10-Q

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

 

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended March 31, 2017

	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from            to          

Commission File Number 0-11204

AmeriServ Financial, Inc.

(Exact name of registrant as specified in its charter)

 

Pennsylvania	25-1424278
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Main & Franklin Streets, P.O. Box 430, Johnstown, PA	15907-0430
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (814) 533-5300

 

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

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 x No o

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

Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company x
Emerging growth company o

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. o

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at May 1, 2017
Common Stock, par value $0.01	18,668,784

 

AmeriServ Financial, Inc.
 
INDEX

	Page No.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) — March 31, 2017 and December 31, 2016		1
Consolidated Statements of Operations (Unaudited) — Three months ended March 31, 2017 and 2016		2
Consolidated Statements of Comprehensive Income (Unaudited) — Three months ended March 31, 2017 and 2016		3
Consolidated Statements of Cash Flows (Unaudited) — Three months ended March 31, 2017 and 2016		4
Notes to Unaudited Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3. Quantitative and Qualitative Disclosure About Market Risk		41
Item 4. Controls and Procedures		41
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		42
Item 1A. Risk Factors		42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3. Defaults Upon Senior Securities		42
Item 4. Mine Safety Disclosures		42
Item 5. Other Information		42
Item 6. Exhibits		42

i

Item 1. Financial Statements

AmeriServ Financial, Inc.
 
CONSOLIDATED BALANCE SHEETS
(In thousands except shares)
(Unaudited)

	March 31, 2017			December 31, 2016
ASSETS
Cash and due from depository institutions	$	22,696		$	25,107
Interest bearing deposits		2,748			3,066
Short-term investments in money market funds		5,572			5,900
Total cash and cash equivalents		31,016			34,073
Investment securities:
Available for sale		129,044			127,077
Held to maturity (fair value $36,594 on March 31, 2017 and $30,420 on December 31, 2016)		36,737			30,665
Loans held for sale		2,613			3,094
Loans		897,296			884,240
Less: Unearned income		453			476
Allowance for loan losses		10,080			9,932
Net loans		886,763			873,832
Premises and equipment, net		11,968			11,694
Accrued interest income receivable		3,200			3,116
Goodwill		11,944			11,944
Bank owned life insurance		38,044			37,903
Net deferred tax asset		9,998			10,655
Federal Home Loan Bank stock		4,284			3,359
Federal Reserve Bank stock		2,125			2,125
Other assets		4,391			4,243
TOTAL ASSETS	$	1,172,127		$	1,153,780
LIABILITIES
Non-interest bearing deposits	$	182,528		$	188,808
Interest bearing deposits		782,248			778,978
Total deposits		964,776			967,786
Short-term borrowings		33,676			12,754
Advances from Federal Home Loan Bank		46,042			45,542
Guaranteed junior subordinated deferrable interest debentures, net		12,912			12,908
Subordinated debt, net		7,447			7,441
Total borrowed funds		100,077			78,645
Other liabilities		11,670			11,954
TOTAL LIABILITIES		1,076,523			1,058,385
SHAREHOLDERS’ EQUITY
Common stock, par value $0.01 per share; 30,000,000 shares authorized; 26,536,139 shares issued and 18,666,520 outstanding on March 31, 2017; 26,521,291 shares issued and 18,903,472 outstanding on December 31, 2016		265			265
Treasury stock at cost, 7,869,619 shares on March 31, 2017 and 7,617,819 on December 31, 2016		(75,821	)		(74,829	)
Capital surplus		145,577			145,535
Retained earnings		37,066			36,001
Accumulated other comprehensive loss, net		(11,483	)		(11,577	)
TOTAL SHAREHOLDERS’ EQUITY		95,604			95,395
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,172,127		$	1,153,780

 
 
See accompanying notes to unaudited consolidated financial statements.

1

AmeriServ Financial, Inc.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

	Three months ended March 31,
	2017		2016
INTEREST INCOME
Interest and fees on loans	$	9,556	$	9,465
Interest bearing deposits		2		7
Short-term investments in money market funds		24		10
Investment securities:
Available for sale		901		767
Held to maturity		265		173
Total Interest Income		10,748		10,422
INTEREST EXPENSE
Deposits		1,436		1,254
Short-term borrowings		19		42
Advances from Federal Home Loan Bank		162		159
Guaranteed junior subordinated deferrable interest debentures		280		280
Subordinated debt		130		129
Total Interest Expense		2,027		1,864
NET INTEREST INCOME		8,721		8,558
Provision for loan losses		225		3,100
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		8,496		5,458
NON-INTEREST INCOME
Trust and investment advisory fees		2,166		2,075
Service charges on deposit accounts		374		415
Net gains on sale of loans		114		107
Mortgage related fees		75		63
Net realized gains on investment securities		27		57
Bank owned life insurance		141		167
Other income		665		553
Total Non-Interest Income		3,562		3,437
NON-INTEREST EXPENSE
Salaries and employee benefits		6,010		6,166
Net occupancy expense		674		737
Equipment expense		419		436
Professional fees		1,200		1,465
Supplies, postage and freight		194		195
Miscellaneous taxes and insurance		294		291
Federal deposit insurance expense		160		179
Other expense		1,134		1,242
Total Non-Interest Expense		10,085		10,711
PRETAX INCOME (LOSS)		1,973		(1,816	)
Provision (benefit) for income tax expense		625		(549	)
NET INCOME (LOSS)		1,348		(1,267	)
Preferred stock dividends		—		15
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	1,348	$	(1,282	)
PER COMMON SHARE DATA:
Basic:
Net income (loss)	$	0.07	$	(0.07	)
Average number of shares outstanding		18,814		18,884
Diluted:
Net income (loss)	$	0.07	$	(0.07	)
Average number of shares outstanding		18,922		18,884
Cash dividends declared	$	0.015	$	0.010

 
 
See accompanying notes to unaudited consolidated financial statements.

2

AmeriServ Financial, Inc.
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)

	Three Months Ended March 31,
	2017			2016
COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$	1,348		$	(1,267	)
Other comprehensive income, before tax:
Pension obligation change for defined benefit plan		77			504
Income tax effect		(27	)		(171	)
Unrealized holding gains on available for sale securities arising during period		92			1,115
Income tax effect		(30	)		(379	)
Reclassification adjustment for gains on available for sale securities included in net income		(27	)		(57	)
Income tax effect		9			19
Other comprehensive income		94			1,031
Comprehensive income (loss)	$	1,442		$	(236	)

 
 
See accompanying notes to unaudited consolidated financial statements.

3

AmeriServ Financial, Inc.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Three months ended March 31,
	2017			2016
OPERATING ACTIVITIES
Net income (loss)	$	1,348		$	(1,267	)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses		225			3,100
Depreciation expense		428			445
Net amortization of investment securities		126			87
Net realized gains on investment securities available for sale		(27	)		(57	)
Net gains on loans held for sale		(114	)		(107	)
Amortization of deferred loan fees		(51	)		(74	)
Origination of mortgage loans held for sale		(7,583	)		(7,226	)
Sales of mortgage loans held for sale		8,178			7,898
Increase in accrued interest income receivable		(84	)		(238	)
Decrease in accrued interest payable		(139	)		(167	)
Earnings on bank owned life insurance		(141	)		(167	)
Deferred income taxes		623			(976	)
Amortization of deferred issuance costs		10			10
Stock based compensation expense		42			55
Other, net		(233	)		(912	)
Net cash provided by operating activities		2,608			404
INVESTING ACTIVITIES
Purchases of investment securities – available for sale		(14,195	)		(6,128	)
Purchases of investment securities – held to maturity		(6,476	)		(2,107	)
Proceeds from sales of investment securities – available for sale		5,653			4,248
Proceeds from maturities of investment securities – available for sale		6,570			6,649
Proceeds from maturities of investment securities – held to maturity		375			253
Purchases of regulatory stock		(4,531	)		(4,929	)
Proceeds from redemption of regulatory stock		3,606			4,910
Long-term loans originated		(50,495	)		(52,432	)
Principal collected on long-term loans		37,520			48,974
Loans purchased or participated		(150	)		(3,995	)
Loans sold or participated		—			5,000
Proceeds from sale of other real estate owned		23			13
Purchases of premises and equipment		(702	)		(227	)
Net cash (used in) provided by investing activities		(22,802	)		229
FINANCING ACTIVITIES
Net (decrease) increase in deposit balances		(3,010	)		3,479
Net increase (decrease) in other short-term borrowings		20,922			(8,796	)
Principal borrowings on advances from Federal Home Loan Bank		3,500			2,000
Principal repayments on advances from Federal Home Loan Bank		(3,000	)		(1,000	)
Preferred stock redemption		—			(21,000	)
Purchase of treasury stock		(992	)		—
Common stock dividends		(283	)		(188	)
Preferred stock dividends		—			(15	)
Net cash provided by (used in) financing activities		17,137			(25,520	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(3,057	)		(24,887	)
CASH AND CASH EQUIVALENTS AT JANUARY 1		34,073			48,510
CASH AND CASH EQUIVALENTS AT MARCH 31	$	31,016		$	23,623

 
 
See accompanying notes to unaudited consolidated financial statements.

4

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Principles of Consolidation

The accompanying consolidated financial statements include the accounts of AmeriServ Financial, Inc. (the Company) and its wholly-owned subsidiaries, AmeriServ Financial Bank (the Bank), AmeriServ Trust and Financial Services Company (the Trust Company), and AmeriServ Life Insurance Company (AmeriServ Life). The Bank is a Pennsylvania state-chartered full service bank with 16 locations in Pennsylvania. The Trust Company offers a complete range of trust and financial services and administers assets valued at $2.0 billion that are not reported on the Company’s consolidated balance sheet at March 31, 2017. AmeriServ Life is a captive insurance company that engages in underwriting as a reinsurer of credit life and disability insurance.

In addition, the Parent Company is an administrative group that provides support in such areas as audit, finance, investments, loan review, general services, and marketing. Significant intercompany accounts and transactions have been eliminated in preparing the consolidated financial statements.

2. Basis of Preparation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. In the opinion of management, all adjustments consisting of normal recurring entries considered necessary for a fair presentation have been included. They are not, however, necessarily indicative of the results of consolidated operations for a full-year.

For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

3. Recent Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This Update applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. All entities that are not public business entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the practical measures it may elect at adoption, but does not anticipate the amendment will have a significant impact to the financial statements. Based on the Company’s preliminary analysis of its current portfolio, the Company expects to recognize a right of use asset and a lease liability for its operating leases commitments. The Company also anticipates additional disclosures to be provided at adoption.

5

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

3. Recent Accounting Pronouncements  – (continued)

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815). The amendments in this Update apply to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a heading instrument under Topic 815. The standards in this Update clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. An entity has an option to apply the amendments in this Update on either a prospective basis or a modified retrospective basis. Early adoption is permitted, including adoption in an interim period. This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the impact that the Update will have on our consolidated financial statements. The overall impact of the amendment will be affected by the portfolio composition and quality at the adoption date as well as economic conditions and forecasts at that time.

In January 2017, the FASB issued ASU No. 2017-03 “Accounting Changes and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings.” ASU 2017-03 provides amendments that add paragraph 250-10-S99-6 which includes the text of “SEC Staff Announcement: Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of a Registrant When Such Standards Are Adopted in a Future Period (in accordance with Staff Accounting Bulletin (SAB) Topic 11.M). This announcement applies to ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases (Topic 842); and ASU 2016-03, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments. The Company has enhanced its disclosures regarding the impact that recently issued accounting standards adopted in a future period will have on its accounting and disclosures in this footnote.

4. Earnings Per Common Share

Basic earnings per share include only the weighted average common shares outstanding. Diluted earnings per share include the weighted average common shares outstanding and any potentially dilutive common stock equivalent shares in the calculation. Treasury shares are excluded for earnings per share purposes. The Company had no options to purchase common shares excluded from the computation of diluted earnings per common share, since all option exercise prices were below the average closing price for the first quarter of 2017. Due to the net loss as of March 31, 2016, all options to purchase common shares were not included in

6

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

4. Earnings Per Common Share  – (continued)

the computation of diluted earnings per common share because to do so would be antidilutive. Dividends on preferred shares are deducted from net income in the calculation of earnings per common share.

	Three months ended March 31,
	2017		2016
	(In thousands, except per share data)
Numerator:
Net income	$	1,348	$	(1,267	)
Preferred stock dividends		—		(15	)
Net income available to common shareholders	$	1,348	$	(1,282	)
Denominator:
Weighted average common shares outstanding (basic)		18,814		18,884
Effect of stock options		108		—
Weighted average common shares outstanding (diluted)		18,922		18,884
Earnings per common share:
Basic	$	0.07	$	(0.07	)
Diluted		0.07		(0.07	)

5. Consolidated Statement of Cash Flows

On a consolidated basis, cash and cash equivalents include cash and due from depository institutions, interest-bearing deposits and short-term investments in money market funds. The Company made $3,000 in income tax payments in the first three months of 2017 and $438,500 in the same 2016 period. The Company made total interest payments of $2,166,000 in the first three months of 2017 compared to $2,031,000 in the same 2016 period. The Company had $20,000 non-cash transfers to other real estate owned (OREO) in the first three months of 2017 compared to $38,000 non-cash transfers in the same 2016 period.

6. Investment Securities

The cost basis and fair values of investment securities are summarized as follows (in thousands):

Investment securities available for sale (AFS):

	March 31, 2017
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	1,397	$	—	$	(6	)	$	1,391
US Agency mortgage-backed securities		88,508		1,023		(641	)		88,890
Taxable municipal		5,450		13		(176	)		5,287
Corporate bonds		33,881		196		(601	)		33,476
Total	$	129,236	$	1,232	$	(1,424	)	$	129,044

7

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. Investment Securities  – (continued)

Investment securities held to maturity (HTM):

	March 31, 2017
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	10,784	$	186	$	(67	)	$	10,903
Taxable municipal		19,907		144		(341	)		19,710
Corporate bonds and other securities		6,046		17		(82	)		5,981
Total	$	36,737	$	347	$	(490	)	$	36,594

Investment securities available for sale (AFS):

	December 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	400	$	—	$	(2	)	$	398
US Agency mortgage-backed securities		88,738		1,132		(686	)		89,184
Taxable municipal		3,793		3		(174	)		3,622
Corporate bonds		34,403		194		(724	)		33,873
Total	$	127,334	$	1,329	$	(1,586	)	$	127,077

Investment securities held to maturity (HTM):

	December 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	11,177	$	180	$	(79	)	$	11,278
Taxable municipal		13,441		70		(348	)		13,163
Corporate bonds and other securities		6,047		15		(83	)		5,979
Total	$	30,665	$	265	$	(510	)	$	30,420

Maintaining investment quality is a primary objective of the Company’s investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s Investor’s Service or Standard & Poor’s rating of “A.” At March 31, 2017, 61.3% of the portfolio was rated “AAA” as compared to 79.1% at December 31, 2016. Approximately 10.7% of the portfolio was either rated below “A” or unrated at March 31, 2017 as compared to 5.7% at December 31, 2016.

The Company sold $5.7 million AFS securities in the first quarter of 2017 resulting in $27,000 of gross investment security gains and sold $4.2 million AFS securities in the first three months of 2016 resulting in $63,000 of gross investment security gains and $6,000 of gross investment security losses.

The book value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits, and certain Federal Home Loan Bank borrowings was $111,529,000 at March 31, 2017 and $104,953,000 at December 31, 2016.

8

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. Investment Securities  – (continued)

The following tables present information concerning investments with unrealized losses as of March 31, 2017 and December 31, 2016 (in thousands):

Total investment securities:

	March 31, 2017
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency	$	1,391	$	(6	)	$	—	$	—		$	1,391	$	(6	)
US Agency mortgage-backed securities		52,169		(645	)		1,478		(63	)		53,647		(708	)
Taxable municipal		14,830		(517	)		—		—			14,830		(517	)
Corporate bonds and other securities		17,979		(450	)		7,766		(233	)		25,745		(683	)
Total	$	86,369	$	(1,618	)	$	9,244	$	(296	)	$	95,613	$	(1,914	)

Total investment securities:

	December 31, 2016
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency	$	398	$	(2	)	$	—	$	—		$	398	$	(2	)
US Agency mortgage-backed securities		49,918		(703	)		1,576		(62	)		51,494		(765	)
Taxable municipal		13,301		(522	)		—		—			13,301		(522	)
Corporate bonds and other securities		20,380		(570	)		6,762		(237	)		27,142		(807	)
Total	$	83,997	$	(1,797	)	$	8,338	$	(299	)	$	92,335	$	(2,096	)

The unrealized losses are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the value of securities will decrease; as market yields fall, the fair value of securities will increase. There are 111 positions that are considered temporarily impaired at March 31, 2017. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value.

Contractual maturities of securities at March 31, 2017 are shown below (in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. The duration of the total investment securities portfolio at March 31, 2017 is 45.2 months and is higher than the duration at December 31, 2016 which was 41.2 months. The duration remains within our internal established guideline range of 24 to 60 months which we believe is appropriate to maintain proper levels of liquidity, interest rate risk, market valuation sensitivity and profitability.

9

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. Investment Securities  – (continued)

Total investment securities:

	March 31, 2017
	Available for sale				Held to maturity
	Cost Basis		Fair Value		Cost Basis		Fair Value
Within 1 year	$	3,000	$	2,993	$	—	$	—
After 1 year but within 5 years		8,881		8,843		3,400		3,349
After 5 years but within 10 years		44,213		44,313		12,105		12,069
After 10 years but within 15 years		32,673		32,399		13,578		13,431
Over 15 years		40,469		40,496		7,654		7,745
Total	$	129,236	$	129,044	$	36,737	$	36,594

7. Loans

The loan portfolio of the Company consists of the following (in thousands):

	March 31, 2017		December 31, 2016
Commercial	$	169,348	$	171,529
Commercial loans secured by real estate		461,017		446,598
Real estate – mortgage		246,907		245,765
Consumer		19,571		19,872
Loans, net of unearned income	$	896,843	$	883,764

Loan balances at March 31, 2017 and December 31, 2016 are net of unearned income of $453,000 and $476,000, respectively. Real estate-construction loans comprised 4.0% and 4.7% of total loans, net of unearned income at March 31, 2017 and December 31, 2016, respectively.

8. Allowance for Loan Losses

The following tables summarize the rollforward of the allowance for loan losses by portfolio segment for the three month periods ending March 31, 2017 and 2016 (in thousands).

	Three months ended March 31, 2017
	Balance at December 31, 2016		Charge-Offs			Recoveries		Provision (Credit)			Balance at March 31, 2017
Commercial	$	4,041	$	—		$	7	$	(24	)	$	4,024
Commercial loans secured by real estate		3,584		(14	)		2		175			3,747
Real estate – mortgage		1,169		(94	)		66		26			1,167
Consumer		151		(63	)		19		42			149
Allocation for general risk		987		—			—		6			993
Total	$	9,932	$	(171	)	$	94	$	225		$	10,080

10

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. Allowance for Loan Losses  – (continued)

	Three months ended March 31, 2016
	Balance at December 31, 2015		Charge-Offs			Recoveries		Provision (Credit)			Balance at March 31, 2016
Commercial	$	4,244	$	(3,339	)	$	7	$	2,655		$	3,567
Commercial loans secured by real estate		3,449		—			28		229			3,706
Real estate – mortgage		1,173		(38	)		42		(20	)		1,157
Consumer		151		(205	)		4		195			145
Allocation for general risk		904		—			—		41			945
Total	$	9,921	$	(3,582	)	$	81	$	3,100		$	9,520

The provision expense, charge-offs and recoveries were at more typical levels in the first quarter of 2017. The substantially higher than typical provision and net loan charge-offs in the first three months 2016 for the commercial portfolio was necessary to resolve the Company’s only meaningful direct loan exposure to the energy industry. These loans were related to a single borrower in the fracking industry who had filed for bankruptcy protection in the fourth quarter of 2015. With the bankruptcy changing from Chapter 11 (reorganization) to Chapter 7 (liquidation) late in the first quarter of 2016, the Company concluded that its previously established reserves on these non-accrual loans were not sufficient to cover the discounted collateral values that resulted from the liquidation process.

The following tables summarize the loan portfolio and allowance for loan loss by the primary segments of the loan portfolio (in thousands).

	At March 31, 2017
	Commercial		Commercial Loans Secured by Real Estate		Real Estate- Mortgage		Consumer		Allocation for General Risk		Total
Loans:
Individually evaluated for impairment	$	484	$	173	$	—	$	—			$	657
Collectively evaluated for impairment		168,864		460,844		246,907		19,571				896,186
Total loans	$	169,348	$	461,017	$	246,907	$	19,571			$	896,843
Allowance for loan losses:
Specific reserve allocation	$	484	$	23	$	—	$	—	$	—	$	507
General reserve allocation		3,540		3,724		1,167		149		993		9,573
Total allowance for loan losses	$	4,024	$	3,747	$	1,167	$	149	$	993	$	10,080

	At December 31, 2016
	Commercial		Commercial Loans Secured by Real Estate		Real Estate- Mortgage		Consumer		Allocation for General Risk		Total
Loans:
Individually evaluated for impairment	$	496	$	178	$	—	$	—			$	674
Collectively evaluated for impairment		171,033		446,420		245,765		19,872				883,090
Total loans	$	171,529	$	446,598	$	245,765	$	19,872			$	883,764
Allowance for loan losses:
Specific reserve allocation	$	496	$	31	$	—	$	—	$	—	$	527
General reserve allocation		3,545		3,553		1,169		151		987		9,405
Total allowance for loan losses	$	4,041	$	3,584	$	1,169	$	151	$	987	$	9,932

11

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. Allowance for Loan Losses  – (continued)

The segments of the Company’s loan portfolio are disaggregated to a level that allows management to monitor risk and performance. The loan segments used are consistent with the internal reports evaluated by the Company’s management and Board of Directors to monitor risk and performance within various segments of its loan portfolio and therefore, no further disaggregation into classes is necessary. The overall risk profile for the commercial loan segment is impacted by non-owner occupied commercial real estate (CRE) loans, which include loans secured by non-owner occupied nonfarm nonresidential properties, as a meaningful portion of the commercial portfolio is centered in these types of accounts. The residential mortgage loan segment is comprised of first lien amortizing residential mortgage loans and home equity loans secured by residential real estate. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates for possible impairment any individual loan in the commercial or commercial real estate segment with a loan balance in excess of $100,000 that is in nonaccrual status or classified as a Troubled Debt Restructure (TDR). Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The Company does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired, or are classified as a TDR.

Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of three methods: (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs for collateral dependent loans. The method is selected on a loan-by-loan basis, with management primarily utilizing the fair value of collateral method. The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis. The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

The need for an updated appraisal on collateral dependent loans is determined on a case-by-case basis. The useful life of an appraisal or evaluation will vary depending upon the circumstances of the property and the economic conditions in the marketplace. A new appraisal is not required if there is an existing appraisal which, along with other information, is sufficient to determine a reasonable value for the property and to support an appropriate and adequate allowance for loan losses. At a minimum, annual documented reevaluation of the property is completed by the Bank’s internal Loan Review Department to support the value of the property.

When reviewing an appraisal associated with an existing collateral real estate dependent transaction, the Bank’s internal Assigned Risk Department must determine if there have been material changes to the underlying assumptions in the appraisal which affect the original estimate of value. Some of the factors that could cause material changes to reported values include:

• the passage of time;

• the volatility of the local market;

• the availability of financing;

• natural disasters;

• the inventory of competing properties;

12

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. Allowance for Loan Losses  – (continued)

• new improvements to, or lack of maintenance of, the subject property or competing properties upon physical inspection by the Bank;

• changes in underlying economic and market assumptions, such as material changes in current and projected vacancy, absorption rates, capitalization rates, lease terms, rental rates, sales prices, concessions, construction overruns and delays, zoning changes, etc.; and/or

• environmental contamination.

The value of the property is adjusted to appropriately reflect the above listed factors and the value is discounted to reflect the value impact of a forced or distressed sale, any outstanding senior liens, any outstanding unpaid real estate taxes, transfer taxes and closing costs that would occur with sale of the real estate. If the Assigned Risk Department personnel determine that a reasonable value cannot be derived based on available information, a new appraisal is ordered. The determination of the need for a new appraisal, versus completion of a property valuation by the Bank’s Assigned Risk Department personnel rests with the Assigned Risk Department and not the originating account officer.

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands).

	March 31, 2017
	Impaired Loans with Specific Allowance				Impaired Loans with no Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
Commercial	$	484	$	484	$	—	$	484	$	511
Commercial loans secured by real estate		157		23		16		173		207
Total impaired loans	$	641	$	507	$	16	$	657	$	718

	December 31, 2016
	Impaired Loans with Specific Allowance				Impaired Loans with no Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
Commercial	$	496	$	496	$	—	$	496	$	517
Commercial loans secured by real estate		162		31		16		178		209
Total impaired loans	$	658	$	527	$	16	$	674	$	726

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated (in thousands).

