10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 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 August 7, 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.	31
Item 3. Quantitative and Qualitative Disclosure about Market Risk.	40
Item 4. Controls and Procedures.	41
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.	41
Item 1A. Risk Factors.	41
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.	41
Item 3.  Defaults Upon Senior Securities.	41
Item 4. Mine Safety Disclosures.	41
Item 5. Other Information.	41
Item 6. Exhibits	41
SIGNATURES	42

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

	(Unaudited)
	June 30,			December 31,
(Dollars in thousands, except share data)	2017			2016
ASSETS
Cash and Due From Banks:
Interest Bearing	$	17,464		$	7,699
Non-Interest Bearing		11,209			6,583
Total Cash and Due From Banks		28,673			14,282
Investment Securities:
Available-for-Sale		116,545			106,208
Loans, Net		674,262			674,094
Premises and Equipment, Net		16,544			14,132
Bank-Owned Life Insurance		18,919			18,687
Goodwill		4,953			4,953
Core Deposit Intangible, Net		3,551			3,819
Accrued Interest and Other Assets		8,942			9,900
TOTAL ASSETS	$	872,389		$	846,075
LIABILITIES
Deposits:
Demand Deposits	$	180,991		$	165,400
NOW Accounts		121,615			105,962
Money Market Accounts		132,510			141,674
Savings Accounts		131,174			121,520
Time Deposits		157,351			155,028
Brokered Deposits		3,418			8,634
Total Deposits		727,059			698,218
Short-Term Borrowings		25,450			27,027
Other Borrowed Funds		24,500			28,000
Accrued Interest and Other Liabilities		3,480			3,361
TOTAL LIABILITIES		780,489			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 June 30, 2017 and December 31, 2016, Respectively		1,818			1,818
Capital Surplus		42,041			41,863
Retained Earnings		53,420			51,713
Treasury Stock, at Cost (275,321 and 276,721 Shares at June 30, 2017 and December 31, 2016, Respectively)		(4,722	)		(4,746	)
Accumulated Other Comprehensive Loss		(657	)		(1,179	)
TOTAL STOCKHOLDERS' EQUITY		91,900			89,469
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	872,389		$	846,075

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

1

 

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands, except share and per share data)	2017		2016		2017		2016
INTEREST AND DIVIDEND INCOME
Loans, Including Fees	$	7,229	$	7,323	$	14,371	$	14,820
Federal Funds Sold		41		8		56		13
Investment Securities:
Taxable		386		307		747		631
Exempt From Federal Income Tax		219		266		436		526
Other Interest and Dividend Income		74		46		130		83
TOTAL INTEREST AND DIVIDEND INCOME		7,949		7,950		15,740		16,073
INTEREST EXPENSE
Deposits		675		560		1,330		1,121
Federal Funds Purchased		-		-		-		1
Short-Term Borrowings		20		15		39		29
Other Borrowed Funds		119		127		241		254
TOTAL INTEREST EXPENSE		814		702		1,610		1,405
NET INTEREST INCOME		7,135		7,248		14,130		14,668
Provision For Loan Losses		300		300		720		1,150
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,835		6,948		13,410		13,518
NONINTEREST INCOME
Service Fees on Deposit Accounts		625		606		1,209		1,192
Insurance Commissions		842		743		1,928		1,615
Other Commissions		107		112		211		229
Net Gains on Sales of Loans		162		185		252		309
Net Gains on Sales of Investments		70		58		122		58
Net Gains on Purchased Tax Credits		15		-		29		-
Income from Bank-Owned Life Insurance		116		119		232		239
Other		29		45		59		73
TOTAL NONINTEREST INCOME		1,966		1,868		4,042		3,715
NONINTEREST EXPENSE
Salaries and Employee Benefits		3,424		3,285		6,913		6,654
Occupancy		604		438		1,152		912
Equipment		473		432		912		854
FDIC Assessment		82		115		163		241
PA Shares Tax		186		203		376		405
Contracted Services		157		156		289		289
Legal and Professional Fees		102		114		243		255
Advertising		182		189		307		354
Bankcard Processing Expense		131		122		254		234
Other Real Estate Owned Expense (Income)		1		10		6		(535	)
Amortization of Core Deposit Intangible		133		133		267		267
Other		829		891		1,639		1,672
TOTAL NONINTEREST EXPENSE		6,304		6,088		12,521		11,602
Income Before Income Taxes		2,497		2,728		4,931		5,631
Income Taxes		696		790		1,426		1,648
NET INCOME	$	1,801	$	1,938	$	3,505	$	3,983
EARNINGS PER SHARE
Basic	$	0.44	$	0.48	$	0.86	$	0.98
Diluted		0.44		0.48		0.85		0.98
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		4,088,025		4,081,017		4,087,659		4,081,017
Diluted		4,105,338		4,084,695		4,101,861		4,083,313

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

2

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2017			2016			2017			2016
Net Income	$	1,801		$	1,938		$	3,505		$	3,983
Other Comprehensive Income:
Unrealized Gains on Available-for-Sale Securities Net of Income Tax of $198 and $28 for the Three Months Ended June 30, 2017 and 2016, Respectively, and $309 and $164 for the Six Months Ended June 30, 2017 and 2016, Respectively		385			55			603			316
Reclassification Adjustment for Gains on Securities:
Included in Net Income, Net of Income Tax of $23 and $20 for the Three Months Ended June 30, 2017 and 2016, Respectively, and $41 and $20 for the Six Months Ended June 30, 2017 and 2016, Respectively (1)		(47	)		(38	)		(81	)		(38	)
Other Comprehensive Income, Net of Income Tax		338			17			522			278
Total Comprehensive Income	$	2,139		$	1,955		$	4,027		$	4,261

⁽¹⁾ The gross amount of gains on securities of $70 and $58 for the Three Months Ended June 30, 2017 and 2016, Respectively and $122 and $58 for the Six Months Ended June 30, 2017 and 2016, Respectively 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)

													Accumulated
													Other		Total
	Shares		Common		Capital		Retained			Treasury			Comprehensive		Stockholders'
(Dollars in thousands, except share and per share data)	Issued		Stock		Surplus		Earnings			Stock			Income		Equity
December 31, 2015		4,363,346	$	1,818	$	41,614	$	47,725		$	(4,836	)	$	575	$	86,896
Comprehensive Income:
Net Income		-		-		-		3,983			-			-		3,983
Other Comprehensive Income		-		-		-		-			-			278		278
Stock-Based Compensation Expense		-		-		174		-			-			-		174
Dividends Paid ($0.22 Per Share)		-		-		-		(1,796	)		-			-		(1,796	)
June 30, 2016		4,363,346	$	1,818	$	41,788	$	49,912		$	(4,836	)	$	853	$	89,535

													Accumulated
													Other			Total
	Shares		Common		Capital		Retained			Treasury			Comprehensive			Stockholders'
(Dollars in thousands, except share and per share data)	Issued		Stock		Surplus		Earnings			Stock			Loss			Equity
December 31, 2016		4,363,346	$	1,818	$	41,863	$	51,713		$	(4,746	)	$	(1,179	)	$	89,469
Comprehensive Income:
Net Income		-		-		-		3,505			-			-			3,505
Other Comprehensive Income		-		-		-		-			-			522			522
Stock-Based Compensation Expense		-		-		171		-			-			-			171
Exercise of stock options		-		-		7		-			24			-			31
Dividends Paid ($0.22 Per Share)		-		-		-		(1,798	)		-			-			(1,798	)
June 30, 2017		4,363,346	$	1,818	$	42,041	$	53,420		$	(4,722	)	$	(657	)	$	91,900

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

3

 

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

	Six Months Ended
	June 30,
(Dollars in thousands)	2017			2016
OPERATING ACTIVITIES
Net Income	$	3,505		$	3,983
Αdjustmеnts to Rеconcilе Net Income to Net Cash Provided By Operating Activities:
Net Amortization on Investments		171			116
Depreciation and Amortization		1,305			1,510
Provision for Loan Losses		720			1,150
Income from Bank-Owned Life Insurance		(232	)		(239	)
Proceeds From Mortgage Loans Sold		10,620			11,574
Originations of Mortgage Loans for Sale		(10,368	)		(11,265	)
Gains on Sales of Loans		(252	)		(309	)
Gains on Sales of Investment Securities		(122	)		(58	)
Gains on Sales of Other Real Estate Owned and Repossessed Assets		-			(49	)
Noncash Expense for Stock-Based Compensation		171			174
Decrease in Accrued Interest Receivable		91			32
Valuation Adjustment on Foreclosed Real Estate		-			(566	)
(Decrease) Increase in Taxes Payable		(1,743	)		1,605
Increase (Decrease) in Accrued Interest Payable		4			(19	)
Net Payment of Federal/State Income Taxes		(1,495	)		(1,450	)
Other, Net		4,078			237
NET CASH PROVIDED BY OPERATING ACTIVITIES		6,453			6,426
INVESTING ACTIVITIES
Investment Securities Available for Sale:
Proceeds From Principal Repayments and Maturities		4,588			36,894
Purchases of Securities		(17,787	)		(35,388	)
Proceeds from Sales of Securities		3,603			302
Net Increase in Loans		(1,502	)		(79	)
Purchase of Premises and Equipment		(3,150	)		(281	)
Retirements of Premises and Equipment		152			-
Proceeds From Sales of Other Real Estate Owned and Repossessed Assets		-			175
Decrease in Restricted Equity Securities		37			571
NET CASH USED IN INVESTING ACTIVITIES		(14,059	)		2,194
FINANCING ACTIVITIES
Net Increase (Decrease) in Deposits		28,841			(4,033	)
Net Decrease in Short-Term Borrowings		(1,577	)		(918	)
Principal Payments on Other Borrowed Funds		(3,500	)		-
Cash Dividends Paid		(1,798	)		(1,796	)
Treasury Stock, Purchases at Cost		24			-
Exercise of Stock Options		7			-
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		21,997			(6,747	)
INCREASE IN CASH AND CASH EQUIVALENTS		14,391			1,873
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR		14,282			11,340
CASH AND DUE FROM BANKS AT END OF PERIOD	$	28,673		$	13,213
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest on deposits and borrowings (including interest credited to deposit accounts of $1,323 and $1,137 respectively)	$	1,606		$	1,423
Income taxes		1,495			1,450
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 sold not settled		-			(70	)
Securities purchased not settled		-			60

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

4

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of CB Financial Services, Inc. (“CB Financial”) and its wholly owned subsidiary, Community Bank (the “Bank”), and the Bank’s wholly-owned subsidiary, Exchange Underwriters, Inc. (“Exchange Underwriters” 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 will continue to evaluate the provisions of Accounting Standards Codification (“ASC”) Topic 280 for segment reporting information related to Exchange Underwriters. During the prior 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 combined 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. During the current quarter, Exchange Underwriters fell below the 10% threshold of combined interest and noninterest income.

Except as disclosed in Note 4 on page 24, 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 July 2017, the FASB issued Accounting Standards Update ("ASU") 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 amendments simplify the accounting for certain financial instruments with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered and will also recognize the effect of the trigger within equity. ASU 2017-11 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 2017-11 but believes that its adoption will not have a material impact on the Company's consolidated financial condition or results of operations.

In May 2017, the FASB issued ASU 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services. ASU 2017-10 amendments clarify that the grantor in a service concession arrangement is the customer of the operation services in all cases for those arrangements. ASU 2017-10 is effective for public business entities that are SEC filers for annual periods beginning after December 15, 2017, and interim periods within those annual periods, for public entities that are not SEC filers for annual periods beginning after December 15, 2018 and for all other entities for annual periods beginning after December 15, 2019 with early adoption permitted, including within an interim period, subject to specific transition requirements depending on whether an entity adopted Topic 606 before or after the issuance of ASU 2017-10. The Company is evaluating the provisions of ASU 2017-10 but believes that its adoption will not have a material impact on the Company's consolidated financial condition or results of operations.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under ASU Topic 718. ASU 2017-09 is effective for all entities for annual periods, including interim periods within those annual periods beginning after December 15, 2017 with early adoption permitted. The Company is evaluating the provisions of ASU 2017-09 but believes that its adoption will not have a material impact on the Company's consolidated financial condition or results of operations.

In March 2017, the FASB issued ASU 2017-08, Receivables- Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchases of Callable Debt Securities. ASU 2017-08 amends guidance on the amortization period of premiums on certain purchases of callable debt securities. The amendments shorten the amortization period of premiums on certain purchases of 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.

6

 

Recent Accounting Standards (continued)

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 Accounting Standards Update (“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 or results of operations.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10), which enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. ASU 2016-01 (i) requires equity investments (except those accounted for under the equity method or that are consolidated) to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost; (iv) requires an entity to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and (v) requires separate

7

 

Recent Accounting Standards (continued)

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 or results of operations.

Note 2. Earnings Per Share

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

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Weighted-Average Common Shares Outstanding		4,363,346			4,363,346			4,363,346			4,363,346
Average Treasury Stock Shares		(275,321	)		(282,329	)		(275,687	)		(282,329	)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share		4,088,025			4,081,017			4,087,659			4,081,017
Additional Common Stock Equivalents (Stock Options and Restricted Stock) Used to Calculate Diluted Earnings Per Share		17,313			3,678			14,202			2,296
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share		4,105,338			4,084,695			4,101,861			4,083,313
Earnings per share:
Basic	$	0.44		$	0.48		$	0.86		$	0.98
Diluted		0.44			0.48			0.85			0.98

8

 

Note 3. Investment Securities

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

	(Dollars in thousands)
	June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. Government Agencies	$	66,620	$	1	$	(1,335	)	$	65,286
Obligations of States and Political Subdivisions		36,423		394		(90	)		36,727
Mortgage-Backed Securities - Government-Sponsored Enterprises		12,907		9		(33	)		12,883
Equity Securities - Mutual Funds		500		7		-			507
Equity Securities - Other		1,091		74		(23	)		1,142
Total	$	117,541	$	485	$	(1,481	)	$	116,545

	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			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)
	June 30, 2017
	Less than 12 months							12 Months or Greater							Total
	Number				Gross			Number				Gross			Number				Gross
	of		Fair		Unrealized			of		Fair		Unrealized			of		Fair		Unrealized
	Securities		Value		Losses			Securities		Value		Losses			Securities		Value		Losses
U.S. Government Agencies		21	$	57,265	$	(1,335	)		-	$	-	$	-			21	$	57,265	$	(1,335	)
Obligations of States and Political Subdivisions		18		9,097		(78	)		4		1,629		(12	)		22		10,726		(90	)
Mortgage-Backed Securities - Government Sponsored Enterprises		5		10,639		(33	)		-		-		-			5		10,639		(33	)
Equity Securities - Other		5		373		(23	)		-		-		-			5		373		(23	)
Total		49	$	77,374	$	(1,469	)		4	$	1,629	$	(12	)		53	$	79,003	$	(1,481	)

9

 

	December 31, 2016
	Less than 12 months							12 Months or Greater							Total
	Number				Gross			Number				Gross			Number				Gross
	of		Fair		Unrealized			of		Fair		Unrealized			of		Fair		Unrealized
	Securities		Value		Losses			Securities		Value		Losses			Securities		Value		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 June 30, 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 June 30, 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)
	June 30, 2017
	Available-for-Sale
	Amortized		Fair
	Cost		Value
Due in One Year or Less	$	1,576	$	1,588
Due after One Year through Five Years		17,826		17,898
Due after Five Years through Ten Years		84,604		83,467
Due after Ten Years		13,535		13,592
Total	$	117,541	$	116,545

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.

10

 

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)
	June 30, 2017						December 31, 2016
	Amount			Percent			Amount			Percent
Originated Loans
Real Estate:
Residential	$	189,189			35.0	%	$	186,077			35.4	%
Commercial		140,652			26.1			139,894			26.7
Construction		20,186			3.7			10,646			2.0
Commercial and Industrial		75,665			14.1			71,091			13.5
Consumer		110,113			20.4			114,007			21.7
Other		3,508			0.7			3,637			0.7
Total Originated Loans		539,313			100.0	%		525,352			100.0	%
Allowance for Loan Losses		(7,468	)					(7,283	)
Loans, Net	$	531,845					$	518,069
Loans Acquired at Fair Value
Real Estate:
Residential	$	78,358			54.8	%	$	85,511			54.7	%
Commercial		55,628			39.0			61,116			39.0
Commercial and Industrial		8,849			6.1			9,721			6.2
Consumer		197			0.1			197			0.1
Total Loans Acquired at Fair Value		143,032			100.0	%		156,545			100.0	%
Allowance for Loan Losses		(615	)					(520	)
Loans, Net	$	142,417					$	156,025
Total Loans
Real Estate:
Residential	$	267,547			39.2	%	$	271,588			39.8	%
Commercial		196,280			28.8			201,010			29.5
Construction		20,186			2.9			10,646			1.6
Commercial and Industrial		84,514			12.4			80,812			11.9
Consumer		110,310			16.2			114,204			16.7
Other		3,508			0.5			3,637			0.5
Total Loans		682,345			100.0	%		681,897			100.0	%
Allowance for Loan Losses		(8,083	)					(7,803	)
Loans, Net	$	674,262					$	674,094

Total unamortized net deferred loan fees were $872,000 and $818,000 at June 30, 2017 and December 31, 2016, respectively.

Real estate loans serviced for others, which are not included in the Consolidated Statement of Financial Condition, totaled $90.4 million and $83.9 million at June 30, 2017 and December 31, 2016, respectively.

11

 

The following table presents loans summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of the dates indicated. At June 30, 2017 and December 31, 2016, there were no loans in the criticized category of Loss within the internal risk rating system.

	(Dollars in thousands)
	June 30, 2017
			Special
	Pass		Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	187,741	$	1,061	$	387	$	-	$	189,189
Commercial		123,544		14,037		2,821		250		140,652
Construction		19,562		-		565		59		20,186
Commercial and Industrial		62,712		10,189		1,312		1,452		75,665
Consumer		110,084		-		29		-		110,113
Other		3,508		-		-		-		3,508
Total Originated Loans	$	507,151	$	25,287	$	5,114	$	1,761	$	539,313
Loans Acquired at Fair Value
Real Estate:
Residential	$	76,342	$	-	$	2,016	$	-	$	78,358
Commercial		52,920		1,997		511		200		55,628
Commercial and Industrial		8,418		13		320		98		8,849
Consumer		197		-		-		-		197
Total Loans Acquired at Fair Value	$	137,877	$	2,010	$	2,847	$	298	$	143,032
Total Loans
Real Estate:
Residential	$	264,083	$	1,061	$	2,403	$	-	$	267,547
Commercial		176,464		16,034		3,332		450		196,280
Construction		19,562		-		565		59		20,186
Commercial and Industrial		71,130		10,202		1,632		1,550		84,514
Consumer		110,281		-		29		-		110,310
Other		3,508		-		-		-		3,508
Total Loans	$	645,028	$	27,297	$	7,961	$	2,059	$	682,345

12

 

	December 31, 2016
			Special
	Pass		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

13

 

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

	(Dollars in thousands)
	June 30, 2017
			30-59		60-89		90 Days
	Loans		Days		Days		Or More		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
Originated Loans
Real Estate:
Residential	$	188,747	$	-	$	17	$	66	$	83	$	359	$	189,189
Commercial		140,364		-		-		-		-		288		140,652
Construction		20,127		-		-		-		-		59		20,186
Commercial and Industrial		73,241		532		-		-		532		1,892		75,665
Consumer		108,813		1,179		75		17		1,271		29		110,113
Other		3,508		-		-		-		-		-		3,508
Total Originated Loans	$	534,800	$	1,711	$	92	$	83	$	1,886	$	2,627	$	539,313
Loans Acquired at Fair Value
Real Estate:
Residential	$	76,978	$	165	$	-	$	88	$	253	$	1,127	$	78,358
Commercial		55,428		-		-		-		-		200		55,628
Commercial and Industrial		8,832		-		-		-		-		17		8,849
Consumer		197		-		-		-		-		-		197
Total Loans Acquired at Fair Value	$	141,435	$	165	$	-	$	88	$	253	$	1,344	$	143,032
Total Loans
Real Estate:
Residential	$	265,725	$	165	$	17	$	154	$	336	$	1,486	$	267,547
Commercial		195,792		-		-		-		-		488		196,280
Construction		20,127		-		-		-		-		59		20,186
Commercial and Industrial		82,073		532		-		-		532		1,909		84,514
Consumer		109,010		1,179		75		17		1,271		29		110,310
Other		3,508		-		-		-		-		-		3,508
Total Loans	$	676,235	$	1,876	$	92	$	171	$	2,139	$	3,971	$	682,345

14

 

	December 31, 2016
			30-59		60-89		90 Days
	Loans		Days		Days		Or More		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		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

15

 

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

	(Dollars in Thousands)
	June 30,			December 31,
	2017			2016
Nonaccrual Loans:
Originated Loans:
Real Estate:
Residential	$	359		$	308
Commercial		288			73
Construction		59			107
Commercial and Industrial		1,892			1,829
Consumer		29			160
Total Originated Nonaccrual Loans		2,627			2,477
Loans Acquired at Fair Value:
Real Estate:
Residential		1,127			1,565
Commercial		200			347
Commercial and Industrial		17			-
Total Loans Acquired at Fair Value Nonaccrual Loans		1,344			1,912
Total Nonaccrual Loans		3,971			4,389
Accruing Loans Past Due 90 Days or More:
Originated Loans:
Real Estate:
Residential		66			120
Consumer		17			8
Total Originated Accruing Loans 90 Days or More Past Due		83			128
Loans Acquired at Fair Value:
Real Estate:
Residential		88			223
Total Loans Acquired at Fair Value Accruing Loans 90 Days or More Past Due		88			223
Total Accruing Loans 90 Days or More Past Due		171			351
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		4,142			4,740
Troubled Debt Restructurings, Accruing:
Originated Loans:
Real Estate - Commercial		1,298			1,325
Commercial and Industrial		5			6
Other		3			4
Total Originated Loans		1,306			1,335
Loans Acquired at Fair Value:
Real Estate - Residential		1,279			1,299
Real Estate - Commercial		457			660
Commercial and Industrial		303			393
Total Loans Acquired at Fair Value		2,039			2,352
Total Troubled Debt Restructurings, Accruing		3,345			3,687
Total Nonperforming Loans		7,487			8,427
Real Estate Owned:
Residential		208			-
Commercial		174			174
Total Real Estate Owned		382			174
Total Nonperforming Assets	$	7,869		$	8,601
Nonperforming Loans to Total Loans		1.10	%		1.24	%
Nonperforming Assets to Total Assets		0.90			1.02

16

 

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 $795,000 and $2.2 million at June 30, 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 the 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 $4.3 million and 15 loans totaling $4.7 million at June 30, 2017 and December 31, 2016, respectively. Originated loans classified as TDRs consisted of 6 loans totaling $2.3 million at June 30, 2017 and December 31, 2016, respectively. Loans acquired at fair value classified as TDRs consisted of 8 loans totaling $2.0 million and 9 loans totaling $2.4 million at June 30, 2017 and December 31, 2016, respectively.

