632	825
Unpaid principal balance - with no related allowance	632	825
Average recorded investment - with no related allowance	619	891
Interest income recognized - with no related allowance	8	45
Recorded investment - with related allowance	2,231	1,940
Related allowance	703	655
Unpaid principal balance - with related allowance	2,255	1,946
Average recorded investment - with related allowance	2,232	1,951
Interest income recognized - with related allowance	27	27
Impaired Loans	2,863	2,765
Unpaid principal balance	2,887	2,771
Average recorded investment	2,851	2,842
Interest income recognized	35	72
Unpaid principal balance	2,887	2,771
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Recorded investment - with no related allowance	379	441
Unpaid principal balance - with no related allowance	379	441
Average recorded investment - with no related allowance	407	543
Interest income recognized - with no related allowance	4	21
Recorded investment - with related allowance	110	121
Related allowance	24	31
Unpaid principal balance - with related allowance	110	121
Average recorded investment - with related allowance	114	141
Interest income recognized - with related allowance	1	6
Impaired Loans	489	562
Unpaid principal balance	489	562
Average recorded investment	521	684
Interest income recognized	5	27
Unpaid principal balance	489	562
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Recorded investment - with no related allowance	639	702
Unpaid principal balance - with no related allowance	639	702
Average recorded investment - with no related allowance	674	843
Interest income recognized - with no related allowance	7	28
Related allowance
Impaired Loans		702
Unpaid principal balance		702
Average recorded investment		843
Interest income recognized		28
Unpaid principal balance		702
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Recorded investment - with no related allowance	639	702
Unpaid principal balance - with no related allowance	639	702
Average recorded investment - with no related allowance	674	843
Interest income recognized - with no related allowance	7	28
Related allowance
Impaired Loans	639	702
Unpaid principal balance	639	702
Average recorded investment	674	843
Interest income recognized	7	28
Unpaid principal balance	639	702
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Related allowance
Impaired Loans	639
Unpaid principal balance	639
Average recorded investment	674
Interest income recognized	7
Unpaid principal balance	639
Other Portfolio Segment [Member]
Recorded investment - with no related allowance	4	4
Unpaid principal balance - with no related allowance	4	4
Average recorded investment - with no related allowance	4	6
Interest income recognized - with no related allowance		1
Related allowance
Impaired Loans		4
Unpaid principal balance		4
Average recorded investment		6
Interest income recognized		1
Unpaid principal balance		4
Other Portfolio Segment [Member] | Originated Loans [Member]
Recorded investment - with no related allowance	4	4
Unpaid principal balance - with no related allowance	4	4
Average recorded investment - with no related allowance	4	6
Interest income recognized - with no related allowance		1
Related allowance
Impaired Loans	4	4
Unpaid principal balance	4	4
Average recorded investment	4	6
Interest income recognized		1
Unpaid principal balance	4	4
Other Portfolio Segment [Member] | Acquired Loans [Member]
Related allowance
Impaired Loans	4
Unpaid principal balance	4
Average recorded investment	4
Interest income recognized
Unpaid principal balance	4
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Recorded investment - with no related allowance	1,289	1,300
Unpaid principal balance - with no related allowance	1,289	1,300
Average recorded investment - with no related allowance	1,294	1,320
Interest income recognized - with no related allowance	16	68
Related allowance
Impaired Loans	1,289	1,300
Unpaid principal balance	1,289	1,300
Average recorded investment	1,294	1,320
Interest income recognized	16	68
Unpaid principal balance	1,289	1,300
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Recorded investment - with no related allowance		1,300
Unpaid principal balance - with no related allowance		1,300
Average recorded investment - with no related allowance		1,320
Interest income recognized - with no related allowance		68
Related allowance
Impaired Loans		1,300
Unpaid principal balance		1,300
Average recorded investment		1,320
Interest income recognized		68
Unpaid principal balance		$ 1,300
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Recorded investment - with no related allowance	1,289
Unpaid principal balance - with no related allowance	1,289
Average recorded investment - with no related allowance	1,294
Interest income recognized - with no related allowance	16
Related allowance
Impaired Loans	1,289
Unpaid principal balance	1,289
Average recorded investment	1,294
Interest income recognized	16
Unpaid principal balance	1,289
Consumer Portfolio Segment [Member] | Real Estate Sector [Member]
Recorded investment - with related allowance	2,062
Related allowance	402
Unpaid principal balance - with related allowance	2,153
Average recorded investment - with related allowance	2,205
Interest income recognized - with related allowance	$ 18