	Three months ended March 31,
	2017		2016
Average loan balance:
Commercial	$	331	$	1,162
Commercial loans secured by real estate		335		615
Average investment in impaired loans	$	666	$	1,777
Interest income recognized:
Commercial	$	6	$	3
Commercial loans secured by real estate		2		—
Interest income recognized on a cash basis on impaired loans	$	8	$	3

13

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. Allowance for Loan Losses  – (continued)

Management uses a nine point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized. The first five “Pass” categories are aggregated, while the Pass-6, Special Mention, Substandard and Doubtful categories are disaggregated to separate pools. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due, or for which any portion of the loan represents a specific allocation of the allowance for loan losses are placed in Substandard or Doubtful.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process, which dictates that, at a minimum, credit reviews are mandatory for all commercial and commercial mortgage loan relationships with aggregate balances in excess of $250,000 within a 12-month period. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, delinquency, or death occurs to raise awareness of a possible credit event. The Company’s commercial relationship managers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. Risk ratings are assigned by the account officer, but require independent review and rating concurrence from the Company’s internal Loan Review Department. The Loan Review Department is an experienced independent function which reports directly to the Board’s Audit Committee. The scope of commercial portfolio coverage by the Loan Review Department is defined and presented to the Audit Committee for approval on an annual basis. The approved scope of coverage for 2017 requires review of a minimum range of 50% to 55% of the commercial loan portfolio.

In addition to loan monitoring by the account officer and Loan Review Department, the Company also requires presentation of all credits rated Pass-6 with aggregate balances greater than $1,000,000, all credits rated Special Mention or Substandard with aggregate balances greater than $250,000, and all credits rated Doubtful with aggregate balances greater than $100,000 on an individual basis to the Company’s Loan Loss Reserve Committee on a quarterly basis. Additionally, the Asset Quality Task Force, which is a group comprised of senior level personnel, meets monthly to monitor the status of problem loans.

The following table presents the classes of the commercial and commercial real estate loan portfolios summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system (in thousands).

	March 31, 2017
	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	166,609	$	1,083	$	1,172	$	484	$	169,348
Commercial loans secured by real estate		447,160		12,441		1,400		16		461,017
Total	$	613,769	$	13,524	$	2,572	$	500	$	630,365

	December 31, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	168,116	$	1,087	$	1,830	$	496	$	171,529
Commercial loans secured by real estate		436,318		7,497		2,767		16		446,598
Total	$	604,434	$	8,584	$	4,597	$	512	$	618,127

14

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. Allowance for Loan Losses  – (continued)

It is generally the policy of the Bank that the outstanding balance of any residential mortgage loan that exceeds 90-days past due as to principal and/or interest is transferred to non-accrual status and an evaluation is completed to determine the fair value of the collateral less selling costs, unless the balance is minor. A charge down is recorded for any deficiency balance determined from the collateral evaluation. The remaining non-accrual balance is reported as impaired with no specific allowance. It is the policy of the bank that the outstanding balance of any consumer loan that exceeds 90-days past due as to principal and/or interest is charged off. The following tables present the performing and non-performing outstanding balances of the residential and consumer portfolios (in thousands).

	March 31, 2017
	Performing		Non-Performing
Real estate – mortgage	$	246,101	$	806
Consumer		19,571		—
Total	$	265,672	$	806

	December 31, 2016
	Performing		Non-Performing
Real estate – mortgage	$	244,836	$	929
Consumer		19,872		—
Total	$	264,708	$	929

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans (in thousands).

	March 31, 2017
	Current		30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days Past Due		Total Past Due		Total Loans		90 Days Past Due and Still Accruing
Commercial	$	169,208	$	140	$	—	$	—	$	140	$	169,348	$	—
Commercial loans secured by real estate		456,482		4,535		—		—		4,535		461,017		—
Real estate – mortgage		243,120		2,784		595		408		3,787		246,907		—
Consumer		19,485		64		22		—		86		19,571		—
Total	$	888,295	$	7,523	$	617	$	408	$	8,548	$	896,843	$	—

	December 31, 2016
	Current		30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days Past Due		Total Past Due		Total Loans		90 Days Past Due and Still Accruing
Commercial	$	171,292	$	237	$	—	$	—	$	237	$	171,529	$	—
Commercial loans secured by real estate		446,477		121		—		—		121		446,598		—
Real estate – mortgage		241,802		2,856		610		497		3,963		245,765		—
Consumer		19,795		50		27		—		77		19,872		—
Total	$	879,366	$	3,264	$	637	$	497	$	4,398	$	883,764	$	—

15

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. Allowance for Loan Losses  – (continued)

An allowance for loan losses (“ALL”) is maintained to support loan growth and cover charge-offs from the loan portfolio. The ALL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of non-performing loans.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are complemented by consideration of other qualitative factors.

Management tracks the historical net charge-off activity at each risk rating grade level for the entire commercial portfolio and at the aggregate level for the consumer, residential mortgage and small business portfolios. A historical charge-off factor is calculated utilizing a rolling 12 consecutive historical quarters for the commercial portfolios. This historical charge-off factor for the consumer, residential mortgage and small business portfolios are based on a three year historical average of actual loss experience.

The Company uses a comprehensive methodology and procedural discipline to maintain an ALL to absorb inherent losses in the loan portfolio. The Company believes this is a critical accounting policy since it involves significant estimates and judgments. The allowance consists of three elements: 1) an allowance established on specifically identified problem loans, 2) formula driven general reserves established for loan categories based upon historical loss experience and other qualitative factors which include delinquency, non-performing and TDR loans, loan trends, economic trends, concentrations of credit, trends in loan volume, experience and depth of management, examination and audit results, effects of any changes in lending policies, and trends in policy, financial information, and documentation exceptions, and 3) a general risk reserve which provides support for variance from our assessment of the previously listed qualitative factors, provides protection against credit risks resulting from other inherent risk factors contained in the Company’s loan portfolio, and recognizes the model and estimation risk associated with the specific and formula driven allowances. The qualitative factors used in the formula driven general reserves are evaluated quarterly (and revised if necessary) by the Company’s management to establish allocations which accommodate each of the listed risk factors.

“Pass” rated credits are segregated from “Criticized” and “Classified” credits for the application of qualitative factors.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

16

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

9. Non-performing Assets Including Troubled Debt Restructurings (TDR)

The following table presents information concerning non-performing assets including TDR (in thousands, except percentages):

	March 31, 2017			December 31, 2016
Non-accrual loans
Commercial	$	484		$	496
Commercial loans secured by real estate		173			178
Real estate – mortgage		806			929
Total		1,463			1,603
Other real estate owned
Real estate – mortgage		25			21
Total		25			21
TDR’s not in non-accrual		—			—
Total non-performing assets including TDR	$	1,488		$	1,624
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned		0.17	%		0.18	%

The Company had no loans past due 90 days or more for the periods presented which were accruing interest.

The following table sets forth, for the periods indicated, (1) the gross interest income that would have been recorded if non-accrual loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period, (2) the amount of interest income actually recorded on such loans, and (3) the net reduction in interest income attributable to such loans (in thousands).

	Three months ended March 31,
	2017		2016
Interest income due in accordance with original terms	$	16	$	59
Interest income recorded		—		—
Net reduction in interest income	$	16	$	59

Consistent with accounting and regulatory guidance, the Bank recognizes a TDR when the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that would not normally be considered. Regardless of the form of concession granted, the Bank’s objective in offering a TDR is to increase the probability of repayment of the borrower’s loan.

To be considered a TDR, both of the following criteria must be met:

• the borrower must be experiencing financial difficulties; and

• the Bank, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that would not otherwise be considered.

Factors that indicate a borrower is experiencing financial difficulties include, but are not limited to:

• the borrower is currently in default on their loan(s);

• the borrower has filed for bankruptcy;

• the borrower has insufficient cash flows to service their loan(s); and

• the borrower is unable to obtain refinancing from other sources at a market rate similar to rates available to a non-troubled debtor.

17

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

9. Non-performing Assets Including Troubled Debt Restructurings (TDR)  – (continued)

Factors that indicate that a concession has been granted include, but are not limited to:

• the borrower is granted an interest rate reduction to a level below market rates for debt with similar risk; or

• the borrower is granted a material maturity date extension, or extension of the amortization plan to provide payment relief. For purposes of this policy, a material maturity date extension will generally include any maturity date extension, or the aggregate of multiple consecutive maturity date extensions, that exceed 120 days. A restructuring that results in an insignificant delay in payment, i.e. 120 days or less, is not necessarily a TDR. Insignificant payment delays occur when the amount of the restructured payments subject to the delay is insignificant relative to the unpaid principal or collateral value, and will result in an insignificant shortfall in the originally scheduled contractual amount due, and/or the delay in timing of the restructured payment period is insignificant relative to the frequency of payments, the original maturity or the original amortization.

The determination of whether a restructured loan is a TDR requires consideration of all of the facts and circumstances surrounding the modification. No single factor is determinative of whether a restructuring is a TDR. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean that the borrower is experiencing financial difficulty. Accordingly, determination of whether a modification is a TDR involves a large degree of judgment.

The Company had no loans modified as TDRs during the three month period ending March 31, 2017 and 2016.

In all instances where loans have been modified in troubled debt restructurings the pre- and post-modified balances are the same. The specific ALL reserve for loans modified as TDR’s was $507,000 and $24,000 as of March 31, 2017 and 2016, respectively. All TDR’s are individually evaluated for impairment and a related allowance is recorded, as needed.

Once a loan is classified as a TDR, this classification will remain until documented improvement in the financial position of the borrower supports confidence that all principal and interest will be paid according to terms. Additionally, the customer must have re-established a track record of timely payments according to the restructured contract terms for a minimum of six consecutive months prior to consideration for removing the loan from non-accrual TDR status. However, a loan will continue to be on non-accrual status until, consistent with our policy, the borrower has made a minimum of an additional six consecutive monthly payments in accordance with the terms of the loan.

The Company had no loans that were classified as TDR’s or were subsequently modified during each 12-month period prior to the current reporting periods, which begin January 1, 2016 and 2015 respectively, and that subsequently defaulted during these reporting periods.

The Company is unaware of any additional loans which are required to either be charged-off or added to the non-performing asset totals disclosed above.

Foreclosed assets acquired in settlement of loans carried at fair value less estimated costs to sell are included in the other assets on the Consolidated Balance Sheet. As of March 31, 2017 and December 31, 2016, a total of $25,000 and $21,000, respectively of residential real estate foreclosed assets were included in other assets. As of March 31, 2017, the Company had initiated formal foreclosure procedures on $321,000 of consumer residential mortgages.

18

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

10. Federal Home Loan Bank Borrowings

Total Federal Home Loan Bank (FHLB) borrowings and advances consist of the following (in thousands, except percentages):

	At March 31, 2017
Type	Maturing		Amount		Weighted Average Rate
Open Repo Plus		Overnight	$	33,676		0.95	%
Advances		2017		9,000		1.11
		2018		12,000		1.48
		2019		12,500		1.51
		2020		11,542		1.60
		2021 and over		1,000		1.60
Total advances				46,042		1.41
Total FHLB borrowings			$	79,718		1.22	%

	At December 31, 2016
Type	Maturing		Amount		Weighted Average Rate
Open Repo Plus		Overnight	$	12,754		0.74	%
Advances		2017		12,000		1.06
		2018		12,000		1.48
		2019		12,500		1.51
		2020		8,042		1.59
		2021 and over		1,000		1.60
Total advances				45,542		1.37
Total FHLB borrowings			$	58,296		1.23	%

The rate on Open Repo Plus advances can change daily, while the rates on the advances are fixed until the maturity of the advance. All FHLB stock along with an interest in certain residential mortgage and CRE loans with an aggregate statutory value equal to the amount of the advances are pledged as collateral to the FHLB of Pittsburgh to support these borrowings.

11. Preferred Stock

On August 11, 2011, pursuant to the Small Business Lending Fund (SBLF), the Company issued and sold to the US Treasury 21,000 shares of its Senior Non-Cumulative Perpetual Preferred Stock, Series E (Series E Preferred Stock) for the aggregate proceeds of $21 million. The SBLF was a voluntary program sponsored by the US Treasury that encouraged small business lending by providing capital to qualified community banks at favorable rates. The Company used the proceeds from the Series E Preferred Stock issued to the US Treasury to repurchase all 21,000 shares of its outstanding preferred shares previously issued to the US Treasury under the Capital Purchase Program.

On January 27, 2016, the Company redeemed the Series E Preferred Stock, at a redemption price of 100% of the liquidation amount plus accrued but unpaid dividends, after receiving approval from its federal banking regulator and the US Treasury.

19

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

12. Accumulated Other Comprehensive Loss

The following table presents the changes in each component of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2017 and 2016 (in thousands):

	Three months ended March 31, 2017									Three months ended March 31, 2016
	Net Unrealized Gains and (Losses) on Investment Securities AFS(1)			Defined Benefit Pension Items(1)			Total(1)			Net Unrealized Gains and (Losses) on Investment Securities AFS(1)			Defined Benefit Pension Items(1)			Total(1)
Beginning balance	$	(171	)	$	(11,406	)	$	(11,577	)	$	808		$	(8,363	)	$	(7,555	)
Other comprehensive income (loss) before reclassifications		62			(210	)		(148	)		736			333			1,069
Amounts reclassified from accumulated other comprehensive loss		(18	)		260			242			(38	)		—			(38	)
Net current period other comprehensive income		44			50			94			698			333			1,031
Ending balance	$	(127	)	$	(11,356	)	$	(11,483	)	$	1,506		$	(8,030	)	$	(6,524	)

(1) Amounts in parentheses indicate debits on the Consolidated Balance Sheets.

The following table presents the amounts reclassified out of each component of accumulated other comprehensive loss for the three months ended March 31, 2017 and 2016 (in thousands):

	Amount reclassified from accumulated other comprehensive loss(1)
Details about accumulated other comprehensive loss components	For the three months ended March 31, 2017			For the three months ended March 31, 2016			Affected line item in the consolidated statement of operations
Realized (gains) and losses on sale of securities
	$	(27	)	$	(57	)		Net realized gains on investment securities
		9			19			Provision for income tax expense
	$	(18	)	$	(38	)		Net of tax
Amortization of defined benefit items Recognized net actuarial loss	$	395		$	—			Salaries and employee benefits
		(135	)		—			Provision for income taxes
	$	260		$	—			Net of tax
Total reclassifications for the period	$	242		$	(38	)		Net income

(1) Amounts in parentheses indicate credits.

13. Regulatory Capital

The Company is subject to various capital requirements administered by the federal banking agencies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Failure to meet minimum capital requirements can initiate certain mandatory

20

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

13. Regulatory Capital  – (continued)

and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. For a more detailed discussion see the Capital Resources section of the MD&A.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, Tier 1 capital to average assets, and common equity Tier I capital (as defined in the regulations) to risk-weighted assets (RWA) (as defined). Additionally under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in regulatory capital. As of March 31, 2017, the Bank was categorized as “Well Capitalized” under the regulatory framework for prompt corrective action promulgated by the Federal Reserve. The Company believes that no conditions or events have occurred that would change this conclusion as of such date. To be categorized as Well Capitalized, the Bank must maintain minimum Total Capital, Common Equity Tier 1 Capital, Tier 1 Capital, and Tier 1 leverage ratios as set forth in the table. Additionally, while not a regulatory capital ratio, the Company’s tangible common equity ratio was 7.21% at March 31, 2017 (in thousands, except ratios).

	AT MARCH 31, 2017
	COMPANY					BANK					MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES			TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS*
	AMOUNT		RATIO			AMOUNT		RATIO			RATIO			RATIO
	(IN THOUSANDS, EXCEPT RATIOS)
Total Capital (To Risk Weighted Assets)	$	125,331		13.03	%	$	108,243		11.32	%		8.00	%		10.00	%
Tier 1 Common Equity (To Risk Weighted Assets)		95,143		9.89			97,346		10.18			4.50			6.50
Tier 1 Capital (To Risk Weighted Assets)		106,987		11.13			97,346		10.18			6.00			8.00
Tier 1 Capital (To Average Assets)		106,987		9.33			97,346		8.63			4.00			5.00

	AT DECEMBER 31, 2016
	COMPANY					BANK					MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES			TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS*
	AMOUNT		RATIO			AMOUNT		RATIO			RATIO			RATIO
	(IN THOUSANDS, EXCEPT RATIOS)
Total Capital (To Risk Weighted Assets)	$	125,131		13.15	%	$	107,618		11.35	%		8.00	%		10.00	%
Tier 1 Common Equity (To Risk Weighted Assets)		95,028		9.99			96,796		10.21			4.50			6.50
Tier 1 Capital (To Risk Weighted Assets)		106,868		11.23			96,796		10.21			6.00			8.00
Tier 1 Capital (To Average Assets)		106,868		9.35			96,796		8.61			4.00			5.00

* Applies to the Bank only.

21

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

14. DERIVATIVE HEDGING INSTRUMENTS

The Company can use various interest rate contracts, such as interest rate swaps, caps, floors and swaptions to help manage interest rate and market valuation risk exposure, which is incurred in normal recurrent banking activities. The Company can use derivative instruments, primarily interest rate swaps, to manage interest rate risk and match the rates on certain assets by hedging the fair value of certain fixed rate debt, which converts the debt to variable rates and by hedging the cash flow variability associated with certain variable rate debt by converting the debt to fixed rates.

To accommodate a customer need and support the Company’s asset/liability positioning, we entered into an interest rate swap with the customer and Pittsburgh National Bank (PNC) in the first quarter of 2017. This arrangement involves the exchange of interest payments based on the notional amounts. The Company entered into a floating rate loan and a fixed rate swap with our customer. Simultaneously, the Company entered into an offsetting fixed rate swap with PNC. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay PNC the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. This transaction allows the Company’s customer to effectively convert a variable rate loan to a fixed rate. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations. The Company received a $58,000 fee on the transaction.

The following table summarizes the interest rate swap transactions that impacted the Company’s first quarter 2017 performance.

START DATE	MATURITY DATE		HEDGE TYPE		NOTIONAL AMOUNT		RATE RECEIVED			RATE PAID			REPRICING FREQUENCY		INCREASE (DECREASE) IN INTEREST EXPENSE
01/12/17		01/12/27		FAIR VALUE	$	5,000,000		4.50	%		3.10	%		MONTHLY	$	15,367
01/12/17		01/12/27		FAIR VALUE		5,000,000		3.10			4.50			MONTHLY		(15,367	)
															$	—

The Company monitors and controls all derivative products with a comprehensive Board of Director approved hedging policy. This policy permits a total maximum notional amount outstanding of $500 million for interest rate swaps, interest rate caps/floors, and swaptions. All hedge transactions must be approved in advance by the Investment Asset/Liability Committee (ALCO) of the Board of Directors. The Company had no caps or floors outstanding at March 31, 2017.

15. Segment Results

The financial performance of the Company is also monitored by an internal funds transfer pricing profitability measurement system which produces line of business results and key performance measures. The Company’s major business units include retail banking, commercial banking, trust, and investment/parent. The reported results reflect the underlying economics of the business segments. Expenses for centrally provided services are allocated based upon the cost and estimated usage of those services. The businesses are match-funded and interest rate risk is centrally managed and accounted for within the investment/parent business segment. The key performance measure the Company focuses on for each business segment is net income contribution.

Retail banking includes the deposit-gathering branch franchise and lending to both individuals and small businesses. Lending activities include residential mortgage loans, direct consumer loans, and local business commercial loans. Commercial banking to businesses includes commercial loans, and CRE loans. The trust segment contains our wealth management businesses which include the Trust Company and West Chester Capital Advisors (WCCA), our registered investment advisory firm and financial services. Wealth management includes personal trust products and services such as personal portfolio investment management, estate planning and administration, custodial services and pre-need trusts. Also, institutional trust products and

22

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

15. Segment Results  – (continued)

services such as 401(k) plans, defined benefit and defined contribution employee benefit plans, and individual retirement accounts are included in this segment. Financial services include the sale of mutual funds, annuities, and insurance products. The wealth management businesses also includes the union collective investment funds, namely the ERECT and BUILD funds which are designed to use union pension dollars in construction projects that utilize union labor. The investment/parent includes the net results of investment securities and borrowing activities, general corporate expenses not allocated to the business segments, interest expense on corporate debt, and centralized interest rate risk management. Inter-segment revenues were not material.

The contribution of the major business segments to the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016 were as follows (in thousands):

	Three months ended March 31, 2017
	Total revenue			Net income (loss)
Retail banking	$	6,243		$	617
Commercial banking		4,725			1,472
Trust		2,326			367
Investment/Parent		(1,011	)		(1,108	)
Total	$	12,283		$	1,348

	Three months ended March 31, 2016
	Total revenue			Net income (loss)
Retail banking	$	6,297		$	583
Commercial banking		4,635			(835	)
Trust		2,177			145
Investment/Parent		(1,114	)		(1,160	)
Total	$	11,995		$	(1,267	)

16. Commitments and Contingent Liabilities

The Company had various outstanding commitments to extend credit approximating $159.8 million and $160.5 million along with standby letters of credit of $8.4 million and $8.5 million as of March 31, 2017 and December 31, 2016, respectively. The Company’s exposure to credit loss in the event of nonperformance by the other party to these commitments to extend credit and standby letters of credit is represented by their contractual amounts. The Bank uses the same credit and collateral policies in making commitments and conditional obligations as for all other lending.

Additionally, the Company is also subject to a number of asserted and unasserted potential claims encountered in the normal course of business. In the opinion of the Company, neither the resolution of these claims nor the funding of these credit commitments will have a material adverse effect on the Company’s consolidated financial position, results of operation or cash flows.

23

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

17. Pension Benefits

The Company has a noncontributory defined benefit pension plan covering certain employees who work at least 1,000 hours per year. The participants shall have a vested interest in their accrued benefit after five full years of service. The benefits of the plan are based upon the employee’s years of service and average annual earnings for the highest five consecutive calendar years during the final ten year period of employment. Plan assets are primarily debt securities (including US Treasury and Agency securities, corporate notes and bonds), listed common stocks (including shares of AmeriServ Financial, Inc. common stock which is limited to 10% of the plan’s assets), mutual funds, and short-term cash equivalent instruments. The net periodic pension cost for the three months ended March 31, 2017 and 2016 were as follows (in thousands):

	Three months ended March 31,
	2017			2016
Components of net periodic benefit cost
Service cost	$	390		$	368
Interest cost		326			344
Expected return on plan assets		(631	)		(563	)
Recognized net actuarial loss		367			314
Net periodic pension cost	$	452		$	463

The Company implemented a soft freeze of its defined benefit pension plan to provide that non-union employees hired on or after January 1, 2013 and union employees hired on or after January 1, 2014 are not eligible to participate in the pension plan. Instead, such employees are eligible to participate in a qualified 401(k) plan. This change was made to help reduce pension costs in future periods.

18. Disclosures about Fair Value Measurements

The following disclosures establish a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring assets and liabilities at fair value. The three broad levels defined within this hierarchy are as follows:

Level I:  Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II:  Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.

Level III:  Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Assets and Liability Measured on a Recurring Basis

Securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quoted market spreads, cash flows, the US Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

The following tables present the assets reported on the Consolidated Balance Sheets at their fair value as of March 31, 2017 and December 31, 2016, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

24

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

18. Disclosures about Fair Value Measurements  – (continued)

Assets and liability measured at fair value on a recurring basis are summarized below (in thousands):

	Fair Value Measurements at March 31, 2017 Using
	Total		(Level 1)		(Level 2)		(Level 3)
US Agency securities	$	1,391	$	—	$	1,391	$	—
US Agency mortgage-backed securities		88,890		—		88,890		—
Taxable municipal		5,287		—		5,287		—
Corporate bonds		33,476		—		33,476		—
Fair value swap asset		5		—		—		5

	Fair Value Measurements at December 31, 2016 Using
	Total		(Level 1)		(Level 2)		(Level 3)
US Agency securities	$	398	$	—	$	398	$	—
Taxable municipal		3,622		—		3,622		—
Corporate bonds		33,873		—		33,873		—
US Agency mortgage-backed securities		89,184		—		89,184		—

Assets Measured on a Non-recurring Basis

Loans considered impaired are loans for which, based on current information and events, it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. As detailed in the allowance for loan loss footnote, impaired loans are reported at fair value of the underlying collateral if the repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on observable market data which at times are discounted. At March 31, 2017, impaired loans with a carrying value of $657,000 were reduced by a specific valuation allowance totaling $507,000 resulting in a net fair value of $150,000. At December 31, 2016, impaired loans with a carrying value of $674,000 were reduced by a specific valuation allowance totaling $527,000 resulting in a net fair value of $147,000.

Other real estate owned is measured at fair value based on appraisals, less estimated cost to sell. Valuations are periodically performed by management. Income and expenses from operations and changes in valuation allowance are included in the net expenses from OREO.