During the six months ended June 30, 2016, one commercial loan previously identified as an acquired loan at fair value TDR paid off, an originated consumer loan modified terms in a new TDR transaction and one commercial and one residential real estate loan that were acquired at fair value modified terms into new TDR transactions. No TDRs have subsequently defaulted during the three or six months ended June 30, 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 and six months ended June 30, 2017 and the three months ended June 30, 2016. The following table presents information at the time of modification related to loans modified in a TDR during the six months ended June 30, 2016.

	(Dollars in thousands)
	Six Months Ended June 30, 2016
			Pre-		Post-
			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded		Related
	Contracts		Investment		Investment		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	$	-

17

 

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

	(Dollars in thousands)
	June 30, 2017
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Residential	$	101	$	-	$	102	$	104	$	2
Commercial		1,947		-		1,947		2,003		46
Construction		624		-		624		652		13
Commercial and Industrial		664		-		664		666		17
Other		3		-		3		3		-
Total With No Related Allowance Recorded	$	3,339	$	-	$	3,340	$	3,428	$	78
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,279	$	-	$	1,279	$	1,289	$	33
Commercial		1,168		-		1,168		1,317		23
Commercial and Industrial		320		-		320		380		8
Total With No Related Allowance Recorded	$	2,767	$	-	$	2,767	$	2,986	$	64
Total Loans
Real Estate:
Residential	$	1,380	$	-	$	1,381	$	1,393	$	35
Commercial		3,115		-		3,115		3,320		69
Construction		624		-		624		652		13
Commercial and Industrial		984		-		984		1,046		25
Other		3		-		3		3		-
Total With No Related Allowance Recorded	$	6,106	$	-	$	6,107	$	6,414	$	142
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,508	$	425	$	1,508	$	1,523	$	33
Commercial and Industrial		2,105		815		2,155		2,271		52
Total With A Related Allowance Recorded	$	3,613	$	1,240	$	3,663	$	3,794	$	85
Loans Acquired at Fair Value
Commercial and Industrial	$	98	$	16	$	98	$	109	$	3
Total With A Related Allowance Recorded	$	98	$	16	$	98	$	109	$	3
Total Loans
Real Estate:
Commercial	$	1,508	$	425	$	1,508	$	1,523	$	33
Commercial and Industrial		2,203		831		2,253		2,380		55
Total With A Related Allowance Recorded	$	3,711	$	1,256	$	3,761	$	3,903	$	88

18

 

	June 30, 2017 (cont.)
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		Recognized
Total Impaired Loans:
Originated Loans
Real Estate:
Residential	$	101	$	-	$	102	$	104	$	2
Commercial		3,455		425		3,455		3,526		79
Construction		624		-		624		652		13
Commercial and Industrial		2,769		815		2,819		2,937		69
Other		3		-		3		3		-
Total Impaired Loans	$	6,952	$	1,240	$	7,003	$	7,222	$	163
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,279	$	-	$	1,279	$	1,289	$	33
Commercial		1,168		-		1,168		1,317		23
Commercial and Industrial		418		16		418		489		11
Total Impaired Loans	$	2,865	$	16	$	2,865	$	3,095	$	67
Total Loans
Real Estate:
Residential	$	1,380	$	-	$	1,381	$	1,393	$	35
Commercial		4,623		425		4,623		4,843		102
Construction		624		-		624		652		13
Commercial and Industrial		3,187		831		3,237		3,426		80
Other		3		-		3		3		-
Total Impaired Loans	$	9,817	$	1,256	$	9,868	$	10,317	$	230

19

 

	December 31, 2016
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		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

20

 

	December 31, 2016 (cont.)
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		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

21

 

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

	(Dollars in thousands)
	June 30, 2017
	Real			Real			Real		Commercial
	Estate			Estate			Estate		and
	Residential			Commercial			Construction		Industrial			Consumer			Other		Unallocated			Total
Originated Loans
March 31, 2017	$	1,089		$	1,898		$	83	$	1,598		$	2,256		$	-	$	282		$	7,206
Charge-offs		-			-			-		-			(118	)		-		-			(118	)
Recoveries		1			-			-		25			53			-		-			79
Provision		(150	)		119			59		137			32			-		103			300
June 30, 2017	$	940		$	2,017		$	142	$	1,760		$	2,223		$	-	$	385		$	7,467
Loans Acquired at Fair Value
March 31, 2017	$	-		$	471		$	-	$	114		$	-		$	-	$	(6	)	$	579
Charge-offs		-			(3	)		-		-			-			-		-			(3	)
Recoveries		38			1			-		-			1			-		-			40
Provision		(38	)		144			-		(5	)		(1	)		-		(100	)		-
June 30, 2017	$	-		$	613		$	-	$	109		$	-		$	-	$	(106	)	$	616
Total Allowance for Loan Losses
March 31, 2017	$	1,089		$	2,369		$	83	$	1,712		$	2,256		$	-	$	276		$	7,785
Charge-offs		-			(3	)		-		-			(118	)		-		-			(121	)
Recoveries		39			1			-		25			54			-		-			119
Provision		(188	)		263			59		132			31			-		3			300
June 30, 2017	$	940		$	2,630		$	142	$	1,869		$	2,223		$	-	$	279		$	8,083
Originated Loans
December 31, 2016	$	1,106		$	1,942		$	65	$	1,579		$	2,463		$	-	$	128		$	7,283
Charge-offs								-		-			(445	)		-		-			(445	)
Recoveries		5						-		36			118			-		-			159
Provision		(171	)		75			77		145			87			-		257			470
June 30, 2017	$	940		$	2,017		$	142	$	1,760		$	2,223		$	-	$	385		$	7,467
Loans Acquired at Fair Value
December 31, 2016	$	-		$	365		$	-	$	120		$	-		$	-	$	35		$	520
Charge-offs		(64	)		(132	)		-		-						-		-			(196	)
Recoveries		38			1			-		-			3			-		-			42
Provision		26			379			-		(11	)		(3	)		-		(141	)		250
June 30, 2017	$	-		$	613		$	-	$	109		$	-		$	-	$	(106	)	$	616
Total Allowance for Loan Losses
December 31, 2016	$	1,106		$	2,307		$	65	$	1,699		$	2,463		$	-	$	163		$	7,803
Charge-offs		(64	)		(132	)		-		-			(445	)		-		-			(641	)
Recoveries		43			1			-		36			121			-		-			201
Provision		(145	)		454			77		134			84			-		116			720
June 30, 2017	$	940		$	2,630		$	142	$	1,869		$	2,223		$	-	$	279		$	8,083

	June 30, 2017
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		Industrial		Consumer		Other		Unallocated			Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	425	$	-	$	815	$	-	$	-	$	-		$	1,240
Collectively Evaluated for Potential Impairment	$	940	$	1,592	$	142	$	945	$	2,223	$	-	$	385		$	6,227
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	-	$	-	$	-	$	16	$	-	$	-	$	-		$	16
Collectively Evaluated for Potential Impairment	$	-	$	613	$	-	$	93	$	-	$	-	$	(106	)	$	600
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	-	$	425	$	-	$	831	$	-	$	-	$	-		$	1,256
Collectively Evaluated for Potential Impairment	$	940	$	2,205	$	142	$	1,038	$	2,223	$	-	$	279		$	6,827

22

 

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

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

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

23

 

	December 31, 2016
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		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		(407	)
Nonaccretable Discount		(194	)
Balance at June 30, 2017	$	1,039

On August 4, 2017, the Company received mortgage insurance proceeds related to an acquired loan that was previously paid-off as of June 30, 2017 from the Mortgage Guaranty Insurance Corporation ("MGIC") for approximately $218,000. This gain contingency will be recorded in the 2017 third quarter consolidated financial statements.

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

	(Dollars in thousands)
	June 30, 2017
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	101	$	3,455	$	624	$	2,769	$	-	$	3	$	6,952
Collectively Evaluated for Potential Impairment		189,088		137,197		19,562		72,896		110,113		3,505		532,361
	$	189,189	$	140,652	$	20,186	$	75,665	$	110,113	$	3,508	$	539,313
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,279	$	1,168	$	-	$	418	$	-	$	-	$	2,865
Collectively Evaluated for Potential Impairment		77,079		54,460		-		8,431		197		-		140,167
	$	78,358	$	55,628	$	-	$	8,849	$	197	$	-	$	143,032
Total Loans
Individually Evaluated for Impairment	$	1,380	$	4,623	$	624	$	3,187	$	-	$	3	$	9,817
Collectively Evaluated for Potential Impairment		266,167		191,657		19,562		81,327		110,310		3,505		672,528
	$	267,547	$	196,280	$	20,186	$	84,514	$	110,310	$	3,508	$	682,345

24

 

	December 31, 2016
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		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

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).

	June 30,
Maturity Period:	2017
One Year or Less	$	46,093
Over One Through Two Years		60,182
Over Two Through Three Years		20,309
Over Three Through Four Years		12,893
Over Four Through Five Years		9,156
Over Five Years		8,718
Total	$	157,351

The balance in time deposits that meet or exceed the FDIC insurance limit of $250,000 totaled $45.0 million and $46.0 million as of June 30, 2017 and December 31, 2016, respectively.

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Note 6. Short-Term Borrowings

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

	(Dollars in thousands)
	June 30, 2017					December 31, 2016
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Short-term Borrowings
Federal Funds Purchased:
Average Balance Outstanding During the Period	$	17		-	%	$	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		25,450		0.25			27,027		0.24
Average Balance Outstanding During the Period		26,332		0.30			26,311		0.26
Maximum Amount Outstanding at any Month End		26,460					30,095
Securities Collaterizing the Agreements at Period-End:
Carrying Value		32,499					33,785
Market Value		31,834					32,931

Note 7. Other Borrowed Funds

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

	(Dollars in thousands)
	June 30, 2017					December 31, 2016
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		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 June 30, 2017, the Company maintained a credit arrangement with a maximum borrowing limit of approximately $285.0 million with the FHLB. This arrangement is subject to annual renewal, incurs no service charge, and is secured by a blanket security agreement on outstanding residential mortgage loans and the Company’s investment in FHLB stock. Under this arrangement the Company had available a variable rate Line of Credit in the amount of $143.1 million and $148.5 million as of June 30, 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 $87.9 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 unaffiliated banks totaling $40.0 million. As of June 30, 2017 and December 31, 2016, no draws had been taken on these facilities.

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Note 8. Commitments and Contingent Liabilities

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

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

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

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

	(Dollars in thousands)
	June 30,		December 31,
	2017		2016
Standby Letters of Credit	$	41,147	$	36,657
Performance Letters of Credit		4,396		2,471
Construction Mortgages		32,485		21,363
Personal Lines of Credit		6,139		5,905
Overdraft Protection Lines		6,183		5,680
Home Equity Lines of Credit		15,286		14,722
Commercial Lines of Credit		64,303		51,725
	$	169,939	$	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.

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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		June 30,		December 31,
	Hierarchy		2017		2016
Available for Sales Securities:
U.S. Government Agencies		Level II	$	65,286	$	66,156
Obligations of States and Political Subdivisions		Level II		36,727		35,735
Mortgage-Backed Securities - Government-Sponsored Enterprises		Level II		12,883		2,619
Equity Securities - Mutual Funds		Level I		507		507
Equity Securities - Other		Level I		1,142		1,191
Total Available for Sale Securities			$	116,545	$	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	June 30, 2017		December 31, 2016		Valuation Techniques	Significant Unobservable Inputs	Unobservable  Input Value
Impaired Loans	Level III	$	2,455	$	2,497	Market Comparable Properties	Marketability Discount	10%	to	30%	(1)
OREO	Level III		155		-	Market Comparable Properties	Marketability Discount	10%	to	50%	(1)

⁽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 June 30, 2017 and December 31, 2016, the fair value of impaired loans consists of the loan balances of $3.7 million and $3.7 million, respectively, less their specific valuation allowances of $1.3 million and $1.2 million, 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 six months ended June 30, 2017, one residential real estate loan for $155,000 moved into OREO. During the six months ended June 30, 2016, two commercial real estate properties for $3.2 million were foreclosed on, moved into OREO, evaluated for fair value and recorded a prior 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 its location and the Company’s need of a new headquarters location.

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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.

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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)
			June 30, 2017				December 31, 2016
	Fair Value		Carrying		Fair		Carrying		Fair
	Hierarchy		Value		Value		Value		Value
Financial Assets:
Cash and Due From Banks:
Interest Bearing		Level I	$	17,464	$	17,464	$	7,699	$	7,699
Non-Interest Bearing		Level I		11,209		11,209		6,583		6,583
Investment Securities:
Available for Sale		See Above		116,545		116,545		106,208		106,208
Loans, Net		Level III		674,262		685,730		674,094		684,777
Restricted Stock		Level II		3,628		3,628		3,665		3,665
Bank-Owned Life Insurance		Level II		18,919		18,919		18,687		18,687
Accrued Interest Receivable		Level II		2,350		2,350		2,441		2,441
Financial Liabilities:
Deposits		Level II		727,059		706,817		698,218		697,806
Short-term Borrowings		Level II		25,450		25,450		27,027		27,027
Other Borrowed Funds		Level II		24,500		24,644		28,000		28,098
Accrued Interest Payable		Level II		338		338		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 and six months ended June 30, 2017 and 2016, are as follows:

	(Dollars in thousands)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Other Noninterest Expense
Non-employee compensation	$	100	$	134	$	200	$	267
Printing and supplies		100		134		202		208
Postage		64		44		130		103
Telephone		99		97		188		181
Charitable contributions		56		41		80		69
Dues and subscriptions		55		46		118		93
Loan expenses		86		73		160		143
Meals and entertainment		43		34		68		58
Travel		43		40		69		70
Training		9		6		20		18
Miscellaneous		174		242		404		462
Total Other Noninterest Expense	$	829	$	891	$	1,639	$	1,672

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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.

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Overview

The following discussion and analysis is presented to assist in the understanding and evaluation of our consolidated financial condition and results of operations. It is intended to complement the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and should be read in conjunction therewith. The detailed discussion focuses on our consolidated financial condition as of June 30, 2017 compared to the financial condition as of December 31, 2016 and the consolidated results of operations for the three months ended June 30, 2017 and 2016.

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 $26.3 million, or 3.1%, to $872.4 million at June 30, 2017 compared to $846.1 million at December 31, 2016.

Investment securities classified as available-for-sale increased $10.3 million, or 9.7%, to $116.5 million at June 30, 2017 compared to $106.2 million at December 31, 2016. This increase was primarily the result of security purchases funded by deposit growth.

Loans, net, increased $168,000, or 0.02%, to $674.3 million at June 30, 2017 compared to $674.1 million at December 31, 2016. This was primarily due to net loan originations of $9.5 million of construction loans and $3.7 million of commercial and industrial loans, partially offset by net loan payoffs of $4.7 million on commercial real estate loans, $4.0 million on residential mortgage loans and $3.9 million on consumer loans (mainly indirect auto loans). The net loan originations offset normal loan payoffs throughout the current period.

Premises and equipment, net, increased $2.4 million, or 17.1%, to $16.5 million at June 30, 2017 compared to $14.1 million at December 31, 2016. This is due to the additions related to the new Operations Center that was placed into service in the current period.

Liabilities. Total liabilities increased $23.9 million, or 3.2%, to $780.5 million at June 30, 2017 compared to $756.6 million at December 31, 2016.

Total deposits increased $28.8 million, or 4.1%, to $727.1 million at June 30, 2017 compared to $698.2 million at December 31, 2016. There were increases of $15.7 million in NOW accounts, $15.6 million in demand deposits, $9.7 in savings accounts and $2.3 million in time deposits, partially offset by decreases of $9.2 million in money market accounts and $5.2 million in brokered deposits. Due to the rising interest rate environment, the Bank has been selective on offering promotional interest rates and has concentrated its efforts on increasing noninterest-bearing accounts by building strong customer relationships. In addition, school district and municipal deposits increased $9.0 million due to building stronger customer relationships with these depositors and new accounts.

Short-term borrowings decreased $1.6 million, or 5.8%, to $25.5 million at June 30, 2017 compared to $27.0 million at December 31, 2016. At June 30, 2017, short-term borrowings were comprised of $25.5 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 by $3.5 million due to a maturing FHLB long-term borrowing that was retired in the current period. As a result of current period activity, the weighted average interest rate on long-term borrowings increased by 12 basis points to 1.92%.

Stockholders’ Equity. Stockholders’ equity increased $2.4 million, or 2.7%, to $91.9 million at June 30, 2017 compared to $89.5 million at December 31, 2016. During the period, net income was $3.5 million and the Company paid $1.8 million in dividends to stockholders.

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Results of Operations for the Three Months Ended June 30, 2017 and 2016

Overview. Net income decreased $137,000, to $1.8 million, for the three months ended June 30, 2017 compared to $1.9 million for the three months ended June 30, 2016. The quarterly results benefited from an increase in noninterest income related to continued insurance commissions and additional contingency fees received by Exchange Underwriters in the current quarter. Detracting from the quarterly results were an increase in noninterest expense and a decrease in net interest income. In addition, a charitable donation of a former Bank building to a local municipality resulted in additional tax benefit in the current quarter. Quarterly pre-tax income decreased by $231,000 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 $113,000, or 1.6%, to $7.1 million for the three months ended June 30, 2017 compared to $7.2 million for the three months ended June 30, 2016.

Interest and dividend income decreased $1,000, or 0.01%, to $7.9 million for the three months ended June 30, 2017 compared to $8.0 million for the three months ended June 30, 2016. Interest income on loans decreased $94,000 for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Despite the overall increase in average loans of $697,000, the loan portfolio had a decrease of 8 basis points in yield. Contributing to the yield decrease this quarter was the accretion on the acquired loan portfolio credit mark. The positive impact of the accretion for the three months ended June 30, 2017 was $173,000, or 10 basis points compared to $381,000, or 23 basis points for the three months ended June 30, 2016. The remaining credit mark balance for acquired loans was $1.0 million as of June 30, 2017. Loan payoffs within the entire loan portfolio have also been a factor in the interest income on loans decrease. Interest income on securities exempt from federal tax decreased $47,000 due to deploying proceeds from security calls and maturities into higher yielding taxable security purchases in the current period. There was a decrease of $3.5 million in the average balance on securities exempt from federal tax and a decrease of 40 basis points in yield as a result of security calls and maturities that had higher yields. Interest income on taxable securities increased $79,000 mainly due to an increase of $27.7 million in the average balance for taxable securities in the current period. The increase in the average balance offset a decrease of 39 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. Interest income on Federal funds sold increased to $41,000 for the three months ended June 30, 2017 compared to $8,000 for the three months ended June 30, 2016. This is the result of the increase in interest rates in the last year and the increases in the average interest-earning balances of $14.1 million for the three months ended June 30, 2017. In addition, other interest and dividend income increased $28,000 as a result of increased interest earned with correspondent deposit banks and FHLB dividends in the current period.

Interest expense increased $112,000, or 16.0%, to $814,000 for the three months ended June 30, 2017 compared to $702,000 for the three months ended June 30, 2016. Interest expense on deposits increased $115,000 due to an increase in average interest-bearing deposits of $30.4 million, primarily due to increases in time deposits, interest-bearing demand deposit and savings accounts. The average cost of interest-bearing deposits increased 6 basis points collectively. This was related to the multiple interest rate hikes over the last year by the Federal Reserve Board (“FRB”). Interest expense on short-term borrowings increased $5,000 mainly due to increased interest rates on securities sold under agreements to repurchase. Interest expense on other borrowed funds decreased $8,000 primarily due to a FHLB long-term borrowing for $3.5 million that matured in the prior quarter.