XML

Note 4 - Loans and Related Allowance for Loan Loss - Activity in the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Balance	$ 7,803	$ 6,490
Charge-offs	(520)	(407)
Recoveries	82	40
Provision	420	850
Balance	7,785	6,973
Individually Evaluated for Impairment	1,129	751	$ 1,160
Collectively Evaluated for Potential Impairment	6,656	6,222	6,643
Provision	420	850
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	1,106	1,623
Charge-offs	(64)	(20)
Recoveries	4	3
Provision	43	(347)
Balance	1,089	1,259
Individually Evaluated for Impairment		52
Collectively Evaluated for Potential Impairment	1,089	1,207	1,106
Provision	43	(347)
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	2,307	2,045
Charge-offs	(129)	(180)
Recoveries	1	1
Provision	190	170
Balance	2,369	2,036
Individually Evaluated for Impairment	402	377	474
Collectively Evaluated for Potential Impairment	1,967	1,659	1,833
Provision	190	170
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Balance	1,699	784
Charge-offs
Recoveries	11
Provision	2	319
Balance	1,712	1,103
Individually Evaluated for Impairment	727	322	686
Collectively Evaluated for Potential Impairment	985	781	1,013
Provision	2	319
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	65	137
Charge-offs
Recoveries
Provision	18	(20)
Balance	83	117
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	83	117	65
Provision	18	(20)
Consumer Portfolio Segment [Member]
Balance	2,463	1,887
Charge-offs	(327)	(190)
Recoveries	66	27
Provision	54	452
Balance	2,256	2,176
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	2,256	2,176	2,463
Provision	54	452
Other Portfolio Segment [Member]
Balance
Charge-offs		(17)
Recoveries		9
Provision		10
Balance		2
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment		2
Provision		10
Unallocated Financing Receivables [Member]
Balance	163	14
Charge-offs
Recoveries
Provision	113	266
Balance	276	280
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	276	280	163
Provision	113	266
Originated Loans [Member]
Balance	7,283	6,490
Charge-offs	(327)	(222)
Recoveries	80	34
Provision	170	635
Balance	7,206	6,937
Individually Evaluated for Impairment	1,105	699	1,015
Collectively Evaluated for Potential Impairment	6,101	6,238	6,268
Provision	170	635
Originated Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	1,106	1,623
Charge-offs		(20)
Recoveries	4	1
Provision	(21)	(345)
Balance	1,089	1,259
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	1,089	1,259	1,106
Provision	(21)	(345)
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	1,942	2,045
Charge-offs
Recoveries
Provision	(44)	(9)
Balance	1,898	2,036
Individually Evaluated for Impairment	402	377	360
Collectively Evaluated for Potential Impairment	1,496	1,659	1,582
Provision	(44)	(9)
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Balance	1,579	784
Charge-offs
Recoveries	11
Provision	8	319
Balance	1,598	1,103
Individually Evaluated for Impairment	703	322	655
Collectively Evaluated for Potential Impairment	895	781	924
Provision	8	319
Originated Loans [Member] | Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	65	137
Charge-offs
Recoveries
Provision	18	(20)
Balance	83	117
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	83	117	65
Provision	18	(20)
Originated Loans [Member] | Consumer Portfolio Segment [Member]
Balance	2,463	1,887
Charge-offs	(327)	(185)
Recoveries	65	24
Provision	55	450
Balance	2,256	2,176
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	2,256	2,176	2,463
Provision	55	450
Originated Loans [Member] | Other Portfolio Segment [Member]
Balance
Charge-offs		(17)
Recoveries		9
Provision		10
Balance		2
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment		2
Provision		10
Originated Loans [Member] | Unallocated Financing Receivables [Member]
Balance	128	14
Charge-offs
Recoveries
Provision	154	230
Balance	282	244
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	282	244	128
Provision	154	230
Acquired Loans [Member]
Balance	520
Charge-offs	(193)	(185)
Recoveries	2	6
Provision	250	215
Balance	579	36
Individually Evaluated for Impairment	24	52	145
Collectively Evaluated for Potential Impairment	555		375
Collectively Evaluated for Potential Impairment		(16)
Provision	250	215
Acquired Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Balance
Charge-offs	(64)
Recoveries		2
Provision	64	(2)
Balance
Individually Evaluated for Impairment		52
Collectively Evaluated for Potential Impairment
Collectively Evaluated for Potential Impairment		(52)
Provision	64	(2)
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Balance	365
Charge-offs	(129)	(180)
Recoveries	1	1
Provision	234	179
Balance	471
Individually Evaluated for Impairment			114
Collectively Evaluated for Potential Impairment	471		251
Provision	234	179
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Balance	120
Charge-offs
Recoveries
Provision	(6)
Balance	114
Individually Evaluated for Impairment	24		31
Collectively Evaluated for Potential Impairment	90		89
Provision	(6)
Acquired Loans [Member] | Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Balance
Charge-offs
Recoveries
Provision
Balance
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Provision
Acquired Loans [Member] | Consumer Portfolio Segment [Member]
Balance
Charge-offs		(5)
Recoveries	1	3
Provision	(1)	2
Balance
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Provision	(1)	2
Acquired Loans [Member] | Other Portfolio Segment [Member]
Balance
Charge-offs
Recoveries
Provision
Balance
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Provision
Acquired Loans [Member] | Unallocated Financing Receivables [Member]
Balance	35
Charge-offs
Recoveries
Provision	(41)	36
Balance	(6)	36
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment		36	$ 35
Collectively Evaluated for Potential Impairment	(6)
Provision	$ (41)	$ 36