Assets measured at fair value on a non-recurring basis are summarized below (in thousands, except range data):

	Fair Value Measurements at March 31, 2017 Using
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	150	$	—	$	—	$	150
Other real estate owned		25		—		—		25

	Fair Value Measurements at December 31, 2016 Using
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	147	$	—	$	—	$	147
Other real estate owned		21		—		—		21

25

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

18. Disclosures about Fair Value Measurements  – (continued)

March 31, 2017	Quantitative Information About Level 3 Fair Value Measurements
	Fair Value Estimate	Valuation Techniques	Unobservable Input	Range (Wgtd Ave)
Impaired loans	$150	Appraisal of collateral(1),(3)	Appraisal adjustments(2)	40% to 77% (42%)
Other real estate owned	25	Appraisal of collateral(1),(3)	Appraisal adjustments(2) Liquidation expenses	0% to 43% (17%) 2% to 206% (108%)

December 31, 2016	Quantitative Information About Level 3 Fair Value Measurements
	Fair Value Estimate	Valuation Techniques	Unobservable Input	Range (Wgtd Ave)
Impaired loans	$147	Appraisal of collateral(1),(3)	Appraisal adjustments(2)	40% to 99% (45%)
Other real estate owned	21	Appraisal of collateral(1),(3)	Appraisal adjustments(2) Liquidation expenses	20% to 77% (42%) 3% to 199% (37%)

(1) Fair Value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

For the Company, as for most financial institutions, approximately 90% of its assets and liabilities are considered financial instruments. Many of the Company’s financial instruments, however, lack an available trading market characterized by a willing buyer and willing seller engaging in an exchange transaction. Therefore, significant estimates and present value calculations were used by the Company for the purpose of this disclosure.

Fair values have been determined by the Company using independent third party valuations that use the best available data (Level 2) and an estimation methodology (Level 3) the Company believes is suitable for each category of financial instruments. Management believes that cash, cash equivalents, and loans and deposits with floating interest rates have estimated fair values which approximate the recorded book balances. The estimation methodologies used, the estimated fair values based on US GAAP measurements, and recorded book balances at March 31, 2017 and December 31, 2016, were as follows (in thousands):

	March 31, 2017
	Carrying Value		Fair Value		(Level 1)		(Level 2)		(Level 3)
FINANCIAL ASSETS:
Cash and cash equivalents	$	31,016	$	31,016	$	31,016	$	—	$	—
Investment securities – AFS		129,044		129,044		—		129,044		—
Investment securities – HTM		36,737		36,594		—		33,648		2,946
Regulatory stock		6,409		6,409		6,409		—		—
Loans held for sale		2,613		2,660		2,660		—		—
Loans, net of allowance for loan loss and unearned income		886,763		882,004		—		—		882,004
Accrued interest income receivable		3,200		3,200		3,200		—		—
Bank owned life insurance		38,044		38,044		38,044		—		—
Fair value swap asset		5		5		—		—		5
FINANCIAL LIABILITIES:
Deposits with no stated maturities	$	709,932	$	709,932	$	709,932	$	—	$	—
Deposits with stated maturities		254,844		255,220		—		—		255,220
Short-term borrowings		33,676		33,676		33,676		—		—
All other borrowings		66,401		69,833		—		—		69,833
Accrued interest payable		1,501		1,501		1,501		—		—
Fair value swap liability		5		5		—		—		5

26

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

18. Disclosures about Fair Value Measurements  – (continued)

	December 31, 2016
	Carrying Value		Fair Value		(Level 1)		(Level 2)		(Level 3)
FINANCIAL ASSETS:
Cash and cash equivalents	$	34,073	$	34,073	$	34,073	$	—	$	—
Investment securities – AFS		127,077		127,077		—		127,077		—
Investment securities – HTM		30,665		30,420		—		27,473		2,947
Regulatory stock		5,484		5,484		5,484		—		—
Loans held for sale		3,094		3,158		3,158		—		—
Loans, net of allowance for loan loss and unearned income		873,832		869,960		—		—		869,960
Accrued interest income receivable		3,116		3,116		3,116		—		—
Bank owned life insurance		37,903		37,903		37,903		—		—
FINANCIAL LIABILITIES:
Deposits with no stated maturities	$	708,062	$	708,062	$	708,062	$	—	$	—
Deposits with stated maturities		259,724		261,446		—		—		261,446
Short-term borrowings		12,754		12,754		12,754		—		—
All other borrowings		65,891		69,348		—		—		69,348
Accrued interest payable		1,640		1,640		1,640		—		—

The fair value of cash and cash equivalents, regulatory stock, accrued interest income receivable, short-term borrowings, and accrued interest payable are equal to the current carrying value.

The fair value of investment securities is equal to the available quoted market price for similar securities. The fair value measurements consider observable data that may include dealer quoted market spreads, cash flows, the US Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The Level 3 securities are valued by discounted cash flows using the US Treasury rate for the remaining term of the securities.

Loans held for sale are priced individually at market rates on the day that the loan is locked for commitment with an investor. All loans in the held for sale account conform to Fannie Mae underwriting guidelines, with the specific intent of the loan being purchased by an investor at the predetermined rate structure. Loans in the held for sale account have specific delivery dates that must be executed to protect the pricing commitment (typically a 30, 45, or 60 day lock period).

The net loan portfolio has been valued using a present value discounted cash flow. The discount rate used in these calculations is based upon the treasury yield curve adjusted for non-interest operating costs, credit loss, current market prices and assumed prepayment risk.

The fair value of bank owned life insurance is based upon the cash surrender value of the underlying policies and matches the book value.

Deposits with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar assets and liabilities. Deposits with no stated maturities have an estimated fair value equal to both the amount payable on demand and the recorded book balance.

The fair value of all other borrowings is based on the discounted value of contractual cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.

The fair values of the fair value swaps used for interest rate risk management represents the amount the Company would have expected to receive or pay to terminate such agreements.

27

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

18. Disclosures about Fair Value Measurements  – (continued)

Commitments to extend credit and standby letters of credit are financial instruments generally not subject to sale, and fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, 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, is not considered material for disclosure. The contractual amounts of unfunded commitments are presented in Note 16.

Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values. The Company’s remaining assets and liabilities which are not considered financial instruments have not been valued differently than has been customary under historical cost accounting.

28

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“M.D. & A.”)

.....2017 FIRST QUARTER SUMMARY OVERVIEW.....AmeriServ Financial, Inc. reported first quarter 2017 net income available to common shareholders of $1,348,000, or $0.07 per diluted common share. This represents a significant improvement of $2.6 million from the first quarter of 2016 net loss available to common shareholders of $1,282,000, or ($0.07) per diluted common share.

This performance represented an increase of $198,000 over the fourth quarter of 2016 and $284,000 over the third quarter of 2016. It is not unusual for first quarter earnings in the northern regions to be challenged by difficult weather which hampers economic activity. However, the Board and Management believe this first quarter result positions the Company well for spring and summer. There already have been a few noticeable positive trends.

Loans outstanding on March 31, 2017 closed the first quarter at $899 million. This represented a new record for AmeriServ and very nearly pushed above $900 million for the first time since the AmeriServ brand was established in 2000. Concurrently, deposits closed the quarter at $965 million for the second highest quarter end total ever. This means that once again AmeriServ is lending over 90% of its deposit base to small-medium sized businesses and to retail consumers. AmeriServ has led its peer banks throughout the region in this measure of active lending performance for the last four years.

It’s important to mention the quality of AmeriServ’s earning assets. We have already noted that the loan portfolio closed the quarter at a record level. Additionaly, the total of non-performing assets at the close of the quarter was lower than any quarter end, at any time in the history of AmeriServ, dating back to the year 2000. We believe this is a tribute to the professional skill and judgement of AmeriServ’s loan officers and credit analysis experts.

Secondly, since the loan portfolio is larger at AmeriServ than at most community banks, the investment portfolio is somewhat smaller. The goal is quality with a reasonable return. This goal is being achieved with an investment portfolio composed of almost two-thirds of mortgage-backed securities to insure a positive cash flow. These are blended with selected municipal securities and high quality corporate debt issues. In total, this is a diversified high quality portfolio. These two portfolios are the major building blocks of our corporate balance sheet, and we are pleased, both, with the quality and the return of each, especially in times when financial markets are so volatile.

Another positive note to mention is that AmeriServ Trust and Financial Services Company is fully active again. During the first quarter of 2017, the Trust Company recorded a record high in total revenue. This wholly-owned subsidiary offers a broad array of trust and wealth management products and services. It has an enviable record of success in increasing its retirement services clients and accounts. Success in the marketplace has enabled the Trust Company to provide fee-based revenue to the Corporation well above the level enjoyed by most financial institutions of AmeriServ’s size throughout the United States.

This is a story of marketplace success which has been the AmeriServ goal since the Great Recession ended. AmeriServ does have its own specific challenges. Primarily among those challenges are expense levels. Progress regarding this was realized during the first quarter. The level of expenses reported on April 18, 2017 are the lowest in more than five years. A big job lies ahead of us, but the increased use of technology, with an increasingly professional workforce is beginning to make a difference. It will always be of the utmost importance to have satisfied customers. New tools are being provided to us that will allow us to reduce expenses while maintaining high quality customer service.

The first quarter also saw the beginning of another AmeriServ common stock repurchase program. Operating within the usual constraints of common stock repurchase programs, the reduction in outstanding shares was 251,800 during the quarter. When this program is completed, AmeriServ will have utilized four separate buyback programs to reduce the number of shares outstanding by over four million since 2008. Consequently, this reduction has increased the ownership stake for every remaining share.

Overall, we are pleased that the first quarter of 2017 has set a positive tone for the rest of the year.

29

THREE MONTHS ENDED MARCH 31, 2017 VS. THREE MONTHS ENDED MARCH 31, 2016

.....PERFORMANCE OVERVIEW.....The following table summarizes some of the Company’s key performance indicators (in thousands, except per share and ratios).

	Three months ended March 31, 2017			Three months ended March 31, 2016
Net income (loss)	$	1,348		$	(1,267	)
Net income (loss) available to common shareholders		1,348			(1,282	)
Diluted earnings per share		0.07			(0.07	)
Return on average assets (annualized)		0.47	%		(0.45	)%
Return on average equity (annualized)		5.74	%		(4.86	)%

The Company reported net income available to common shareholders of $1,348,000, or $0.07 per diluted common share in the first quarter of 2017. This earnings performance represents a significant improvement from the first quarter of 2016 where the net loss available to common shareholders totaled $1,282,000, or $(0.07) per diluted common share. The improved earnings in the first quarter of 2017 resulted from growth in total revenue, a reduction in non-interest expense and a controlled loan loss provision due to outstanding asset quality. The balance sheet is well positioned for higher interest rates as demonstrated in the form of increased net interest income in the first quarter of 2017. Additionally, the Company benefitted from several profitability improvement initiatives that were executed in 2016 as each of the reported non-interest expense categories favorably declined in the first quarter of 2017.

.....NET INTEREST INCOME AND MARGIN.....The Company’s net interest income represents the amount by which interest income on average earning assets exceeds interest paid on average interest bearing liabilities. Net interest income is a primary source of the Company’s earnings, and it is affected by interest rate fluctuations as well as changes in the amount and mix of average earning assets and average interest bearing liabilities. The following table compares the Company’s net interest income performance for the first quarter of 2017 to the first quarter of 2016 (in thousands, except percentages):

	Three months ended March 31, 2017			Three months ended March 31, 2016			$ Change			% Change
Interest income	$	10,748		$	10,422		$	326			3.1	%
Interest expense		2,027			1,864			163			8.7
Net interest income	$	8,721		$	8,558		$	163			1.9
Net interest margin		3.27	%		3.30	%		(0.03	)		N/M

N/M — not meaningful

The Company’s net interest income in the first quarter of 2017 increased by $163,000, or 1.9%, when compared to the first quarter of 2016. The Company’s net interest margin of 3.27% for the first quarter of 2017 was three basis points lower than the net interest margin of 3.30% for the first quarter 2016 but improved by nine basis points from the 3.18% margin reported for the more recent fourth quarter 2016 performance. The improvement in net interest income is a result of a higher volume of total earning assets which more than offset the lower net interest margin. The Company continues to grow earning assets while also controlling its cost of funds through disciplined deposit pricing. Specifically, the earning asset growth occurred in, both, the investment securities portfolio and the loan portfolio. Total investment securities averaged $168 million in the first quarter of 2017 which is $26.1 million or 18.4% higher than the $142 million average for the first quarter of 2016 while total loans averaged $890 million in the first quarter of 2017 which is $8.8 million, or 1.0%, higher than the $881 million average for the first quarter of 2016. The growth in the investment securities portfolio is the result of management electing to diversify the mix of the investment securities portfolio through purchases of high quality corporate and taxable municipal securities. This revised strategy for securities purchases was facilitated by the increase in national interest rates and the steepening yield curve that resulted in improved opportunities to purchase additional securities and grow the portfolio. As a result, interest on investments increased between years by $235,000 or 24.6%. The growth in the loan portfolio reflects the successful results of the Company’s business development efforts, with an

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emphasis on generating commercial loans and owner occupied commercial real estate loans particularly through its loan production offices. The year over year loan growth was lower in comparison to what the Company has recently experienced due to a slowdown in production during the second half of 2016 that was caused by uncertainty in the economy because of the Presidential election. Loan production has since returned to more normal and higher levels. Loan interest income increased by $91,000, or 1.0% even though prepayment fee income on early loan payoffs were approximately $110,000 lower in the first quarter of 2017 when compared to the first quarter of 2016. Overall, total interest income increased by $326,000, or 3.1%, between years.

Total interest expense for the first quarter of 2017 increased by $163,000, or 8.7%, due to a higher level of deposit interest expense. The Company experienced growth in deposits which we believe reflects the loyalty of our core deposit base that provides a strong foundation upon which this growth builds. Management’s ability to acquire new core deposit funding from outside of our traditional market areas as well as our ongoing efforts to offer new loan customers deposit products were the primary reasons for this growth. Specifically, total deposits averaged $976 million for the first quarter of 2017 which is $66.0 million, or 7.3%, higher than the $910 million average for the first quarter of 2016. The Company is also pleased that a meaningful portion of this deposit growth occurred in non-interest bearing demand deposit accounts. Deposit interest expense in 2017 increased by $182,000, or 14.5%, due to the higher balance of deposits along with certain money market accounts repricing upward after the Federal Reserve elected to increase the overnight fed funds interest rate in December of 2016 and again in March of 2017. As a result of the strong deposit growth, the Company’s loan to deposit ratio averaged 91.2% in the first quarter of 2017 which indicates that the Company has ample room to further grow its loan portfolio in 2017. The Company experienced a $19,000 decrease in the interest cost for borrowings in the first quarter of 2017 because there was a lower level of total borrowed funds due to the deposit growth. Total average borrowings decreased by $24.2 million or 24.4% and more than offset the immediate impact that the increases in the Federal Funds Rate had on the cost of borrowed funds.

The table that follows provides an analysis of net interest income on a tax-equivalent basis for the three month periods ended March 31, 2017 and March 31, 2016 setting forth (i) average assets, liabilities, and stockholders’ equity, (ii) interest income earned on interest earning assets and interest expense paid on interest bearing liabilities, (iii) average yields earned on interest earning assets and average rates paid on interest bearing liabilities, (iv) the Company’s interest rate spread (the difference between the average yield earned on interest earning assets and the average rate paid on interest bearing liabilities), and (v) the Company’s net interest margin (net interest income as a percentage of average total interest earning assets). For purposes of these tables, loan balances do include non-accrual loans, and interest income on loans includes loan fees or amortization of such fees which have been deferred, as well as interest recorded on certain non-accrual loans as cash is received. Additionally, a tax rate of 34% is used to compute tax-equivalent yields.

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Three months ended March 31 (In thousands, except percentages)

	2017									2016
	Average Balance			Interest Income/ Expense			Yield/Rate			Average Balance			Interest Income/ Expense			Yield/Rate
Interest earning assets:
Loans and loans held for sale, net of unearned income	$	889,908		$	9,566			4.31	%	$	881,063		$	9,473			4.27	%
Interest bearing deposits		1,030			2			0.79			3,484			7			0.78
Short-term investment in money market funds		7,940			24			1.19			7,955			10			0.51
Investment securities – AFS		134,140			901			2.69			120,213			767			2.56
Investment securities – HTM		34,121			265			3.11			21,948			173			3.15
Total investment securities		168,261			1,166			2.77			142,161			940			2.65
Total interest earning assets/interest income		1,067,139			10,758			4.04			1,034,663			10,430			4.03
Non-interest earning assets:
Cash and due from banks		22,330									18,739
Premises and equipment		11,804									12,090
Other assets		67,794									67,751
Allowance for loan losses		(10,053	)								(9,886	)
TOTAL ASSETS	$	1,159,014								$	1,123,357
Interest bearing liabilities:
Interest bearing deposits:
Interest bearing demand	$	127,531		$	122			0.39	%	$	101,293		$	69			0.27	%
Savings		97,254			40			0.16			95,303			39			0.16
Money markets		278,811			334			0.48			264,433			278			0.42
Time deposits		288,830			940			1.29			267,805			868			1.29
Total interest bearing deposits		792,426			1,436			0.73			728,834			1,254			0.69
Short-term borrowings		8,863			19			0.87			29,449			42			0.57
Advances from Federal Home Loan Bank		45,535			162			1.44			49,135			159			1.30
Guaranteed junior subordinated deferrable interest debentures		13,085			280			8.57			13,085			280			8.57
Subordinated debt		7,650			130			6.80			7,650			129			6.73
Total interest bearing liabilities/interest expense		867,559			2,027			0.94			828,153			1,864			0.90
Non-interest bearing liabilities:
Demand deposits		183,532									181,096
Other liabilities		12,613									9,370
Shareholders’ equity		95,310									104,738
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,159,014								$	1,123,357
Interest rate spread								3.10									3.13
Net interest income/Net interest margin					8,731			3.27	%					8,566			3.30	%
Tax-equivalent adjustment					(10	)								(8	)
Net Interest Income				$	8,721								$	8,558

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.....PROVISION FOR LOAN LOSSES.....The Company recorded a $225,000 provision for loan losses in the first quarter of 2017 compared to a $3.1 million provision for loan losses in the first quarter of 2016, or a decrease of $2.875 million between periods. Both, the loan loss provision and net charge-offs were at more typical levels this year than the substantially higher levels that were necessary last year to resolve a troubled loan exposure to the energy industry. The provision recorded in the first quarter of 2017 supported the continuing loan growth and more than covered the low level of net loan charge-offs incurred in the first quarter of 2017. The Company experienced net loan charge-offs of $77,000, or 0.04% of total loans, in the first quarter of 2017 compared to net loan charge-offs of $3.5 million, or 1.60% of total loans, in the first quarter of 2016. Overall, the Company continued to maintain excellent asset quality as its non-performing assets totaled $1.5 million, or only 0.17% of total loans, at March 31, 2017. In summary, the allowance for loan losses provided a strong 677% coverage of non-performing loans, and 1.12% of total loans, at March 31, 2017, compared to 612% coverage of non-performing loans, and 1.12% of total loans, at December 31, 2016.

.....NON-INTEREST INCOME.....Non-interest income for the first quarter of 2017 totaled $3.6 million and increased $125,000, or 3.6%, from the first quarter 2016 performance. Factors contributing to this higher level of non-interest income for the quarter included:

* a $112,000 increase in other income primarily due to an increase in income from our Financial Services business unit as wealth management continues to be an important strategic focus of the Company;

* a $91,000 increase in trust and investment advisory fees due to a higher level of fee income that resulted from the effective management of client accounts as asset market values improved;

* a $41,000 decrease in services charges on deposit accounts due to a reduced level of overdraft fee income; and

* a $30,000 decrease in gains realized on the sale of investment securities in the first quarter of 2017 as the Company sold certain lower coupon mortgage backed securities to reinvest in the portfolio.

.....NON-INTEREST EXPENSE.....Non-interest expense for the first quarter of 2017 totaled $10.1 million and decreased by $626,000, or 5.8%, from the prior year’s first quarter. Factors contributing to the lower non-interest expense in the quarter included:

* a $265,000 or 18.1% decrease in professional fees that was almost entirely attributable to non-recurring costs for legal and accounting services that were necessary to resolve the previously disclosed trust operations trading error. Costs related to this trust issue were also the primary reason that other expenses decreased by $108,000 or 8.7%;

* a $156,000, or 2.5%, decrease in salaries and employee benefits as there were 10 fewer full time equivalent employees in the first quarter of 2017 due to the previously disclosed branch consolidation in the State College market and closure of an unprofitable loan production office; and

* an $80,000 decrease in occupancy and equipment expenses which is reflective of the Company’s ongoing efforts to become more efficient by reducing and controling non-interest expenses.

.....INCOME TAX EXPENSE.....The Company recorded an income tax expense of $625,000, or an effective tax rate of 31.7%, in the first three months of 2017. This compares to the income tax benefit of $549,000, or an effective tax rate of (30.2%), for the first three months of 2016.

.....SEGMENT RESULTS.....Retail banking’s net income contribution was $617,000 in the first quarter of 2017 which was up by $34,000 from the net income contribution for the same 2016 period. These increases in earnings in 2017 were due to this segment’s net interest income benefitting from the significantly higher average deposit balances and reduced non-interest expenses particularly occupancy and equipment related costs. These favorable items more than offset a lower level of BOLI income. Note that revenue from mortgage loan sales and mortgage related fee income increased during the quarter, favorably impacting the net income contribution for this time period.

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The commercial banking segment reported net income of $1.5 million in the first quarter of 2017 which was $2.3 million higher when compared to the first quarter of 2016 result. The higher level of income for 2017 was due to the lower level of provision for loan losses which was partially offset by a lower receipt of prepayment fee income from early loan payoffs. The higher loan loss provision that was required to resolve the troubled energy sector loan had a significant negative impact to reported net income last year. Strong growth in commercial and commercial real estate loans over the past year also contributed to the higher level of net income.

The trust segment reported net income of $367,000 in the first quarter of 2017 which was $222,000 higher than the 2016 result for the same quarter period. The increase to income occurred as expenses returned to a more normal level after additional costs were necessary in 2016 to address the trust operations trading error. Also, the higher level of net income results from continued effective management of existing customer accounts as asset market values have improved. Finally, income from the Financial Services business unit increased as wealth management continues to be an important strategic focus of the Company.

The investment/parent segment reported net loss of $1.1 million in the first quarter of 2017, which resulted in a lower loss by $52,000 from the 2016 result for the same period. The decreased loss between years is reflective of the higher level of investment securities on the Company’s balance sheet. Even with this improvement, this segment continues to feel the most earnings pressure from the continued low interest rate environment.

.....BALANCE SHEET.....The Company’s total consolidated assets were $1.172 billion at March 31, 2017, which increased by $18.3 million, or 1.6%, from the December 31, 2016 asset level. The increase was driven by the growth in loans and investment securities. Specifically, total loans grew by $12.6 million, or 1.4%, during the period and was complemented by an additional $8.0 million, or 5.1%, growth in investment securities.

Total deposits decreased modestly by $3.0 million, or 0.3% in the first three months of 2017. Total FHLB borrowings have increased by $21.4 million since year-end 2016. The FHLB term advances grew by $500,000 and now total $46 million as the Company has utilized these advances to help manage interest rate risk and favorably position our balance sheet for a rising rate environment. The Company’s total shareholders’ equity increased by $209,000 over the first three months of 2017 due to the retention of earnings more than offsetting our common dividend payment to shareholders and the impact of our common stock buyback program. In accordance with the common stock buyback program announced on January 24, 2017, the Company returned $992,000 of capital to its shareholders through the repurchase of 251,800 shares of its common stock in the first quarter of 2017. The Company continues to be considered well capitalized for regulatory purposes with a total capital ratio of 13.03%, and a common equity tier 1 capital ratio of 9.89% at March 31, 2017. (See the discussion of the new Basel III capital requirements under the “Capital Resources” section.) The Company’s book value per common share was $5.12, its tangible book value per common share was $4.48, and its tangible common equity to tangible assets ratio was 7.21% at March 31, 2017.

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.....LOAN QUALITY.....The following table sets forth information concerning the Company’s loan delinquency, non-performing assets, and classified assets (in thousands, except percentages):

	March 31, 2017			December 31, 2016			March 31, 2016
Total accruing loan delinquency (past due 30 to 89 days)	$	7,715		$	3,278		$	8,315
Total non-accrual loans		1,463			1,603			2,191
Total non-performing assets including TDR*		1,488			1,624			3,007
Accruing loan delinquency, as a percentage of total loans, net of unearned income		0.86	%		0.37	%		0.94	%
Non-accrual loans, as a percentage of total loans, net of unearned income		0.16			0.18			0.25
Non-performing assets, as a percentage of total loans, net of unearned income, and other real estate owned		0.17			0.18			0.34
Non-performing assets as a percentage of total assets		0.13			0.14			0.27
As a percent of average loans, net of unearned income:
Annualized net charge-offs		0.04			0.44			1.60
Annualized provision for loan losses		0.10			0.44			1.42
Total classified loans (loans rated substandard or doubtful)	$	3,878		$	6,039		$	4,671

* Non-performing assets are comprised of (i) loans that are on a non-accrual basis, (ii) loans that are contractually past due 90 days or more as to interest and principal payments, (iii) performing loans classified as a troubled debt restructuring and (iv) other real estate owned.