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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 June 30,
	2017							2016
			Interest							Interest
	Average		and		Yield/			Average		and		Yield/
	Balance		Dividends		Cost (1)			Balance		Dividends		Cost (1)
Assets:
Interest-Earning Assets:
Loans, Net	$	670,231	$	7,251		4.34	%	$	669,534	$	7,352		4.42	%
Investment Securities
Taxable		81,409		386		1.90			53,716		307		2.29
Exempt From Federal Tax		35,529		325		3.66			39,016		396		4.06
Other Interest-Earning Assets		30,666		115		1.50			16,579		54		1.31
Total Interest-Earning Assets		817,835		8,077		3.96			778,845		8,109		4.19
Noninterest-Earning Assets		57,904							52,616
Total Assets	$	875,739						$	831,461
Liabilities and Stockholders' equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits	$	125,695		78		0.25	%	$	114,549		49		0.17	%
Savings		129,719		60		0.19			124,473		57		0.18
Money Market		136,026		88		0.26			144,195		91		0.25
Time Deposits		159,309		449		1.13			137,174		363		1.06
Total Interest-Bearing Deposits		550,749		675		0.49			520,391		560		0.43
Borrowings		51,070		139		1.09			53,443		142		1.07
Total Interest-Bearing Liabilities		601,819		814		0.54			573,834		702		0.49
Noninterest-Bearing Demand Deposits		178,478							164,750
Other Liabilities		3,617							3,765
Total Liabilities		783,914							742,349
Stockholders' Equity		91,825							89,112
Total Liabilities and
Stockholders' Equity	$	875,739						$	831,461
Net Interest Income			$	7,263						$	7,407
Net Interest Rate Spread (2)						3.42	%						3.70	%
Net Interest-Earning Assets (3)	$	216,016						$	205,011
Net Interest Margin (4)						3.56							3.82
Return on Average Assets						0.82							0.94
Return on Average Equity						7.87							8.75
Average Equity to Average Assets						10.49							10.72
Average Interest-Earning Assets to Average Interest-Bearing Liabilities						135.89							135.73

(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%.

34

 

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

	(Dollars in thousands)
	Three Months Ended June 30, 2017
	Compared To
	Three Months Ended June 30, 2016
	Increase (Decrease) Due to
	Volume			Rate			Total
Interest and Dividend Income:
Loans, net	$	33		$	(134	)	$	(101	)
Investment Securities:
Taxable		138			(59	)		79
Exempt From Federal Tax		(34	)		(37	)		(71	)
Other Interest-Earning Assets		52			9			61
Total Interest-Earning Assets		189			(221	)		(32	)
Interest Expense:
Deposits		33			82			115
Borrowings		(6	)		3			(3	)
Total Interest-Bearing Liabilities		27			85			112
Change in Net Interest Income	$	162		$	(306	)	$	(144	)

Provision for Loan Losses. The provision for loan losses was $300,000 for the three months ended June 30, 2017 and for the three months ended June 30, 2016. Net charge-offs for the three months ended June 30, 2017 were $2,000, which included $49,000 of net charge-offs on automobile loans, compared to $83,000 of net charge-offs, which included $66,000 of net charge-offs on automobile loans for the three months ended June 30, 2016. The decrease in net charge-offs during the current period was due to recoveries of $46,000 on automobile loans, $39,000 for residential mortgages and $25,000 for a commercial and industrial loan relationship. 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 the current quarter provision remained constant for the three months ended June 30, 2017 and 2016. This was due to improvements in the loan department along with loan personnel experience, and the local economy which had a positive impact on the qualitative factors within the allowance calculation. In addition, average loans increased marginally during the current period compared to the prior period, which was a contributing factor in keeping the provision constant.

Noninterest Income. Noninterest income increased $98,000, or 5.2% to $2.0 million for the three months ended June 30, 2017 compared to $1.9 million for the three months ended June 30, 2016. Insurance commissions from Exchange Underwriters increased $99,000 due to increased commercial lines commission and fee income and contingency fees received in the current period. 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. Service fees on deposit accounts increased $19,000 due to increased non sufficient funds (“NSF”) fees due to customer overdrafts of deposit accounts. Net gains on purchased tax credits increased $15,000 due to the purchased Pennsylvania shares tax credits being recognized in the current period. Net gains on the sales of investments increased $12,000 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 with FedFirst. The capital loss carry forward deferred tax asset has been has been fully recognized in the current period. Partially offsetting these increases was a decrease in the net gains on the sales of residential mortgage loans of $23,000. 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 Mortgage Partnership Finance® (“MPF®”) program. The MPF® program enables member financial institutions to offer competitive interest rates for fixed-rate mortgage loans without assuming any of the interest rate risk associated with a long-term asset. In addition, there was a decrease of $16,000 in other income due to FHLB sold loan services fees recognized in the current quarter.

35

 

Noninterest Expense. Noninterest expense increased $216,000, or 3.5%, to $6.3 million for the three months ended June 30, 2017 compared to $6.1 million for the three months ended June 30, 2016. Occupancy increased $166,000 primarily due to accelerated depreciation taken on leasehold improvements in the Bank’s former operations center that did not transfer over to the new Ralph J. Sommers Jr. Operations Center (“Operations Center”). The new Operations Center was completed and placed into bank operations during the current quarter. Other increases in occupancy were related to property insurance, moving and landscaping expenses. Salaries and employee benefits increased $139,000 primarily due to normal salary increases, retirement benefits expense and employee stock options. This increase was partially offset by decreases in restricted stock awards and miscellaneous compensation expenses. Equipment increased $41,000 due to equipment purchases and new maintenance contracts for the Operations Center. This was partially offset by other noninterest expense which decreased $62,000 primarily due to reduced overdraft and debit card fraud losses, customer supplies and non-employee restricted stock awards. The Federal Deposit Insurance Corporation (“FDIC”) assessment expense decreased $33,000 due to an assessment factor reduction by the FDIC in the computation of the insurance assessment. Pennsylvania shares tax decreased $17,000 due to the prior period shares tax accrual that anticipated a shares tax rate increase in 2016 that subsequently became effective in 2017.

Income Tax Expense. Income taxes decreased $94,000 to $696,000 for the three months ended June 30, 2017 compared to $790,000 for the three months ended June 30, 2016. The effective tax rate for the three months ended June 30, 2017 was 27.9% compared to 29.0% for the three months ended June 30, 2016. The decrease in income taxes was partially due to a decrease of $231,000 in pre-tax income. The decrease in the effective tax rate was related to a favorable tax preference charitable donation of a former First Federal Savings Bank building to the City of Monessen, Pennsylvania that was acquired in the merger with FedFirst.

Results of Operations for the Six Months Ended June 30, 2017 and 2016

Overview. Net income decreased $478,000, to $3.5 million, for the three months ended June 30, 2017 compared to $4.0 million for the three months ended June 30, 2016.

Net Interest Income. Net interest income decreased $538,000 , or 3.7%, to $14.1 million for the six months ended June 30, 2017 compared to $14.7 million for the six months ended June 30, 2016.

Interest and dividend income decreased $333,000, or 2.1%, to $15.7 million for the six months ended June 30, 2017 compared to $16.1 million for the six months ended June 30, 2016. Interest income on loans decreased $449,000 primarily due to a decrease in average loans outstanding of $5.9 million. The decrease in average loans was due to loan runoff within the commercial and installment loan portfolios, partially offset by increases in indirect auto, line of credit, student and mortgage loans mainly due to loan originations. The accretion on the acquired loan portfolio credit mark for the six months ended June 30, 2017 was $406,000, or 12 basis points compared to $773,000, or 23 basis points for the six months ended June 30, 2016. Interest income on securities exempt from federal tax decreased $90,000 due to deploying proceeds from security calls and maturities into purchasing taxable securities with higher earning yields in the current year. There was a decrease of $3.1 million in the average balance on securities exempt from federal tax and a decrease of 42 basis points in yield as a result of security calls and maturities that had higher yields. Interest income on taxable securities increased $116,000 despite a decrease of 41 basis points in yield from new purchases and from higher yields on the existing securities in the portfolio. The average balance for taxable securities increased $24.1 million for the six months ended June 30, 2017. Other interest and dividend income increased $47,000 primarily due to increased interest earned with correspondent deposit banks and FHLB dividends in the current period. Federal Funds sold increased $43,000 for the six months ended June 30, 2017. This is the direct result of the end of the historically low interest rates in the last year and the increases in the average interest-earning balances to $12.5 million for the six months ended June 30, 2017.

Interest expense increased $205,000, or 14.6%, to $1.6 million for the six months ended June 30, 2017 compared to $1.4 million for the six months ended June 30, 2016. Interest expense on deposits increased $209,000 due to increases in the discount interest rate by the FRB and average interest-bearing deposits of $21.6 million which we attribute primarily to time deposits, interest-bearing demand deposits and savings accounts. The average cost of interest-bearing deposits increased 6 basis points. In addition, short-term borrowings increased $10,000 in the current period due to increased interest rates on securities sold under agreements to repurchase. Interest expense on other borrowed funds decreased $13,000 due to a decrease in long-term borrowings as a result of a FHLB long-term borrowing for $3.5 million that matured in the current period.

36

 

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

	(Dollars in thousands) (Unaudited)
	Six Months Ended June 30,
	2017							2016
			Interest							Interest
	Average		and		Yield/			Average		and		Yield/
(Dollars in thousands)	Balance		Dividends		Cost (1)			Balance		Dividends		Cost (1)
Assets:
Interest-Earning Assets:
Loans, Net	$	668,606	$	14,415		4.35	%	$	674,513	$	14,878		4.44	%
Investment Securities
Taxable		78,741		747		1.90			54,651		631		2.31
Exempt From Federal Tax		35,561		648		3.64			38,636		784		4.06
Other Interest-Earning Assets		25,147		186		1.49			12,664		96		1.52
Total Interest-Earning Assets		808,055		15,996		3.99			780,464		16,389		4.22
Noninterest-Earning Assets		57,107							53,463
Total Assets	$	865,162						$	833,927
Liabilities and Stockholders' equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits	$	122,141		147		0.24	%	$	116,112		97		0.17	%
Savings		127,141		116		0.18			123,908		113		0.18
Money Market		139,273		181		0.26			145,240		181		0.25
Time Deposits		158,610		886		1.13			140,260		730		1.05
Total Interest-Bearing Deposits		547,165		1,330		0.49			525,520		1,121		0.43
Borrowings		51,894		280		1.09			52,886		284		1.08
Total Interest-Bearing Liabilities		599,059		1,610		0.54			578,406		1,405		0.49
Noninterest-Bearing Demand Deposits		171,507							163,002
Other Liabilities		3,550							4,028
Total Liabilities		774,116							745,436
Stockholders' Equity		91,046							88,491
Total Liabilities and Stockholders' Equity	$	865,162						$	833,927
Net interest income			$	14,386						$	14,984
Net Interest Rate Spread (2)						3.45	%						3.73	%
Net Interest-Earning Assets (3)	$	208,996						$	202,058
Net Interest Margin (4)						3.59							3.86
Return on Average Assets						0.82							0.96
Return on Average Equity						7.76							9.05
Average Equity to Average Assets						10.52							10.61
Average Interest-Earning Assets to Average Interest-Bearing Liabilities						134.89							134.93

(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%.

37

 

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

	(Dollars in thousands)
	Six Months Ended June 30, 2017
	Compared To
	Six Months Ended June 30, 2016
	Increase (Decrease) Due to
(Dollars in thousands)	Volume			Rate			Total
Interest and Dividend Income:
Loans, net	$	(164	)	$	(299	)	$	(463	)
Investment Securities:
Taxable		242			(126	)		116
Exempt From Federal Tax		(58	)		(78	)		(136	)
Other Interest-Earning Assets		92			(2	)		90
Total Interest-Earning Assets		112			(505	)		(393	)
Interest Expense:
Deposits		48			161			209
Borrowings		(7	)		3			(4	)
Total Interest-Bearing Liabilities		41			164			205
Change in Net Interest Income	$	71		$	(669	)	$	(598	)

Provision for Loan Losses. The provision for loan losses decreased $430,000 to $720,000, for the six months ended June 30, 2017, of which $250,000 was attributed to the acquired loan portfolio, compared to $1.2 million of provision for loan losses for the six months ended June 30, 2016. Net charge-offs for the six months ended June 30, 2017 were $440,000, which included $287,000 of net charge-offs on automobile loans, compared to net charge-offs of $450,000, which included $229,000 of net charge-offs on automobile loans, for the six months ended June 30, 2016. Management analyzes the loan portfolio on a quarterly basis to determine the adequacy of the allowance for loan losses and the need for an increase or reduction in provision for loan losses for the six months ended June 30, 2017. There was minimal loan growth and increased loan portfolio performance compared to the prior year. As the acquired loan portfolio has loan payoffs, paydowns and accretion of the credit mark, the need for additional provision may be required based on our loan loss analysis.

Noninterest Income. Noninterest income increased $327,000, or 8.8%, to $4.0 million for the six months ended June 30, 2017 compared to $3.7 million at June 30, 2016. There was a $313,000 increase in insurance commissions from Exchange Underwriters due to additional contingency fees received and an increase in commercial commission and fee income received in the current period. Net gains on the sales of investments increased $64,000 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. The capital loss carry forward deferred tax asset has been fully recognized in the current period. Net gains on purchased tax credits increased $29,000 due to purchased Pennsylvania shares tax credits being recognized in the current period. Service fees on deposit accounts increased $17,000 primarily due to increased NSF fees due to customer overdrafts of deposit accounts. There was a decrease in the net gains on sales of residential mortgage loans of $57,000. 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® programs. Other commissions decreased $18,000 primarily due to decreases in merchant services and check sales fees in the current period. Other miscellaneous income decreased $14,000 primarily due to increases in amortization on mortgage servicing rights related to loans sold to the FHLB. This was partially offset by an increase in the servicing income received from mortgage loans sold to the FHLB as part of the MPF® program.

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Noninterest Expense. Noninterest expense increased $919,000, or 7.9%, to $12.5 million for the six months ended June 30, 2017 compared to $11.6 million for the six months ended June 30, 2016. Salaries and employee benefits increased $259,000, primarily due to additional employees, normal salary increases, retirement benefits and employee stock options. This was partially offset by decreases in group health insurance expense and restricted stock awards expense. Occupancy and equipment increased $240,000 and $58,000, respectively, primarily due to accelerated depreciation taken on leasehold improvements in the Bank’s former operations center that will not transfer over to the new Operations Center that was placed into service in the current period. Other increases for occupancy were related to real estate taxes, moving expenses, utilities and property insurance. Equipment expense increases were mainly due to equipment purchases and new maintenance contracts for the Operations Center. Other real estate owned expense was $6,000 in the current period compared to $535,000 of income in the prior period resulting in an increase of $541,000 in expense. This change is primarily due to the $566,000 pre-tax gain recognized due to the foreclosure procedures on two commercial real estate loans that moved into other real estate owned properties in the first quarter of 2016. The FDIC assessment decreased $78,000 due to an assessment factor reduction by the FDIC in the computation of the insurance assessment. Advertising decreased $47,000 related to decreases in print/media advertising and promotional items as a cost savings initiative. Other noninterest expense decreased $33,000 primarily due to decreases in various miscellaneous expenses, such as donations, non-employee restricted stock awards and a Pennsylvania state sales tax refund as a result of a Bank initiated reverse audit. Pennsylvania shares tax, which is calculated based on the Bank’s stockholders’ equity, decreased $29,000 due to the prior period shares tax accrual that anticipated a shares tax rate increase in 2016 that subsequently became effective in 2017.

Income Tax Expense. Income taxes decreased $222,000 to $1.4 million for the six months ended June 30, 2017 compared to $1.6 million for the six months ended June 30, 2016. The effective tax rate for the six months ended June 30, 2017 was 28.9% compared to 29.3% for the six months ended June 30, 2016. The decrease in income taxes was primarily due to a decrease of $700,000 in pre-tax income. The decrease in the effective tax rate was related to the favorable tax preference charitable donation of a former First Federal Savings Bank building to the City of Monessen, Pennsylvania, partially offset by the decrease in tax exempt income and the expiration of the low income housing tax credit program 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 June 30, 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 June 30, 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 $28.7 million at June 30, 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 $36.0 million at June 30, 2017. In addition, at June 30, 2017, the Company had the ability to borrow up to $285.0 million from the FHLB of Pittsburgh, of which $24.5 million was outstanding and $39.9 million was utilized toward standby letters of credit. The Company also has the ability to borrow up to $87.9 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 June 30, 2017, time deposits due within one year of that date totaled $46.1 million, or 29.3% 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.

39

 

CB Financial is a separate legal entity from the Bank and must provide for its own liquidity to pay any dividends to its shareholders and for other corporate purposes. Its primary source of liquidity is dividend payments it receives from the Bank. The Bank’s ability to pay dividends to CB Financial is subject to regulatory limitations. At June 30, 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.

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 June 30, 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)
	June 30, 2017					December 31, 2016
	Amount		Ratio			Amount		Ratio
Common Equity Tier 1 (to risk weighted assets)
Actual	$	83,099		13.44	%	$	81,845		13.38	%
For Capital Adequacy Purposes		27,822		4.50			27,533		4.50
To Be Well Capitalized		40,188		6.50			39,770		6.50
Tier 1 Capital (to risk weighted assets)
Actual		83,099		13.44			81,845		13.38
For Capital Adequacy Purposes		37,097		6.00			36,711		6.00
To Be Well Capitalized		49,462		8.00			48,947		8.00
Total Capital (to risk weighted assets)
Actual		90,834		14.69			89,497		14.63
For Capital Adequacy Purposes		49,462		8.00			48,947		8.00
To Be Well Capitalized		61,828		10.00			61,184		10.00
Tier 1 Leverage (to adjusted total assets)
Actual		83,099		9.58			81,845		9.80
For Capital Adequacy Purposes		34,710		4.00			33,390		4.00
To Be Well Capitalized		43,387		5.00			41,738		5.00

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

The Company believes that as of June 30, 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.

40

 

Item 4. Controls and Procedures.

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

There have been no changes in CB Financial’s internal control over financial reporting during the quarter ended June 30, 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 (Chief Executive Officer)

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

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

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

101.0 The following materials for the quarter ended June 30, 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

41

 

SIGNATURES

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

		CB FINANCIAL SERVICES, INC.
		(Registrant)
Date:	August 9, 2017	/s/ Barron P. McCune, Jr.
		Barron P. McCune, Jr.
		Chief Executive Officer
Date:	August 9, 2017	/s/ Kevin D. Lemley
		Kevin D. Lemley
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer and Chief Accounting Officer)

42

EX-31.1

EXHIBIT 31.1

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

CHIEF EXECUTIVE OFFICER CERTIFICATION

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

1.       I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 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:	August 9, 2017	/s/ Barron P. McCune, Jr.
		Barron P. McCune, Jr.
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

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

CHIEF FINANCIAL OFFICER CERTIFICATION

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

1.       I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 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:	August 9, 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 June 30, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Barron P. McCune, Jr., the Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date:	August 9, 2017	/s/ Barron P. McCune, Jr.
		Barron P. McCune, Jr.
		Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CB Financial Services, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 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:	August 9, 2017	/s/ Kevin D. Lemley
		Kevin D. Lemley
		Executive Vice President and Chief Financial Officer

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 07, 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	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Statement of Financial Condition (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
ASSETS
Interest Bearing	$ 17,464	$ 7,699
Non-Interest Bearing	11,209	6,583
Total Cash and Due From Banks	28,673	14,282
Available-for-Sale	116,545	106,208
Loans, Net	674,262	674,094
Premises and Equipment, Net	16,544	14,132
Bank-Owned Life Insurance	18,919	18,687
Goodwill	4,953	4,953
Core Deposit Intangible, Net	3,551	3,819
Accrued Interest and Other Assets	8,942	9,900
TOTAL ASSETS	872,389	846,075
LIABILITIES
Demand Deposits	180,991	165,400
NOW Accounts	121,615	105,962
Money Market Accounts	132,510	141,674
Savings Accounts	131,174	121,520
Time Deposits	157,351	155,028
Brokered Deposits	3,418	8,634
Total Deposits	727,059	698,218
Short-Term Borrowings	25,450	27,027
Other Borrowed Funds	24,500	28,000
Accrued Interest and Other Liabilities	3,480	3,361
TOTAL LIABILITIES	780,489	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 June 30, 2017 and December 31, 2016, Respectively	1,818	1,818
Capital Surplus	42,041	41,863
Retained Earnings	53,420	51,713
Treasury Stock, at Cost (275,321 and 276,721 Shares at June 30, 2017 and December 31, 2016, Respectively)	(4,722)	(4,746)
Accumulated Other Comprehensive Loss	(657)	(1,179)
TOTAL STOCKHOLDERS' EQUITY	91,900	89,469
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 872,389	$ 846,075