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Note 4 - Loans and Related Allowance for Loan Loss - Accretable Discount on Loans Acquired at Fair Value (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Balance	$ 1,640
Accretable Yield	(234)
Balance	$ 1,406

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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	Mar. 31, 2017	Dec. 31, 2016
Individually Evaluated for Impairment	$ 10,342	$ 9,701
Collectively Evaluated for Potential Impairment	664,241	672,196
Total Loans	674,583	681,897
Loans and Leases Receivable, Gross	674,583	681,897
Originated Loans [Member]
Individually Evaluated for Impairment	7,038	6,832
Collectively Evaluated for Potential Impairment	518,154	518,520
Total Loans	525,192	525,352
Loans and Leases Receivable, Gross	525,192	525,352
Acquired Loans [Member]
Individually Evaluated for Impairment	3,304	2,869
Collectively Evaluated for Potential Impairment	146,087	153,676
Total Loans	149,391	156,545
Loans and Leases Receivable, Gross	149,391	156,545
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Individually Evaluated for Impairment	1,289	1,300
Collectively Evaluated for Potential Impairment	269,874	270,288
Total Loans	271,163	271,588
Loans and Leases Receivable, Gross	271,163	271,588
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	188,583	186,077
Total Loans	188,583	186,077
Loans and Leases Receivable, Gross	188,583	186,077
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment	1,289	1,300
Collectively Evaluated for Potential Impairment	81,291	84,211
Total Loans	82,580	85,511
Loans and Leases Receivable, Gross	82,580	85,511
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Individually Evaluated for Impairment	5,058	4,368
Collectively Evaluated for Potential Impairment	188,646	196,642
Total Loans	193,704	201,010
Loans and Leases Receivable, Gross	193,704	201,010
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Individually Evaluated for Impairment	3,532	3,361
Collectively Evaluated for Potential Impairment	132,873	136,533
Total Loans	136,405	139,894
Loans and Leases Receivable, Gross	136,405	139,894
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment	1,526	1,007
Collectively Evaluated for Potential Impairment	55,773	60,109
Total Loans	57,299	61,116
Loans and Leases Receivable, Gross	57,299	61,116
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Individually Evaluated for Impairment	3,352	3,327
Collectively Evaluated for Potential Impairment	80,435	77,485
Total Loans	83,787	80,812
Loans and Leases Receivable, Gross	83,787	80,812
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Individually Evaluated for Impairment	2,863	2,765
Collectively Evaluated for Potential Impairment	71,606	68,326
Total Loans	74,469	71,091
Loans and Leases Receivable, Gross	74,469	71,091
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment	489	562
Collectively Evaluated for Potential Impairment	8,829	9,159
Total Loans	9,318	9,721
Loans and Leases Receivable, Gross	9,318	9,721
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Individually Evaluated for Impairment	639	702
Collectively Evaluated for Potential Impairment	12,699	9,944
Total Loans	13,338	10,646
Loans and Leases Receivable, Gross	13,338	10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Individually Evaluated for Impairment	639	702
Collectively Evaluated for Potential Impairment	12,699	9,944
Total Loans	13,338	10,646
Loans and Leases Receivable, Gross	13,338	10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Total Loans
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	109,011	114,204
Total Loans	109,011	114,204
Loans and Leases Receivable, Gross	109,011	114,204
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	108,817	114,007
Total Loans	108,817	114,007
Loans and Leases Receivable, Gross	108,817	114,007
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	194	197
Total Loans	194	197
Loans and Leases Receivable, Gross	194	197
Other Portfolio Segment [Member]
Individually Evaluated for Impairment	4	4
Collectively Evaluated for Potential Impairment	3,576	3,633
Total Loans	3,580	3,637
Loans and Leases Receivable, Gross	3,580	3,637
Other Portfolio Segment [Member] | Originated Loans [Member]
Individually Evaluated for Impairment	4	4
Collectively Evaluated for Potential Impairment	3,576	3,633
Total Loans	3,580	3,637
Loans and Leases Receivable, Gross	3,580	3,637
Other Portfolio Segment [Member] | Acquired Loans [Member]
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Total Loans
Loans and Leases Receivable, Gross