The Company continued to maintain strong asset quality in the first quarter of 2017 as evidenced by low levels of non-accrual loans, non-performing assets, classified loans, and loan delinquency levels that continue to be below 1% of total loans. We continue to closely monitor the loan portfolio given the slow recovery in the economy and the number of relatively large-sized commercial and commercial real estate loans within the portfolio. As of March 31, 2017, the 25 largest credits represented 27.3% of total loans outstanding, which represents an increase from the first quarter 2016 when it was 25.5%.

.....ALLOWANCE FOR LOAN LOSSES.....The following table sets forth the allowance for loan losses and certain ratios for the periods ended (in thousands, except percentages):

	March 31, 2017			December 31, 2016			March 31, 2016
Allowance for loan losses	$	10,080		$	9,932		$	9,520
Allowance for loan losses as a percentage of each of the following
total loans, net of unearned income		1.12	%		1.12	%		1.08	%
total accruing delinquent loans (past due 30 to 89 days)		130.65			302.99			114.49
total non-accrual loans		689.00			619.59			434.50
total non-performing assets		677.42			611.58			316.59

The Company recorded a $225,000 provision for loan losses in the first quarter of 2017 compared to a $3.1 million provision for loan losses in the first quarter of 2016 or a decrease of $2.9 million between periods. The loan loss provision was at a more typical level in 2017 and supports the continuing loan growth and more than covered the low level of net loan charge-offs incurred during the quarter.

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.....LIQUIDITY.....The Company’s liquidity position has been strong during the last several years. Our core retail deposit base has grown over the past five years and has been more than adequate to fund the Company’s operations. Payments and prepayments from the loan portfolios, as well as, cash flow from maturities, prepayments and amortization of securities was also used to help fund loan growth over the past few years. We strive to operate our loan to deposit ratio in a range of 80% to 100%. For the first three months of 2017, the Company’s loan to deposit ratio has averaged 91.2%. We are optimistic that we can increase the loan to deposit ratio in the future given current commercial loan pipelines, continued growth from our loan production offices and our focus on small business lending.

Liquidity can be analyzed by utilizing the Consolidated Statement of Cash Flows. Cash and cash equivalents decreased by $3.1 million from December 31, 2016 to March 31, 2017, due to $22.8 million of cash used in investing activities offset by $2.6 million of cash provided by operating activities and $17.1 million provided by financing activities. Within investing activities, cash provided from investment security maturities was $6.9 million. Cash advanced for new loan fundings and purchases (excluding residential mortgages sold in the secondary market) totaled $50.6 million and was $13.1 million higher than the $37.5 million of cash received from loan principal payments and participations sold. Within financing activities, deposits decreased by $3.0 million of cash. Total borrowings increased as advances of short-term borrowings and purchases of FHLB term advances increased by $21.4 million. During the first quarter of 2017, the Company’s common stock repurchase program was able to return $992,000 of capital to its shareholders. At March 31, 2017, the Company had immediately available $376 million of overnight borrowing capacity at the FHLB and $39 million of unsecured federal funds lines with correspondent banks.

The holding company had $11.5 million of cash, short-term investments, and investment securities at March 31, 2017. Additionally, dividend payments from our subsidiaries also provide ongoing cash to the holding company. At March 31, 2017, our subsidiary Bank had $1.8 million of cash available for immediate dividends to the holding company under applicable regulatory formulas. Management follows a policy that limits dividend payments from the Trust Company to 75% of annual net income. Overall, we believe that the holding company has strong liquidity to meet its trust preferred debt service requirements, its subordinated debt interest payments, its common stock dividends, and support its common stock repurchase program.

.....CAPITAL RESOURCES.....The Bank meaningfully exceeds all regulatory capital ratios for each of the periods presented and is considered well capitalized. The Company’s common equity tier 1 ratio was 9.89%, the tier 1 capital ratio was 11.13%, and the total capital ratio was 13.03% at March 31, 2017. The Company’s tier 1 leverage was 9.33% at March 31, 2017. We anticipate that we will maintain our strong capital ratios throughout the remainder of 2017. Capital generated from earnings will be utilized to pay the common stock cash dividend, support the stock repurchase program and will also support anticipated balance sheet growth. On January 24, 2017, the Company’s Board of Directors approved a new common stock repurchase program which calls for AmeriServ Financial, Inc. to buy back up to 5% or approximately 945,000 shares of its outstanding common stock during the next 18 months. The shares may be purchased from time to time in open market, privately negotiated, or block transactions. This common stock repurchase program does not obligate the Company to acquire any specific number of shares and may be modified, suspended or discontinued at any time. During the first quarter of 2017, the Company was able to repurchase 251,800 shares of its common stock and return $992,000 of capital to its shareholders. As of March 31, 2017, the Company had approximately 18.7 million shares of its common stock outstanding.

On January 1, 2015, U.S. federal banking agencies implemented the new Basel III capital standards, which establish the minimum capital levels to be considered well-capitalized and revise the prompt corrective action requirements under banking regulations. The revisions from the previous standards include a revised definition of capital, the introduction of a minimum Common Equity Tier 1 capital ratio and changed risk weightings for certain assets. The implementation of the new rules will be phased in over a four year period ending January 1, 2019 with minimum capital requirements becoming increasingly more strict each year of the transition. The new minimum capital requirements for each ratio, both, initially on January 1, 2015 and at the end of the transition on January 1, 2019, are as follows: A common equity tier 1 capital ratio of 4.5% initially and 7.0% at January 1, 2019; a tier 1 capital ratio of 6.0% and 8.50%; a total capital ratio of 8.0% and 10.50%; and a tier 1 leverage ratio of 5.00% and 5.00%. Under the new rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to

36

executive officers), a banking organization must hold a capital conservation buffer above its minimum risk-based capital requirements, which increases over the transition period, from 0.625% of total risk weighted assets in 2016 to 2.5% in 2019. The Company continues to be committed to maintaining strong capital levels that exceed regulatory requirements while also supporting balance sheet growth and providing a return to our shareholders.

.....INTEREST RATE SENSITIVITY.....The following table presents an analysis of the sensitivity inherent in the Company’s net interest income and market value of portfolio equity. The interest rate scenarios in the table compare the Company’s base forecast, which was prepared using a flat interest rate scenario, to scenarios that reflect immediate interest rate changes of 100 and 200 basis points. Note that we suspended the 200 basis point downward rate shock since it has little value due to the absolute low level of interest rates. Each rate scenario contains unique prepayment and repricing assumptions that are applied to the Company’s existing balance sheet that was developed under the flat interest rate scenario.

Interest Rate Scenario	Variability of Net Interest Income			Change in Market Value of Portfolio Equity
200bp increase		3.1	%		19.3	%
100bp increase		2.0			11.4
100bp decrease		(2.7	)		(15.9	)

The Company believes that its overall interest rate risk position is well controlled. The variability of net interest income is positive in the upward rate shocks due to the Company’s short duration investment securities portfolio, the scheduled repricing of loans tied to LIBOR or prime, and the extension of a portion of borrowed funds. Also, the Company expects that it will not have to reprice its core deposit accounts up as quickly when interest rates rise. The variability of net interest income is negative in the 100 basis point downward rate scenario as the Company has more exposure to assets repricing downward to a greater extent than liabilities due to the absolute low level of interest rates with the fed funds rate currently at approximately 1.00%. The market value of portfolio equity increases in the upward rate shocks due to the improved value of the Company’s core deposit base. Negative variability of market value of portfolio equity occurs in the downward rate shock due to a reduced value for core deposits.

.....OFF BALANCE SHEET ARRANGEMENTS.....The Company incurs off-balance sheet risks in the normal course of business in order to meet the financing needs of its customers. These risks derive from commitments to extend credit and standby letters of credit. Such commitments and standby letters of credit involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated financial statements. The Company had various outstanding commitments to extend credit approximating $159.8 million and standby letters of credit of $8.4 million as of March 31, 2017. The Company’s exposure to credit loss in the event of nonperformance by the other party to these commitments to extend credit and standby letters of credit is represented by their contractual amounts. The Company uses the same credit and collateral policies in making commitments and conditional obligations as for all other lending.

.....CRITICAL ACCOUNTING POLICIES AND ESTIMATES.....The accounting and reporting policies of the Company are in accordance with Generally Accepted Accounting Principles and conform to general practices within the banking industry. Accounting and reporting policies for the allowance for loan losses, goodwill, income taxes, and investment securities are deemed critical because they involve the use of estimates and require significant management judgments. Application of assumptions different than those used by the Company could result in material changes in the Company’s financial position or results of operation.

ACCOUNT — Allowance for Loan Losses
BALANCE SHEET REFERENCE — Allowance for loan losses
INCOME STATEMENT REFERENCE — Provision for loan losses
DESCRIPTION

The allowance for loan losses is calculated with the objective of maintaining reserve levels believed by management to be sufficient to absorb estimated probable credit losses. Management’s determination of the adequacy of the allowance is based on periodic evaluations of the credit portfolio and other relevant factors. However, this quarterly evaluation is inherently subjective as it requires material estimates, including, among

37

others, likelihood of customer default, loss given default, exposure at default, the amounts and timing of expected future cash flows on impaired loans, value of collateral, estimated losses on consumer loans and residential mortgages, and general amounts for historical loss experience. This process also considers economic conditions, uncertainties in estimating losses and inherent risks in the various credit portfolios. All of these factors may be susceptible to significant change. Also, the allocation of the allowance for credit losses to specific loan pools is based on historical loss trends and management’s judgment concerning those trends.

Commercial and commercial real estate loans are the largest category of credits and the most sensitive to changes in assumptions and judgments underlying the determination of the allowance for loan loss. Approximately $7.8 million, or 77%, of the total allowance for loan losses at March 31, 2017 has been allocated to these two loan categories. This allocation also considers other relevant factors such as actual versus estimated losses, economic trends, delinquencies, levels of non-performing and TDR loans, concentrations of credit, trends in loan volume, experience and depth of management, examination and audit results, effects of any changes in lending policies and trends in policy, financial information and documentation exceptions. To the extent actual outcomes differ from management estimates, additional provision for loan losses may be required that would adversely impact earnings in future periods.

ACCOUNT — Goodwill
BALANCE SHEET REFERENCE — Goodwill
INCOME STATEMENT REFERENCE — Goodwill impairment
DESCRIPTION

The Company considers our accounting policies related to goodwill to be critical because the assumptions or judgment used in determining the fair value of assets and liabilities acquired in past acquisitions are subjective and complex. As a result, changes in these assumptions or judgment could have a significant impact on our financial condition or results of operations.

The fair value of acquired assets and liabilities, including the resulting goodwill, was based either on quoted market prices or provided by other third party sources, when available. When third party information was not available, estimates were made in good faith by management primarily through the use of internal cash flow modeling techniques. The assumptions that were used in the cash flow modeling were subjective and are susceptible to significant changes. The Company routinely utilizes the services of an independent third party that is regarded within the banking industry as an expert in valuing core deposits to monitor the ongoing value and changes in the Company’s core deposit base. These core deposit valuation updates are based upon specific data provided from statistical analysis of the Company’s own deposit behavior to estimate the duration of these non-maturity deposits combined with market interest rates and other economic factors.

Goodwill arising from business combinations represents the value attributable to unidentifiable intangible elements in the business acquired. The Company’s goodwill relates to value inherent in the banking and wealth management businesses, and the value is dependent upon the Company’s ability to provide quality, cost-effective services in the face of free competition from other market participants on a regional basis. This ability relies upon continuing investments in processing systems, the development of value-added service features and the ease of use of the Company’s services. As such, goodwill value is supported ultimately by revenue that is driven by the volume of business transacted and the loyalty of the Company’s deposit and customer base over a longer time frame. The quality and value of a Company’s assets is also an important factor to consider when performing goodwill impairment testing. A decline in earnings as a result of a lack of growth or the inability to deliver cost-effective value added services over sustained periods can lead to impairment of goodwill.

Goodwill which has an indefinite useful life is tested for impairment at least annually and written down and charged to results of operations only in periods in which the recorded value is more than the estimated fair value.

ACCOUNT — Income Taxes
BALANCE SHEET REFERENCE — Net deferred tax asset
INCOME STATEMENT REFERENCE — Provision for income tax expense
DESCRIPTION

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The provision for income taxes is the sum of income taxes both currently payable and deferred. The changes in deferred tax assets and liabilities are determined based upon the changes in differences between the basis of assets and liabilities for financial reporting purposes and the basis of assets and liabilities as measured by the enacted tax rates that management estimates will be in effect when the differences reverse. This income tax review is completed on a quarterly basis.

In relation to recording the provision for income taxes, management must estimate the future tax rates applicable to the reversal of tax differences, make certain assumptions regarding whether tax differences are permanent or temporary and the related timing of the expected reversal. Also, estimates are made as to whether taxable operating income in future periods will be sufficient to fully recognize any gross deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. Alternatively, we may make estimates about the potential usage of deferred tax assets that decrease our valuation allowances. As of March 31, 2017, we believe that all of the deferred tax assets recorded on our balance sheet will ultimately be recovered and that no valuation allowances were needed.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.

ACCOUNT — Investment Securities
BALANCE SHEET REFERENCE — Investment securities
INCOME STATEMENT REFERENCE — Net realized gains on investment securities
DESCRIPTION

Available-for-sale and held-to-maturity securities are reviewed quarterly for possible other-than-temporary impairment. The review includes an analysis of the facts and circumstances of each individual investment such as the severity of loss, the length of time the fair value has been below cost, the expectation for that security’s performance, the creditworthiness of the issuer and the Company’s intent and ability to hold the security to recovery. A decline in value that is considered to be other-than-temporary is recorded as a loss within non-interest income in the Consolidated Statements of Operations. At March 31, 2017, the unrealized losses in the available-for-sale security portfolio were comprised of securities issued by government agencies or government sponsored agencies and certain high quality corporate and taxable municipal securities. The Company believes the unrealized losses are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the value of securities will decrease; as market yields fall, the fair value of securities will increase. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value.

39

.....FORWARD LOOKING STATEMENT.....

THE STRATEGIC FOCUS:

The challenge for the future is to improve earnings performance to peer levels through a disciplined focus on community banking and improving the profitability of our Trust Company. In accordance with our strategic plan, the Company will maintain its focus as a community bank delivering banking and trust services to the best of our ability and focus on further growing revenues by leveraging our strong capital base and infrastructure. This Company will not succumb to the lure of quick fixes and fancy financial gimmicks. It is our plan to continue to build the Company into a potent banking force in this region and in this industry. Our focus encompasses the following:

• Customer Service — It is the existing and prospective customer that the Company must satisfy. This means good products and fair prices. But it also means quick response time and professional competence. It means speedy problem resolution and a minimizing of bureaucratic frustrations. The Company is training and motivating its staff to meet these standards while providing customers with more banking options that involve leading technologies such as computers, smartphones, and tablets to conduct business.

• Revenue Growth — It is necessary for the Company to focus on growing revenues. This means loan growth, deposit growth and fee growth. It also means close coordination between all customer service areas so that revenue producing products can be presented to existing and prospective customers to meet their banking needs. The Company’s Strategic Plan contains action plans in each of these areas particularly on increasing loans through several loan production offices. There will be a particular focus on small business commercial lending. An examination of the peer bank database provides ample proof that a well-executed community banking business model can generate a reliable and rewarding revenue stream.

• Expense Rationalization — The Company remains focused on trying to reduce and rationalize expenses. This has not been a program of broad based cuts, but has been targeted so the Company stays strong but spends less. It is critical to be certain that future expenditures are directed to areas that are playing a positive role in the drive to improve revenues. The Company’s also recently completed three additional initiatives that will further reduce non-interest expenses and improve the Company’s future profitability. Specifically, at the end of the first quarter of 2016, the Company closed its Southern Atherton branch office in the State College market and consolidated the retail customer accounts from this branch into its nearby and newer branch office located on North Atherton Street. The Company remains committed to the State College market and this change will allow for a more efficient operation that will allow us to better compete in this demographically attractive but highly competitive banking market. The Company also realigned its executive leadership team by eliminating one senior position in its executive office. Finally, the Company closed its Harrisonburg, Virginia loan production office. The combined annual cost savings from these profitability improvement initiatives which we expect will approximate $1.2 million, which the Company began to fully realize in the first quarter of 2017.

This Form 10-Q contains various forward-looking statements and includes assumptions concerning the Company’s beliefs, plans, objectives, goals, expectations, anticipations, estimates, intentions, operations, future results, and prospects, including statements that include the words “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan” or similar expressions. These forward-looking statements are based upon current expectations, are subject to risk and uncertainties and are applicable only as of the dates of such statements. Forward-looking statements involve risks, uncertainties and assumptions. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. You should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Form 10-Q, even if subsequently made available on our website or otherwise, and we undertake no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Form 10-Q. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statement identifying important factors (some of which are beyond the

40

Company’s control) which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions.

Such factors include the following: (i) the effect of changing regional and national economic conditions; (ii) the effects of trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve; (iii) significant changes in interest rates and prepayment speeds; (iv) inflation, stock and bond market, and monetary fluctuations; (v) credit risks of commercial, real estate, consumer, and other lending activities; (vi) changes in federal and state banking and financial services laws and regulations; (vii) the presence in the Company’s market area of competitors with greater financial resources than the Company; (viii) the timely development of competitive new products and services by the Company and the acceptance of those products and services by customers and regulators (when required); (ix) the willingness of customers to substitute competitors’ products and services for those of the Company and vice versa; (x) changes in consumer spending and savings habits; (xi) unanticipated regulatory or judicial proceedings; and (xii) other external developments which could materially impact the Company’s operational and financial performance.

The foregoing list of important factors is not exclusive, and neither such list nor any forward-looking statement takes into account the impact that any future acquisition may have on the Company and on any such forward-looking statement.

Item 3.....QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.....The Company manages market risk, which for the Company is primarily interest rate risk, through its asset liability management process and committee, see further discussion in Interest Rate Sensitivity section of the M.D. & A.

Item 4.....CONTROLS AND PROCEDURES.....(a) Evaluation of Disclosure Controls and Procedures. The Company’s management carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and the operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2017, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer along with the Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of March 31, 2017, are effective.

(b) Changes in Internal Controls. There have been no changes in AmeriServ Financial Inc.’s internal controls over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

41

Part II Other Information

Item 1. Legal Proceedings

There are no material proceedings to which the Company or any of our subsidiaries are a party or by which, to the Company’s’ knowledge, we, or any of our subsidiaries, are threatened. All legal proceedings presently pending or threatened against the Company or our subsidiaries involve routine litigation incidental to our business or that of the subsidiary involved and are not material in respect to the amount in controversy.

Item 1A. Risk Factors

Not Applicable

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

Following are the Company’s monthly common stock purchases during the first quarter of 2017. All shares are repurchased under Board of Directors authorization.

Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plan		Maximum number of shares that may yet be purchased under the plan
January 1 – 31, 2017		—		—		—		945,000
February 1 – 28, 2017		179,500	$	3.97		179,500		765,500
March 1 – 31, 2017		72,300		3.87		72,300		693,200
Total		251,800	$	3.94		251,800

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

None

Item 6. Exhibits

3.1	Amended and Restated Articles of Incorporation as amended through August 11, 2011 (Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-8 (File No. 333-176869) filed on September 16, 2011).
3.2	Bylaws, as amended and restated on December 30, 2014 (Incorporated by reference to Exhibit 3.2 to the Current report on Form 8-K filed on January 2, 2015).
15.1	Report of S.R. Snodgrass, P.C. regarding unaudited interim financial statement information.
15.2	Awareness Letter of S.R. Snodgrass, P.C.
31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
101	The following information from AMERISERV FINANCIAL, INC.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, formatted in XBRL (eTensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive Income (unaudited), (iv) Consolidated Statements of Cash Flows (unaudited), and (iv) Notes to the Unaudited Consolidated Financial Statements.

42

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AmeriServ Financial, Inc. Registrant
Date: May 5, 2017	/s/ Jeffrey A. Stopko Jeffrey A. Stopko President and Chief Executive Officer
Date: May 5, 2017	/s/ Michael D. Lynch Michael D. Lynch Senior Vice President and Chief Financial Officer

43

EX-15.1

Exhibit 15.1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Audit Committee
AmeriServ Financial, Inc.

We have reviewed the accompanying consolidated balance sheet of AmeriServ Financial, Inc. and subsidiaries as of March 31, 2017, the related consolidated statements of income and comprehensive income for the three-month periods ended March 31, 2017 and 2016, the related consolidated statement of changes in stockholders’ equity for the three-month period ended March 31, 2017, and the related consolidated statements of cash flows for the three-month periods ended March 31, 2017 and 2016. These consolidated financial statements are the responsibility of AmeriServ Financial, Inc.’s management.

We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of AmeriServ Financial, Inc. as of December 31, 2016, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the year then ended (not presented herein), and in our report dated March 3, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2016, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

/s/ S.R. Snodgrass, P.C.

Cranberry Township, Pennsylvania
May 5, 2017

EX-15.2

Exhibit 15.2

May 5, 2017

AmeriServ Financial, Inc.
216 Franklin Street
P.O. Box 520
Johnstown, Pennsylvania 15907-0520

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of AmeriServ Financial, Inc. and subsidiaries for the three month periods ended March 31, 2017 and 2016, as indicated in our report dated May 5, 2017; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our reports referred to above, which were included in your Quarterly Reports on Form 10-Q for the quarter ended March 31, 2017, are incorporated by reference in the following Registration Statements:

Registration Statement No. 333-176869 on Form S-8
Registration Statement No. 333-67600 on Form S-8
Registration Statement No. 033-56604 on Form S-3
Registration Statement No. 333-129009 on Form S-3
Registration Statement No. 333-121215 on Form S-3
Registration Statement No. 333-120022 on Form S-3
Registration Statement No. 333-50225 on Form S-3

We also are aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, are not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

Sincerely,
 
/s/ S.R. Snodgrass, P.C.

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT OF
1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey A. Stopko, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AmeriServ Financial, Inc. (ASF);

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 ASF as of, and for, the periods presented in this report;

4. ASF’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for ASF 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 ASF, 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 ASF’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 ASF’s internal control over financial reporting that occurred during ASF’s most recent fiscal quarter (ASF’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, ASF’s internal control over financial reporting; and

5. ASF’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to ASF’s auditors and the audit committee of ASF’s board of directors:

(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 ASF’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 ASF’s internal control over financial reporting.

Date: May 5, 2017	/s/ Jeffrey A. Stopko Jeffrey A. Stopko President & CEO

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT OF
1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael D. Lynch, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AmeriServ Financial, Inc. (ASF);

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 ASF as of, and for, the periods presented in this report;

4. ASF’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for ASF 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 ASF, 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 ASF’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 ASF’s internal control over financial reporting that occurred during ASF’s most recent fiscal quarter (ASF’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, ASF’s internal control over financial reporting; and

5. ASF’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to ASF’s auditors and the audit committee of ASF’s board of directors:

(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 ASF’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 ASF’s internal control over financial reporting.

Date: May 5, 2017	/s/ Michael D. Lynch Michael D. Lynch Senior Vice President & CFO

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 AmeriServ Financial, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey A. Stopko, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ Jeffrey A. Stopko

Jeffrey A. Stopko
President and Chief Executive Officer
May 5, 2017

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 AmeriServ Financial, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Lynch, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ Michael D. Lynch

Michael D. Lynch
Senior Vice President and
Chief Financial Officer
May 5, 2017

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 01, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Entity Registrant Name	AMERISERV FINANCIAL INC /PA/
Entity Central Index Key	0000707605
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	ASRV
Entity Common Stock, Shares Outstanding		18,668,784

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
ASSETS
Cash and due from depository institutions		$ 22,696	$ 25,107
Interest bearing deposits		2,748	3,066
Short-term investments in money market funds		5,572	5,900
Total cash and cash equivalents		31,016	34,073
Investment securities:
Available for sale		129,044	127,077
Held to maturity (fair value $36,594 on March 31, 2017 and $30,420 on December 31, 2016)		36,737	30,665
Loans held for sale		2,613	3,094
Loans		897,296	884,240
Less: Unearned income		453	476
Allowance for loan losses		10,080	9,932
Net loans		886,763	873,832
Premises and equipment, net		11,968	11,694
Accrued interest income receivable		3,200	3,116
Goodwill		11,944	11,944
Bank owned life insurance		38,044	37,903
Net deferred tax asset		9,998	10,655
Federal Home Loan Bank stock		4,284	3,359
Federal Reserve Bank stock		2,125	2,125
Other assets		4,391	4,243
TOTAL ASSETS		1,172,127	1,153,780
LIABILITIES
Non-interest bearing deposits		182,528	188,808
Interest bearing deposits		782,248	778,978
Total deposits		964,776	967,786
Short-term borrowings		33,676	12,754
Advances from Federal Home Loan Bank		46,042	45,542
Guaranteed junior subordinated deferrable interest debentures, net		12,912	12,908
Subordinated debt, net		7,447	7,441
Total borrowed funds		100,077	78,645
Other liabilities		11,670	11,954
TOTAL LIABILITIES		1,076,523	1,058,385
SHAREHOLDERS’ EQUITY
Common stock, par value $0.01 per share; 30,000,000 shares authorized; 26,536,139 shares issued and 18,666,520 outstanding on March 31, 2017; 26,521,291 shares issued and 18,903,472 outstanding on December 31, 2016		265	265
Treasury stock at cost, 7,869,619 shares on March 31, 2017 and 7,617,819 on December 31, 2016		(75,821)	(74,829)
Capital surplus		145,577	145,535
Retained earnings		37,066	36,001
Accumulated other comprehensive loss, net	[1]	(11,483)	(11,577)
TOTAL SHAREHOLDERS’ EQUITY		95,604	95,395
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$ 1,172,127	$ 1,153,780

[1] Amounts in parentheses indicate debits on the Consolidated Balance Sheets.