XML

Consolidated Statement of Financial Condition (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 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		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
INTEREST AND DIVIDEND INCOME
Loans, Including Fees	$ 7,229	$ 7,323	$ 14,371	$ 14,820
Federal Funds Sold	41	8	56	13
Taxable	386	307	747	631
Exempt From Federal Income Tax	219	266	436	526
Other Interest and Dividend Income	74	46	130	83
TOTAL INTEREST AND DIVIDEND INCOME	7,949	7,950	15,740	16,073
INTEREST EXPENSE
Deposits	675	560	1,330	1,121
Federal Funds Purchased				1
Short-Term Borrowings	20	15	39	29
Other Borrowed Funds	119	127	241	254
TOTAL INTEREST EXPENSE	814	702	1,610	1,405
NET INTEREST INCOME	7,135	7,248	14,130	14,668
Provision For Loan Losses	300	300	720	1,150
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	6,835	6,948	13,410	13,518
NONINTEREST INCOME
Service Fees on Deposit Accounts	625	606	1,209	1,192
Insurance Commissions	842	743	1,928	1,615
Other Commissions	107	112	211	229
Net Gains on Sales of Loans	162	185	252	309
Net Gains on Sales of Investments	70	58	122	58
Net Gains on Purchased Tax Credits	15		29
Income from Bank-Owned Life Insurance	116	119	232	239
Other	29	45	59	73
TOTAL NONINTEREST INCOME	1,966	1,868	4,042	3,715
Salaries and Employee Benefits	3,424	3,285	6,913	6,654
Occupancy	604	438	1,152	912
Equipment	473	432	912	854
FDIC Assessment	82	115	163	241
PA Shares Tax	186	203	376	405
Contracted Services	157	156	289	289
Legal and Professional Fees	102	114	243	255
Advertising	182	189	307	354
Bankcard Processing Expense	131	122	254	234
Other Real Estate Owned Expense (Income)	1	10	6	(535)
Amortization of Core Deposit Intangible	133	133	267	267
Other	829	891	1,639	1,672
TOTAL NONINTEREST EXPENSE	6,304	6,088	12,521	11,602
Income Before Income Taxes	2,497	2,728	4,931	5,631
Income Taxes	696	790	1,426	1,648
NET INCOME	$ 1,801	$ 1,938	$ 3,505	$ 3,983
EARNINGS PER SHARE
Basic (in dollars per share)	$ 0.44	$ 0.48	$ 0.86	$ 0.98
Diluted (in dollars per share)	$ 0.44	$ 0.48	$ 0.85	$ 0.98
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic (in shares)	4,088,025	4,081,017	4,087,659	4,081,017
Diluted (in shares)	4,105,338	4,084,695	4,101,861	4,083,313

XML

Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net Income		$ 1,801	$ 1,938	$ 3,505	$ 3,983
Other Comprehensive Income:
Unrealized Gains on Available-for-Sale Securities Net of Income Tax of $198 and $28 for the Three Months Ended June 30, 2017 and 2016, Respectively, and $309 and $164 for the Six Months Ended June 30, 2017 and 2016, Respectively		385	55	603	316
Reclassification Adjustment for Gains on Securities: Included in Net Income, Net of Income Tax of $23 and $20 for the Three Months Ended June 30, 2017 and 2016, Respectively, and $41 and $20 for the Six Months Ended June 30, 2017 and 2016, Respectively (1)	[1]	(47)	(38)	(81)	(38)
Other Comprehensive Income, Net of Income Tax		338	17	522	278
Total Comprehensive Income		$ 2,139	$ 1,955	$ 4,027	$ 4,261

[1] The gross amount of gains on securities of $70 and $58 for the Three Months Ended June 30, 2017 and 2016, Respectively and $122 and $58 for the Six Months Ended June 30, 2017 and 2016, Respectively 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		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Unrealized Gains, on Available-for-Sale Securities, Tax	$ 198	$ 28	$ 309	$ 164
Reclassification Adjustment for Gains on Securities, Tax	23	20	41	20
Net Gains on Sales of Investments	$ 70	$ 58	$ 122	$ 58

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 at Dec. 31, 2015	$ 1,818	$ 41,614	$ 47,725	$ (4,836)	$ 575	$ 86,896
Balance (in shares) at Dec. 31, 2015	4,363,346
Net Income			3,983			3,983
Other Comprehensive Income (Loss)					278	278
Stock-Based Compensation Expense		174				174
Dividends Paid			(1,796)			(1,796)
Balance (in shares) at Jun. 30, 2016	4,363,346
Balance at Jun. 30, 2016	$ 1,818	41,788	49,912	(4,836)	853	89,535
Balance at Dec. 31, 2016	$ 1,818	41,863	51,713	(4,746)	(1,179)	89,469
Balance (in shares) at Dec. 31, 2016	4,363,346
Net Income			3,505			3,505
Other Comprehensive Income (Loss)					522	522
Stock-Based Compensation Expense		171				171
Exercise of stock options		7		24		31
Dividends Paid			(1,798)			(1,798)
Balance (in shares) at Jun. 30, 2017	4,363,346
Balance at Jun. 30, 2017	$ 1,818	$ 42,041	$ 53,420	$ (4,722)	$ (657)	$ 91,900

XML

Consolidated Statement of Changes In Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Retained Earnings [Member]
Dividends paid (in dollars per share)	$ 0.22	$ 0.22

XML

Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
OPERATING ACTIVITIES
Net Income	$ 3,505	$ 3,983
Adjustments to Reconcil Net Income to Net Cash Provided By Operating Activities:
Net Amortization on Investments	171	116
Depreciation and Amortization	1,305	1,510
Provision for Loan Losses	720	1,150
Income from Bank-Owned Life Insurance	(232)	(239)
Proceeds From Mortgage Loans Sold	10,620	11,574
Originations of Mortgage Loans for Sale	(10,368)	(11,265)
Gains on Sales of Loans	(252)	(309)
Gains on Sales of Investment Securities	(122)	(58)
Gains on Sales of Other Real Estate Owned and Repossessed Assets		(49)
Noncash Expense for Stock-Based Compensation	171	174
Decrease in Accrued Interest Receivable	91	32
Valuation Adjustment on Foreclosed Real Estate		(566)
(Decrease) Increase in Taxes Payable	(1,743)	1,605
Increase (Decrease) in Accrued Interest Payable	4	(19)
Net Payment of Federal/State Income Taxes	(1,495)	(1,450)
Other, Net	4,078	237
NET CASH PROVIDED BY OPERATING ACTIVITIES	6,453	6,426
INVESTING ACTIVITIES
Proceeds From Principal Repayments and Maturities	4,588	36,894
Purchases of Securities	(17,787)	(35,388)
Proceeds from Sales of Securities	3,603	302
Net Increase in Loans	(1,502)	(79)
Purchase of Premises and Equipment	(3,150)	(281)
Retirements of Premises and Equipment	152
Proceeds From Sales of Other Real Estate Owned and Repossessed Assets		175
Decrease in Restricted Equity Securities	37	571
NET CASH USED IN INVESTING ACTIVITIES	(14,059)	2,194
FINANCING ACTIVITIES
Net Increase (Decrease) in Deposits	28,841	(4,033)
Net Decrease in Short-Term Borrowings	(1,577)	(918)
Principal Payments on Other Borrowed Funds	(3,500)
Cash Dividends Paid	(1,798)	(1,796)
Treasury Stock, Purchases at Cost	24
Exercise of Stock Options	7
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	21,997	(6,747)
INCREASE IN CASH AND CASH EQUIVALENTS	14,391	1,873
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR	14,282	11,340
CASH AND DUE FROM BANKS AT END OF PERIOD	28,673	13,213
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest on deposits and borrowings (including interest credited to deposit accounts of $1,323 and $1,137 respectively)	1,606	1,423
Income taxes	1,495	1,450
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 sold not settled		(70)
Securities purchased not settled		$ 60

XML

Consolidated Statement of Cash Flows (Unaudited) (Parentheticals) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Interest credited to deposit accounts	$ 1,323	$ 1,137

XML

Note 1 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 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 will continue to evaluate the provisions of Accounting Standards Codification (“ASC”) Topic

280

for segment reporting information related to Exchange Underwriters. During the prior 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 combined 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. During the current quarter, Exchange Underwriters fell below the

10%

threshold of combined interest and noninterest income.

Except as disclosed in Note

4

on page

24,

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

July 2017,

the FASB issued Accounting Standards Update ("ASU")

2017

-

11,

Earnings Per Share (Topic

260

); Distinguishing Liabilities from Equity (Topic

480

); Derivatives and Hedging (Topic

815

): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.

ASU

2017

-

11

amendments simplify the accounting for certain financial instruments with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered and will also recognize the effect of the trigger within equity. ASU

2017

-

11

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

-

11

but believes that its adoption will

not

have a material impact on the Company's consolidated financial condition or results of operations.

In

May 2017,

the FASB issued ASU

2017

-

10,

Service Concession Arrangements (Topic

853

): Determining the Customer of the Operation Services.

ASU

2017

-

10

amendments clarify that the grantor in a service concession arrangement is the customer of the operation services in all cases for those arrangements. ASU

2017

-

10

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

December 15, 2017,

and interim periods within those annual periods, for public entities that are

not

SEC filers for annual periods beginning after

December 15, 2018

and for all other entities for annual periods beginning after

December 15, 2019

with early adoption permitted, including within an interim period, subject to specific transition requirements depending on whether an entity adopted Topic

606

before or after the issuance of ASU

2017

-

10.

The Company is evaluating the provisions of ASU

2017

-

10

but believes that its adoption will

not

have a material impact on the Company's consolidated financial condition or results of operations.

In

May 2017,

the FASB issued ASU

2017

-

09,

Compensation—Stock Compensation (Topic

718

): Scope of Modification Accounting.

ASU

2017

-

09

amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under ASU Topic

718.

ASU

2017

-

09

is effective for all entities for annual periods, including interim periods within those annual periods beginning after

December 15, 2017

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

2017

-

09

but believes that its adoption will

not

have a material impact on the Company's consolidated financial condition or results of operations.

In

March 2017,

the FASB issued ASU

2017

-

08,

Receivables- Nonrefundable Fees and Other Costs (Subtopic

310

-

20

): Premium Amortization on Purchases of Callable Debt Securities.

ASU

2017

-

08

amends guidance on the amortization period of premiums on certain purchases of callable debt securities. The amendments shorten the amortization period of premiums on certain purchases of 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 Accounting Standards Update (“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 or results of operations.

In

January 2016,

the FASB issued ASU

2016

-

01,

Financial Instruments – Overall (Subtopic

825

-

10

)

, which enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. ASU

2016

-

01

(i) requires equity investments (except those accounted for under the equity method or that are consolidated) to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost; (iv) requires an entity to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and (v) requires separate

presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. ASU

2016

-

01

is effective for fiscal years, and interim periods within those years, beginning after

December 15, 2017,

and is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is 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 or results of operations.

XML

Note 2 - Earnings Per Share

6 Months Ended

Jun. 30, 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						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Weighted-Average Common Shares Outstanding		4,363,346			4,363,346			4,363,346			4,363,346
Average Treasury Stock Shares		(275,321	)		(282,329	)		(275,687	)		(282,329	)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share		4,088,025			4,081,017			4,087,659			4,081,017
Additional Common Stock Equivalents (Stock Options and Restricted Stock) Used to Calculate Diluted Earnings Per Share		17,313			3,678			14,202			2,296
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share		4,105,338			4,084,695			4,101,861			4,083,313
Earnings per share:
Basic	$	0.44		$	0.48		$	0.86		$	0.98
Diluted		0.44			0.48			0.85			0.98

XML

Note 3 - Investment Securities

6 Months Ended

Jun. 30, 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)
	June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. Government Agencies	$	66,620	$	1	$	(1,335	)	$	65,286
Obligations of States and Political Subdivisions		36,423		394		(90	)		36,727
Mortgage-Backed Securities - Government-Sponsored Enterprises		12,907		9		(33	)		12,883
Equity Securities - Mutual Funds		500		7		-			507
Equity Securities - Other		1,091		74		(23	)		1,142
Total	$	117,541	$	485	$	(1,481	)	$	116,545

	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			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)
	June 30, 2017
	Less than 12 months							12 Months or Greater							Total
	Number				Gross			Number				Gross			Number				Gross
	of		Fair		Unrealized			of		Fair		Unrealized			of		Fair		Unrealized
	Securities		Value		Losses			Securities		Value		Losses			Securities		Value		Losses
U.S. Government Agencies		21	$	57,265	$	(1,335	)		-	$	-	$	-			21	$	57,265	$	(1,335	)
Obligations of States and Political Subdivisions		18		9,097		(78	)		4		1,629		(12	)		22		10,726		(90	)
Mortgage-Backed Securities - Government Sponsored Enterprises		5		10,639		(33	)		-		-		-			5		10,639		(33	)
Equity Securities - Other		5		373		(23	)		-		-		-			5		373		(23	)
Total		49	$	77,374	$	(1,469	)		4	$	1,629	$	(12	)		53	$	79,003	$	(1,481	)

	December 31, 2016
	Less than 12 months							12 Months or Greater							Total
	Number				Gross			Number				Gross			Number				Gross
	of		Fair		Unrealized			of		Fair		Unrealized			of		Fair		Unrealized
	Securities		Value		Losses			Securities		Value		Losses			Securities		Value		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

June 30, 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

June 30, 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)
	June 30, 2017
	Available-for-Sale
	Amortized		Fair
	Cost		Value
Due in One Year or Less	$	1,576	$	1,588
Due after One Year through Five Years		17,826		17,898
Due after Five Years through Ten Years		84,604		83,467
Due after Ten Years		13,535		13,592
Total	$	117,541	$	116,545

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 Loss

6 Months Ended

Jun. 30, 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)
	June 30, 2017						December 31, 2016
	Amount			Percent			Amount			Percent
Originated Loans
Real Estate:
Residential	$	189,189			35.0	%	$	186,077			35.4	%
Commercial		140,652			26.1			139,894			26.7
Construction		20,186			3.7			10,646			2.0
Commercial and Industrial		75,665			14.1			71,091			13.5
Consumer		110,113			20.4			114,007			21.7
Other		3,508			0.7			3,637			0.7
Total Originated Loans		539,313			100.0	%		525,352			100.0	%
Allowance for Loan Losses		(7,468	)					(7,283	)
Loans, Net	$	531,845					$	518,069
Loans Acquired at Fair Value
Real Estate:
Residential	$	78,358			54.8	%	$	85,511			54.7	%
Commercial		55,628			39.0			61,116			39.0
Commercial and Industrial		8,849			6.1			9,721			6.2
Consumer		197			0.1			197			0.1
Total Loans Acquired at Fair Value		143,032			100.0	%		156,545			100.0	%
Allowance for Loan Losses		(615	)					(520	)
Loans, Net	$	142,417					$	156,025
Total Loans
Real Estate:
Residential	$	267,547			39.2	%	$	271,588			39.8	%
Commercial		196,280			28.8			201,010			29.5
Construction		20,186			2.9			10,646			1.6
Commercial and Industrial		84,514			12.4			80,812			11.9
Consumer		110,310			16.2			114,204			16.7
Other		3,508			0.5			3,637			0.5
Total Loans		682,345			100.0	%		681,897			100.0	%
Allowance for Loan Losses		(8,083	)					(7,803	)
Loans, Net	$	674,262					$	674,094

Total unamortized net deferred loan fees were

$872,000

and

$818,000

at

June 30, 2017

and

December 31, 2016,

respectively.

Real estate loans serviced for others, which are

not

included in the Consolidated Statement of Financial Condition, totaled

$90.4

million and

$83.9

million at

June 30, 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

June 30, 2017

and

December 31, 2016,

there were

no

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

	(Dollars in thousands)
	June 30, 2017
			Special
	Pass		Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	187,741	$	1,061	$	387	$	-	$	189,189
Commercial		123,544		14,037		2,821		250		140,652
Construction		19,562		-		565		59		20,186
Commercial and Industrial		62,712		10,189		1,312		1,452		75,665
Consumer		110,084		-		29		-		110,113
Other		3,508		-		-		-		3,508
Total Originated Loans	$	507,151	$	25,287	$	5,114	$	1,761	$	539,313
Loans Acquired at Fair Value
Real Estate:
Residential	$	76,342	$	-	$	2,016	$	-	$	78,358
Commercial		52,920		1,997		511		200		55,628
Commercial and Industrial		8,418		13		320		98		8,849
Consumer		197		-		-		-		197
Total Loans Acquired at Fair Value	$	137,877	$	2,010	$	2,847	$	298	$	143,032
Total Loans
Real Estate:
Residential	$	264,083	$	1,061	$	2,403	$	-	$	267,547
Commercial		176,464		16,034		3,332		450		196,280
Construction		19,562		-		565		59		20,186
Commercial and Industrial		71,130		10,202		1,632		1,550		84,514
Consumer		110,281		-		29		-		110,310
Other		3,508		-		-		-		3,508
Total Loans	$	645,028	$	27,297	$	7,961	$	2,059	$	682,345

	December 31, 2016
			Special
	Pass		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)
	June 30, 2017
			30-59		60-89		90 Days
	Loans		Days		Days		Or More		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
Originated Loans
Real Estate:
Residential	$	188,747	$	-	$	17	$	66	$	83	$	359	$	189,189
Commercial		140,364		-		-		-		-		288		140,652
Construction		20,127		-		-		-		-		59		20,186
Commercial and Industrial		73,241		532		-		-		532		1,892		75,665
Consumer		108,813		1,179		75		17		1,271		29		110,113
Other		3,508		-		-		-		-		-		3,508
Total Originated Loans	$	534,800	$	1,711	$	92	$	83	$	1,886	$	2,627	$	539,313
Loans Acquired at Fair Value
Real Estate:
Residential	$	76,978	$	165	$	-	$	88	$	253	$	1,127	$	78,358
Commercial		55,428		-		-		-		-		200		55,628
Commercial and Industrial		8,832		-		-		-		-		17		8,849
Consumer		197		-		-		-		-		-		197
Total Loans Acquired at Fair Value	$	141,435	$	165	$	-	$	88	$	253	$	1,344	$	143,032
Total Loans
Real Estate:
Residential	$	265,725	$	165	$	17	$	154	$	336	$	1,486	$	267,547
Commercial		195,792		-		-		-		-		488		196,280
Construction		20,127		-		-		-		-		59		20,186
Commercial and Industrial		82,073		532		-		-		532		1,909		84,514
Consumer		109,010		1,179		75		17		1,271		29		110,310
Other		3,508		-		-		-		-		-		3,508
Total Loans	$	676,235	$	1,876	$	92	$	171	$	2,139	$	3,971	$	682,345

	December 31, 2016
			30-59		60-89		90 Days
	Loans		Days		Days		Or More		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		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)
	June 30,			December 31,
	2017			2016
Nonaccrual Loans:
Originated Loans:
Real Estate:
Residential	$	359		$	308
Commercial		288			73
Construction		59			107
Commercial and Industrial		1,892			1,829
Consumer		29			160
Total Originated Nonaccrual Loans		2,627			2,477
Loans Acquired at Fair Value:
Real Estate:
Residential		1,127			1,565
Commercial		200			347
Commercial and Industrial		17			-
Total Loans Acquired at Fair Value Nonaccrual Loans		1,344			1,912
Total Nonaccrual Loans		3,971			4,389
Accruing Loans Past Due 90 Days or More:
Originated Loans:
Real Estate:
Residential		66			120
Consumer		17			8
Total Originated Accruing Loans 90 Days or More Past Due		83			128
Loans Acquired at Fair Value:
Real Estate:
Residential		88			223
Total Loans Acquired at Fair Value Accruing Loans 90 Days or More Past Due		88			223
Total Accruing Loans 90 Days or More Past Due		171			351
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		4,142			4,740
Troubled Debt Restructurings, Accruing:
Originated Loans:
Real Estate - Commercial		1,298			1,325
Commercial and Industrial		5			6
Other		3			4
Total Originated Loans		1,306			1,335
Loans Acquired at Fair Value:
Real Estate - Residential		1,279			1,299
Real Estate - Commercial		457			660
Commercial and Industrial		303			393
Total Loans Acquired at Fair Value		2,039			2,352
Total Troubled Debt Restructurings, Accruing		3,345			3,687
Total Nonperforming Loans		7,487			8,427
Real Estate Owned:
Residential		208			-
Commercial		174			174
Total Real Estate Owned		382			174
Total Nonperforming Assets	$	7,869		$	8,601
Nonperforming Loans to Total Loans		1.10	%		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

$795,000

and

$2.2

million at

June 30, 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 the 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

$4.3

million and

15

loans totaling

$4.7

million at

June 30, 2017

and

December 31, 2016,

respectively. Originated loans classified as TDRs consisted of

6

loans totaling

$2.3

million at

June 30, 2017

and

December 31, 2016,

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

8

loans totaling

$2.0

million and

9

loans totaling

$2.4

million at

June 30, 2017

and

December 31, 2016,

respectively.

During the

six

months ended

June 30, 2016,

one

commercial loan previously identified as an acquired loan at fair value TDR paid off, an originated consumer loan modified terms in a new TDR transaction and

one

commercial and

one

residential real estate loan that were acquired at fair value modified terms into new TDR transactions.

No

TDRs have subsequently defaulted during the

three

or

six

months ended

June 30, 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

and

six

months ended

June 30, 2017

and the

three

months ended

June 30, 2016.

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

six

months ended

June 30, 2016.