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Note 5 - Deposits (Details Textual) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Time Deposits, at or Above FDIC Insurance Limit	$ 45.7	$ 46.0

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Note 5 - Deposits - Maturities of Time Deposits (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
One Year or Less	$ 49,215
Over One Through Two Years	55,404
Over Two Through Three Years	18,564
Over Three Through Four Years	14,930
Over Four Through Five Years	11,060
Over Five Years	8,483
Total	$ 157,656	$ 155,028

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Note 6 - Short-term Borrowings - Federal Funds Purchased and Short-term Borrowings (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Balance at Period End	$ 24,828	$ 27,027
Federal Funds Purchased [Member]
Average Balance Outstanding During the Period	$ 34	$ 307
Average Balance Outstanding During the Period		0.65%
Maximum Amount Outstanding at any Month End	$ 550	$ 6,000
Other Short-term Debt [Member]
Average Balance Outstanding During the Period		$ 596
Average Balance Outstanding During the Period		0.67%
Maximum Amount Outstanding at any Month End		$ 6,160
Balance at Period End
Balance at Period End
Securities Sold under Agreements to Repurchase [Member]
Average Balance Outstanding During the Period	$ 26,092	$ 26,311
Average Balance Outstanding During the Period	0.30%	0.26%
Maximum Amount Outstanding at any Month End	$ 25,575	$ 30,095
Balance at Period End	$ 24,828	$ 27,027
Balance at Period End	0.24%	0.24%
Carrying Value	$ 32,501	$ 33,785
Market Value	$ 31,684	$ 32,931

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Note 7 - Other Borrowed Funds (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	$ 286,100
Federal Home Loan Bank, Advances, General Debt Obligations, Amount of Available, Unused Funds	148,500	$ 148,500
Federal Reserve Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity	86,000
Line of Credit Facility, Commitment Fee Amount	0
Long-term Line of Credit	0	$ 0
Various Banks [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 40,000

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Note 7 - Other Borrowed Funds - Federal Home Loan Bank Advances (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Due in One Year, amount	$ 3.5
Due in One Year	1.35%
Due After One Year to Two Years, amount	$ 4.0	$ 3.5
Due After One Year to Two Years	1.67%	0.94%
Due After Two Years to Three Years, amount	$ 6.0	$ 4.5
Due After Two Years to Three Years	1.88%	1.41%
Due After Three Years to Four Years, amount	$ 5.0	$ 6.0
Due After Three Years to Four Years	2.09%	1.78%
Due After Four Years to Five Years, amount	$ 3.0	$ 6.0
Due After Four Years to Five Years	2.23%	1.97%
Due After Five Years, amount	$ 3.0	$ 8.0
Due After Five Years	2.41%	2.27%
Total	$ 24.5	$ 28.0
Weighted Average [Member]
Total	1.92%	1.80%