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Held to maturity securities, fair value	$ 36,594	$ 30,420
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	26,536,139	26,521,291
Common stock, shares outstanding	18,666,520	18,903,472
Treasury stock, shares	7,869,619	7,617,819

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
INTEREST INCOME
Interest and fees on loans	$ 9,556	$ 9,465
Interest bearing deposits	2	7
Short-term investments in money market funds	24	10
Investment securities:
Available for sale	901	767
Held to maturity	265	173
Total Interest Income	10,748	10,422
INTEREST EXPENSE
Deposits	1,436	1,254
Short-term borrowings	19	42
Advances from Federal Home Loan Bank	162	159
Guaranteed junior subordinated deferrable interest debentures	280	280
Subordinated debt	130	129
Total Interest Expense	2,027	1,864
NET INTEREST INCOME	8,721	8,558
Provision for loan losses	225	3,100
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	8,496	5,458
NON-INTEREST INCOME
Trust and investment advisory fees	2,166	2,075
Service charges on deposit accounts	374	415
Net gains on sale of loans	114	107
Mortgage related fees	75	63
Net realized gains on investment securities	27	57
Bank owned life insurance	141	167
Other income	665	553
Total Non-Interest Income	3,562	3,437
NON-INTEREST EXPENSE
Salaries and employee benefits	6,010	6,166
Net occupancy expense	674	737
Equipment expense	419	436
Professional fees	1,200	1,465
Supplies, postage, and freight	194	195
Miscellaneous taxes and insurance	294	291
Federal deposit insurance expense	160	179
Other expense	1,134	1,242
Total Non-Interest Expense	10,085	10,711
PRETAX INCOME (LOSS)	1,973	(1,816)
Provision (benefit) for income tax expense	625	(549)
NET INCOME (LOSS)	1,348	(1,267)
Preferred stock dividends	0	15
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$ 1,348	$ (1,282)
Basic:
Net income (loss)	$ 0.07	$ (0.07)
Average number of shares outstanding	18,814	18,884
Diluted:
Net income (loss)	$ 0.07	$ (0.07)
Average number of shares outstanding	18,922	18,884
Cash dividends declared	$ 0.015	$ 0.010

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
COMPREHENSIVE INCOME (LOSS)
Net income (loss)		$ 1,348	$ (1,267)
Other comprehensive income, before tax:
Pension obligation change for defined benefit plan		77	504
Income tax effect		(27)	(171)
Unrealized holding gains on available for sale securities arising during period		92	1,115
Income tax effect		(30)	(379)
Reclassification adjustment for gains on available for sale securities included in net income	[1]	(27)	(57)
Income tax effect	[1]	9	19
Other comprehensive income	[2]	94	1,031
Comprehensive income (loss)		$ 1,442	$ (236)

[1] Amounts in parentheses indicate credits.

[2] Amounts in parentheses indicate debits on the Consolidated Balance Sheets.

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
OPERATING ACTIVITIES
Net income (loss)	$ 1,348	$ (1,267)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses	225	3,100
Depreciation expense	428	445
Net amortization of investment securities	126	87
Net realized gains on investment securities available for sale	(27)	(57)
Net gains on loans held for sale	(114)	(107)
Amortization of deferred loan fees	(51)	(74)
Origination of mortgage loans held for sale	(7,583)	(7,226)
Sales of mortgage loans held for sale	8,178	7,898
Increase in accrued interest income receivable	(84)	(238)
Decrease in accrued interest payable	(139)	(167)
Earnings on bank owned life insurance	(141)	(167)
Deferred income taxes	623	(976)
Amortization of deferred issuance costs	10	10
Stock based compensation expense	42	55
Other, net	(233)	(912)
Net cash provided by operating activities	2,608	404
INVESTING ACTIVITIES
Purchases of investment securities - available for sale	(14,195)	(6,128)
Purchases of investment securities - held to maturity	(6,476)	(2,107)
Proceeds from sales of investment securities - available for sale	5,653	4,248
Proceeds from maturities of investment securities - available for sale	6,570	6,649
Proceeds from maturities of investment securities - held to maturity	375	253
Purchase of regulatory stock	(4,531)	(4,929)
Proceeds from redemption of regulatory stock	3,606	4,910
Long-term loans originated	(50,495)	(52,432)
Principal collected on long-term loans	37,520	48,974
Loans purchased or participated	(150)	(3,995)
Loans sold or participated	0	5,000
Proceeds from sale of other real estate owned	23	13
Purchases of premises and equipment	(702)	(227)
Net cash (used in) provided by investing activities	(22,802)	229
FINANCING ACTIVITIES
Net (decrease) increase in deposit balances	(3,010)	3,479
Net increase (decrease) in other short-term borrowings	20,922	(8,796)
Principal borrowings on advances from Federal Home Loan Bank	3,500	2,000
Principal repayments on advances from Federal Home Loan Bank	(3,000)	(1,000)
Preferred stock redemption	0	(21,000)
Purchase of treasury stock	(992)	0
Common stock dividends	(283)	(188)
Preferred stock dividends	0	(15)
Net cash provided by (used in) financing activities	17,137	(25,520)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(3,057)	(24,887)
CASH AND CASH EQUIVALENTS AT JANUARY 1	34,073	48,510
CASH AND CASH EQUIVALENTS AT MARCH 31	$ 31,016	$ 23,623

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Principles of Consolidation

3 Months Ended

Mar. 31, 2017

Principles of Consolidation [Abstract]

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

1. Principles of Consolidation

The accompanying consolidated financial statements include the accounts of AmeriServ Financial, Inc. (the Company) and its wholly-owned subsidiaries, AmeriServ Financial Bank (the Bank), AmeriServ Trust and Financial Services Company (the Trust Company), and AmeriServ Life Insurance Company (AmeriServ Life). The Bank is a Pennsylvania state-chartered full service bank with 16 locations in Pennsylvania. The Trust Company offers a complete range of trust and financial services and administers assets valued at $2.0 billion that are not reported on the Company’s consolidated balance sheet at March 31, 2017. AmeriServ Life is a captive insurance company that engages in underwriting as a reinsurer of credit life and disability insurance.

In addition, the Parent Company is an administrative group that provides support in such areas as audit, finance, investments, loan review, general services, and marketing. Significant intercompany accounts and transactions have been eliminated in preparing the consolidated financial statements.

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Basis of Preparation

3 Months Ended

Mar. 31, 2017

Basis of Preparation [Abstract]

Basis of Accounting [Text Block]

2. Basis of Preparation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. In the opinion of management, all adjustments consisting of normal recurring entries considered necessary for a fair presentation have been included. They are not, however, necessarily indicative of the results of consolidated operations for a full-year.

For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2017

Recent Accounting Pronouncements [Abstract]

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

3. Recent Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This Update applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. All entities that are not public business entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the practical measures it may elect at adoption, but does not anticipate the amendment will have a significant impact to the financial statements. Based on the Company’s preliminary analysis of its current portfolio, the Company expects to recognize a right of use asset and a lease liability for its operating leases commitments. The Company also anticipates additional disclosures to be provided at adoption.

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815). The amendments in this Update apply to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a heading instrument under Topic 815. The standards in this Update clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. An entity has an option to apply the amendments in this Update on either a prospective basis or a modified retrospective basis. Early adoption is permitted, including adoption in an interim period. This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the impact that the Update will have on our consolidated financial statements. The overall impact of the amendment will be affected by the portfolio composition and quality at the adoption date as well as economic conditions and forecasts at that time.

In January 2017, the FASB issued ASU No. 2017-03 “Accounting Changes and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings.” ASU 2017-03 provides amendments that add paragraph 250-10-S99-6 which includes the text of “SEC Staff Announcement: Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of a Registrant When Such Standards Are Adopted in a Future Period (in accordance with Staff Accounting Bulletin (SAB) Topic 11.M). This announcement applies to ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases (Topic 842); and ASU 2016-03, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments. The Company has enhanced its disclosures regarding the impact that recently issued accounting standards adopted in a future period will have on its accounting and disclosures in this footnote.

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2017

Earnings Per Common Share [Abstract]

Earnings Per Share [Text Block]

4. Earnings Per Common Share

Basic earnings per share include only the weighted average common shares outstanding. Diluted earnings per share include the weighted average common shares outstanding and any potentially dilutive common stock equivalent shares in the calculation. Treasury shares are excluded for earnings per share purposes. The Company had no options to purchase common shares excluded from the computation of diluted earnings per common share, since all option exercise prices were below the average closing price for the first quarter of 2017. Due to the net loss as of March 31, 2016, all options to purchase common shares were not included in

the computation of diluted earnings per common share because to do so would be antidilutive. Dividends on preferred shares are deducted from net income in the calculation of earnings per common share.

	Three months ended March 31,
	2017		2016
	(In thousands, except per share data)
Numerator:
Net income	$	1,348	$	(1,267	)
Preferred stock dividends		—		(15	)
Net income available to common shareholders	$	1,348	$	(1,282	)
Denominator:
Weighted average common shares outstanding (basic)		18,814		18,884
Effect of stock options		108		—
Weighted average common shares outstanding (diluted)		18,922		18,884
Earnings per common share:
Basic	$	0.07	$	(0.07	)
Diluted		0.07		(0.07	)

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Consolidated Statement of Cash Flows

3 Months Ended

Mar. 31, 2017

Supplemental Cash Flow Elements [Abstract]

Cash Flow, Supplemental Disclosures [Text Block]

5. Consolidated Statement of Cash Flows

On a consolidated basis, cash and cash equivalents include cash and due from depository institutions, interest-bearing deposits and short-term investments in money market funds. The Company made $3,000 in income tax payments in the first three months of 2017 and $438,500 in the same 2016 period. The Company made total interest payments of $2,166,000 in the first three months of 2017 compared to $2,031,000 in the same 2016 period. The Company had $20,000 non-cash transfers to other real estate owned (OREO) in the first three months of 2017 compared to $38,000 non-cash transfers in the same 2016 period.

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Investment Securities

3 Months Ended

Mar. 31, 2017

Investment Securities [Abstract]

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

6. Investment Securities

The cost basis and fair values of investment securities are summarized as follows (in thousands):

Investment securities available for sale (AFS):

	March 31, 2017
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	1,397	$	—	$	(6	)	$	1,391
US Agency mortgage-backed securities		88,508		1,023		(641	)		88,890
Taxable municipal		5,450		13		(176	)		5,287
Corporate bonds		33,881		196		(601	)		33,476
Total	$	129,236	$	1,232	$	(1,424	)	$	129,044

Investment securities held to maturity (HTM):

	March 31, 2017
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	10,784	$	186	$	(67	)	$	10,903
Taxable municipal		19,907		144		(341	)		19,710
Corporate bonds and other securities		6,046		17		(82	)		5,981
Total	$	36,737	$	347	$	(490	)	$	36,594

Investment securities available for sale (AFS):

	December 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	400	$	—	$	(2	)	$	398
US Agency mortgage-backed securities		88,738		1,132		(686	)		89,184
Taxable municipal		3,793		3		(174	)		3,622
Corporate bonds		34,403		194		(724	)		33,873
Total	$	127,334	$	1,329	$	(1,586	)	$	127,077

Investment securities held to maturity (HTM):

	December 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	11,177	$	180	$	(79	)	$	11,278
Taxable municipal		13,441		70		(348	)		13,163
Corporate bonds and other securities		6,047		15		(83	)		5,979
Total	$	30,665	$	265	$	(510	)	$	30,420

Maintaining investment quality is a primary objective of the Company’s investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s Investor’s Service or Standard & Poor’s rating of “A.” At March 31, 2017, 61.3% of the portfolio was rated “AAA” as compared to 79.1% at December 31, 2016. Approximately 10.7% of the portfolio was either rated below “A” or unrated at March 31, 2017 as compared to 5.7% at December 31, 2016.

The Company sold $5.7 million AFS securities in the first quarter of 2017 resulting in $27,000 of gross investment security gains and sold $4.2 million AFS securities in the first three months of 2016 resulting in $63,000 of gross investment security gains and $6,000 of gross investment security losses.

The book value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits, and certain Federal Home Loan Bank borrowings was $111,529,000 at March 31, 2017 and $104,953,000 at December 31, 2016.

The following tables present information concerning investments with unrealized losses as of March 31, 2017 and December 31, 2016 (in thousands):

Total investment securities:

	March 31, 2017
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency	$	1,391	$	(6	)	$	—	$	—		$	1,391	$	(6	)
US Agency mortgage-backed securities		52,169		(645	)		1,478		(63	)		53,647		(708	)
Taxable municipal		14,830		(517	)		—		—			14,830		(517	)
Corporate bonds and other securities		17,979		(450	)		7,766		(233	)		25,745		(683	)
Total	$	86,369	$	(1,618	)	$	9,244	$	(296	)	$	95,613	$	(1,914	)

Total investment securities:

	December 31, 2016
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency	$	398	$	(2	)	$	—	$	—		$	398	$	(2	)
US Agency mortgage-backed securities		49,918		(703	)		1,576		(62	)		51,494		(765	)
Taxable municipal		13,301		(522	)		—		—			13,301		(522	)
Corporate bonds and other securities		20,380		(570	)		6,762		(237	)		27,142		(807	)
Total	$	83,997	$	(1,797	)	$	8,338	$	(299	)	$	92,335	$	(2,096	)

The unrealized losses are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the value of securities will decrease; as market yields fall, the fair value of securities will increase. There are 111 positions that are considered temporarily impaired at March 31, 2017. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value.

Contractual maturities of securities at March 31, 2017 are shown below (in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. The duration of the total investment securities portfolio at March 31, 2017 is 45.2 months and is higher than the duration at December 31, 2016 which was 41.2 months. The duration remains within our internal established guideline range of 24 to 60 months which we believe is appropriate to maintain proper levels of liquidity, interest rate risk, market valuation sensitivity and profitability.

Total investment securities:

	March 31, 2017
	Available for sale				Held to maturity
	Cost Basis		Fair Value		Cost Basis		Fair Value
Within 1 year	$	3,000	$	2,993	$	—	$	—
After 1 year but within 5 years		8,881		8,843		3,400		3,349
After 5 years but within 10 years		44,213		44,313		12,105		12,069
After 10 years but within 15 years		32,673		32,399		13,578		13,431
Over 15 years		40,469		40,496		7,654		7,745
Total	$	129,236	$	129,044	$	36,737	$	36,594

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Loans

3 Months Ended

Mar. 31, 2017

Loans [Abstract]

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

7. Loans

The loan portfolio of the Company consists of the following (in thousands):

	March 31, 2017		December 31, 2016
Commercial	$	169,348	$	171,529
Commercial loans secured by real estate		461,017		446,598
Real estate – mortgage		246,907		245,765
Consumer		19,571		19,872
Loans, net of unearned income	$	896,843	$	883,764

Loan balances at March 31, 2017 and December 31, 2016 are net of unearned income of $453,000 and $476,000, respectively. Real estate-construction loans comprised 4.0% and 4.7% of total loans, net of unearned income at March 31, 2017 and December 31, 2016, respectively.

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Allowance for Loan Losses

3 Months Ended

Mar. 31, 2017

Allowance for Loan Losses [Abstract]

Allowance for Credit Losses [Text Block]

8. Allowance for Loan Losses

The following tables summarize the rollforward of the allowance for loan losses by portfolio segment for the three month periods ending March 31, 2017 and 2016 (in thousands).

	Three months ended March 31, 2017
	Balance at December 31, 2016		Charge-Offs			Recoveries		Provision (Credit)			Balance at March 31, 2017
Commercial	$	4,041	$	—		$	7	$	(24	)	$	4,024
Commercial loans secured by real estate		3,584		(14	)		2		175			3,747
Real estate – mortgage		1,169		(94	)		66		26			1,167
Consumer		151		(63	)		19		42			149
Allocation for general risk		987		—			—		6			993
Total	$	9,932	$	(171	)	$	94	$	225		$	10,080

	Three months ended March 31, 2016
	Balance at December 31, 2015		Charge-Offs			Recoveries		Provision (Credit)			Balance at March 31, 2016
Commercial	$	4,244	$	(3,339	)	$	7	$	2,655		$	3,567
Commercial loans secured by real estate		3,449		—			28		229			3,706
Real estate – mortgage		1,173		(38	)		42		(20	)		1,157
Consumer		151		(205	)		4		195			145
Allocation for general risk		904		—			—		41			945
Total	$	9,921	$	(3,582	)	$	81	$	3,100		$	9,520

The provision expense, charge-offs and recoveries were at more typical levels in the first quarter of 2017. The substantially higher than typical provision and net loan charge-offs in the first three months 2016 for the commercial portfolio was necessary to resolve the Company’s only meaningful direct loan exposure to the energy industry. These loans were related to a single borrower in the fracking industry who had filed for bankruptcy protection in the fourth quarter of 2015. With the bankruptcy changing from Chapter 11 (reorganization) to Chapter 7 (liquidation) late in the first quarter of 2016, the Company concluded that its previously established reserves on these non-accrual loans were not sufficient to cover the discounted collateral values that resulted from the liquidation process.

The following tables summarize the loan portfolio and allowance for loan loss by the primary segments of the loan portfolio (in thousands).

	At March 31, 2017
	Commercial		Commercial Loans Secured by Real Estate		Real Estate- Mortgage		Consumer		Allocation for General Risk		Total
Loans:
Individually evaluated for impairment	$	484	$	173	$	—	$	—			$	657
Collectively evaluated for impairment		168,864		460,844		246,907		19,571				896,186
Total loans	$	169,348	$	461,017	$	246,907	$	19,571			$	896,843
Allowance for loan losses:
Specific reserve allocation	$	484	$	23	$	—	$	—	$	—	$	507
General reserve allocation		3,540		3,724		1,167		149		993		9,573
Total allowance for loan losses	$	4,024	$	3,747	$	1,167	$	149	$	993	$	10,080

	At December 31, 2016
	Commercial		Commercial Loans Secured by Real Estate		Real Estate- Mortgage		Consumer		Allocation for General Risk		Total
Loans:
Individually evaluated for impairment	$	496	$	178	$	—	$	—			$	674
Collectively evaluated for impairment		171,033		446,420		245,765		19,872				883,090
Total loans	$	171,529	$	446,598	$	245,765	$	19,872			$	883,764
Allowance for loan losses:
Specific reserve allocation	$	496	$	31	$	—	$	—	$	—	$	527
General reserve allocation		3,545		3,553		1,169		151		987		9,405
Total allowance for loan losses	$	4,041	$	3,584	$	1,169	$	151	$	987	$	9,932

The segments of the Company’s loan portfolio are disaggregated to a level that allows management to monitor risk and performance. The loan segments used are consistent with the internal reports evaluated by the Company’s management and Board of Directors to monitor risk and performance within various segments of its loan portfolio and therefore, no further disaggregation into classes is necessary. The overall risk profile for the commercial loan segment is impacted by non-owner occupied commercial real estate (CRE) loans, which include loans secured by non-owner occupied nonfarm nonresidential properties, as a meaningful portion of the commercial portfolio is centered in these types of accounts. The residential mortgage loan segment is comprised of first lien amortizing residential mortgage loans and home equity loans secured by residential real estate. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates for possible impairment any individual loan in the commercial or commercial real estate segment with a loan balance in excess of $100,000 that is in nonaccrual status or classified as a Troubled Debt Restructure (TDR). Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The Company does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired, or are classified as a TDR.

Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of three methods: (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs for collateral dependent loans. The method is selected on a loan-by-loan basis, with management primarily utilizing the fair value of collateral method. The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis. The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

The need for an updated appraisal on collateral dependent loans is determined on a case-by-case basis. The useful life of an appraisal or evaluation will vary depending upon the circumstances of the property and the economic conditions in the marketplace. A new appraisal is not required if there is an existing appraisal which, along with other information, is sufficient to determine a reasonable value for the property and to support an appropriate and adequate allowance for loan losses. At a minimum, annual documented reevaluation of the property is completed by the Bank’s internal Loan Review Department to support the value of the property.

When reviewing an appraisal associated with an existing collateral real estate dependent transaction, the Bank’s internal Assigned Risk Department must determine if there have been material changes to the underlying assumptions in the appraisal which affect the original estimate of value. Some of the factors that could cause material changes to reported values include:

• the passage of time;

• the volatility of the local market;

• the availability of financing;

• natural disasters;

• the inventory of competing properties;

• new improvements to, or lack of maintenance of, the subject property or competing properties upon physical inspection by the Bank;

• changes in underlying economic and market assumptions, such as material changes in current and projected vacancy, absorption rates, capitalization rates, lease terms, rental rates, sales prices, concessions, construction overruns and delays, zoning changes, etc.; and/or

• environmental contamination.

The value of the property is adjusted to appropriately reflect the above listed factors and the value is discounted to reflect the value impact of a forced or distressed sale, any outstanding senior liens, any outstanding unpaid real estate taxes, transfer taxes and closing costs that would occur with sale of the real estate. If the Assigned Risk Department personnel determine that a reasonable value cannot be derived based on available information, a new appraisal is ordered. The determination of the need for a new appraisal, versus completion of a property valuation by the Bank’s Assigned Risk Department personnel rests with the Assigned Risk Department and not the originating account officer.

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands).

	March 31, 2017
	Impaired Loans with Specific Allowance				Impaired Loans with no Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
Commercial	$	484	$	484	$	—	$	484	$	511
Commercial loans secured by real estate		157		23		16		173		207
Total impaired loans	$	641	$	507	$	16	$	657	$	718

	December 31, 2016
	Impaired Loans with Specific Allowance				Impaired Loans with no Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
Commercial	$	496	$	496	$	—	$	496	$	517
Commercial loans secured by real estate		162		31		16		178		209
Total impaired loans	$	658	$	527	$	16	$	674	$	726

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated (in thousands).

	Three months ended March 31,
	2017		2016
Average loan balance:
Commercial	$	331	$	1,162
Commercial loans secured by real estate		335		615
Average investment in impaired loans	$	666	$	1,777
Interest income recognized:
Commercial	$	6	$	3
Commercial loans secured by real estate		2		—
Interest income recognized on a cash basis on impaired loans	$	8	$	3

Management uses a nine point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized. The first five “Pass” categories are aggregated, while the Pass-6, Special Mention, Substandard and Doubtful categories are disaggregated to separate pools. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due, or for which any portion of the loan represents a specific allocation of the allowance for loan losses are placed in Substandard or Doubtful.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process, which dictates that, at a minimum, credit reviews are mandatory for all commercial and commercial mortgage loan relationships with aggregate balances in excess of $250,000 within a 12-month period. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, delinquency, or death occurs to raise awareness of a possible credit event. The Company’s commercial relationship managers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. Risk ratings are assigned by the account officer, but require independent review and rating concurrence from the Company’s internal Loan Review Department. The Loan Review Department is an experienced independent function which reports directly to the Board’s Audit Committee. The scope of commercial portfolio coverage by the Loan Review Department is defined and presented to the Audit Committee for approval on an annual basis. The approved scope of coverage for 2017 requires review of a minimum range of 50% to 55% of the commercial loan portfolio.

In addition to loan monitoring by the account officer and Loan Review Department, the Company also requires presentation of all credits rated Pass-6 with aggregate balances greater than $1,000,000, all credits rated Special Mention or Substandard with aggregate balances greater than $250,000, and all credits rated Doubtful with aggregate balances greater than $100,000 on an individual basis to the Company’s Loan Loss Reserve Committee on a quarterly basis. Additionally, the Asset Quality Task Force, which is a group comprised of senior level personnel, meets monthly to monitor the status of problem loans.

The following table presents the classes of the commercial and commercial real estate loan portfolios summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system (in thousands).

	March 31, 2017
	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	166,609	$	1,083	$	1,172	$	484	$	169,348
Commercial loans secured by real estate		447,160		12,441		1,400		16		461,017
Total	$	613,769	$	13,524	$	2,572	$	500	$	630,365

	December 31, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	168,116	$	1,087	$	1,830	$	496	$	171,529
Commercial loans secured by real estate		436,318		7,497		2,767		16		446,598
Total	$	604,434	$	8,584	$	4,597	$	512	$	618,127

It is generally the policy of the Bank that the outstanding balance of any residential mortgage loan that exceeds 90-days past due as to principal and/or interest is transferred to non-accrual status and an evaluation is completed to determine the fair value of the collateral less selling costs, unless the balance is minor. A charge down is recorded for any deficiency balance determined from the collateral evaluation. The remaining non-accrual balance is reported as impaired with no specific allowance. It is the policy of the bank that the outstanding balance of any consumer loan that exceeds 90-days past due as to principal and/or interest is charged off. The following tables present the performing and non-performing outstanding balances of the residential and consumer portfolios (in thousands).