	(Dollars in thousands)
	Six Months Ended June 30, 2016
			Pre-		Post-
			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded		Related
	Contracts		Investment		Investment		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)
	June 30, 2017
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Residential	$	101	$	-	$	102	$	104	$	2
Commercial		1,947		-		1,947		2,003		46
Construction		624		-		624		652		13
Commercial and Industrial		664		-		664		666		17
Other		3		-		3		3		-
Total With No Related Allowance Recorded	$	3,339	$	-	$	3,340	$	3,428	$	78
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,279	$	-	$	1,279	$	1,289	$	33
Commercial		1,168		-		1,168		1,317		23
Commercial and Industrial		320		-		320		380		8
Total With No Related Allowance Recorded	$	2,767	$	-	$	2,767	$	2,986	$	64
Total Loans
Real Estate:
Residential	$	1,380	$	-	$	1,381	$	1,393	$	35
Commercial		3,115		-		3,115		3,320		69
Construction		624		-		624		652		13
Commercial and Industrial		984		-		984		1,046		25
Other		3		-		3		3		-
Total With No Related Allowance Recorded	$	6,106	$	-	$	6,107	$	6,414	$	142
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,508	$	425	$	1,508	$	1,523	$	33
Commercial and Industrial		2,105		815		2,155		2,271		52
Total With A Related Allowance Recorded	$	3,613	$	1,240	$	3,663	$	3,794	$	85
Loans Acquired at Fair Value
Commercial and Industrial	$	98	$	16	$	98	$	109	$	3
Total With A Related Allowance Recorded	$	98	$	16	$	98	$	109	$	3
Total Loans
Real Estate:
Commercial	$	1,508	$	425	$	1,508	$	1,523	$	33
Commercial and Industrial		2,203		831		2,253		2,380		55
Total With A Related Allowance Recorded	$	3,711	$	1,256	$	3,761	$	3,903	$	88

	June 30, 2017 (cont.)
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		Recognized
Total Impaired Loans:
Originated Loans
Real Estate:
Residential	$	101	$	-	$	102	$	104	$	2
Commercial		3,455		425		3,455		3,526		79
Construction		624		-		624		652		13
Commercial and Industrial		2,769		815		2,819		2,937		69
Other		3		-		3		3		-
Total Impaired Loans	$	6,952	$	1,240	$	7,003	$	7,222	$	163
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,279	$	-	$	1,279	$	1,289	$	33
Commercial		1,168		-		1,168		1,317		23
Commercial and Industrial		418		16		418		489		11
Total Impaired Loans	$	2,865	$	16	$	2,865	$	3,095	$	67
Total Loans
Real Estate:
Residential	$	1,380	$	-	$	1,381	$	1,393	$	35
Commercial		4,623		425		4,623		4,843		102
Construction		624		-		624		652		13
Commercial and Industrial		3,187		831		3,237		3,426		80
Other		3		-		3		3		-
Total Impaired Loans	$	9,817	$	1,256	$	9,868	$	10,317	$	230

	December 31, 2016
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		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.)
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		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)
	June 30, 2017
	Real			Real			Real		Commercial
	Estate			Estate			Estate		and
	Residential			Commercial			Construction		Industrial			Consumer			Other		Unallocated			Total
Originated Loans
March 31, 2017	$	1,089		$	1,898		$	83	$	1,598		$	2,256		$	-	$	282		$	7,206
Charge-offs		-			-			-		-			(118	)		-		-			(118	)
Recoveries		1			-			-		25			53			-		-			79
Provision		(150	)		119			59		137			32			-		103			300
June 30, 2017	$	940		$	2,017		$	142	$	1,760		$	2,223		$	-	$	385		$	7,467
Loans Acquired at Fair Value
March 31, 2017	$	-		$	471		$	-	$	114		$	-		$	-	$	(6	)	$	579
Charge-offs		-			(3	)		-		-			-			-		-			(3	)
Recoveries		38			1			-		-			1			-		-			40
Provision		(38	)		144			-		(5	)		(1	)		-		(100	)		-
June 30, 2017	$	-		$	613		$	-	$	109		$	-		$	-	$	(106	)	$	616
Total Allowance for Loan Losses
March 31, 2017	$	1,089		$	2,369		$	83	$	1,712		$	2,256		$	-	$	276		$	7,785
Charge-offs		-			(3	)		-		-			(118	)		-		-			(121	)
Recoveries		39			1			-		25			54			-		-			119
Provision		(188	)		263			59		132			31			-		3			300
June 30, 2017	$	940		$	2,630		$	142	$	1,869		$	2,223		$	-	$	279		$	8,083
Originated Loans
December 31, 2016	$	1,106		$	1,942		$	65	$	1,579		$	2,463		$	-	$	128		$	7,283
Charge-offs								-		-			(445	)		-		-			(445	)
Recoveries		5						-		36			118			-		-			159
Provision		(171	)		75			77		145			87			-		257			470
June 30, 2017	$	940		$	2,017		$	142	$	1,760		$	2,223		$	-	$	385		$	7,467
Loans Acquired at Fair Value
December 31, 2016	$	-		$	365		$	-	$	120		$	-		$	-	$	35		$	520
Charge-offs		(64	)		(132	)		-		-						-		-			(196	)
Recoveries		38			1			-		-			3			-		-			42
Provision		26			379			-		(11	)		(3	)		-		(141	)		250
June 30, 2017	$	-		$	613		$	-	$	109		$	-		$	-	$	(106	)	$	616
Total Allowance for Loan Losses
December 31, 2016	$	1,106		$	2,307		$	65	$	1,699		$	2,463		$	-	$	163		$	7,803
Charge-offs		(64	)		(132	)		-		-			(445	)		-		-			(641	)
Recoveries		43			1			-		36			121			-		-			201
Provision		(145	)		454			77		134			84			-		116			720
June 30, 2017	$	940		$	2,630		$	142	$	1,869		$	2,223		$	-	$	279		$	8,083

	June 30, 2017
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		Industrial		Consumer		Other		Unallocated			Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	425	$	-	$	815	$	-	$	-	$	-		$	1,240
Collectively Evaluated for Potential Impairment	$	940	$	1,592	$	142	$	945	$	2,223	$	-	$	385		$	6,227
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	-	$	-	$	-	$	16	$	-	$	-	$	-		$	16
Collectively Evaluated for Potential Impairment	$	-	$	613	$	-	$	93	$	-	$	-	$	(106	)	$	600
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	-	$	425	$	-	$	831	$	-	$	-	$	-		$	1,256
Collectively Evaluated for Potential Impairment	$	940	$	2,205	$	142	$	1,038	$	2,223	$	-	$	279		$	6,827

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

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

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

	December 31, 2016
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		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		(407	)
Nonaccretable Discount		(194	)
Balance at June 30, 2017	$	1,039

On

August 4, 2017,

the Company received mortgage insurance proceeds related to an acquired loan that was previously paid-off as of

June 30, 2017

from the Mortgage Guaranty Insurance Corporation ("MGIC") for approximately

$218,000.

This gain contingency will be recorded in the

2017

third

quarter consolidated financial statements.

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

	(Dollars in thousands)
	June 30, 2017
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	101	$	3,455	$	624	$	2,769	$	-	$	3	$	6,952
Collectively Evaluated for Potential Impairment		189,088		137,197		19,562		72,896		110,113		3,505		532,361
	$	189,189	$	140,652	$	20,186	$	75,665	$	110,113	$	3,508	$	539,313
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,279	$	1,168	$	-	$	418	$	-	$	-	$	2,865
Collectively Evaluated for Potential Impairment		77,079		54,460		-		8,431		197		-		140,167
	$	78,358	$	55,628	$	-	$	8,849	$	197	$	-	$	143,032
Total Loans
Individually Evaluated for Impairment	$	1,380	$	4,623	$	624	$	3,187	$	-	$	3	$	9,817
Collectively Evaluated for Potential Impairment		266,167		191,657		19,562		81,327		110,310		3,505		672,528
	$	267,547	$	196,280	$	20,186	$	84,514	$	110,310	$	3,508	$	682,345

	December 31, 2016
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		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

6 Months Ended

Jun. 30, 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).

	June 30,
Maturity Period:	2017
One Year or Less	$	46,093
Over One Through Two Years		60,182
Over Two Through Three Years		20,309
Over Three Through Four Years		12,893
Over Four Through Five Years		9,156
Over Five Years		8,718
Total	$	157,351

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

$250,000

totaled

$45.0

million and

$46.0

million as of

June 30, 2017

and

December 31, 2016,

respectively.

XML

Note 6 - Short-term Borrowings

6 Months Ended

Jun. 30, 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)
	June 30, 2017					December 31, 2016
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Short-term Borrowings
Federal Funds Purchased:
Average Balance Outstanding During the Period	$	17		-	%	$	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		25,450		0.25			27,027		0.24
Average Balance Outstanding During the Period		26,332		0.30			26,311		0.26
Maximum Amount Outstanding at any Month End		26,460					30,095
Securities Collaterizing the Agreements at Period-End:
Carrying Value		32,499					33,785
Market Value		31,834					32,931

XML

Note 7 - Other Borrowed Funds

6 Months Ended

Jun. 30, 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)
	June 30, 2017					December 31, 2016
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		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

June 30, 2017,

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

$285.0

million with the FHLB. This arrangement is subject to annual renewal, incurs

no

service charge, and is secured by a blanket security agreement on outstanding residential mortgage loans and the Company’s investment in FHLB stock. Under this arrangement the Company had available a variable rate Line of Credit in the amount of

$143.1

million and

$148.5

million as of

June 30, 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

$87.9

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 unaffiliated banks totaling

$40.0

million. As of

June 30, 2017

and

December 31, 2016,

no

draws had been taken on these facilities.

XML

Note 8 - Commitments and Contingent Liabilities

6 Months Ended

Jun. 30, 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)
	June 30,		December 31,
	2017		2016
Standby Letters of Credit	$	41,147	$	36,657
Performance Letters of Credit		4,396		2,471
Construction Mortgages		32,485		21,363
Personal Lines of Credit		6,139		5,905
Overdraft Protection Lines		6,183		5,680
Home Equity Lines of Credit		15,286		14,722
Commercial Lines of Credit		64,303		51,725
	$	169,939	$	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

6 Months Ended

Jun. 30, 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		June 30,		December 31,
	Hierarchy		2017		2016
Available for Sales Securities:
U.S. Government Agencies		Level II	$	65,286	$	66,156
Obligations of States and Political Subdivisions		Level II		36,727		35,735
Mortgage-Backed Securities - Government-Sponsored Enterprises		Level II		12,883		2,619
Equity Securities - Mutual Funds		Level I		507		507
Equity Securities - Other		Level I		1,142		1,191
Total Available for Sale Securities			$	116,545	$	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	June 30, 2017		December 31, 2016		Valuation Techniques	Significant Unobservable Inputs	Unobservable  Input Value
Impaired Loans	Level III	$	2,455	$	2,497	Market Comparable Properties	Marketability Discount	10%	to	30%	(1)
OREO	Level III		155		-	Market Comparable Properties	Marketability Discount	10%	to	50%	(1)

(

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

June 30, 2017

and

December 31, 2016,

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

$3.7

million and

$3.7

million, respectively, less their specific valuation allowances of

$1.3

million and

$1.2

million, 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

six

months ended

June 30, 2017,

one

residential real estate loan for

$155,000

moved into OREO. During the

six

months ended

June 30, 2016,

two

commercial real estate properties for

$3.2

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

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 its location and the Company’s need of a new headquarters location.

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

second

entity on potentially favorable or unfavorable terms.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If

no

readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses and other factors, as determined through various option pricing formulas or simulation modeling. As many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values

may

not

be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in the assumptions on which the estimated fair values are based

may

have significant impact on the resulting estimated fair values.

As certain assets such as deferred tax assets and premises and equipment are

not

considered financial instruments, the estimated fair value of financial instruments would

not

represent the full value of the Company.

The Company employs simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices are

not

available, based upon the following assumptions:

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

The fair value is equal to the current carrying value.

Investment Securities

The fair value of investment securities is equal to the available quoted market price. If

no

quoted market price is available, fair value is estimated using the quoted market price for similar securities or matrix pricing, which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted prices.

Loans Receivable

For variable-rate loans that reprice frequently and with

no

significant change in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. Fair values for other loans are estimated using discounted cash flow analyses, using market interest rates for comparable loans. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Deposit Liabilities

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

Borrowed Funds

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

Commitments to Extend Credit

These financial instruments are generally

not

subject to sale and estimated fair values are

not

readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are

not

considered material for disclosure. The contractual amounts of unfunded commitments and letters of credit are presented in Note

8.

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

			(Dollars in thousands)
			June 30, 2017				December 31, 2016
	Fair Value		Carrying		Fair		Carrying		Fair
	Hierarchy		Value		Value		Value		Value
Financial Assets:
Cash and Due From Banks:
Interest Bearing		Level I	$	17,464	$	17,464	$	7,699	$	7,699
Non-Interest Bearing		Level I		11,209		11,209		6,583		6,583
Investment Securities:
Available for Sale		See Above		116,545		116,545		106,208		106,208
Loans, Net		Level III		674,262		685,730		674,094		684,777
Restricted Stock		Level II		3,628		3,628		3,665		3,665
Bank-Owned Life Insurance		Level II		18,919		18,919		18,687		18,687
Accrued Interest Receivable		Level II		2,350		2,350		2,441		2,441
Financial Liabilities:
Deposits		Level II		727,059		706,817		698,218		697,806
Short-term Borrowings		Level II		25,450		25,450		27,027		27,027
Other Borrowed Funds		Level II		24,500		24,644		28,000		28,098
Accrued Interest Payable		Level II		338		338		334		334

XML

Note 10 - Other Noninterest Expense

6 Months Ended

Jun. 30, 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

and

six

months ended

June 30, 2017

and

2016,

are as follows:

	(Dollars in thousands)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Other Noninterest Expense
Non-employee compensation	$	100	$	134	$	200	$	267
Printing and supplies		100		134		202		208
Postage		64		44		130		103
Telephone		99		97		188		181
Charitable contributions		56		41		80		69
Dues and subscriptions		55		46		118		93
Loan expenses		86		73		160		143
Meals and entertainment		43		34		68		58
Travel		43		40		69		70
Training		9		6		20		18
Miscellaneous		174		242		404		462
Total Other Noninterest Expense	$	829	$	891	$	1,639	$	1,672

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 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 will continue to evaluate the provisions of Accounting Standards Codification (“ASC”) Topic

280

for segment reporting information related to Exchange Underwriters. During the prior 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 combined 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. During the current quarter, Exchange Underwriters fell below the

10%

threshold of combined interest and noninterest income.

Except as disclosed in Note

4

on page

24,

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

July 2017,

the FASB issued Accounting Standards Update ("ASU")

2017

-

11,

Earnings Per Share (Topic

260

); Distinguishing Liabilities from Equity (Topic

480

); Derivatives and Hedging (Topic

815

): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.

ASU

2017

-

11

amendments simplify the accounting for certain financial instruments with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered and will also recognize the effect of the trigger within equity. ASU

2017

-

11

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

-

11

but believes that its adoption will

not

have a material impact on the Company's consolidated financial condition or results of operations.

In

May 2017,

the FASB issued ASU

2017

-

10,

Service Concession Arrangements (Topic

853

): Determining the Customer of the Operation Services.

ASU

2017

-

10

amendments clarify that the grantor in a service concession arrangement is the customer of the operation services in all cases for those arrangements. ASU

2017

-

10

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

December 15, 2017,

and interim periods within those annual periods, for public entities that are

not

SEC filers for annual periods beginning after

December 15, 2018

and for all other entities for annual periods beginning after

December 15, 2019

with early adoption permitted, including within an interim period, subject to specific transition requirements depending on whether an entity adopted Topic

606

before or after the issuance of ASU

2017

-

10.

The Company is evaluating the provisions of ASU

2017

-

10

but believes that its adoption will

not

have a material impact on the Company's consolidated financial condition or results of operations.

In

May 2017,

the FASB issued ASU

2017

-

09,

Compensation—Stock Compensation (Topic

718

): Scope of Modification Accounting.

ASU

2017

-

09

amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under ASU Topic

718.

ASU

2017

-

09

is effective for all entities for annual periods, including interim periods within those annual periods beginning after

December 15, 2017

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

2017

-

09

but believes that its adoption will

not

have a material impact on the Company's consolidated financial condition or results of operations.

In

March 2017,

the FASB issued ASU

2017

-

08,

Receivables- Nonrefundable Fees and Other Costs (Subtopic

310

-

20

): Premium Amortization on Purchases of Callable Debt Securities.

ASU

2017

-

08

amends guidance on the amortization period of premiums on certain purchases of callable debt securities. The amendments shorten the amortization period of premiums on certain purchases of 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 Accounting Standards Update (“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 or results of operations.

In

January 2016,

the FASB issued ASU

2016

-

01,

Financial Instruments – Overall (Subtopic

825

-

10

)

, which enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. ASU

2016

-

01

(i) requires equity investments (except those accounted for under the equity method or that are consolidated) to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost; (iv) requires an entity to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and (v) requires separate

presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. ASU

2016

-

01

is effective for fiscal years, and interim periods within those years, beginning after

December 15, 2017,

and is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is 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 or results of operations.

XML

Note 2 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Weighted-Average Common Shares Outstanding		4,363,346			4,363,346			4,363,346			4,363,346
Average Treasury Stock Shares		(275,321	)		(282,329	)		(275,687	)		(282,329	)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share		4,088,025			4,081,017			4,087,659			4,081,017
Additional Common Stock Equivalents (Stock Options and Restricted Stock) Used to Calculate Diluted Earnings Per Share		17,313			3,678			14,202			2,296
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share		4,105,338			4,084,695			4,101,861			4,083,313
Earnings per share:
Basic	$	0.44		$	0.48		$	0.86		$	0.98
Diluted		0.44			0.48			0.85			0.98

XML

Note 3 - Investment Securities (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Available-for-sale Securities [Table Text Block]

	(Dollars in thousands)
	June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. Government Agencies	$	66,620	$	1	$	(1,335	)	$	65,286
Obligations of States and Political Subdivisions		36,423		394		(90	)		36,727
Mortgage-Backed Securities - Government-Sponsored Enterprises		12,907		9		(33	)		12,883
Equity Securities - Mutual Funds		500		7		-			507
Equity Securities - Other		1,091		74		(23	)		1,142
Total	$	117,541	$	485	$	(1,481	)	$	116,545

	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			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)
	June 30, 2017
	Less than 12 months							12 Months or Greater							Total
	Number				Gross			Number				Gross			Number				Gross
	of		Fair		Unrealized			of		Fair		Unrealized			of		Fair		Unrealized
	Securities		Value		Losses			Securities		Value		Losses			Securities		Value		Losses
U.S. Government Agencies		21	$	57,265	$	(1,335	)		-	$	-	$	-			21	$	57,265	$	(1,335	)
Obligations of States and Political Subdivisions		18		9,097		(78	)		4		1,629		(12	)		22		10,726		(90	)
Mortgage-Backed Securities - Government Sponsored Enterprises		5		10,639		(33	)		-		-		-			5		10,639		(33	)
Equity Securities - Other		5		373		(23	)		-		-		-			5		373		(23	)
Total		49	$	77,374	$	(1,469	)		4	$	1,629	$	(12	)		53	$	79,003	$	(1,481	)

	December 31, 2016
	Less than 12 months							12 Months or Greater							Total
	Number				Gross			Number				Gross			Number				Gross
	of		Fair		Unrealized			of		Fair		Unrealized			of		Fair		Unrealized
	Securities		Value		Losses			Securities		Value		Losses			Securities		Value		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)
	June 30, 2017
	Available-for-Sale
	Amortized		Fair
	Cost		Value
Due in One Year or Less	$	1,576	$	1,588
Due after One Year through Five Years		17,826		17,898
Due after Five Years through Ten Years		84,604		83,467
Due after Ten Years		13,535		13,592
Total	$	117,541	$	116,545

XML

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

6 Months Ended

Jun. 30, 2017

Notes Tables

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

	(Dollars in thousands)
	June 30, 2017						December 31, 2016
	Amount			Percent			Amount			Percent
Originated Loans
Real Estate:
Residential	$	189,189			35.0	%	$	186,077			35.4	%
Commercial		140,652			26.1			139,894			26.7
Construction		20,186			3.7			10,646			2.0
Commercial and Industrial		75,665			14.1			71,091			13.5
Consumer		110,113			20.4			114,007			21.7
Other		3,508			0.7			3,637			0.7
Total Originated Loans		539,313			100.0	%		525,352			100.0	%
Allowance for Loan Losses		(7,468	)					(7,283	)
Loans, Net	$	531,845					$	518,069
Loans Acquired at Fair Value
Real Estate:
Residential	$	78,358			54.8	%	$	85,511			54.7	%
Commercial		55,628			39.0			61,116			39.0
Commercial and Industrial		8,849			6.1			9,721			6.2
Consumer		197			0.1			197			0.1
Total Loans Acquired at Fair Value		143,032			100.0	%		156,545			100.0	%
Allowance for Loan Losses		(615	)					(520	)
Loans, Net	$	142,417					$	156,025
Total Loans
Real Estate:
Residential	$	267,547			39.2	%	$	271,588			39.8	%
Commercial		196,280			28.8			201,010			29.5
Construction		20,186			2.9			10,646			1.6
Commercial and Industrial		84,514			12.4			80,812			11.9
Consumer		110,310			16.2			114,204			16.7
Other		3,508			0.5			3,637			0.5
Total Loans		682,345			100.0	%		681,897			100.0	%
Allowance for Loan Losses		(8,083	)					(7,803	)
Loans, Net	$	674,262					$	674,094

Financing Receivable Credit Quality Indicators [Table Text Block]

	(Dollars in thousands)
	June 30, 2017
			Special
	Pass		Mention		Substandard		Doubtful		Total
Originated Loans
Real Estate:
Residential	$	187,741	$	1,061	$	387	$	-	$	189,189
Commercial		123,544		14,037		2,821		250		140,652
Construction		19,562		-		565		59		20,186
Commercial and Industrial		62,712		10,189		1,312		1,452		75,665
Consumer		110,084		-		29		-		110,113
Other		3,508		-		-		-		3,508
Total Originated Loans	$	507,151	$	25,287	$	5,114	$	1,761	$	539,313
Loans Acquired at Fair Value
Real Estate:
Residential	$	76,342	$	-	$	2,016	$	-	$	78,358
Commercial		52,920		1,997		511		200		55,628
Commercial and Industrial		8,418		13		320		98		8,849
Consumer		197		-		-		-		197
Total Loans Acquired at Fair Value	$	137,877	$	2,010	$	2,847	$	298	$	143,032
Total Loans
Real Estate:
Residential	$	264,083	$	1,061	$	2,403	$	-	$	267,547
Commercial		176,464		16,034		3,332		450		196,280
Construction		19,562		-		565		59		20,186
Commercial and Industrial		71,130		10,202		1,632		1,550		84,514
Consumer		110,281		-		29		-		110,310
Other		3,508		-		-		-		3,508
Total Loans	$	645,028	$	27,297	$	7,961	$	2,059	$	682,345