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Note 8 - Commitments and Contingent Liabilities - Unused and Available Credit Balances of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financial instruments	$ 164,825	$ 138,523
Financial Standby Letter of Credit [Member]
Financial instruments	42,564	36,657
Performance Guarantee [Member]
Financial instruments	1,962	2,471
Construction Mortgages [Member]
Financial instruments	28,968	21,363
Personal Line Of Credit [Member]
Financial instruments	6,138	5,905
Overdraft Protection Lines [Member]
Financial instruments	5,692	5,680
Home Equity Lines of Credit [Member]
Financial instruments	15,205	14,722
Commercial Lines Of Credit [Member]
Financial instruments	$ 64,296	$ 51,725

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Note 9 - Fair Value Disclosure (Details Textual)	3 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Impaired Financing Receivable, with Related Allowance, Recorded Investment	$ 4,403,000		$ 3,657,000
Impaired Financing Receivable, Related Allowance	1,129,000		1,160,000
Real Estate Owned, Transfer to Real Estate Owned	155,000	$ 3,236,000
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Impaired Financing Receivable, Related Allowance
Number of Loans Transferred to Other Real Estate Owned	1
Real Estate Owned, Transfer to Real Estate Owned	$ 155,000
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Impaired Financing Receivable, with Related Allowance, Recorded Investment			1,596,000
Impaired Financing Receivable, Related Allowance	$ 402,000		$ 474,000
Number of Properties Transferred to Other Real Estate Owned		2
Real Estate Owned, Transfer to Real Estate Owned		$ 3,200,000
Other Real Estate, Valuation Adjustments		$ 566,000

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Note 9 - Fair Value Disclosure - Assets and Liabilities Reported Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Available for sale securities	$ 114,521	$ 106,208
Fair Value, Inputs, Level 2 [Member] | US Government Agencies Debt Securities [Member]
Available for sale securities	64,973	66,156
Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member]
Available for sale securities	34,365	35,735
Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for sale securities	13,408	2,619
Fair Value, Inputs, Level 1 [Member] | Equity Securities - Mutual Funds [Member]
Available for sale securities	504	507
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member]
Available for sale securities	$ 1,271	$ 1,191

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Note 9 - Fair Value Disclosure - Significant Unobservable Inputs Used in the Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Impaired Loans	$ 10,342	$ 9,701
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member]
Impaired Loans	$ 3,274	2,497
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Significant Unobservable Input Value	10.00%
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Significant Unobservable Input Value	30.00%
Fair Value, Inputs, Level 3 [Member] | OREO [Member] | Market Approach Valuation Technique [Member]
OREO	$ 155
Fair Value, Inputs, Level 3 [Member] | OREO [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Significant Unobservable Input Value	10.00%
Fair Value, Inputs, Level 3 [Member] | OREO [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Significant Unobservable Input Value	50.00%

XML

Note 9 - Fair Value Disclosure - Estimated Fair Value of the Company's Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Available for Sale	$ 114,521	$ 106,208
Reported Value Measurement [Member]
Available for Sale	114,521	106,208
Estimate of Fair Value Measurement [Member]
Available for Sale	114,521	106,208
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member]
Interest Bearing	19,193	7,699
Non-Interest Bearing	16,402	6,583
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member]
Interest Bearing	19,193	7,699
Non-Interest Bearing	16,402	6,583
Fair Value, Inputs, Level 3 [Member] | Reported Value Measurement [Member]
Loans, Net	666,798	674,094
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member]
Loans, Net	677,172	684,777
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member]
Restricted Stock	3,567	3,665
Bank-Owned Life Insurance	18,803	18,687
Accrued Interest Receivable	2,364	2,441
Deposits	725,461	698,218
Short-term Borrowings	24,828	27,027
Other Borrowed Funds	24,500	28,000
Accrued Interest Payable	375	334
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Restricted Stock	3,567	3,665
Bank-Owned Life Insurance	18,803	18,687
Accrued Interest Receivable	2,364	2,441
Deposits	696,110	697,806
Short-term Borrowings	24,828	27,027
Other Borrowed Funds	24,567	28,098
Accrued Interest Payable	$ 375	$ 334

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Note 10 - Other Noninterest Expense - Components of Other Noninterest Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Other Noninterest Expense
Non-employee compensation	$ 100	$ 133
Printing and supplies	103	74
Postage	66	59
Telephone	88	84
Charitable contributions	24	28
Dues and subscriptions	63	47
Loan expenses	74	70
Meals and entertainment	24	25
Travel	26	30
Training	11	12
Miscellaneous	231	219
Total Other Noninterest Expense	$ 810	$ 781