	March 31, 2017
	Performing		Non-Performing
Real estate – mortgage	$	246,101	$	806
Consumer		19,571		—
Total	$	265,672	$	806

	December 31, 2016
	Performing		Non-Performing
Real estate – mortgage	$	244,836	$	929
Consumer		19,872		—
Total	$	264,708	$	929

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans (in thousands).

	March 31, 2017
	Current		30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days Past Due		Total Past Due		Total Loans		90 Days Past Due and Still Accruing
Commercial	$	169,208	$	140	$	—	$	—	$	140	$	169,348	$	—
Commercial loans secured by real estate		456,482		4,535		—		—		4,535		461,017		—
Real estate – mortgage		243,120		2,784		595		408		3,787		246,907		—
Consumer		19,485		64		22		—		86		19,571		—
Total	$	888,295	$	7,523	$	617	$	408	$	8,548	$	896,843	$	—

	December 31, 2016
	Current		30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days Past Due		Total Past Due		Total Loans		90 Days Past Due and Still Accruing
Commercial	$	171,292	$	237	$	—	$	—	$	237	$	171,529	$	—
Commercial loans secured by real estate		446,477		121		—		—		121		446,598		—
Real estate – mortgage		241,802		2,856		610		497		3,963		245,765		—
Consumer		19,795		50		27		—		77		19,872		—
Total	$	879,366	$	3,264	$	637	$	497	$	4,398	$	883,764	$	—

An allowance for loan losses (“ALL”) is maintained to support loan growth and cover charge-offs from the loan portfolio. The ALL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of non-performing loans.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are complemented by consideration of other qualitative factors.

Management tracks the historical net charge-off activity at each risk rating grade level for the entire commercial portfolio and at the aggregate level for the consumer, residential mortgage and small business portfolios. A historical charge-off factor is calculated utilizing a rolling 12 consecutive historical quarters for the commercial portfolios. This historical charge-off factor for the consumer, residential mortgage and small business portfolios are based on a three year historical average of actual loss experience.

The Company uses a comprehensive methodology and procedural discipline to maintain an ALL to absorb inherent losses in the loan portfolio. The Company believes this is a critical accounting policy since it involves significant estimates and judgments. The allowance consists of three elements: 1) an allowance established on specifically identified problem loans, 2) formula driven general reserves established for loan categories based upon historical loss experience and other qualitative factors which include delinquency, non-performing and TDR loans, loan trends, economic trends, concentrations of credit, trends in loan volume, experience and depth of management, examination and audit results, effects of any changes in lending policies, and trends in policy, financial information, and documentation exceptions, and 3) a general risk reserve which provides support for variance from our assessment of the previously listed qualitative factors, provides protection against credit risks resulting from other inherent risk factors contained in the Company’s loan portfolio, and recognizes the model and estimation risk associated with the specific and formula driven allowances. The qualitative factors used in the formula driven general reserves are evaluated quarterly (and revised if necessary) by the Company’s management to establish allocations which accommodate each of the listed risk factors.

“Pass” rated credits are segregated from “Criticized” and “Classified” credits for the application of qualitative factors.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

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Non-performing Assets Including Troubled Debt Restructurings (TDR)

3 Months Ended

Mar. 31, 2017

Nonperforming Assets Including Troubled Debt Restructurings [Abstract]

Non Performing Assets Including Troubled Debt Restructurings TDR [Text Block]

9. Non-performing Assets Including Troubled Debt Restructurings (TDR)

The following table presents information concerning non-performing assets including TDR (in thousands, except percentages):

	March 31, 2017			December 31, 2016
Non-accrual loans
Commercial	$	484		$	496
Commercial loans secured by real estate		173			178
Real estate – mortgage		806			929
Total		1,463			1,603
Other real estate owned
Real estate – mortgage		25			21
Total		25			21
TDR’s not in non-accrual		—			—
Total non-performing assets including TDR	$	1,488		$	1,624
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned		0.17	%		0.18	%

The Company had no loans past due 90 days or more for the periods presented which were accruing interest.

The following table sets forth, for the periods indicated, (1) the gross interest income that would have been recorded if non-accrual loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period, (2) the amount of interest income actually recorded on such loans, and (3) the net reduction in interest income attributable to such loans (in thousands).

	Three months ended March 31,
	2017		2016
Interest income due in accordance with original terms	$	16	$	59
Interest income recorded		—		—
Net reduction in interest income	$	16	$	59

Consistent with accounting and regulatory guidance, the Bank recognizes a TDR when the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that would not normally be considered. Regardless of the form of concession granted, the Bank’s objective in offering a TDR is to increase the probability of repayment of the borrower’s loan.

To be considered a TDR, both of the following criteria must be met:

• the borrower must be experiencing financial difficulties; and

• the Bank, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that would not otherwise be considered.

Factors that indicate a borrower is experiencing financial difficulties include, but are not limited to:

• the borrower is currently in default on their loan(s);

• the borrower has filed for bankruptcy;

• the borrower has insufficient cash flows to service their loan(s); and

• the borrower is unable to obtain refinancing from other sources at a market rate similar to rates available to a non-troubled debtor.

Factors that indicate that a concession has been granted include, but are not limited to:

• the borrower is granted an interest rate reduction to a level below market rates for debt with similar risk; or

• the borrower is granted a material maturity date extension, or extension of the amortization plan to provide payment relief. For purposes of this policy, a material maturity date extension will generally include any maturity date extension, or the aggregate of multiple consecutive maturity date extensions, that exceed 120 days. A restructuring that results in an insignificant delay in payment, i.e. 120 days or less, is not necessarily a TDR. Insignificant payment delays occur when the amount of the restructured payments subject to the delay is insignificant relative to the unpaid principal or collateral value, and will result in an insignificant shortfall in the originally scheduled contractual amount due, and/or the delay in timing of the restructured payment period is insignificant relative to the frequency of payments, the original maturity or the original amortization.

The determination of whether a restructured loan is a TDR requires consideration of all of the facts and circumstances surrounding the modification. No single factor is determinative of whether a restructuring is a TDR. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean that the borrower is experiencing financial difficulty. Accordingly, determination of whether a modification is a TDR involves a large degree of judgment.

The Company had no loans modified as TDRs during the three month period ending March 31, 2017 and 2016.

In all instances where loans have been modified in troubled debt restructurings the pre- and post-modified balances are the same. The specific ALL reserve for loans modified as TDR’s was $507,000 and $24,000 as of March 31, 2017 and 2016, respectively. All TDR’s are individually evaluated for impairment and a related allowance is recorded, as needed.

Once a loan is classified as a TDR, this classification will remain until documented improvement in the financial position of the borrower supports confidence that all principal and interest will be paid according to terms. Additionally, the customer must have re-established a track record of timely payments according to the restructured contract terms for a minimum of six consecutive months prior to consideration for removing the loan from non-accrual TDR status. However, a loan will continue to be on non-accrual status until, consistent with our policy, the borrower has made a minimum of an additional six consecutive monthly payments in accordance with the terms of the loan.

The Company had no loans that were classified as TDR’s or were subsequently modified during each 12-month period prior to the current reporting periods, which begin January 1, 2016 and 2015 respectively, and that subsequently defaulted during these reporting periods.

The Company is unaware of any additional loans which are required to either be charged-off or added to the non-performing asset totals disclosed above.

Foreclosed assets acquired in settlement of loans carried at fair value less estimated costs to sell are included in the other assets on the Consolidated Balance Sheet. As of March 31, 2017 and December 31, 2016, a total of $25,000 and $21,000, respectively of residential real estate foreclosed assets were included in other assets. As of March 31, 2017, the Company had initiated formal foreclosure procedures on $321,000 of consumer residential mortgages.

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Federal Home Loan Bank Borrowings

3 Months Ended

Mar. 31, 2017

Federal Home Loan Bank Borrowings [Abstract]

Federal Home Loan Bank Advances, Disclosure [Text Block]

10. Federal Home Loan Bank Borrowings

Total Federal Home Loan Bank (FHLB) borrowings and advances consist of the following (in thousands, except percentages):

	At March 31, 2017
Type	Maturing		Amount		Weighted Average Rate
Open Repo Plus		Overnight	$	33,676		0.95	%
Advances		2017		9,000		1.11
		2018		12,000		1.48
		2019		12,500		1.51
		2020		11,542		1.60
		2021 and over		1,000		1.60
Total advances				46,042		1.41
Total FHLB borrowings			$	79,718		1.22	%

	At December 31, 2016
Type	Maturing		Amount		Weighted Average Rate
Open Repo Plus		Overnight	$	12,754		0.74	%
Advances		2017		12,000		1.06
		2018		12,000		1.48
		2019		12,500		1.51
		2020		8,042		1.59
		2021 and over		1,000		1.60
Total advances				45,542		1.37
Total FHLB borrowings			$	58,296		1.23	%

The rate on Open Repo Plus advances can change daily, while the rates on the advances are fixed until the maturity of the advance. All FHLB stock along with an interest in certain residential mortgage and CRE loans with an aggregate statutory value equal to the amount of the advances are pledged as collateral to the FHLB of Pittsburgh to support these borrowings.

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Preferred Stock

3 Months Ended

Mar. 31, 2017

Preferred Stock [Abstract]

Preferred Stock [Text Block]

11. Preferred Stock

On August 11, 2011, pursuant to the Small Business Lending Fund (SBLF), the Company issued and sold to the US Treasury 21,000 shares of its Senior Non-Cumulative Perpetual Preferred Stock, Series E (Series E Preferred Stock) for the aggregate proceeds of $21 million. The SBLF was a voluntary program sponsored by the US Treasury that encouraged small business lending by providing capital to qualified community banks at favorable rates. The Company used the proceeds from the Series E Preferred Stock issued to the US Treasury to repurchase all 21,000 shares of its outstanding preferred shares previously issued to the US Treasury under the Capital Purchase Program.

On January 27, 2016, the Company redeemed the Series E Preferred Stock, at a redemption price of 100% of the liquidation amount plus accrued but unpaid dividends, after receiving approval from its federal banking regulator and the US Treasury.

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2017

Accumulated Comprehensive Loss [Abstract]

Comprehensive Income (Loss) Note [Text Block]

12. Accumulated Other Comprehensive Loss

The following table presents the changes in each component of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2017 and 2016 (in thousands):

	Three months ended March 31, 2017									Three months ended March 31, 2016
	Net Unrealized Gains and (Losses) on Investment Securities AFS(1)			Defined Benefit Pension Items(1)			Total(1)			Net Unrealized Gains and (Losses) on Investment Securities AFS(1)			Defined Benefit Pension Items(1)			Total(1)
Beginning balance	$	(171	)	$	(11,406	)	$	(11,577	)	$	808		$	(8,363	)	$	(7,555	)
Other comprehensive income (loss) before reclassifications		62			(210	)		(148	)		736			333			1,069
Amounts reclassified from accumulated other comprehensive loss		(18	)		260			242			(38	)		—			(38	)
Net current period other comprehensive income		44			50			94			698			333			1,031
Ending balance	$	(127	)	$	(11,356	)	$	(11,483	)	$	1,506		$	(8,030	)	$	(6,524	)

(1) Amounts in parentheses indicate debits on the Consolidated Balance Sheets.

The following table presents the amounts reclassified out of each component of accumulated other comprehensive loss for the three months ended March 31, 2017 and 2016 (in thousands):

	Amount reclassified from accumulated other comprehensive loss(1)
Details about accumulated other comprehensive loss components	For the three months ended March 31, 2017			For the three months ended March 31, 2016			Affected line item in the consolidated statement of operations
Realized (gains) and losses on sale of securities
	$	(27	)	$	(57	)		Net realized gains on investment securities
		9			19			Provision for income tax expense
	$	(18	)	$	(38	)		Net of tax
Amortization of defined benefit items Recognized net actuarial loss	$	395		$	—			Salaries and employee benefits
		(135	)		—			Provision for income taxes
	$	260		$	—			Net of tax
Total reclassifications for the period	$	242		$	(38	)		Net income

(1) Amounts in parentheses indicate credits.

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Regulatory Capital

3 Months Ended

Mar. 31, 2017

Regulatory Capital [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

13. Regulatory Capital

The Company is subject to various capital requirements administered by the federal banking agencies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Failure to meet minimum capital requirements can initiate certain mandatory

and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. For a more detailed discussion see the Capital Resources section of the MD&A.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, Tier 1 capital to average assets, and common equity Tier I capital (as defined in the regulations) to risk-weighted assets (RWA) (as defined). Additionally under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in regulatory capital. As of March 31, 2017, the Bank was categorized as “Well Capitalized” under the regulatory framework for prompt corrective action promulgated by the Federal Reserve. The Company believes that no conditions or events have occurred that would change this conclusion as of such date. To be categorized as Well Capitalized, the Bank must maintain minimum Total Capital, Common Equity Tier 1 Capital, Tier 1 Capital, and Tier 1 leverage ratios as set forth in the table. Additionally, while not a regulatory capital ratio, the Company’s tangible common equity ratio was 7.21% at March 31, 2017 (in thousands, except ratios).

	AT MARCH 31, 2017
	COMPANY					BANK					MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES			TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS*
	AMOUNT		RATIO			AMOUNT		RATIO			RATIO			RATIO
	(IN THOUSANDS, EXCEPT RATIOS)
Total Capital (To Risk Weighted Assets)	$	125,331		13.03	%	$	108,243		11.32	%		8.00	%		10.00	%
Tier 1 Common Equity (To Risk Weighted Assets)		95,143		9.89			97,346		10.18			4.50			6.50
Tier 1 Capital (To Risk Weighted Assets)		106,987		11.13			97,346		10.18			6.00			8.00
Tier 1 Capital (To Average Assets)		106,987		9.33			97,346		8.63			4.00			5.00

	AT DECEMBER 31, 2016
	COMPANY					BANK					MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES			TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS*
	AMOUNT		RATIO			AMOUNT		RATIO			RATIO			RATIO
	(IN THOUSANDS, EXCEPT RATIOS)
Total Capital (To Risk Weighted Assets)	$	125,131		13.15	%	$	107,618		11.35	%		8.00	%		10.00	%
Tier 1 Common Equity (To Risk Weighted Assets)		95,028		9.99			96,796		10.21			4.50			6.50
Tier 1 Capital (To Risk Weighted Assets)		106,868		11.23			96,796		10.21			6.00			8.00
Tier 1 Capital (To Average Assets)		106,868		9.35			96,796		8.61			4.00			5.00

* Applies to the Bank only.

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DERIVATIVE HEDGING INSTRUMENTS

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

14. DERIVATIVE HEDGING INSTRUMENTS

The Company can use various interest rate contracts, such as interest rate swaps, caps, floors and swaptions to help manage interest rate and market valuation risk exposure, which is incurred in normal recurrent banking activities. The Company can use derivative instruments, primarily interest rate swaps, to manage interest rate risk and match the rates on certain assets by hedging the fair value of certain fixed rate debt, which converts the debt to variable rates and by hedging the cash flow variability associated with certain variable rate debt by converting the debt to fixed rates.

To accommodate a customer need and support the Company’s asset/liability positioning, we entered into an interest rate swap with the customer and Pittsburgh National Bank (PNC) in the first quarter of 2017. This arrangement involves the exchange of interest payments based on the notional amounts. The Company entered into a floating rate loan and a fixed rate swap with our customer. Simultaneously, the Company entered into an offsetting fixed rate swap with PNC. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay PNC the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. This transaction allows the Company’s customer to effectively convert a variable rate loan to a fixed rate. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations. The Company received a $58,000 fee on the transaction.

The following table summarizes the interest rate swap transactions that impacted the Company’s first quarter 2017 performance.

START DATE	MATURITY DATE		HEDGE TYPE		NOTIONAL AMOUNT		RATE RECEIVED			RATE PAID			REPRICING FREQUENCY		INCREASE (DECREASE) IN INTEREST EXPENSE
01/12/17		01/12/27		FAIR VALUE	$	5,000,000		4.50	%		3.10	%		MONTHLY	$	15,367
01/12/17		01/12/27		FAIR VALUE		5,000,000		3.10			4.50			MONTHLY		(15,367	)
															$	—

The Company monitors and controls all derivative products with a comprehensive Board of Director approved hedging policy. This policy permits a total maximum notional amount outstanding of $500 million for interest rate swaps, interest rate caps/floors, and swaptions. All hedge transactions must be approved in advance by the Investment Asset/Liability Committee (ALCO) of the Board of Directors. The Company had no caps or floors outstanding at March 31, 2017.

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Segment Results

3 Months Ended

Mar. 31, 2017

Segment Results [Abstract]

Segment Reporting Disclosure [Text Block]

15. Segment Results

The financial performance of the Company is also monitored by an internal funds transfer pricing profitability measurement system which produces line of business results and key performance measures. The Company’s major business units include retail banking, commercial banking, trust, and investment/parent. The reported results reflect the underlying economics of the business segments. Expenses for centrally provided services are allocated based upon the cost and estimated usage of those services. The businesses are match-funded and interest rate risk is centrally managed and accounted for within the investment/parent business segment. The key performance measure the Company focuses on for each business segment is net income contribution.

Retail banking includes the deposit-gathering branch franchise and lending to both individuals and small businesses. Lending activities include residential mortgage loans, direct consumer loans, and local business commercial loans. Commercial banking to businesses includes commercial loans, and CRE loans. The trust segment contains our wealth management businesses which include the Trust Company and West Chester Capital Advisors (WCCA), our registered investment advisory firm and financial services. Wealth management includes personal trust products and services such as personal portfolio investment management, estate planning and administration, custodial services and pre-need trusts. Also, institutional trust products and services such as 401(k) plans, defined benefit and defined contribution employee benefit plans, and individual retirement accounts are included in this segment. Financial services include the sale of mutual funds, annuities, and insurance products. The wealth management businesses also includes the union collective investment funds, namely the ERECT and BUILD funds which are designed to use union pension dollars in construction projects that utilize union labor. The investment/parent includes the net results of investment securities and borrowing activities, general corporate expenses not allocated to the business segments, interest expense on corporate debt, and centralized interest rate risk management. Inter-segment revenues were not material.

The contribution of the major business segments to the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016 were as follows (in thousands):

	Three months ended March 31, 2017
	Total revenue			Net income (loss)
Retail banking	$	6,243		$	617
Commercial banking		4,725			1,472
Trust		2,326			367
Investment/Parent		(1,011	)		(1,108	)
Total	$	12,283		$	1,348

	Three months ended March 31, 2016
	Total revenue			Net income (loss)
Retail banking	$	6,297		$	583
Commercial banking		4,635			(835	)
Trust		2,177			145
Investment/Parent		(1,114	)		(1,160	)
Total	$	11,995		$	(1,267	)

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Commitments and Contingent Liabilities

3 Months Ended

Mar. 31, 2017

Commitments and Contingent Liabilities [Abstract]

Commitments and Contingencies Disclosure [Text Block]

16. Commitments and Contingent Liabilities

The Company had various outstanding commitments to extend credit approximating $159.8 million and $160.5 million along with standby letters of credit of $8.4 million and $8.5 million as of March 31, 2017 and December 31, 2016, respectively. The Company’s exposure to credit loss in the event of nonperformance by the other party to these commitments to extend credit and standby letters of credit is represented by their contractual amounts. The Bank uses the same credit and collateral policies in making commitments and conditional obligations as for all other lending.

Additionally, the Company is also subject to a number of asserted and unasserted potential claims encountered in the normal course of business. In the opinion of the Company, neither the resolution of these claims nor the funding of these credit commitments will have a material adverse effect on the Company’s consolidated financial position, results of operation or cash flows.

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Pension Benefits

3 Months Ended

Mar. 31, 2017

Pension Benefits [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

17. Pension Benefits

The Company has a noncontributory defined benefit pension plan covering certain employees who work at least 1,000 hours per year. The participants shall have a vested interest in their accrued benefit after five full years of service. The benefits of the plan are based upon the employee’s years of service and average annual earnings for the highest five consecutive calendar years during the final ten year period of employment. Plan assets are primarily debt securities (including US Treasury and Agency securities, corporate notes and bonds), listed common stocks (including shares of AmeriServ Financial, Inc. common stock which is limited to 10% of the plan’s assets), mutual funds, and short-term cash equivalent instruments. The net periodic pension cost for the three months ended March 31, 2017 and 2016 were as follows (in thousands):

	Three months ended March 31,
	2017			2016
Components of net periodic benefit cost
Service cost	$	390		$	368
Interest cost		326			344
Expected return on plan assets		(631	)		(563	)
Recognized net actuarial loss		367			314
Net periodic pension cost	$	452		$	463

The Company implemented a soft freeze of its defined benefit pension plan to provide that non-union employees hired on or after January 1, 2013 and union employees hired on or after January 1, 2014 are not eligible to participate in the pension plan. Instead, such employees are eligible to participate in a qualified 401(k) plan. This change was made to help reduce pension costs in future periods.

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Disclosures about Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Disclosures about Fair Value Measurements [Abstract]

Fair Value, Measurement Inputs, Disclosure [Text Block]

18. Disclosures about Fair Value Measurements

The following disclosures establish a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring assets and liabilities at fair value. The three broad levels defined within this hierarchy are as follows:

Level I:  Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II:  Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.

Level III:  Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Assets and Liability Measured on a Recurring Basis

Securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quoted market spreads, cash flows, the US Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

The following tables present the assets reported on the Consolidated Balance Sheets at their fair value as of March 31, 2017 and December 31, 2016, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Assets and liability measured at fair value on a recurring basis are summarized below (in thousands):

	Fair Value Measurements at March 31, 2017 Using
	Total		(Level 1)		(Level 2)		(Level 3)
US Agency securities	$	1,391	$	—	$	1,391	$	—
US Agency mortgage-backed securities		88,890		—		88,890		—
Taxable municipal		5,287		—		5,287		—
Corporate bonds		33,476		—		33,476		—
Fair value swap asset		5		—		—		5

	Fair Value Measurements at December 31, 2016 Using
	Total		(Level 1)		(Level 2)		(Level 3)
US Agency securities	$	398	$	—	$	398	$	—
Taxable municipal		3,622		—		3,622		—
Corporate bonds		33,873		—		33,873		—
US Agency mortgage-backed securities		89,184		—		89,184		—

Assets Measured on a Non-recurring Basis

Loans considered impaired are loans for which, based on current information and events, it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. As detailed in the allowance for loan loss footnote, impaired loans are reported at fair value of the underlying collateral if the repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on observable market data which at times are discounted. At March 31, 2017, impaired loans with a carrying value of $657,000 were reduced by a specific valuation allowance totaling $507,000 resulting in a net fair value of $150,000. At December 31, 2016, impaired loans with a carrying value of $674,000 were reduced by a specific valuation allowance totaling $527,000 resulting in a net fair value of $147,000.

Other real estate owned is measured at fair value based on appraisals, less estimated cost to sell. Valuations are periodically performed by management. Income and expenses from operations and changes in valuation allowance are included in the net expenses from OREO.

Assets measured at fair value on a non-recurring basis are summarized below (in thousands, except range data):

	Fair Value Measurements at March 31, 2017 Using
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	150	$	—	$	—	$	150
Other real estate owned		25		—		—		25

	Fair Value Measurements at December 31, 2016 Using
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	147	$	—	$	—	$	147
Other real estate owned		21		—		—		21

March 31, 2017	Quantitative Information About Level 3 Fair Value Measurements
	Fair Value Estimate	Valuation Techniques	Unobservable Input	Range (Wgtd Ave)
Impaired loans	$150	Appraisal of collateral(1),(3)	Appraisal adjustments(2)	40% to 77% (42%)
Other real estate owned	25	Appraisal of collateral(1),(3)	Appraisal adjustments(2) Liquidation expenses	0% to 43% (17%) 2% to 206% (108%)

December 31, 2016	Quantitative Information About Level 3 Fair Value Measurements
	Fair Value Estimate	Valuation Techniques	Unobservable Input	Range (Wgtd Ave)
Impaired loans	$147	Appraisal of collateral(1),(3)	Appraisal adjustments(2)	40% to 99% (45%)
Other real estate owned	21	Appraisal of collateral(1),(3)	Appraisal adjustments(2) Liquidation expenses	20% to 77% (42%) 3% to 199% (37%)

(1) Fair Value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

For the Company, as for most financial institutions, approximately 90% of its assets and liabilities are considered financial instruments. Many of the Company’s financial instruments, however, lack an available trading market characterized by a willing buyer and willing seller engaging in an exchange transaction. Therefore, significant estimates and present value calculations were used by the Company for the purpose of this disclosure.