	December 31, 2016
			Special
	Pass		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)
	June 30, 2017
			30-59		60-89		90 Days
	Loans		Days		Days		Or More		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
Originated Loans
Real Estate:
Residential	$	188,747	$	-	$	17	$	66	$	83	$	359	$	189,189
Commercial		140,364		-		-		-		-		288		140,652
Construction		20,127		-		-		-		-		59		20,186
Commercial and Industrial		73,241		532		-		-		532		1,892		75,665
Consumer		108,813		1,179		75		17		1,271		29		110,113
Other		3,508		-		-		-		-		-		3,508
Total Originated Loans	$	534,800	$	1,711	$	92	$	83	$	1,886	$	2,627	$	539,313
Loans Acquired at Fair Value
Real Estate:
Residential	$	76,978	$	165	$	-	$	88	$	253	$	1,127	$	78,358
Commercial		55,428		-		-		-		-		200		55,628
Commercial and Industrial		8,832		-		-		-		-		17		8,849
Consumer		197		-		-		-		-		-		197
Total Loans Acquired at Fair Value	$	141,435	$	165	$	-	$	88	$	253	$	1,344	$	143,032
Total Loans
Real Estate:
Residential	$	265,725	$	165	$	17	$	154	$	336	$	1,486	$	267,547
Commercial		195,792		-		-		-		-		488		196,280
Construction		20,127		-		-		-		-		59		20,186
Commercial and Industrial		82,073		532		-		-		532		1,909		84,514
Consumer		109,010		1,179		75		17		1,271		29		110,310
Other		3,508		-		-		-		-		-		3,508
Total Loans	$	676,235	$	1,876	$	92	$	171	$	2,139	$	3,971	$	682,345

	December 31, 2016
			30-59		60-89		90 Days
	Loans		Days		Days		Or More		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		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)
	June 30,			December 31,
	2017			2016
Nonaccrual Loans:
Originated Loans:
Real Estate:
Residential	$	359		$	308
Commercial		288			73
Construction		59			107
Commercial and Industrial		1,892			1,829
Consumer		29			160
Total Originated Nonaccrual Loans		2,627			2,477
Loans Acquired at Fair Value:
Real Estate:
Residential		1,127			1,565
Commercial		200			347
Commercial and Industrial		17			-
Total Loans Acquired at Fair Value Nonaccrual Loans		1,344			1,912
Total Nonaccrual Loans		3,971			4,389
Accruing Loans Past Due 90 Days or More:
Originated Loans:
Real Estate:
Residential		66			120
Consumer		17			8
Total Originated Accruing Loans 90 Days or More Past Due		83			128
Loans Acquired at Fair Value:
Real Estate:
Residential		88			223
Total Loans Acquired at Fair Value Accruing Loans 90 Days or More Past Due		88			223
Total Accruing Loans 90 Days or More Past Due		171			351
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due		4,142			4,740
Troubled Debt Restructurings, Accruing:
Originated Loans:
Real Estate - Commercial		1,298			1,325
Commercial and Industrial		5			6
Other		3			4
Total Originated Loans		1,306			1,335
Loans Acquired at Fair Value:
Real Estate - Residential		1,279			1,299
Real Estate - Commercial		457			660
Commercial and Industrial		303			393
Total Loans Acquired at Fair Value		2,039			2,352
Total Troubled Debt Restructurings, Accruing		3,345			3,687
Total Nonperforming Loans		7,487			8,427
Real Estate Owned:
Residential		208			-
Commercial		174			174
Total Real Estate Owned		382			174
Total Nonperforming Assets	$	7,869		$	8,601
Nonperforming Loans to Total Loans		1.10	%		1.24	%
Nonperforming Assets to Total Assets		0.90			1.02

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	(Dollars in thousands)
	Six Months Ended June 30, 2016
			Pre-		Post-
			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded		Related
	Contracts		Investment		Investment		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)
	June 30, 2017
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		Recognized
With No Related Allowance Recorded:
Originated Loans
Real Estate:
Residential	$	101	$	-	$	102	$	104	$	2
Commercial		1,947		-		1,947		2,003		46
Construction		624		-		624		652		13
Commercial and Industrial		664		-		664		666		17
Other		3		-		3		3		-
Total With No Related Allowance Recorded	$	3,339	$	-	$	3,340	$	3,428	$	78
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,279	$	-	$	1,279	$	1,289	$	33
Commercial		1,168		-		1,168		1,317		23
Commercial and Industrial		320		-		320		380		8
Total With No Related Allowance Recorded	$	2,767	$	-	$	2,767	$	2,986	$	64
Total Loans
Real Estate:
Residential	$	1,380	$	-	$	1,381	$	1,393	$	35
Commercial		3,115		-		3,115		3,320		69
Construction		624		-		624		652		13
Commercial and Industrial		984		-		984		1,046		25
Other		3		-		3		3		-
Total With No Related Allowance Recorded	$	6,106	$	-	$	6,107	$	6,414	$	142
With A Related Allowance Recorded:
Originated Loans
Real Estate:
Commercial	$	1,508	$	425	$	1,508	$	1,523	$	33
Commercial and Industrial		2,105		815		2,155		2,271		52
Total With A Related Allowance Recorded	$	3,613	$	1,240	$	3,663	$	3,794	$	85
Loans Acquired at Fair Value
Commercial and Industrial	$	98	$	16	$	98	$	109	$	3
Total With A Related Allowance Recorded	$	98	$	16	$	98	$	109	$	3
Total Loans
Real Estate:
Commercial	$	1,508	$	425	$	1,508	$	1,523	$	33
Commercial and Industrial		2,203		831		2,253		2,380		55
Total With A Related Allowance Recorded	$	3,711	$	1,256	$	3,761	$	3,903	$	88

	June 30, 2017 (cont.)
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		Recognized
Total Impaired Loans:
Originated Loans
Real Estate:
Residential	$	101	$	-	$	102	$	104	$	2
Commercial		3,455		425		3,455		3,526		79
Construction		624		-		624		652		13
Commercial and Industrial		2,769		815		2,819		2,937		69
Other		3		-		3		3		-
Total Impaired Loans	$	6,952	$	1,240	$	7,003	$	7,222	$	163
Loans Acquired at Fair Value
Real Estate:
Residential	$	1,279	$	-	$	1,279	$	1,289	$	33
Commercial		1,168		-		1,168		1,317		23
Commercial and Industrial		418		16		418		489		11
Total Impaired Loans	$	2,865	$	16	$	2,865	$	3,095	$	67
Total Loans
Real Estate:
Residential	$	1,380	$	-	$	1,381	$	1,393	$	35
Commercial		4,623		425		4,623		4,843		102
Construction		624		-		624		652		13
Commercial and Industrial		3,187		831		3,237		3,426		80
Other		3		-		3		3		-
Total Impaired Loans	$	9,817	$	1,256	$	9,868	$	10,317	$	230

	December 31, 2016
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		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.)
					Unpaid		Average		Interest
	Recorded		Related		Principal		Recorded		Income
	Investment		Allowance		Balance		Investment		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)
	June 30, 2017
	Real			Real			Real		Commercial
	Estate			Estate			Estate		and
	Residential			Commercial			Construction		Industrial			Consumer			Other		Unallocated			Total
Originated Loans
March 31, 2017	$	1,089		$	1,898		$	83	$	1,598		$	2,256		$	-	$	282		$	7,206
Charge-offs		-			-			-		-			(118	)		-		-			(118	)
Recoveries		1			-			-		25			53			-		-			79
Provision		(150	)		119			59		137			32			-		103			300
June 30, 2017	$	940		$	2,017		$	142	$	1,760		$	2,223		$	-	$	385		$	7,467
Loans Acquired at Fair Value
March 31, 2017	$	-		$	471		$	-	$	114		$	-		$	-	$	(6	)	$	579
Charge-offs		-			(3	)		-		-			-			-		-			(3	)
Recoveries		38			1			-		-			1			-		-			40
Provision		(38	)		144			-		(5	)		(1	)		-		(100	)		-
June 30, 2017	$	-		$	613		$	-	$	109		$	-		$	-	$	(106	)	$	616
Total Allowance for Loan Losses
March 31, 2017	$	1,089		$	2,369		$	83	$	1,712		$	2,256		$	-	$	276		$	7,785
Charge-offs		-			(3	)		-		-			(118	)		-		-			(121	)
Recoveries		39			1			-		25			54			-		-			119
Provision		(188	)		263			59		132			31			-		3			300
June 30, 2017	$	940		$	2,630		$	142	$	1,869		$	2,223		$	-	$	279		$	8,083
Originated Loans
December 31, 2016	$	1,106		$	1,942		$	65	$	1,579		$	2,463		$	-	$	128		$	7,283
Charge-offs								-		-			(445	)		-		-			(445	)
Recoveries		5						-		36			118			-		-			159
Provision		(171	)		75			77		145			87			-		257			470
June 30, 2017	$	940		$	2,017		$	142	$	1,760		$	2,223		$	-	$	385		$	7,467
Loans Acquired at Fair Value
December 31, 2016	$	-		$	365		$	-	$	120		$	-		$	-	$	35		$	520
Charge-offs		(64	)		(132	)		-		-						-		-			(196	)
Recoveries		38			1			-		-			3			-		-			42
Provision		26			379			-		(11	)		(3	)		-		(141	)		250
June 30, 2017	$	-		$	613		$	-	$	109		$	-		$	-	$	(106	)	$	616
Total Allowance for Loan Losses
December 31, 2016	$	1,106		$	2,307		$	65	$	1,699		$	2,463		$	-	$	163		$	7,803
Charge-offs		(64	)		(132	)		-		-			(445	)		-		-			(641	)
Recoveries		43			1			-		36			121			-		-			201
Provision		(145	)		454			77		134			84			-		116			720
June 30, 2017	$	940		$	2,630		$	142	$	1,869		$	2,223		$	-	$	279		$	8,083

	June 30, 2017
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		Industrial		Consumer		Other		Unallocated			Total
Originated Loans
Individually Evaluated for Impairment	$	-	$	425	$	-	$	815	$	-	$	-	$	-		$	1,240
Collectively Evaluated for Potential Impairment	$	940	$	1,592	$	142	$	945	$	2,223	$	-	$	385		$	6,227
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	-	$	-	$	-	$	16	$	-	$	-	$	-		$	16
Collectively Evaluated for Potential Impairment	$	-	$	613	$	-	$	93	$	-	$	-	$	(106	)	$	600
Total Allowance for Loan Losses
Individually Evaluated for Impairment	$	-	$	425	$	-	$	831	$	-	$	-	$	-		$	1,256
Collectively Evaluated for Potential Impairment	$	940	$	2,205	$	142	$	1,038	$	2,223	$	-	$	279		$	6,827

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

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

	December 31, 2016
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		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		(407	)
Nonaccretable Discount		(194	)
Balance at June 30, 2017	$	1,039

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

	(Dollars in thousands)
	June 30, 2017
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		Industrial		Consumer		Other		Total
Originated Loans
Individually Evaluated for Impairment	$	101	$	3,455	$	624	$	2,769	$	-	$	3	$	6,952
Collectively Evaluated for Potential Impairment		189,088		137,197		19,562		72,896		110,113		3,505		532,361
	$	189,189	$	140,652	$	20,186	$	75,665	$	110,113	$	3,508	$	539,313
Loans Acquired at Fair Value
Individually Evaluated for Impairment	$	1,279	$	1,168	$	-	$	418	$	-	$	-	$	2,865
Collectively Evaluated for Potential Impairment		77,079		54,460		-		8,431		197		-		140,167
	$	78,358	$	55,628	$	-	$	8,849	$	197	$	-	$	143,032
Total Loans
Individually Evaluated for Impairment	$	1,380	$	4,623	$	624	$	3,187	$	-	$	3	$	9,817
Collectively Evaluated for Potential Impairment		266,167		191,657		19,562		81,327		110,310		3,505		672,528
	$	267,547	$	196,280	$	20,186	$	84,514	$	110,310	$	3,508	$	682,345

	December 31, 2016
	Real		Real		Real		Commercial
	Estate		Estate		Estate		and
	Residential		Commercial		Construction		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)

6 Months Ended

Jun. 30, 2017

Notes Tables

Time Deposit Maturities [Table Text Block]

	June 30,
Maturity Period:	2017
One Year or Less	$	46,093
Over One Through Two Years		60,182
Over Two Through Three Years		20,309
Over Three Through Four Years		12,893
Over Four Through Five Years		9,156
Over Five Years		8,718
Total	$	157,351

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Note 6 - Short-term Borrowings (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Debt [Table Text Block]

	(Dollars in thousands)
	June 30, 2017					December 31, 2016
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Short-term Borrowings
Federal Funds Purchased:
Average Balance Outstanding During the Period	$	17		-	%	$	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		25,450		0.25			27,027		0.24
Average Balance Outstanding During the Period		26,332		0.30			26,311		0.26
Maximum Amount Outstanding at any Month End		26,460					30,095
Securities Collaterizing the Agreements at Period-End:
Carrying Value		32,499					33,785
Market Value		31,834					32,931

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Note 7 - Other Borrowed Funds (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

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

	(Dollars in thousands)
	June 30, 2017					December 31, 2016
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		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)

6 Months Ended

Jun. 30, 2017

Notes Tables

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

	(Dollars in thousands)
	June 30,		December 31,
	2017		2016
Standby Letters of Credit	$	41,147	$	36,657
Performance Letters of Credit		4,396		2,471
Construction Mortgages		32,485		21,363
Personal Lines of Credit		6,139		5,905
Overdraft Protection Lines		6,183		5,680
Home Equity Lines of Credit		15,286		14,722
Commercial Lines of Credit		64,303		51,725
	$	169,939	$	138,523

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Note 9 - Fair Value Disclosure (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

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

			(Dollars in thousands)
	Fair Value		June 30,		December 31,
	Hierarchy		2017		2016
Available for Sales Securities:
U.S. Government Agencies		Level II	$	65,286	$	66,156
Obligations of States and Political Subdivisions		Level II		36,727		35,735
Mortgage-Backed Securities - Government-Sponsored Enterprises		Level II		12,883		2,619
Equity Securities - Mutual Funds		Level I		507		507
Equity Securities - Other		Level I		1,142		1,191
Total Available for Sale Securities			$	116,545	$	106,208

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

		(Dollars in thousands)
		Fair Value at						Significant
Financial Asset	Fair Value Hierarchy	June 30, 2017		December 31, 2016		Valuation Techniques	Significant Unobservable Inputs	Unobservable  Input Value
Impaired Loans	Level III	$	2,455	$	2,497	Market Comparable Properties	Marketability Discount	10%	to	30%	(1)
OREO	Level III		155		-	Market Comparable Properties	Marketability Discount	10%	to	50%	(1)

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

			(Dollars in thousands)
			June 30, 2017				December 31, 2016
	Fair Value		Carrying		Fair		Carrying		Fair
	Hierarchy		Value		Value		Value		Value
Financial Assets:
Cash and Due From Banks:
Interest Bearing		Level I	$	17,464	$	17,464	$	7,699	$	7,699
Non-Interest Bearing		Level I		11,209		11,209		6,583		6,583
Investment Securities:
Available for Sale		See Above		116,545		116,545		106,208		106,208
Loans, Net		Level III		674,262		685,730		674,094		684,777
Restricted Stock		Level II		3,628		3,628		3,665		3,665
Bank-Owned Life Insurance		Level II		18,919		18,919		18,687		18,687
Accrued Interest Receivable		Level II		2,350		2,350		2,441		2,441
Financial Liabilities:
Deposits		Level II		727,059		706,817		698,218		697,806
Short-term Borrowings		Level II		25,450		25,450		27,027		27,027
Other Borrowed Funds		Level II		24,500		24,644		28,000		28,098
Accrued Interest Payable		Level II		338		338		334		334

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Note 10 - Other Noninterest Expense (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

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

	(Dollars in thousands)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Other Noninterest Expense
Non-employee compensation	$	100	$	134	$	200	$	267
Printing and supplies		100		134		202		208
Postage		64		44		130		103
Telephone		99		97		188		181
Charitable contributions		56		41		80		69
Dues and subscriptions		55		46		118		93
Loan expenses		86		73		160		143
Meals and entertainment		43		34		68		58
Travel		43		40		69		70
Training		9		6		20		18
Miscellaneous		174		242		404		462
Total Other Noninterest Expense	$	829	$	891	$	1,639	$	1,672

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Note 1 - Summary of Significant Accounting Policies (Details Textual)	6 Months Ended
	Jun. 30, 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		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Weighted-Average Common Shares Outstanding (in shares)	4,363,346	4,363,346	4,363,346	4,363,346
Average Treasury Stock Shares (in shares)	(275,321)	(282,329)	(275,687)	(282,329)
Basic (in shares)	4,088,025	4,081,017	4,087,659	4,081,017
Additional Common Stock Equivalents (Stock Options and Restricted Stock) Used to Calculate Diluted Earnings Per Share (in shares)	17,313	3,678	14,202	2,296
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share (in shares)	4,105,338	4,084,695	4,101,861	4,083,313
EARNINGS PER SHARE
Basic (in dollars per share)	$ 0.44	$ 0.48	$ 0.86	$ 0.98
Diluted (in dollars per share)	$ 0.44	$ 0.48	$ 0.85	$ 0.98

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Note 3 - Investment Securities (Details Textual) - USD ($) $ in Thousands	Jun. 30, 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	Jun. 30, 2017	Dec. 31, 2016
Securities available-for-sale, gross unrealized gains	$ 485	$ 513
Securities available-for-sale, gross unrealized losses	(1,481)	(2,299)
Available for sale securities	116,545	106,208
Securities available-for-sale, amortized cost	117,541	107,994
US Government Agencies Debt Securities [Member]
Securities available-for-sale, gross unrealized gains	1	18
Securities available-for-sale, gross unrealized losses	(1,335)	(1,806)
Available for sale securities	65,286	66,156
Securities available-for-sale, amortized cost	66,620	67,944
US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale, gross unrealized gains	394	366
Securities available-for-sale, gross unrealized losses	(90)	(487)
Available for sale securities	36,727	35,735
Securities available-for-sale, amortized cost	36,423	35,856
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities available-for-sale, gross unrealized gains	9	31
Securities available-for-sale, gross unrealized losses	(33)
Available for sale securities	12,883	2,619
Securities available-for-sale, amortized cost	12,907	2,588
Equity Securities - Mutual Funds [Member]
Securities available-for-sale, gross unrealized gains	7	7
Securities available-for-sale, gross unrealized losses
Available for sale securities	507	507
Securities available-for-sale, amortized cost	500	500
Equity Securities [Member]
Securities available-for-sale, gross unrealized gains	74	91
Securities available-for-sale, gross unrealized losses	(23)	(6)
Available for sale securities	1,142	1,191
Securities available-for-sale, amortized cost	$ 1,091	$ 1,106

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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	Jun. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)
Securities in continuous unrealized loss position, number of securities	53	65
Securities in continuous unrealized loss position, fair value	$ 79,003	$ 83,022
Securities in continuous unrealized loss position, gross unrealized losses	$ (1,481)	$ (2,299)
Securities in continuous unrealized loss position, less than twelve months, number of securities	49	64
Securities in continuous unrealized loss position, less than twelve months, fair value	$ 77,374	$ 82,762
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (1,469)	$ (2,297)
Securities in continuous unrealized loss position, twelve months or more, number of securities	4	1
Securities in continuous unrealized loss position, twelve months or more, fair value	$ 1,629	$ 260
Securities in continuous unrealized loss position, twelve months or more, gross unrealized losses	$ (12)	$ (2)
US Government Agencies Debt Securities [Member]
Securities in continuous unrealized loss position, number of securities	21	23
Securities in continuous unrealized loss position, fair value	$ 57,265	$ 62,853
Securities in continuous unrealized loss position, gross unrealized losses	$ (1,335)	$ (1,806)
Securities in continuous unrealized loss position, less than twelve months, number of securities	21	23
Securities in continuous unrealized loss position, less than twelve months, fair value	$ 57,265	$ 62,853
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (1,335)	$ (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
US States and Political Subdivisions Debt Securities [Member]
Securities in continuous unrealized loss position, number of securities	22	40
Securities in continuous unrealized loss position, fair value	$ 10,726	$ 20,009
Securities in continuous unrealized loss position, gross unrealized losses	$ (90)	$ (487)
Securities in continuous unrealized loss position, less than twelve months, number of securities	18	39
Securities in continuous unrealized loss position, less than twelve months, fair value	$ 9,097	$ 19,749
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (78)	$ (485)
Securities in continuous unrealized loss position, twelve months or more, number of securities	4	1
Securities in continuous unrealized loss position, twelve months or more, fair value	$ 1,629	$ 260
Securities in continuous unrealized loss position, twelve months or more, gross unrealized losses	$ (12)	$ (2)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities in continuous unrealized loss position, number of securities	5
Securities in continuous unrealized loss position, fair value	$ 10,639
Securities in continuous unrealized loss position, gross unrealized losses	$ (33)
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	$ 10,639
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (33)
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
Equity Securities [Member]
Securities in continuous unrealized loss position, number of securities	5	2
Securities in continuous unrealized loss position, fair value	$ 373	$ 160
Securities in continuous unrealized loss position, gross unrealized losses	$ (23)	$ (6)
Securities in continuous unrealized loss position, less than twelve months, number of securities	5	2
Securities in continuous unrealized loss position, less than twelve months, fair value	$ 373	$ 160
Securities in continuous unrealized loss position, less than twelve months, gross unrealized losses	$ (23)	$ (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

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Note 3 - Investment Securities - Maturities of Investment Securities Available-for-sale and Held-to-maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Due in one year or less, amortized cost	$ 1,576
Due in one year or less, fair value	1,588
Due after one year through five years, amortized cost	17,826
Due after one year through five years, fair value	17,898
Due after five years through ten years, amortized cost	84,604
Due after five years through ten years, fair value	83,467
Due after ten years, amortized cost	13,535
Due after ten years, fair value	13,592
Total, amortized cost	117,541	$ 107,994
Total, fair value	$ 116,545	$ 106,208

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Note 4 - Loans and Related Allowance for Loan Loss (Details Textual)		3 Months Ended		6 Months Ended
	Aug. 04, 2017 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016	Jun. 30, 2017 USD ($)	Jun. 30, 2016	Dec. 31, 2016 USD ($)
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums		$ 872,000		$ 872,000		$ 818,000
Financing Receivable, Modifications, Subsequent Default, Number of Contracts		0	0	0	0
Financing Receivable, Modifications, Number of Contracts		0	0	0	0
Loans and Leases Receivable, Gross		$ 682,345,000		$ 682,345,000		681,897,000
Real Estate Loans Serviced for Others		90,400,000		90,400,000		83,900,000
Mortgage Loans in Process of Foreclosure, Amount		$ 795,000		$ 795,000		$ 2,200,000
Financing Receivable, TDRs, Number of Contracts		14		14		15
Financing Receivable, Modifications, Recorded Investment		$ 4,300,000		$ 4,300,000		$ 4,700,000
Unlikely to be Collected Financing Receivable [Member]
Loans and Leases Receivable, Gross		0		0		0
Subsequent Event [Member]
Financial Guarantee Insurance Contracts, Premium Receivable, Proceeds from Premiums Received	$ 218,000
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross		196,280,000		196,280,000		201,010,000
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross		267,547,000		267,547,000		271,588,000
Originated Loans [Member]
Financing Receivable, Modifications, Number of Contracts					1
Loans and Leases Receivable, Gross		$ 539,313,000		$ 539,313,000		$ 525,352,000
Financing Receivable, TDRs, Number of Contracts		6		6		6
Financing Receivable, Modifications, Recorded Investment		$ 2,300,000		$ 2,300,000		$ 2,300,000
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross		140,652,000		140,652,000		139,894,000
Originated Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross		189,189,000		189,189,000		186,077,000
Acquired Loans [Member]
Financing Receivable, Modifications, Number of Contracts					2
Loans and Leases Receivable, Gross		$ 143,032,000		$ 143,032,000		$ 156,545,000
Financing Receivable, TDRs, Number of Contracts		8		8		9
Financing Receivable, Modifications, Recorded Investment		$ 2,000,000		$ 2,000,000		$ 2,400,000
Acquired Loans [Member] | Commercial Portfolio Segment [Member]
Financing Receivable Modifications Number of Contracts Paid Off					1
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Modifications, Number of Contracts					1
Loans and Leases Receivable, Gross		55,628,000		55,628,000		61,116,000
Financing Receivable Modifications Number of Contracts Paid Off					1
Acquired Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Modifications, Number of Contracts					1
Loans and Leases Receivable, Gross		$ 78,358,000		$ 78,358,000		$ 85,511,000
Financing Receivable Modifications Number of Contracts Paid Off					1

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Note 4 - Loans and Related Allowance for Loan Loss - Composition of Loan Portfolio (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Originated and acquired loans, percent	100.00%	100.00%
Allowance for loan losses	$ (8,083)	$ (7,803)
Loans, Net	674,262	674,094
Originated and acquired loans	$ 682,345	$ 681,897
Originated Loans [Member]
Originated and acquired loans, percent	100.00%	100.00%
Allowance for loan losses	$ (7,468)	$ (7,283)
Loans, Net	531,845	518,069
Originated and acquired loans	$ 539,313	$ 525,352
Acquired Loans [Member]
Originated and acquired loans, percent	100.00%	100.00%
Allowance for loan losses	$ (615)	$ (520)
Loans, Net	142,417	156,025
Originated and acquired loans	$ 143,032	$ 156,545
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Originated and acquired loans, percent	39.20%	39.80%
Originated and acquired loans	$ 267,547	$ 271,588
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Originated and acquired loans, percent	35.00%	35.40%
Originated and acquired loans	$ 189,189	$ 186,077
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Originated and acquired loans, percent	54.80%	54.70%
Originated and acquired loans	$ 78,358	$ 85,511
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Originated and acquired loans, percent	28.80%	29.50%
Originated and acquired loans	$ 196,280	$ 201,010
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Originated and acquired loans, percent	26.10%	26.70%
Originated and acquired loans	$ 140,652	$ 139,894
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Originated and acquired loans, percent	39.00%	39.00%
Originated and acquired loans	$ 55,628	$ 61,116
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Originated and acquired loans, percent	12.40%	11.90%
Originated and acquired loans	$ 84,514	$ 80,812
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Originated and acquired loans, percent	14.10%	13.50%
Originated and acquired loans	$ 75,665	$ 71,091
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Originated and acquired loans, percent	6.10%	6.20%
Originated and acquired loans	$ 8,849	$ 9,721
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Originated and acquired loans, percent	2.90%	1.60%
Originated and acquired loans	$ 20,186	$ 10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Originated and acquired loans, percent	3.70%	2.00%
Originated and acquired loans	$ 20,186	$ 10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Originated and acquired loans
Consumer Portfolio Segment [Member]
Originated and acquired loans, percent	16.20%	16.70%
Originated and acquired loans	$ 110,310	$ 114,204
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Originated and acquired loans, percent	20.40%	21.70%
Originated and acquired loans	$ 110,113	$ 114,007
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Originated and acquired loans, percent	0.10%	0.10%
Originated and acquired loans	$ 197	$ 197
Unallocated Financing Receivables [Member]
Originated and acquired loans, percent	0.50%	0.50%
Originated and acquired loans	$ 3,508	$ 3,637
Unallocated Financing Receivables [Member] | Originated Loans [Member]
Originated and acquired loans, percent	0.70%	0.70%
Originated and acquired loans	$ 3,508	$ 3,637

XML

Note 4 - Loans and Related Allowance for Loan Loss - Credit Quality Information (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Loans and Leases Receivable, Gross	$ 682,345	$ 681,897
Pass [Member]
Loans and Leases Receivable, Gross	645,028	651,341
Special Mention [Member]
Loans and Leases Receivable, Gross	27,297	20,288
Substandard [Member]
Loans and Leases Receivable, Gross	7,961	7,673
Doubtful [Member]
Loans and Leases Receivable, Gross	2,059	2,595
Originated Loans [Member]
Loans and Leases Receivable, Gross	539,313	525,352
Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	507,151	500,572
Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	25,287	17,888
Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	5,114	4,418
Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	1,761	2,474
Acquired Loans [Member]
Loans and Leases Receivable, Gross	143,032	156,545
Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	137,877	150,769
Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	2,010	2,400
Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	2,847	3,255
Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	298	121
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	267,547	271,588
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	264,083	267,765
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	1,061	1,050
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	2,403	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	189,189	186,077
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	187,741	184,721
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	1,061	1,050
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	387	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	78,358	85,511
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	76,342	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	2,016	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	196,280	201,010
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	176,464	181,222
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	16,034	16,476
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	3,332	2,382
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	450	930
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	140,652	139,894
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	123,544	122,811
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	14,037	14,118
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	2,821	2,035
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	250	930
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	55,628	61,116
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	52,920	58,411
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	1,997	2,358
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	511	347
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	200
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Loans and Leases Receivable, Gross	84,514	80,812
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	71,130	74,729
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	10,202	2,762
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	1,632	1,763
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	1,550	1,558
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	75,665	71,091
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	62,712	65,612
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	10,189	2,720
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	1,312	1,322
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	1,452	1,437
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Loans and Leases Receivable, Gross	8,849	9,721
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	8,418	9,117
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Special Mention [Member]
Loans and Leases Receivable, Gross	13	42
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Substandard [Member]
Loans and Leases Receivable, Gross	320	441
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross	98	121
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Loans and Leases Receivable, Gross	20,186	10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Loans and Leases Receivable, Gross	19,562	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	565	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	20,186	10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	19,562	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	565	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	110,310	114,204
Consumer Portfolio Segment [Member] | Pass [Member]
Loans and Leases Receivable, Gross	110,281	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	29	160
Consumer Portfolio Segment [Member] | Doubtful [Member]
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Loans and Leases Receivable, Gross	110,113	114,007
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	110,084	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	29	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	197	197
Consumer Portfolio Segment [Member] | Acquired Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	197	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	3,508	3,637
Other Portfolio Segment [Member] | Pass [Member]
Loans and Leases Receivable, Gross	3,508	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	3,508	3,637
Other Portfolio Segment [Member] | Originated Loans [Member] | Pass [Member]
Loans and Leases Receivable, Gross	3,508	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	Jun. 30, 2017	Dec. 31, 2016
Loans current	$ 676,235	$ 671,212
Total past due	2,139	6,296
Non-accrual	3,971	4,389
Loans and Leases Receivable, Gross	682,345	681,897
Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	1,876	5,247
Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	92	698
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	171	351
Originated Loans [Member]
Loans current	534,800	518,478
Total past due	1,886	4,397
Non-accrual	2,627	2,477
Loans and Leases Receivable, Gross	539,313	525,352
Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	1,711	3,901
Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	92	368
Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	83	128
Acquired Loans [Member]
Loans current	141,435	152,734
Total past due	253	1,899
Non-accrual	1,344	1,912
Loans and Leases Receivable, Gross	143,032	156,545
Acquired Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	165	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	88	223
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Loans current	265,725	266,462
Total past due	336	3,253
Non-accrual	1,486	1,873
Loans and Leases Receivable, Gross	267,547	271,588
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	165	2,531
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	17	379
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	154	343
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Loans current	188,747	183,939
Total past due	83	1,830
Non-accrual	359	308
Loans and Leases Receivable, Gross	189,189	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		1,638
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	17	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	66	120
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Loans current	76,978	82,523
Total past due	253	1,423
Non-accrual	1,127	1,565
Loans and Leases Receivable, Gross	78,358	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	165	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	88	223
Commercial Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	17	8
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Loans current	195,792	200,258
Total past due		332
Non-accrual	488	420
Loans and Leases Receivable, Gross	196,280	201,010
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due		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	140,364	139,821
Total past due
Non-accrual	288	73
Loans and Leases Receivable, Gross	140,652	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
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	55,428	60,437
Total past due		332
Non-accrual	200	347
Loans and Leases Receivable, Gross	55,628	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	82,073	77,887
Total past due	532	1,096
Non-accrual	1,909	1,829
Loans and Leases Receivable, Gross	84,514	80,812
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	532	1,073
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due		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	73,241	68,310
Total past due	532	952
Non-accrual	1,892	1,829
Loans and Leases Receivable, Gross	75,665	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	532	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
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	8,832	9,577
Total past due		144
Non-accrual	17
Loans and Leases Receivable, Gross	8,849	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		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	20,127	10,539
Total past due
Non-accrual	59	107
Loans and Leases Receivable, Gross	20,186	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	20,127	10,539
Total past due
Non-accrual	59	107
Loans and Leases Receivable, Gross	20,186	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	109,010	112,429
Total past due	1,271	1,615
Non-accrual	29	160
Loans and Leases Receivable, Gross	110,310	114,204
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	1,179	1,311
Consumer Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	75	296
Consumer Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total past due	17	8
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Loans current	108,813	112,232
Total past due	1,271	1,615
Non-accrual	29	160
Loans and Leases Receivable, Gross	110,113	114,007
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total past due	1,179	1,311
Consumer Portfolio Segment [Member] | Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total past due	75	296
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Loans current	197	197
Total past due
Non-accrual
Loans and Leases Receivable, Gross	197	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	3,508	3,637
Total past due
Non-accrual
Loans and Leases Receivable, Gross	3,508	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	3,508	3,637
Total past due
Non-accrual
Loans and Leases Receivable, Gross	3,508	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	6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Nonaccrual loans	$ 3,971		$ 4,389
Originated and acquired loans	682,345		681,897
Total Nonperforming Assets	$ 872,389		$ 846,075
Nonperforming Loans to Total Loans	1.10%		1.24%
Nonperforming Assets to Total Assets	0.90%		1.02%
Nonperforming Financial Instruments [Member]
Nonaccrual loans	$ 3,971		$ 4,389
Accruing loans past due 90 days or more	171		351
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due	4,142		4,740
Nonperforming loans	3,345		3,687
Originated and acquired loans	7,487		8,427
Total Real Estate Owned	382		174
Total Nonperforming Assets	7,869		8,601
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	1,486		1,873
Originated and acquired loans	267,547		271,588
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Nonperforming Financial Instruments [Member]
Total Real Estate Owned	208
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	488		420
Originated and acquired loans	196,280		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	1,909		1,829
Originated and acquired loans	84,514		80,812
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	59		107
Originated and acquired loans	20,186		10,646
Consumer Portfolio Segment [Member]
Nonaccrual loans	29		160
Originated and acquired loans	110,310		114,204
Other Portfolio Segment [Member]
Nonaccrual loans
Originated and acquired loans	3,508		3,637
Originated Loans [Member]
Nonaccrual loans	2,627		2,477
Accruing loans past due 90 days or more	83		128
Nonperforming loans	1,306	$ 7	1,335
Originated and acquired loans	539,313		525,352
Originated Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	359		308
Accruing loans past due 90 days or more	66		120
Originated and acquired loans	189,189		186,077
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	288		73
Nonperforming loans	1,298		1,325
Originated and acquired loans	140,652		139,894
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Nonaccrual loans	1,892		1,829
Nonperforming loans	5		6
Originated and acquired loans	75,665		71,091
Originated Loans [Member] | Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	59		107
Originated and acquired loans	20,186		10,646
Originated Loans [Member] | Consumer Portfolio Segment [Member]
Nonaccrual loans	29		160
Accruing loans past due 90 days or more	17		8
Originated and acquired loans	110,113		114,007
Originated Loans [Member] | Other Portfolio Segment [Member]
Nonaccrual loans
Nonperforming loans	3	7	4
Originated and acquired loans	3,508		3,637
Acquired Loans [Member]
Nonaccrual loans	1,344		1,912
Accruing loans past due 90 days or more	88		223
Nonperforming loans	2,039	584	2,352
Originated and acquired loans	143,032		156,545
Acquired Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	1,127		1,565
Accruing loans past due 90 days or more	88		223
Nonperforming loans	1,279	45	1,299
Originated and acquired loans	78,358		85,511
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Nonaccrual loans	200		347
Nonperforming loans	457	$ 539	660
Originated and acquired loans	55,628		61,116
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Nonaccrual loans	17
Nonperforming loans	303		393
Originated and acquired loans	8,849		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	197		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		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Number of contracts	0	0	0	0
Originated Loans [Member]
Number of contracts				1
Pre-modification outstanding recorded investment				$ 7
Nonperforming loans			$ 1,306	7	$ 1,335
Related allowance
Originated Loans [Member] | Other Portfolio Segment [Member]
Number of contracts				1
Pre-modification outstanding recorded investment				$ 7
Nonperforming loans			3	7	4
Related allowance
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Nonperforming loans			1,298		1,325
Acquired Loans [Member]
Number of contracts				2
Pre-modification outstanding recorded investment				$ 576
Nonperforming loans			2,039	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			1,279	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			$ 457	539	$ 660
Related allowance

XML

Note 4 - Loans and Related Allowance for Loan Loss - Impaired Loans (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Unpaid principal balance - with related allowance	$ 3,761	$ 3,753
Average recorded investment - with related allowance	3,903	3,736
Interest income recognized - with related allowance	88	99
Recorded investment - with related allowance	3,711	3,657
Average recorded investment	10,317	10,330
Interest income recognized	230	409
Impaired Loans	9,817	9,701
Related allowance	1,256	1,160
Recorded investment - with no related allowance	6,106	6,044
Unpaid principal balance	9,868	9,797
Unpaid principal balance - with no related allowance	6,107	6,044
Average recorded investment - with no related allowance	6,414	6,594
Interest income recognized - with no related allowance	142	310
Originated Loans [Member]
Unpaid principal balance - with related allowance	3,663	3,195
Average recorded investment - with related allowance	3,794	3,228
Interest income recognized - with related allowance	85	93
Recorded investment - with related allowance	3,613	3,189
Average recorded investment	7,222	7,196
Interest income recognized	163	267
Impaired Loans	6,952	6,832
Related allowance	1,240	1,015
Recorded investment - with no related allowance	3,339	3,643
Unpaid principal balance	7,003	6,838
Unpaid principal balance - with no related allowance	3,340	3,643
Average recorded investment - with no related allowance	3,428	3,968
Interest income recognized - with no related allowance	78	174
Acquired Loans [Member]
Unpaid principal balance - with related allowance	98	558
Average recorded investment - with related allowance	109	508
Interest income recognized - with related allowance	3	6
Recorded investment - with related allowance	98	468
Average recorded investment	3,095	3,134
Interest income recognized	67	142
Impaired Loans	2,865	2,869
Related allowance	16	145
Recorded investment - with no related allowance	2,767	2,401
Unpaid principal balance	2,865	2,959
Unpaid principal balance - with no related allowance	2,767	2,401
Average recorded investment - with no related allowance	2,986	2,626
Interest income recognized - with no related allowance	64	136
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Average recorded investment	1,393	1,320
Interest income recognized	35	68
Impaired Loans	1,380	1,300
Related allowance
Recorded investment - with no related allowance	1,380	1,300
Unpaid principal balance	1,381	1,300
Unpaid principal balance - with no related allowance		1,300
Average recorded investment - with no related allowance	1,393	1,320
Interest income recognized - with no related allowance	35	68
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Average recorded investment	104
Interest income recognized	2
Impaired Loans	101
Related allowance
Recorded investment - with no related allowance	101
Unpaid principal balance	102
Unpaid principal balance - with no related allowance	102
Average recorded investment - with no related allowance	104
Interest income recognized - with no related allowance	2
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Average recorded investment	1,289	1,320
Interest income recognized	33	68
Impaired Loans	1,279	1,300
Related allowance
Recorded investment - with no related allowance	1,279	1,300
Unpaid principal balance	1,279	1,300
Unpaid principal balance - with no related allowance	1,279	1,300
Average recorded investment - with no related allowance	1,289	1,320
Interest income recognized - with no related allowance	33	68
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Unpaid principal balance - with related allowance	1,508	1,686
Average recorded investment - with related allowance	1,523	1,644
Interest income recognized - with related allowance	33	66
Recorded investment - with related allowance	1,508	1,596
Average recorded investment	4,843	4,635
Interest income recognized	102	213
Impaired Loans	4,623	4,368
Related allowance	425	474
Recorded investment - with no related allowance	3,115	2,772
Unpaid principal balance	4,623	4,458
Unpaid principal balance - with no related allowance	3,115	2,772
Average recorded investment - with no related allowance	3,320	2,991
Interest income recognized - with no related allowance	69	147
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Unpaid principal balance - with related allowance	1,508	1,249
Average recorded investment - with related allowance	1,523	1,277
Interest income recognized - with related allowance	33	66
Recorded investment - with related allowance	1,508	1,249
Average recorded investment	3,526	3,505
Interest income recognized	79	166
Impaired Loans	3,455	3,361
Related allowance	425	360
Recorded investment - with no related allowance	1,947	2,112
Unpaid principal balance	3,455	3,361
Unpaid principal balance - with no related allowance	1,947	2,112
Average recorded investment - with no related allowance	2,003	2,228
Interest income recognized - with no related allowance	46	100
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Unpaid principal balance - with related allowance		437
Average recorded investment - with related allowance		367
Interest income recognized - with related allowance
Recorded investment - with related allowance		347
Average recorded investment	1,317	1,130
Interest income recognized	23	47
Impaired Loans	1,168	1,007
Related allowance		114
Recorded investment - with no related allowance	1,168	660
Unpaid principal balance	1,168	1,097
Unpaid principal balance - with no related allowance	1,168	660
Average recorded investment - with no related allowance	1,317	763
Interest income recognized - with no related allowance	23	47
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Unpaid principal balance - with related allowance	2,253	2,067
Average recorded investment - with related allowance	2,380	2,092
Interest income recognized - with related allowance	55	33
Recorded investment - with related allowance	2,203	2,061
Average recorded investment	3,426	3,526
Interest income recognized	80	99
Impaired Loans	3,187	3,327
Related allowance	831	686
Recorded investment - with no related allowance	984	1,266
Unpaid principal balance	3,237	3,333
Unpaid principal balance - with no related allowance	984	1,266
Average recorded investment - with no related allowance	1,046	1,434
Interest income recognized - with no related allowance	25	66
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Unpaid principal balance - with related allowance	2,155	1,946
Average recorded investment - with related allowance	2,271	1,951
Interest income recognized - with related allowance	52	27
Recorded investment - with related allowance	2,105	1,940
Average recorded investment	2,937	2,842
Interest income recognized	69	72
Impaired Loans	2,769	2,765
Related allowance	815	655
Recorded investment - with no related allowance	664	825
Unpaid principal balance	2,819	2,771
Unpaid principal balance - with no related allowance	664	825
Average recorded investment - with no related allowance	666	891
Interest income recognized - with no related allowance	17	45
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Unpaid principal balance - with related allowance	98	121
Average recorded investment - with related allowance	109	141
Interest income recognized - with related allowance	3	6
Recorded investment - with related allowance	98	121
Average recorded investment	489	684
Interest income recognized	11	27
Impaired Loans	418	562
Related allowance	16	31
Recorded investment - with no related allowance	320	441
Unpaid principal balance	418	562
Unpaid principal balance - with no related allowance	320	441
Average recorded investment - with no related allowance	380	543
Interest income recognized - with no related allowance	8	21
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Average recorded investment	652	843
Interest income recognized	13	28
Impaired Loans	624	702
Related allowance
Recorded investment - with no related allowance	624	702
Unpaid principal balance	624	702
Unpaid principal balance - with no related allowance	624	702
Average recorded investment - with no related allowance	652	843
Interest income recognized - with no related allowance	13	28
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Average recorded investment	652	843
Interest income recognized	13	28
Impaired Loans	624	702
Related allowance
Recorded investment - with no related allowance	624	702
Unpaid principal balance	624	702
Unpaid principal balance - with no related allowance	624	702
Average recorded investment - with no related allowance	652	843
Interest income recognized - with no related allowance	13	28
Other Portfolio Segment [Member]
Average recorded investment	3	6
Interest income recognized		1
Impaired Loans	3	4
Related allowance
Recorded investment - with no related allowance	3	4
Unpaid principal balance	3	4
Unpaid principal balance - with no related allowance	3	4
Average recorded investment - with no related allowance	3	6
Interest income recognized - with no related allowance		1
Other Portfolio Segment [Member] | Originated Loans [Member]
Average recorded investment	3	6
Interest income recognized		1
Impaired Loans	3	4
Related allowance
Recorded investment - with no related allowance	3	4
Unpaid principal balance	3	4
Unpaid principal balance - with no related allowance	3	4
Average recorded investment - with no related allowance	3	6
Interest income recognized - with no related allowance		$ 1