Fair values have been determined by the Company using independent third party valuations that use the best available data (Level 2) and an estimation methodology (Level 3) the Company believes is suitable for each category of financial instruments. Management believes that cash, cash equivalents, and loans and deposits with floating interest rates have estimated fair values which approximate the recorded book balances. The estimation methodologies used, the estimated fair values based on US GAAP measurements, and recorded book balances at March 31, 2017 and December 31, 2016, were as follows (in thousands):

	March 31, 2017
	Carrying Value		Fair Value		(Level 1)		(Level 2)		(Level 3)
FINANCIAL ASSETS:
Cash and cash equivalents	$	31,016	$	31,016	$	31,016	$	—	$	—
Investment securities – AFS		129,044		129,044		—		129,044		—
Investment securities – HTM		36,737		36,594		—		33,648		2,946
Regulatory stock		6,409		6,409		6,409		—		—
Loans held for sale		2,613		2,660		2,660		—		—
Loans, net of allowance for loan loss and unearned income		886,763		882,004		—		—		882,004
Accrued interest income receivable		3,200		3,200		3,200		—		—
Bank owned life insurance		38,044		38,044		38,044		—		—
Fair value swap asset		5		5		—		—		5
FINANCIAL LIABILITIES:
Deposits with no stated maturities	$	709,932	$	709,932	$	709,932	$	—	$	—
Deposits with stated maturities		254,844		255,220		—		—		255,220
Short-term borrowings		33,676		33,676		33,676		—		—
All other borrowings		66,401		69,833		—		—		69,833
Accrued interest payable		1,501		1,501		1,501		—		—
Fair value swap liability		5		5		—		—		5

	December 31, 2016
	Carrying Value		Fair Value		(Level 1)		(Level 2)		(Level 3)
FINANCIAL ASSETS:
Cash and cash equivalents	$	34,073	$	34,073	$	34,073	$	—	$	—
Investment securities – AFS		127,077		127,077		—		127,077		—
Investment securities – HTM		30,665		30,420		—		27,473		2,947
Regulatory stock		5,484		5,484		5,484		—		—
Loans held for sale		3,094		3,158		3,158		—		—
Loans, net of allowance for loan loss and unearned income		873,832		869,960		—		—		869,960
Accrued interest income receivable		3,116		3,116		3,116		—		—
Bank owned life insurance		37,903		37,903		37,903		—		—
FINANCIAL LIABILITIES:
Deposits with no stated maturities	$	708,062	$	708,062	$	708,062	$	—	$	—
Deposits with stated maturities		259,724		261,446		—		—		261,446
Short-term borrowings		12,754		12,754		12,754		—		—
All other borrowings		65,891		69,348		—		—		69,348
Accrued interest payable		1,640		1,640		1,640		—		—

The fair value of cash and cash equivalents, regulatory stock, accrued interest income receivable, short-term borrowings, and accrued interest payable are equal to the current carrying value.

The fair value of investment securities is equal to the available quoted market price for similar securities. The fair value measurements consider observable data that may include dealer quoted market spreads, cash flows, the US Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The Level 3 securities are valued by discounted cash flows using the US Treasury rate for the remaining term of the securities.

Loans held for sale are priced individually at market rates on the day that the loan is locked for commitment with an investor. All loans in the held for sale account conform to Fannie Mae underwriting guidelines, with the specific intent of the loan being purchased by an investor at the predetermined rate structure. Loans in the held for sale account have specific delivery dates that must be executed to protect the pricing commitment (typically a 30, 45, or 60 day lock period).

The net loan portfolio has been valued using a present value discounted cash flow. The discount rate used in these calculations is based upon the treasury yield curve adjusted for non-interest operating costs, credit loss, current market prices and assumed prepayment risk.

The fair value of bank owned life insurance is based upon the cash surrender value of the underlying policies and matches the book value.

Deposits with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar assets and liabilities. Deposits with no stated maturities have an estimated fair value equal to both the amount payable on demand and the recorded book balance.

The fair value of all other borrowings is based on the discounted value of contractual cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.

The fair values of the fair value swaps used for interest rate risk management represents the amount the Company would have expected to receive or pay to terminate such agreements.

Commitments to extend credit and standby letters of credit are financial instruments generally not subject to sale, and fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, 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, is not considered material for disclosure. The contractual amounts of unfunded commitments are presented in Note 16.

Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values. The Company’s remaining assets and liabilities which are not considered financial instruments have not been valued differently than has been customary under historical cost accounting.

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Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Common Share [Abstract]

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

Dividends on preferred shares are deducted from net income in the calculation of earnings per common share.

	Three months ended March 31,
	2017		2016
	(In thousands, except per share data)
Numerator:
Net income	$	1,348	$	(1,267	)
Preferred stock dividends		—		(15	)
Net income available to common shareholders	$	1,348	$	(1,282	)
Denominator:
Weighted average common shares outstanding (basic)		18,814		18,884
Effect of stock options		108		—
Weighted average common shares outstanding (diluted)		18,922		18,884
Earnings per common share:
Basic	$	0.07	$	(0.07	)
Diluted		0.07		(0.07	)

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Investment Securities (Tables)

3 Months Ended

Mar. 31, 2017

Investment Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

The cost basis and fair values of investment securities are summarized as follows (in thousands):

Investment securities available for sale (AFS):

	March 31, 2017
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	1,397	$	—	$	(6	)	$	1,391
US Agency mortgage-backed securities		88,508		1,023		(641	)		88,890
Taxable municipal		5,450		13		(176	)		5,287
Corporate bonds		33,881		196		(601	)		33,476
Total	$	129,236	$	1,232	$	(1,424	)	$	129,044

Investment securities held to maturity (HTM):

	March 31, 2017
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	10,784	$	186	$	(67	)	$	10,903
Taxable municipal		19,907		144		(341	)		19,710
Corporate bonds and other securities		6,046		17		(82	)		5,981
Total	$	36,737	$	347	$	(490	)	$	36,594

Investment securities available for sale (AFS):

	December 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	400	$	—	$	(2	)	$	398
US Agency mortgage-backed securities		88,738		1,132		(686	)		89,184
Taxable municipal		3,793		3		(174	)		3,622
Corporate bonds		34,403		194		(724	)		33,873
Total	$	127,334	$	1,329	$	(1,586	)	$	127,077

Investment securities held to maturity (HTM):

	December 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	11,177	$	180	$	(79	)	$	11,278
Taxable municipal		13,441		70		(348	)		13,163
Corporate bonds and other securities		6,047		15		(83	)		5,979
Total	$	30,665	$	265	$	(510	)	$	30,420

Schedule of Unrealized Loss on Investments [Table Text Block]

The following tables present information concerning investments with unrealized losses as of March 31, 2017 and December 31, 2016 (in thousands):

Total investment securities:

	March 31, 2017
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency	$	1,391	$	(6	)	$	—	$	—		$	1,391	$	(6	)
US Agency mortgage-backed securities		52,169		(645	)		1,478		(63	)		53,647		(708	)
Taxable municipal		14,830		(517	)		—		—			14,830		(517	)
Corporate bonds and other securities		17,979		(450	)		7,766		(233	)		25,745		(683	)
Total	$	86,369	$	(1,618	)	$	9,244	$	(296	)	$	95,613	$	(1,914	)

Total investment securities:

	December 31, 2016
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency	$	398	$	(2	)	$	—	$	—		$	398	$	(2	)
US Agency mortgage-backed securities		49,918		(703	)		1,576		(62	)		51,494		(765	)
Taxable municipal		13,301		(522	)		—		—			13,301		(522	)
Corporate bonds and other securities		20,380		(570	)		6,762		(237	)		27,142		(807	)
Total	$	83,997	$	(1,797	)	$	8,338	$	(299	)	$	92,335	$	(2,096	)

Schedule of Contractual Maturities of Securities [Table Text Block]

Total investment securities:

	March 31, 2017
	Available for sale				Held to maturity
	Cost Basis		Fair Value		Cost Basis		Fair Value
Within 1 year	$	3,000	$	2,993	$	—	$	—
After 1 year but within 5 years		8,881		8,843		3,400		3,349
After 5 years but within 10 years		44,213		44,313		12,105		12,069
After 10 years but within 15 years		32,673		32,399		13,578		13,431
Over 15 years		40,469		40,496		7,654		7,745
Total	$	129,236	$	129,044	$	36,737	$	36,594

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Loans (Tables)

3 Months Ended

Mar. 31, 2017

Loans [Abstract]

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

The loan portfolio of the Company consists of the following (in thousands):

	March 31, 2017		December 31, 2016
Commercial	$	169,348	$	171,529
Commercial loans secured by real estate		461,017		446,598
Real estate – mortgage		246,907		245,765
Consumer		19,571		19,872
Loans, net of unearned income	$	896,843	$	883,764

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Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2017

Allowance for Loan Losses [Abstract]

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

The following tables summarize the rollforward of the allowance for loan losses by portfolio segment for the three month periods ending March 31, 2017 and 2016 (in thousands).

	Three months ended March 31, 2017
	Balance at December 31, 2016		Charge-Offs			Recoveries		Provision (Credit)			Balance at March 31, 2017
Commercial	$	4,041	$	—		$	7	$	(24	)	$	4,024
Commercial loans secured by real estate		3,584		(14	)		2		175			3,747
Real estate – mortgage		1,169		(94	)		66		26			1,167
Consumer		151		(63	)		19		42			149
Allocation for general risk		987		—			—		6			993
Total	$	9,932	$	(171	)	$	94	$	225		$	10,080

	Three months ended March 31, 2016
	Balance at December 31, 2015		Charge-Offs			Recoveries		Provision (Credit)			Balance at March 31, 2016
Commercial	$	4,244	$	(3,339	)	$	7	$	2,655		$	3,567
Commercial loans secured by real estate		3,449		—			28		229			3,706
Real estate – mortgage		1,173		(38	)		42		(20	)		1,157
Consumer		151		(205	)		4		195			145
Allocation for general risk		904		—			—		41			945
Total	$	9,921	$	(3,582	)	$	81	$	3,100		$	9,520

Schedule of Primary Segments of Loan Portfolio [Table Text Block]

The following tables summarize the loan portfolio and allowance for loan loss by the primary segments of the loan portfolio (in thousands).

	At March 31, 2017
	Commercial		Commercial Loans Secured by Real Estate		Real Estate- Mortgage		Consumer		Allocation for General Risk		Total
Loans:
Individually evaluated for impairment	$	484	$	173	$	—	$	—			$	657
Collectively evaluated for impairment		168,864		460,844		246,907		19,571				896,186
Total loans	$	169,348	$	461,017	$	246,907	$	19,571			$	896,843
Allowance for loan losses:
Specific reserve allocation	$	484	$	23	$	—	$	—	$	—	$	507
General reserve allocation		3,540		3,724		1,167		149		993		9,573
Total allowance for loan losses	$	4,024	$	3,747	$	1,167	$	149	$	993	$	10,080

	At December 31, 2016
	Commercial		Commercial Loans Secured by Real Estate		Real Estate- Mortgage		Consumer		Allocation for General Risk		Total
Loans:
Individually evaluated for impairment	$	496	$	178	$	—	$	—			$	674
Collectively evaluated for impairment		171,033		446,420		245,765		19,872				883,090
Total loans	$	171,529	$	446,598	$	245,765	$	19,872			$	883,764
Allowance for loan losses:
Specific reserve allocation	$	496	$	31	$	—	$	—	$	—	$	527
General reserve allocation		3,545		3,553		1,169		151		987		9,405
Total allowance for loan losses	$	4,041	$	3,584	$	1,169	$	151	$	987	$	9,932

Impaired Financing Receivables [Table Text Block]

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands).

	March 31, 2017
	Impaired Loans with Specific Allowance				Impaired Loans with no Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
Commercial	$	484	$	484	$	—	$	484	$	511
Commercial loans secured by real estate		157		23		16		173		207
Total impaired loans	$	641	$	507	$	16	$	657	$	718

	December 31, 2016
	Impaired Loans with Specific Allowance				Impaired Loans with no Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
Commercial	$	496	$	496	$	—	$	496	$	517
Commercial loans secured by real estate		162		31		16		178		209
Total impaired loans	$	658	$	527	$	16	$	674	$	726

Schedule of Average Recorded Investment in Impaired Loans and Related Interest Income Recognized [Table Text Block]

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated (in thousands).

	Three months ended March 31,
	2017		2016
Average loan balance:
Commercial	$	331	$	1,162
Commercial loans secured by real estate		335		615
Average investment in impaired loans	$	666	$	1,777
Interest income recognized:
Commercial	$	6	$	3
Commercial loans secured by real estate		2		—
Interest income recognized on a cash basis on impaired loans	$	8	$	3

Financing Receivable Credit Quality Indicators [Table Text Block]

The following table presents the classes of the commercial and commercial real estate loan portfolios summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system (in thousands).

	March 31, 2017
	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	166,609	$	1,083	$	1,172	$	484	$	169,348
Commercial loans secured by real estate		447,160		12,441		1,400		16		461,017
Total	$	613,769	$	13,524	$	2,572	$	500	$	630,365

	December 31, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	168,116	$	1,087	$	1,830	$	496	$	171,529
Commercial loans secured by real estate		436,318		7,497		2,767		16		446,598
Total	$	604,434	$	8,584	$	4,597	$	512	$	618,127

Schedule of Financing Receivable Performing and Nonperforming [Table Text Block]

The following tables present the performing and non-performing outstanding balances of the residential and consumer portfolios (in thousands).

	March 31, 2017
	Performing		Non-Performing
Real estate – mortgage	$	246,101	$	806
Consumer		19,571		—
Total	$	265,672	$	806

	December 31, 2016
	Performing		Non-Performing
Real estate – mortgage	$	244,836	$	929
Consumer		19,872		—
Total	$	264,708	$	929

Past Due Financing Receivables [Table Text Block]

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans (in thousands).

	March 31, 2017
	Current		30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days Past Due		Total Past Due		Total Loans		90 Days Past Due and Still Accruing
Commercial	$	169,208	$	140	$	—	$	—	$	140	$	169,348	$	—
Commercial loans secured by real estate		456,482		4,535		—		—		4,535		461,017		—
Real estate – mortgage		243,120		2,784		595		408		3,787		246,907		—
Consumer		19,485		64		22		—		86		19,571		—
Total	$	888,295	$	7,523	$	617	$	408	$	8,548	$	896,843	$	—

	December 31, 2016
	Current		30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days Past Due		Total Past Due		Total Loans		90 Days Past Due and Still Accruing
Commercial	$	171,292	$	237	$	—	$	—	$	237	$	171,529	$	—
Commercial loans secured by real estate		446,477		121		—		—		121		446,598		—
Real estate – mortgage		241,802		2,856		610		497		3,963		245,765		—
Consumer		19,795		50		27		—		77		19,872		—
Total	$	879,366	$	3,264	$	637	$	497	$	4,398	$	883,764	$	—

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Non-performing Assets Including Troubled Debt Restructurings (TDR) (Tables)

3 Months Ended

Mar. 31, 2017

Nonperforming Assets Including Troubled Debt Restructurings [Abstract]

Schedule Of Nonperforming Assets Including Trouble Debt Restructurings [Table Text Block]

The following table presents information concerning non-performing assets including TDR (in thousands, except percentages):

	March 31, 2017			December 31, 2016
Non-accrual loans
Commercial	$	484		$	496
Commercial loans secured by real estate		173			178
Real estate – mortgage		806			929
Total		1,463			1,603
Other real estate owned
Real estate – mortgage		25			21
Total		25			21
TDR’s not in non-accrual		—			—
Total non-performing assets including TDR	$	1,488		$	1,624
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned		0.17	%		0.18	%

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

The following table sets forth, for the periods indicated, (1) the gross interest income that would have been recorded if non-accrual loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period, (2) the amount of interest income actually recorded on such loans, and (3) the net reduction in interest income attributable to such loans (in thousands).

	Three months ended March 31,
	2017		2016
Interest income due in accordance with original terms	$	16	$	59
Interest income recorded		—		—
Net reduction in interest income	$	16	$	59

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Federal Home Loan Bank Borrowings (Tables)

3 Months Ended

Mar. 31, 2017

Federal Home Loan Bank Borrowings [Abstract]

Schedule of Federal Home Loan Bank, Advances, by Branch of FHLB Bank [Table Text Block]

Total Federal Home Loan Bank (FHLB) borrowings and advances consist of the following (in thousands, except percentages):

	At March 31, 2017
Type	Maturing		Amount		Weighted Average Rate
Open Repo Plus		Overnight	$	33,676		0.95	%
Advances		2017		9,000		1.11
		2018		12,000		1.48
		2019		12,500		1.51
		2020		11,542		1.60
		2021 and over		1,000		1.60
Total advances				46,042		1.41
Total FHLB borrowings			$	79,718		1.22	%

	At December 31, 2016
Type	Maturing		Amount		Weighted Average Rate
Open Repo Plus		Overnight	$	12,754		0.74	%
Advances		2017		12,000		1.06
		2018		12,000		1.48
		2019		12,500		1.51
		2020		8,042		1.59
		2021 and over		1,000		1.60
Total advances				45,542		1.37
Total FHLB borrowings			$	58,296		1.23	%

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2017

Accumulated Comprehensive Loss [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The following table presents the changes in each component of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2017 and 2016 (in thousands):

	Three months ended March 31, 2017									Three months ended March 31, 2016
	Net Unrealized Gains and (Losses) on Investment Securities AFS(1)			Defined Benefit Pension Items(1)			Total(1)			Net Unrealized Gains and (Losses) on Investment Securities AFS(1)			Defined Benefit Pension Items(1)			Total(1)
Beginning balance	$	(171	)	$	(11,406	)	$	(11,577	)	$	808		$	(8,363	)	$	(7,555	)
Other comprehensive income (loss) before reclassifications		62			(210	)		(148	)		736			333			1,069
Amounts reclassified from accumulated other comprehensive loss		(18	)		260			242			(38	)		—			(38	)
Net current period other comprehensive income		44			50			94			698			333			1,031
Ending balance	$	(127	)	$	(11,356	)	$	(11,483	)	$	1,506		$	(8,030	)	$	(6,524	)

(1) Amounts in parentheses indicate debits on the Consolidated Balance Sheets.

Schedule Of Amounts Reclassified Out Of Accumulated Other Comprehensive Loss [Table Text Block]

The following table presents the amounts reclassified out of each component of accumulated other comprehensive loss for the three months ended March 31, 2017 and 2016 (in thousands):

	Amount reclassified from accumulated other comprehensive loss(1)
Details about accumulated other comprehensive loss components	For the three months ended March 31, 2017			For the three months ended March 31, 2016			Affected line item in the consolidated statement of operations
Realized (gains) and losses on sale of securities
	$	(27	)	$	(57	)		Net realized gains on investment securities
		9			19			Provision for income tax expense
	$	(18	)	$	(38	)		Net of tax
Amortization of defined benefit items Recognized net actuarial loss	$	395		$	—			Salaries and employee benefits
		(135	)		—			Provision for income taxes
	$	260		$	—			Net of tax
Total reclassifications for the period	$	242		$	(38	)		Net income

(1) Amounts in parentheses indicate credits.

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Regulatory Capital (Tables)

3 Months Ended

Mar. 31, 2017

Regulatory Capital [Abstract]

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

Additionally, while not a regulatory capital ratio, the Company’s tangible common equity ratio was 7.21% at March 31, 2017 (in thousands, except ratios).

	AT MARCH 31, 2017
	COMPANY					BANK					MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES			TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS*
	AMOUNT		RATIO			AMOUNT		RATIO			RATIO			RATIO
	(IN THOUSANDS, EXCEPT RATIOS)
Total Capital (To Risk Weighted Assets)	$	125,331		13.03	%	$	108,243		11.32	%		8.00	%		10.00	%
Tier 1 Common Equity (To Risk Weighted Assets)		95,143		9.89			97,346		10.18			4.50			6.50
Tier 1 Capital (To Risk Weighted Assets)		106,987		11.13			97,346		10.18			6.00			8.00
Tier 1 Capital (To Average Assets)		106,987		9.33			97,346		8.63			4.00			5.00

	AT DECEMBER 31, 2016
	COMPANY					BANK					MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES			TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS*
	AMOUNT		RATIO			AMOUNT		RATIO			RATIO			RATIO
	(IN THOUSANDS, EXCEPT RATIOS)
Total Capital (To Risk Weighted Assets)	$	125,131		13.15	%	$	107,618		11.35	%		8.00	%		10.00	%
Tier 1 Common Equity (To Risk Weighted Assets)		95,028		9.99			96,796		10.21			4.50			6.50
Tier 1 Capital (To Risk Weighted Assets)		106,868		11.23			96,796		10.21			6.00			8.00
Tier 1 Capital (To Average Assets)		106,868		9.35			96,796		8.61			4.00			5.00

* Applies to the Bank only.

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DERIVATIVE HEDGING INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives [Table Text Block]

The following table summarizes the interest rate swap transactions that impacted the Company’s first quarter 2017 performance.

START DATE	MATURITY DATE		HEDGE TYPE		NOTIONAL AMOUNT		RATE RECEIVED			RATE PAID			REPRICING FREQUENCY		INCREASE (DECREASE) IN INTEREST EXPENSE
01/12/17		01/12/27		FAIR VALUE	$	5,000,000		4.50	%		3.10	%		MONTHLY	$	15,367
01/12/17		01/12/27		FAIR VALUE		5,000,000		3.10			4.50			MONTHLY		(15,367	)
															$	—

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Segment Results (Tables)

3 Months Ended

Mar. 31, 2017

Segment Results [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

The contribution of the major business segments to the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016 were as follows (in thousands):

	Three months ended March 31, 2017
	Total revenue			Net income (loss)
Retail banking	$	6,243		$	617
Commercial banking		4,725			1,472
Trust		2,326			367
Investment/Parent		(1,011	)		(1,108	)
Total	$	12,283		$	1,348

	Three months ended March 31, 2016
	Total revenue			Net income (loss)
Retail banking	$	6,297		$	583
Commercial banking		4,635			(835	)
Trust		2,177			145
Investment/Parent		(1,114	)		(1,160	)
Total	$	11,995		$	(1,267	)

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Pension Benefits (Tables)

3 Months Ended

Mar. 31, 2017

Pension Benefits [Abstract]

Schedule of Net Benefit Costs [Table Text Block]

The net periodic pension cost for the three months ended March 31, 2017 and 2016 were as follows (in thousands):

	Three months ended March 31,
	2017			2016
Components of net periodic benefit cost
Service cost	$	390		$	368
Interest cost		326			344
Expected return on plan assets		(631	)		(563	)
Recognized net actuarial loss		367			314
Net periodic pension cost	$	452		$	463

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Disclosures about Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Disclosures about Fair Value Measurements [Abstract]

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

Assets and liability measured at fair value on a recurring basis are summarized below (in thousands):

	Fair Value Measurements at March 31, 2017 Using
	Total		(Level 1)		(Level 2)		(Level 3)
US Agency securities	$	1,391	$	—	$	1,391	$	—
US Agency mortgage-backed securities		88,890		—		88,890		—
Taxable municipal		5,287		—		5,287		—
Corporate bonds		33,476		—		33,476		—
Fair value swap asset		5		—		—		5

	Fair Value Measurements at December 31, 2016 Using
	Total		(Level 1)		(Level 2)		(Level 3)
US Agency securities	$	398	$	—	$	398	$	—
Taxable municipal		3,622		—		3,622		—
Corporate bonds		33,873		—		33,873		—
US Agency mortgage-backed securities		89,184		—		89,184		—

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

Assets measured at fair value on a non-recurring basis are summarized below (in thousands, except range data):

	Fair Value Measurements at March 31, 2017 Using
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	150	$	—	$	—	$	150
Other real estate owned		25		—		—		25

	Fair Value Measurements at December 31, 2016 Using
	Total		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	147	$	—	$	—	$	147
Other real estate owned		21		—		—		21

March 31, 2017	Quantitative Information About Level 3 Fair Value Measurements
	Fair Value Estimate	Valuation Techniques	Unobservable Input	Range (Wgtd Ave)
Impaired loans	$150	Appraisal of collateral(1),(3)	Appraisal adjustments(2)	40% to 77% (42%)
Other real estate owned	25	Appraisal of collateral(1),(3)	Appraisal adjustments(2) Liquidation expenses	0% to 43% (17%) 2% to 206% (108%)

December 31, 2016	Quantitative Information About Level 3 Fair Value Measurements
	Fair Value Estimate	Valuation Techniques	Unobservable Input	Range (Wgtd Ave)
Impaired loans	$147	Appraisal of collateral(1),(3)	Appraisal adjustments(2)	40% to 99% (45%)
Other real estate owned	21	Appraisal of collateral(1),(3)	Appraisal adjustments(2) Liquidation expenses	20% to 77% (42%) 3% to 199% (37%)

(1) Fair Value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

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

The estimation methodologies used, the estimated fair values based on US GAAP measurements, and recorded book balances at March 31, 2017 and December 31, 2016, were as follows (in thousands):

	March 31, 2017
	Carrying Value		Fair Value		(Level 1)		(Level 2)		(Level 3)
FINANCIAL ASSETS:
Cash and cash equivalents	$	31,016	$	31,016	$	31,016	$	—	$	—
Investment securities – AFS		129,044		129,044		—		129,044		—
Investment securities – HTM		36,737		36,594		—		33,648		2,946
Regulatory stock		6,409		6,409		6,409		—		—
Loans held for sale		2,613		2,660		2,660		—		—
Loans, net of allowance for loan loss and unearned income		886,763		882,004		—		—		882,004
Accrued interest income receivable		3,200		3,200		3,200		—		—
Bank owned life insurance		38,044		38,044		38,044		—		—
Fair value swap asset		5		5		—		—		5
FINANCIAL LIABILITIES:
Deposits with no stated maturities	$	709,932	$	709,932	$	709,932	$	—	$	—
Deposits with stated maturities		254,844		255,220		—		—		255,220
Short-term borrowings		33,676		33,676		33,676		—		—
All other borrowings		66,401		69,833		—		—		69,833
Accrued interest payable		1,501		1,501		1,501		—		—
Fair value swap liability		5		5		—		—		5