XML

Note 4 - Loans and Related Allowance for Loan Loss - Activity in the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Recoveries	$ 119	$ 66	$ 201	$ 107
Provision	300	300	720	1,150
Balance	8,083	7,191	8,083	7,191
Collectively Evaluated for Potential Impairment	(6,827)	(5,938)	(6,827)	(5,938)	$ (6,643)
Individually Evaluated for Impairment	1,256	1,253	1,256	1,253	1,160
Collectively Evaluated for Potential Impairment	6,827	5,938	6,827	5,938	6,643
Balance	7,785	6,973	7,803	6,490
Charge-offs	(121)	(148)	(641)	(556)
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Recoveries	39	6	43	9
Provision	(188)	(141)	(145)	(486)
Balance	940	1,110	940	1,110
Collectively Evaluated for Potential Impairment	(940)	(1,029)	(940)	(1,029)	(1,106)
Individually Evaluated for Impairment		81		81
Collectively Evaluated for Potential Impairment	940	1,029	940	1,029	1,106
Balance	1,089	1,259	1,106	1,623
Charge-offs		(14)	(64)	(36)
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Recoveries	1	1	1	2
Provision	263	(70)	454	100
Balance	2,630	1,967	2,630	1,967
Collectively Evaluated for Potential Impairment	(2,205)	(1,442)	(2,205)	(1,442)	(1,833)
Individually Evaluated for Impairment	425	525	425	525	474
Collectively Evaluated for Potential Impairment	2,205	1,442	2,205	1,442	1,833
Balance	2,369	2,036	2,307	2,045
Charge-offs	(3)		(132)	(180)
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Recoveries	25		36
Provision	132	480	134	799
Balance	1,869	1,583	1,869	1,583
Collectively Evaluated for Potential Impairment	(1,038)	(936)	(1,038)	(936)	(1,013)
Individually Evaluated for Impairment	831	647	831	647	686
Collectively Evaluated for Potential Impairment	1,038	936	1,038	936	1,013
Balance	1,712	1,103	1,699	784
Charge-offs
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Recoveries
Provision	59	(35)	77	(55)
Balance	142	82	142	82
Collectively Evaluated for Potential Impairment	(142)	(82)	(142)	(82)	(65)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	142	82	142	82	65
Balance	83	117	65	137
Charge-offs
Consumer Portfolio Segment [Member]
Recoveries	54	54	121	85
Provision	31	33	84	485
Balance	2,223	2,143	2,223	2,143
Collectively Evaluated for Potential Impairment	(2,223)	(2,143)	(2,223)	(2,143)	(2,463)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	2,223	2,143	2,223	2,143	2,463
Balance	2,256	2,176	2,463	1,887
Charge-offs	(118)	(120)	(445)	(314)
Other Portfolio Segment [Member]
Recoveries		5		11
Provision		8		16
Balance		1		1
Collectively Evaluated for Potential Impairment		(1)		(1)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment		1		1
Balance		2
Charge-offs		(14)		(26)
Unallocated Financing Receivables [Member]
Recoveries
Provision	3	25	116	291
Balance	279	305	279	305
Collectively Evaluated for Potential Impairment	(279)	(305)	(279)	(305)	(163)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	279	305	279	305	163
Balance	276	280	163	14
Charge-offs
Originated Loans [Member]
Recoveries	79	61	159	95
Provision	300	191	470	826
Balance	7,467	7,055	7,467	7,055
Collectively Evaluated for Potential Impairment	(6,227)	(6,016)	(6,227)	(6,016)	(6,268)
Individually Evaluated for Impairment	1,240	1,039	1,240	1,039	1,015
Collectively Evaluated for Potential Impairment	6,227	6,016	6,227	6,016	6,268
Balance	7,206	6,937	7,283	6,490
Charge-offs	(118)	(134)	(445)	(356)
Originated Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Recoveries	1	3	5	4
Provision	(150)	(152)	(171)	(497)
Balance	940	1,110	940	1,110
Collectively Evaluated for Potential Impairment	(940)	(1,110)	(940)	(1,110)	(1,106)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	940	1,110	940	1,110	1,106
Balance	1,089	1,259	1,106	1,623
Charge-offs				(20)
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Recoveries
Provision	119	(80)	75	(89)
Balance	2,017	1,956	2,017	1,956
Collectively Evaluated for Potential Impairment	(1,592)	(1,564)	(1,592)	(1,564)	(1,582)
Individually Evaluated for Impairment	425	392	425	392	360
Collectively Evaluated for Potential Impairment	1,592	1,564	1,592	1,564	1,582
Balance	1,898	2,036	1,942	2,045
Charge-offs
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Recoveries	25		36
Provision	137	365	145	684
Balance	1,760	1,468	1,760	1,468
Collectively Evaluated for Potential Impairment	(945)	(821)	(945)	(821)	(924)
Individually Evaluated for Impairment	815	647	815	647	655
Collectively Evaluated for Potential Impairment	945	821	945	821	924
Balance	1,598	1,103	1,579	784
Charge-offs
Originated Loans [Member] | Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Recoveries
Provision	59	(35)	77	(55)
Balance	142	82	142	82
Collectively Evaluated for Potential Impairment	(142)	(82)	(142)	(82)	(65)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	142	82	142	82	65
Balance	83	117	65	137
Charge-offs
Originated Loans [Member] | Consumer Portfolio Segment [Member]
Recoveries	53	53	118	80
Provision	32	34	87	486
Balance	2,223	2,143	2,223	2,143
Collectively Evaluated for Potential Impairment	(2,223)	(2,143)	(2,223)	(2,143)	(2,463)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	2,223	2,143	2,223	2,143	2,463
Balance	2,256	2,176	2,463	1,887
Charge-offs	(118)	(120)	(445)	(310)
Originated Loans [Member] | Other Portfolio Segment [Member]
Recoveries		5		11
Provision		8		16
Balance		1		1
Collectively Evaluated for Potential Impairment		(1)		(1)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment		1		1
Balance		2
Charge-offs		(14)		(26)
Originated Loans [Member] | Unallocated Financing Receivables [Member]
Recoveries
Provision	103	51	257	281
Balance	385	295	385	295
Collectively Evaluated for Potential Impairment	(385)	(295)	(385)	(295)	(128)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	385	295	385	295	128
Balance	282	244	128	14
Charge-offs
Acquired Loans [Member]
Recoveries	40	5	42	12
Provision		109	250	324
Balance	616	136	616	136
Collectively Evaluated for Potential Impairment	(600)	(78)	(600)	(78)	(375)
Individually Evaluated for Impairment	16	214	16	214	145
Collectively Evaluated for Potential Impairment	600	78	600	78	375
Balance	579	36	520
Charge-offs	(3)	(14)	(196)	(200)
Acquired Loans [Member] | Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Recoveries	38	3	38	5
Provision	(38)	11	26	11
Balance
Collectively Evaluated for Potential Impairment		(81)		(81)
Individually Evaluated for Impairment		81		81
Collectively Evaluated for Potential Impairment		81		81
Balance
Charge-offs		(14)	(64)	(16)
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Recoveries	1	1	1	2
Provision	144	10	379	189
Balance	613	11	613	11
Collectively Evaluated for Potential Impairment	(613)	(122)	(613)	(122)	(251)
Individually Evaluated for Impairment		133		133	114
Collectively Evaluated for Potential Impairment	613	122	613	122	251
Balance	471		365
Charge-offs	(3)		(132)	(180)
Acquired Loans [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Recoveries
Provision	(5)	115	(11)	115
Balance	109	115	109	115
Collectively Evaluated for Potential Impairment	(93)	(115)	(93)	(115)	(89)
Individually Evaluated for Impairment	16		16		31
Collectively Evaluated for Potential Impairment	93	115	93	115	89
Balance	114		120
Charge-offs
Acquired Loans [Member] | Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Recoveries
Provision
Balance
Collectively Evaluated for Potential Impairment
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Balance
Charge-offs
Acquired Loans [Member] | Consumer Portfolio Segment [Member]
Recoveries	1	1	3	5
Provision	(1)	(1)	(3)	(1)
Balance
Collectively Evaluated for Potential Impairment
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Balance
Charge-offs				(4)
Acquired Loans [Member] | Other Portfolio Segment [Member]
Recoveries
Provision
Balance
Collectively Evaluated for Potential Impairment
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Balance
Charge-offs
Acquired Loans [Member] | Unallocated Financing Receivables [Member]
Recoveries
Provision	(100)	(26)	(141)	10
Balance	(106)	10	(106)	10
Collectively Evaluated for Potential Impairment	106	(10)	106	(10)	(35)
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	(106)	10	(106)	10	$ 35
Balance	(6)	36	35
Charge-offs

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Note 4 - Loans and Related Allowance for Loan Loss - Accretable Discount on Loans Acquired at Fair Value (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Balance	$ 1,640
Accretable Yield	(407)
Nonaccretable Discount	(194)
Balance	$ 1,039

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Note 4 - Major Classifications of Loans Summarized by Individually Evaluated for Impairment and Collectively Evaluated for Potential Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Total Loans	$ 682,345	$ 681,897
Individually Evaluated for Impairment	9,817	9,701
Collectively Evaluated for Potential Impairment	672,528	672,196
Loans and Leases Receivable, Gross	682,345	681,897
Originated Loans [Member]
Total Loans	539,313	525,352
Individually Evaluated for Impairment	6,952	6,832
Collectively Evaluated for Potential Impairment	532,361	518,520
Loans and Leases Receivable, Gross	539,313	525,352
Acquired Loans [Member]
Total Loans	143,032	156,545
Individually Evaluated for Impairment	2,865	2,869
Collectively Evaluated for Potential Impairment	140,167	153,676
Loans and Leases Receivable, Gross	143,032	156,545
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Total Loans	267,547	271,588
Individually Evaluated for Impairment	1,380	1,300
Collectively Evaluated for Potential Impairment	266,167	270,288
Loans and Leases Receivable, Gross	267,547	271,588
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Total Loans	189,189	186,077
Individually Evaluated for Impairment	101
Collectively Evaluated for Potential Impairment	189,088	186,077
Loans and Leases Receivable, Gross	189,189	186,077
Residential Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Total Loans	78,358	85,511
Individually Evaluated for Impairment	1,279	1,300
Collectively Evaluated for Potential Impairment	77,079	84,211
Loans and Leases Receivable, Gross	78,358	85,511
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Total Loans	196,280	201,010
Individually Evaluated for Impairment	4,623	4,368
Collectively Evaluated for Potential Impairment	191,657	196,642
Loans and Leases Receivable, Gross	196,280	201,010
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Total Loans	140,652	139,894
Individually Evaluated for Impairment	3,455	3,361
Collectively Evaluated for Potential Impairment	137,197	136,533
Loans and Leases Receivable, Gross	140,652	139,894
Commercial Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Total Loans	55,628	61,116
Individually Evaluated for Impairment	1,168	1,007
Collectively Evaluated for Potential Impairment	54,460	60,109
Loans and Leases Receivable, Gross	55,628	61,116
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Total Loans	84,514	80,812
Individually Evaluated for Impairment	3,187	3,327
Collectively Evaluated for Potential Impairment	81,327	77,485
Loans and Leases Receivable, Gross	84,514	80,812
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Originated Loans [Member]
Total Loans	75,665	71,091
Individually Evaluated for Impairment	2,769	2,765
Collectively Evaluated for Potential Impairment	72,896	68,326
Loans and Leases Receivable, Gross	75,665	71,091
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Acquired Loans [Member]
Total Loans	8,849	9,721
Individually Evaluated for Impairment	418	562
Collectively Evaluated for Potential Impairment	8,431	9,159
Loans and Leases Receivable, Gross	8,849	9,721
Construction Portfolio Segment [Member] | Real Estate Sector [Member]
Total Loans	20,186	10,646
Individually Evaluated for Impairment	624	702
Collectively Evaluated for Potential Impairment	19,562	9,944
Loans and Leases Receivable, Gross	20,186	10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Originated Loans [Member]
Total Loans	20,186	10,646
Individually Evaluated for Impairment	624	702
Collectively Evaluated for Potential Impairment	19,562	9,944
Loans and Leases Receivable, Gross	20,186	10,646
Construction Portfolio Segment [Member] | Real Estate Sector [Member] | Acquired Loans [Member]
Total Loans
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member]
Total Loans	110,310	114,204
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	110,310	114,204
Loans and Leases Receivable, Gross	110,310	114,204
Consumer Portfolio Segment [Member] | Originated Loans [Member]
Total Loans	110,113	114,007
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	110,113	114,007
Loans and Leases Receivable, Gross	110,113	114,007
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Total Loans	197	197
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment	197	197
Loans and Leases Receivable, Gross	197	197
Other Portfolio Segment [Member]
Total Loans	3,508	3,637
Individually Evaluated for Impairment	3	4
Collectively Evaluated for Potential Impairment	3,505	3,633
Loans and Leases Receivable, Gross	3,508	3,637
Other Portfolio Segment [Member] | Originated Loans [Member]
Total Loans	3,508	3,637
Individually Evaluated for Impairment	3	4
Collectively Evaluated for Potential Impairment	3,505	3,633
Loans and Leases Receivable, Gross	3,508	3,637
Other Portfolio Segment [Member] | Acquired Loans [Member]
Total Loans
Individually Evaluated for Impairment
Collectively Evaluated for Potential Impairment
Loans and Leases Receivable, Gross

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Note 5 - Deposits (Details Textual) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Time Deposits, at or Above FDIC Insurance Limit	$ 45	$ 46

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Note 5 - Deposits - Maturities of Time Deposits (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
One Year or Less	$ 46,093
Over One Through Two Years	60,182
Over Two Through Three Years	20,309
Over Three Through Four Years	12,893
Over Four Through Five Years	9,156
Over Five Years	8,718
Total	$ 157,351	$ 155,028

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Note 6 - Short-term Borrowings - Federal Funds Purchased and Short-term Borrowings (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Balance at Period End	$ 25,450	$ 27,027
Federal Funds Purchased [Member]
Average Balance Outstanding During the Period	$ 17	$ 307
Average Balance Outstanding During the Period		0.65%
Maximum Amount Outstanding at any Month End	$ 550	$ 6,000
Other Short-term Debt [Member]
Balance at Period End
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
Securities Sold under Agreements to Repurchase [Member]
Balance at Period End	0.25%	0.24%
Average Balance Outstanding During the Period	$ 26,332	$ 26,311
Average Balance Outstanding During the Period	0.30%	0.26%
Maximum Amount Outstanding at any Month End	$ 26,460	$ 30,095
Balance at Period End	25,450	27,027
Carrying Value	32,499	33,785
Market Value	$ 31,834	$ 32,931

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Note 7 - Other Borrowed Funds (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	$ 285,000,000
Federal Home Loan Bank, Advances, General Debt Obligations, Amount of Available, Unused Funds	143,100,000	$ 148,500,000
Line of Credit Facility, Maximum Borrowing Capacity	3,700,000	3,700,000
Federal Reserve Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity	87,900,000
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	$ 40,000,000

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Note 7 - Other Borrowed Funds - Federal Home Loan Bank Advances (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Due in One Year	1.35%
Due in One Year, amount	$ 3.5
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	Jun. 30, 2017	Dec. 31, 2016
Financial instruments	$ 169,939	$ 138,523
Financial Standby Letter of Credit [Member]
Financial instruments	41,147	36,657
Performance Guarantee [Member]
Financial instruments	4,396	2,471
Construction Mortgages [Member]
Financial instruments	32,485	21,363
Personal Line Of Credit [Member]
Financial instruments	6,139	5,905
Overdraft Protection Lines [Member]
Financial instruments	6,183	5,680
Home Equity Lines of Credit [Member]
Financial instruments	15,286	14,722
Commercial Lines Of Credit [Member]
Financial instruments	$ 64,303	$ 51,725

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Note 9 - Fair Value Disclosure (Details Textual)	6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,700,000		$ 3,700,000
Real Estate Owned, Transfer to Real Estate Owned	155,000	$ 3,236,000
Impaired Financing Receivable, Related Allowance	1,256,000		1,160,000
Residential Portfolio Segment [Member] | Real Estate Sector [Member]
Real Estate Owned, Transfer to Real Estate Owned	155,000
Impaired Financing Receivable, Related Allowance
Number of Loans Transferred to Other Real Estate Owned	1
Commercial Portfolio Segment [Member] | Real Estate Sector [Member]
Real Estate Owned, Transfer to Real Estate Owned		$ 3,200,000
Impaired Financing Receivable, Related Allowance	$ 425,000		$ 474,000
Number of Loans Transferred to Other Real Estate Owned		2
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	Jun. 30, 2017	Dec. 31, 2016
Available for sale securities	$ 116,545	$ 106,208
Fair Value, Inputs, Level 2 [Member] | US Government Agencies Debt Securities [Member]
Available for sale securities	65,286	66,156
Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member]
Available for sale securities	36,727	35,735
Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for sale securities	12,883	2,619
Fair Value, Inputs, Level 1 [Member] | Equity Securities - Mutual Funds [Member]
Available for sale securities	507	507
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member]
Available for sale securities	$ 1,142	$ 1,191

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Note 9 - Fair Value Disclosure - Significant Unobservable Inputs Used in the Fair Value Measurements (Details) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2017	Dec. 31, 2016
Impaired Loans		$ 9,817	$ 9,701
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member]
Impaired Loans		$ 2,455	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	[1]	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	[1]	50.00%

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

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Note 9 - Fair Value Disclosure - Estimated Fair Value of the Company's Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Available for Sale	$ 116,545	$ 106,208
Reported Value Measurement [Member]
Available for Sale	116,545	106,208
Estimate of Fair Value Measurement [Member]
Available for Sale	116,545	106,208
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member]
Interest Bearing	17,464	7,699
Non-Interest Bearing	11,209	6,583
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member]
Interest Bearing	17,464	7,699
Non-Interest Bearing	11,209	6,583
Fair Value, Inputs, Level 3 [Member] | Reported Value Measurement [Member]
Loans, Net	674,262	674,094
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member]
Loans, Net	685,730	684,777
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member]
Restricted Stock	3,628	3,665
Bank-Owned Life Insurance	18,919	18,687
Accrued Interest Receivable	2,350	2,441
Deposits	727,059	698,218
Short-term Borrowings	25,450	27,027
Other Borrowed Funds	24,500	28,000
Accrued Interest Payable	338	334
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Restricted Stock	3,628	3,665
Bank-Owned Life Insurance	18,919	18,687
Accrued Interest Receivable	2,350	2,441
Deposits	706,817	697,806
Short-term Borrowings	25,450	27,027
Other Borrowed Funds	24,644	28,098
Accrued Interest Payable	$ 338	$ 334

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Note 10 - Other Noninterest Expense - Components of Other Noninterest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Other Noninterest Expense
Non-employee compensation	$ 100	$ 134	$ 200	$ 267
Printing and supplies	100	134	202	208
Postage	64	44	130	103
Telephone	99	97	188	181
Charitable contributions	56	41	80	69
Dues and subscriptions	55	46	118	93
Loan expenses	86	73	160	143
Meals and entertainment	43	34	68	58
Travel	43	40	69	70
Training	9	6	20	18
Miscellaneous	174	242	404	462
Total Other Noninterest Expense	$ 829	$ 891	$ 1,639	$ 1,672