	December 31, 2016
	Carrying Value		Fair Value		(Level 1)		(Level 2)		(Level 3)
FINANCIAL ASSETS:
Cash and cash equivalents	$	34,073	$	34,073	$	34,073	$	—	$	—
Investment securities – AFS		127,077		127,077		—		127,077		—
Investment securities – HTM		30,665		30,420		—		27,473		2,947
Regulatory stock		5,484		5,484		5,484		—		—
Loans held for sale		3,094		3,158		3,158		—		—
Loans, net of allowance for loan loss and unearned income		873,832		869,960		—		—		869,960
Accrued interest income receivable		3,116		3,116		3,116		—		—
Bank owned life insurance		37,903		37,903		37,903		—		—
FINANCIAL LIABILITIES:
Deposits with no stated maturities	$	708,062	$	708,062	$	708,062	$	—	$	—
Deposits with stated maturities		259,724		261,446		—		—		261,446
Short-term borrowings		12,754		12,754		12,754		—		—
All other borrowings		65,891		69,348		—		—		69,348
Accrued interest payable		1,640		1,640		1,640		—		—

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Principles of Consolidation (Details Textual) $ in Billions	Mar. 31, 2017 USD ($)
Number of locations	16
Trust and financial services and administers assets	$ 2.0

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Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Numerator:
Net income	$ 1,348	$ (1,267)
Preferred stock dividends	0	15
Net income available to common shareholders	$ 1,348	$ (1,282)
Denominator:
Weighted average common shares outstanding (basic)	18,814	18,884
Effect of stock options	108	0
Weighted average common shares outstanding (diluted)	18,922	18,884
Earnings per common share:
Basic	$ 0.07	$ (0.07)
Diluted	$ 0.07	$ (0.07)

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Consolidated Statement of Cash Flows (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income tax payments	$ 3,000	$ 438,500
Total interest payments	2,166,000	2,031,000
Non-cash transfers to other real estate owned	$ 20,000	$ 38,000

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Investment Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Available-For-Sale-Securities-And-Held-To-Maturity-Securities
Investment securities available for sale, Cost Basis	$ 129,236	$ 127,334
Investment securities available for sale, Gross Unrealized Gains	1,232	1,329
Investment securities available for sale, Gross Unrealized Losses	(1,424)	(1,586)
Available for Sale, Fair Value, Total	129,044	127,077
Investment securities held to maturity, Cost Basis	36,737	30,665
Investment securities held to maturity, Gross Unrealized Gains	347	265
Investment securities held to maturity, Gross Unrealized Losses	(490)	(510)
Held to Maturity, Fair Value, Total	36,594	30,420
U.S. Agency [Member]
Available-For-Sale-Securities-And-Held-To-Maturity-Securities
Investment securities available for sale, Cost Basis	1,397	400
Investment securities available for sale, Gross Unrealized Gains	0	0
Investment securities available for sale, Gross Unrealized Losses	(6)	(2)
Available for Sale, Fair Value, Total	1,391	398
U.S. Agency mortgage-backed securities [Member]
Available-For-Sale-Securities-And-Held-To-Maturity-Securities
Investment securities available for sale, Cost Basis	88,508	88,738
Investment securities available for sale, Gross Unrealized Gains	1,023	1,132
Investment securities available for sale, Gross Unrealized Losses	(641)	(686)
Available for Sale, Fair Value, Total	88,890	89,184
Investment securities held to maturity, Cost Basis	10,784	11,177
Investment securities held to maturity, Gross Unrealized Gains	186	180
Investment securities held to maturity, Gross Unrealized Losses	(67)	(79)
Held to Maturity, Fair Value, Total	10,903	11,278
Taxable Municipal [Member]
Available-For-Sale-Securities-And-Held-To-Maturity-Securities
Investment securities available for sale, Cost Basis	5,450	3,793
Investment securities available for sale, Gross Unrealized Gains	13	3
Investment securities available for sale, Gross Unrealized Losses	(176)	(174)
Available for Sale, Fair Value, Total	5,287	3,622
Investment securities held to maturity, Cost Basis	19,907	13,441
Investment securities held to maturity, Gross Unrealized Gains	144	70
Investment securities held to maturity, Gross Unrealized Losses	(341)	(348)
Held to Maturity, Fair Value, Total	19,710	13,163
Corporate bonds [Member]
Available-For-Sale-Securities-And-Held-To-Maturity-Securities
Investment securities available for sale, Cost Basis	33,881	34,403
Investment securities available for sale, Gross Unrealized Gains	196	194
Investment securities available for sale, Gross Unrealized Losses	(601)	(724)
Available for Sale, Fair Value, Total	33,476	33,873
Corporate bonds and other securities [Member]
Available-For-Sale-Securities-And-Held-To-Maturity-Securities
Investment securities held to maturity, Cost Basis	6,046	6,047
Investment securities held to maturity, Gross Unrealized Gains	17	15
Investment securities held to maturity, Gross Unrealized Losses	(82)	(83)
Held to Maturity, Fair Value, Total	$ 5,981	$ 5,979

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Investment Securities (Details 1) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Information concerning investments with unrealized losses
Less than 12 months, Fair Value	$ 86,369	$ 83,997
Less than 12 months, Unrealized Losses	(1,618)	(1,797)
12 months or longer, Fair Value	9,244	8,338
12 months or longer, Unrealized Losses	(296)	(299)
Total, Fair Value	95,613	92,335
Total, Unrealized Losses	(1,914)	(2,096)
U.S. Agency [Member]
Information concerning investments with unrealized losses
Less than 12 months, Fair Value	1,391	398
Less than 12 months, Unrealized Losses	(6)	(2)
12 months or longer, Fair Value	0	0
12 months or longer, Unrealized Losses	0	0
Total, Fair Value	1,391	398
Total, Unrealized Losses	(6)	(2)
U.S. Agency mortgage-backed securities [Member]
Information concerning investments with unrealized losses
Less than 12 months, Fair Value	52,169	49,918
Less than 12 months, Unrealized Losses	(645)	(703)
12 months or longer, Fair Value	1,478	1,576
12 months or longer, Unrealized Losses	(63)	(62)
Total, Fair Value	53,647	51,494
Total, Unrealized Losses	(708)	(765)
Taxable Municipal [Member]
Information concerning investments with unrealized losses
Less than 12 months, Fair Value	14,830	13,301
Less than 12 months, Unrealized Losses	(517)	(522)
12 months or longer, Fair Value	0	0
12 months or longer, Unrealized Losses	0	0
Total, Fair Value	14,830	13,301
Total, Unrealized Losses	(517)	(522)
Corporate bonds and other securities [Member]
Information concerning investments with unrealized losses
Less than 12 months, Fair Value	17,979	20,380
Less than 12 months, Unrealized Losses	(450)	(570)
12 months or longer, Fair Value	7,766	6,762
12 months or longer, Unrealized Losses	(233)	(237)
Total, Fair Value	25,745	27,142
Total, Unrealized Losses	$ (683)	$ (807)

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Investment Securities (Details 2) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Contractual maturities of securities
Available for Sale, Cost Basis, Within 1 year	$ 3,000
Available for Sale, Cost Basis, After 1 year but within 5 years	8,881
Available for Sale, Cost Basis, After 5 years but within 10 years	44,213
Available for Sale, Cost Basis, After 10 years but within 15 years	32,673
Available for Sale, Cost Basis, Over 15 years	40,469
Available for Sale, Cost Basis, Total	129,236
Available for Sale, Fair Value, Within 1 year	2,993
Available for Sale, Fair Value, After 1 year but within 5 years	8,843
Available for Sale, Fair Value, After 5 years but within 10 years	44,313
Available for Sale, Fair Value, After 10 years but within 15 years	32,399
Available for Sale, Fair Value, Over 15 years	40,496
Available for Sale, Fair Value, Total	129,044	$ 127,077
Held to Maturity, Cost Basis, Within 1 year	0
Held to Maturity, Cost Basis, After 1 year but within 5 years	3,400
Held to Maturity, Cost Basis, After 5 years but within 10 years	12,105
Held to Maturity, Cost Basis, After 10 years but within 15 years	13,578
Held to Maturity, Cost Basis, Over 15 years	7,654
Held to Maturity, Cost Basis, Total	36,737	30,665
Held to Maturity, Fair Value, Within 1 year	0
Held to Maturity, Fair Value, After 1 year but within 5 years	3,349
Held to Maturity, Fair Value, After 5 years but within 10 years	12,069
Held to Maturity, Fair Value, After 10 years but within 15 years	13,431
Held to Maturity, Fair Value, Over 15 years	7,745
Held to Maturity, Fair Value, Total	$ 36,594	$ 30,420

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Investment Securities (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Investments [Line Items]
Gross investment gains	$ 27,000	$ 63,000
Gross investment losses	6,000
Investment Securities:
Proceeds from sales of investment securities — available for sale	5,653,000	$ 4,248,000
Book value of securities available for sale and held to maturity	$ 111,529,000		$ 104,953,000
Held-to-maturity, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	111
Standard & Poor's, AAA Rating [Member]
Investments [Line Items]
Portfolio rated	61.30%		79.10%
Standard & Poor's, A Rating [Member]
Investments [Line Items]
Portfolio rated	10.70%		5.70%
Maximum [Member]
Investment Securities:
Consolidated investment securities portfolio modified, years	60 months
Maximum [Member] | Standard & Poor's, A Rating [Member]
Investment Securities:
Consolidated investment securities portfolio modified, years	45 months 6 days
Minimum [Member]
Investment Securities:
Consolidated investment securities portfolio modified, years	24 months
Minimum [Member] | Standard & Poor's, A Rating [Member]
Investment Securities:
Consolidated investment securities portfolio modified, years	41 months 6 days

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Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net of unearned income	$ 896,843	$ 883,764
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net of unearned income	169,348	171,529
Commercial loans secured by real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net of unearned income	461,017	446,598
Real estate - mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net of unearned income	246,907	245,765
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net of unearned income	$ 19,571	$ 19,872

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Loans (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Real estate-construction loans, percentage	4.00%	4.70%
Loan balances net of unearned income	$ 453	$ 476

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Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
BALANCES AT BEGINNING OF PERIOD	$ 9,932	$ 9,921
CHARGE-OFFS	(171)	(3,582)
RECOVERIES	94	81
PROVISION (CREDIT)	225	3,100
BALANCES AT END OF PERIOD	10,080	9,520
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
BALANCES AT BEGINNING OF PERIOD	4,041	4,244
CHARGE-OFFS	0	(3,339)
RECOVERIES	7	7
PROVISION (CREDIT)	(24)	2,655
BALANCES AT END OF PERIOD	4,024	3,567
Commercial loans secured by real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
BALANCES AT BEGINNING OF PERIOD	3,584	3,449
CHARGE-OFFS	(14)	0
RECOVERIES	2	28
PROVISION (CREDIT)	175	229
BALANCES AT END OF PERIOD	3,747	3,706
Real estate - mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
BALANCES AT BEGINNING OF PERIOD	1,169	1,173
CHARGE-OFFS	(94)	(38)
RECOVERIES	66	42
PROVISION (CREDIT)	26	(20)
BALANCES AT END OF PERIOD	1,167	1,157
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
BALANCES AT BEGINNING OF PERIOD	151	151
CHARGE-OFFS	(63)	(205)
RECOVERIES	19	4
PROVISION (CREDIT)	42	195
BALANCES AT END OF PERIOD	149	145
Allocation for general risk [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
BALANCES AT BEGINNING OF PERIOD	987	904
CHARGE-OFFS	0	0
RECOVERIES	0	0
PROVISION (CREDIT)	6	41
BALANCES AT END OF PERIOD	$ 993	$ 945

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Allowance for Loan Losses (Details 1) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Loans:
Individually evaluated for impairment	$ 657	$ 674
Collectively evaluated for impairment	896,186	883,090
Total Loans	896,843	883,764
Allowance for loan losses:
Specific reserve allocation	507	527
General reserve allocation	9,573	9,405
Total allowance for loan losses	10,080	9,932	$ 9,520	$ 9,921
Commercial [Member]
Loans:
Individually evaluated for impairment	484	496
Collectively evaluated for impairment	168,864	171,033
Total Loans	169,348	171,529
Allowance for loan losses:
Specific reserve allocation	484	496
General reserve allocation	3,540	3,545
Total allowance for loan losses	4,024	4,041	3,567	4,244
Commercial loans secured by real estate [Member]
Loans:
Individually evaluated for impairment	173	178
Collectively evaluated for impairment	460,844	446,420
Total Loans	461,017	446,598
Allowance for loan losses:
Specific reserve allocation	23	31
General reserve allocation	3,724	3,553
Total allowance for loan losses	3,747	3,584	3,706	3,449
Real estate - mortgage [Member]
Loans:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	246,907	245,765
Total Loans	246,907	245,765
Allowance for loan losses:
Specific reserve allocation	0	0
General reserve allocation	1,167	1,169
Total allowance for loan losses	1,167	1,169	1,157	1,173
Consumer [Member]
Loans:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	19,571	19,872
Total Loans	19,571	19,872
Allowance for loan losses:
Specific reserve allocation	0	0
General reserve allocation	149	151
Total allowance for loan losses	149	151	145	151
Allocation for general risk [Member]
Allowance for loan losses:
Specific reserve allocation	0	0
General reserve allocation	993	987
Total allowance for loan losses	$ 993	$ 987	$ 945	$ 904

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Allowance for Loan Losses (Details 2) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	$ 657	$ 674
Related Allowance	507	527
Unpaid Principal Balance	718	726
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	484	496
Unpaid Principal Balance	511	517
Commercial loans secured by real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	173	178
Unpaid Principal Balance	207	209
Impaired Loans with Specific Allowance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	641	658
Related Allowance	507	527
Impaired Loans with Specific Allowance [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	484	496
Related Allowance	484	496
Impaired Loans with Specific Allowance [Member] | Commercial loans secured by real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	157	162
Related Allowance	23	31
Impaired Loans with No Specific Allowance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	16	16
Impaired Loans with No Specific Allowance [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	0	0
Impaired Loans with No Specific Allowance [Member] | Commercial loans secured by real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	$ 16	$ 16

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Allowance for Loan Losses (Details 3) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Average loan balance:
Average investment in impaired loans	$ 666	$ 1,777
Interest income recognized:
Interest income recognized on a cash basis on impaired loans	8	3
Commercial [Member]
Average loan balance:
Average investment in impaired loans	331	1,162
Interest income recognized:
Interest income recognized on a cash basis on impaired loans	6	3
Commercial loans secured by real estate [Member]
Average loan balance:
Average investment in impaired loans	335	615
Interest income recognized:
Interest income recognized on a cash basis on impaired loans	$ 2	$ 0

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Allowance for Loan Losses (Details 4) - Commercial Portfolio Segment [Member] - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	$ 630,365	$ 618,127
Commercial [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	169,348	171,529
Commercial loans secured by real estate [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	461,017	446,598
Pass [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	613,769	604,434
Pass [Member] | Commercial [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	166,609	168,116
Pass [Member] | Commercial loans secured by real estate [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	447,160	436,318
Special Mention [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	13,524	8,584
Special Mention [Member] | Commercial [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	1,083	1,087
Special Mention [Member] | Commercial loans secured by real estate [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	12,441	7,497
Substandard [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	2,572	4,597
Substandard [Member] | Commercial [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	1,172	1,830
Substandard [Member] | Commercial loans secured by real estate [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	1,400	2,767
Doubtful [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	500	512
Doubtful [Member] | Commercial [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	484	496
Doubtful [Member] | Commercial loans secured by real estate [Member]
Loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system
Loan portfolio	$ 16	$ 16

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Allowance for Loan Losses (Details 5) - Consumer Portfolio Segment [Member] - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Performing [Member]
Performing and non-performing outstanding balances of the residential and consumer portfolios
Loan portfolio	$ 265,672	$ 264,708
Performing [Member] | Real estate - mortgage [Member]
Performing and non-performing outstanding balances of the residential and consumer portfolios
Loan portfolio	246,101	244,836
Performing [Member] | Consumer [Member]
Performing and non-performing outstanding balances of the residential and consumer portfolios
Loan portfolio	19,571	19,872
Non-Performing [Member]
Performing and non-performing outstanding balances of the residential and consumer portfolios
Loan portfolio	806	929
Non-Performing [Member] | Real estate - mortgage [Member]
Performing and non-performing outstanding balances of the residential and consumer portfolios
Loan portfolio	806	929
Non-Performing [Member] | Consumer [Member]
Performing and non-performing outstanding balances of the residential and consumer portfolios
Loan portfolio	$ 0	$ 0

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Allowance for Loan Losses (Details 6) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Current	$ 888,295	$ 879,366
Past Due	8,548	4,398
Total Loans	896,843	883,764
90 Days Past Due and Still Accruing	0	0
30-59 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	7,523	3,264
60-89 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	617	637
90 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	408	497
Commercial [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Current	169,208	171,292
Past Due	140	237
Total Loans	169,348	171,529
90 Days Past Due and Still Accruing	0	0
Commercial [Member] | 30-59 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	140	237
Commercial [Member] | 60-89 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	0	0
Commercial [Member] | 90 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	0	0
Commercial loans secured by real estate [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Current	456,482	446,477
Past Due	4,535	121
Total Loans	461,017	446,598
90 Days Past Due and Still Accruing	0	0
Commercial loans secured by real estate [Member] | 30-59 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	4,535	121
Commercial loans secured by real estate [Member] | 60-89 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	0	0
Commercial loans secured by real estate [Member] | 90 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	0	0
Real estate - mortgage [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Current	243,120	241,802
Past Due	3,787	3,963
Total Loans	246,907	245,765
90 Days Past Due and Still Accruing	0	0
Real estate - mortgage [Member] | 30-59 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	2,784	2,856
Real estate - mortgage [Member] | 60-89 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	595	610
Real estate - mortgage [Member] | 90 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	408	497
Consumer [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Current	19,485	19,795
Past Due	86	77
Total Loans	19,571	19,872
90 Days Past Due and Still Accruing	0	0
Consumer [Member] | 30-59 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	64	50
Consumer [Member] | 60-89 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	22	27
Consumer [Member] | 90 Days Past Due [Member]
Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans
Past Due	$ 0	$ 0

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Allowance for Loan Losses (Details Textual)	3 Months Ended
	Mar. 31, 2017 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individual loan balance is classified as nonaccrual status or troubled debt restructure	$ 100,000
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Threshold for individually evaluating loans	250,000
Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Minimum individual loan balance requiring quarterly review	1,000,000
Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Minimum individual loan balance requiring quarterly review	250,000
Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Minimum individual loan balance requiring quarterly review	$ 100,000
Minimum [Member] | Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Minimum percent of portfolio to be reviewed	50.00%
Maximum [Member] | Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Minimum percent of portfolio to be reviewed	55.00%

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Non-performing Assets Including Troubled Debt Restructurings (TDR) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Non-performing assets including TDR
Non-accrual loans	$ 1,463	$ 1,603
Other real estate owned	25	21
TDR’s not in non-accrual	0	0
Total non-performing assets including TDR	$ 1,488	$ 1,624
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned	0.17%	0.18%
Commercial [Member]
Non-performing assets including TDR
Non-accrual loans	$ 484	$ 496
Commercial loans secured by real estate [Member]
Non-performing assets including TDR
Non-accrual loans	173	178
Real estate - mortgage [Member]
Non-performing assets including TDR
Non-accrual loans	806	929
Other real estate owned	$ 25	$ 21

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Non-performing Assets Including Troubled Debt Restructurings (TDR) (Details 1) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Schedule of Interest Income
Interest income due in accordance with original terms	$ 16	$ 59
Interest income recorded	0	0
Net reduction in interest income	$ 16	$ 59

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Non-performing Assets Including Troubled Debt Restructurings (TDR) (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016
Aggregate of multiple consecutive maturity date extensions delay in payment, days	120 days
Timely payments on contract terms for minimum consecutive months prior to consideration for removing loan from TDR status	6 years
Minimum consecutive months payment for removing the loan from non-accrual status	6 years
ALL reserve for TDR's	$ 507,000		$ 24,000
Mortgage Loans in Process of Foreclosure, Amount	321,000
Residential Real Estate [Member]
Other Assets, Noncurrent	$ 25,000	$ 21,000

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Federal Home Loan Bank Borrowings (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Federal Home Loan Bank (FHLB) borrowings and advances
Open Repo Plus	$ 33,676	$ 12,754
Advances 2017, Amount	9,000	12,000
Advances 2018, Amount	12,000	12,000
Advances 2019, Amount	12,500	12,500
Advances 2020, Amount	11,542	8,042
Advances 2021 and over, Amount	1,000	1,000
Advances from Federal Home Loan Bank	46,042	45,542
Total FHLB borrowings, Amount	$ 79,718	$ 58,296
Open Repo Plus Maturity Overnight, Weighted Average Rate	0.95%	0.74%
Advances Maturing 2017, Weighted Average Rate	1.11%	1.06%
Advances Maturing 2018, Weighted Average Rate	1.48%	1.48%
Advances Maturing 2019, Weighted Average Rate	1.51%	1.51%
Advances Maturing 2020, Weighted Average Rate	1.60%	1.59%
Advances Maturing 2021 and over, Weighted Average Rate	1.60%	1.60%
Total FHLB borrowings, Weighted Average Rate	1.22%	1.23%
Weighted Average [Member]
Federal Home Loan Bank (FHLB) borrowings and advances
Advances from Federal Home Loan Bank	$ 46,042	$ 45,542
Total advances, Weighted Average Rate	1.41%	1.37%

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Preferred Stock (Details Textual) - USD ($) $ in Millions	1 Months Ended
	Aug. 11, 2011	Jan. 27, 2016
Temporary Equity [Line Items]
Shares of stock issued	21,000
Aggregate proceeds	$ 21
Redemption price, percent of liquidation amount		100.00%

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Accumulated Other Comprehensive Loss [Line Items]
Beginning balance	[1]	$ (11,577)	$ (7,555)
Other comprehensive income (loss) before reclassifications	[1]	(148)	1,069
Amounts reclassified from accumulated other comprehensive loss	[1]	242	(38)
Net current period other comprehensive income	[1]	94	1,031
Ending balance	[1]	(11,483)	(6,524)
Net Unrealized Gains and (Losses) on Investment Securities AFS [Member]
Accumulated Other Comprehensive Loss [Line Items]
Beginning balance	[1]	(171)	808
Other comprehensive income (loss) before reclassifications	[1]	62	736
Amounts reclassified from accumulated other comprehensive loss	[1]	(18)	(38)
Net current period other comprehensive income	[1]	44	698
Ending balance	[1]	(127)	1,506
Defined Benefit Pension Items [Member]
Accumulated Other Comprehensive Loss [Line Items]
Beginning balance	[1]	(11,406)	(8,363)
Other comprehensive income (loss) before reclassifications	[1]	(210)	333
Amounts reclassified from accumulated other comprehensive loss	[1]	260	0
Net current period other comprehensive income	[1]	50	333
Ending balance	[1]	$ (11,356)	$ (8,030)

[1] Amounts in parentheses indicate debits on the Consolidated Balance Sheets.

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Accumulated Other Comprehensive Loss (Details 1) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Realized (gains) and losses on sale of securities
Net realized gains on investment securities	[1]	$ (27)	$ (57)
Provision for income tax expense	[1]	9	19
Net of tax	[1]	(18)	(38)
Amortization of defined benefit items
Amortization of defined benefit items Recognized net actuarial loss	[1]	395	0
Provision for income taxes	[1]	(135)	0
Transition asset	[1]	260	0
Total reclassifications for the period	[1]	$ 242	$ (38)

[1] Amounts in parentheses indicate credits.

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Regulatory Capital (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
Summarized regulatory capital ratio of company
Total Capital (To RWA), Actual Amount		$ 108,243	$ 107,618
Tier 1 Common Equity (To RWA), Actual Amount		97,346	96,796
Tier 1 Capital (To RWA), Actual Amount		97,346	96,796
Tier 1 Capital (To Average Assets), Actual Amount		$ 97,346	$ 96,796
Total Capital (To RWA), Actual Ratio		11.32%	11.35%
Tier 1 Common Equity (To RWA), Actual Ratio		10.18%	10.21%
Tier 1 Capital (To RWA), Actual Ratio		10.18%	10.21%
Tier 1 Capital (To Average Assets), Actual Ratio		8.63%	8.61%
Total Capital (To RWA), Minimun Required For Capital Adequacy Purpose		8.00%	8.00%
Tier 1 Common Equity (To RWA), Minimum Required For Capital Adequacy Purpose		4.50%	4.50%
Tier 1 Capital (To RWA), Minimun Required For Capital Adequacy Purpose		6.00%	6.00%
Tier 1 Capital (To Average Assets), Minimun Required For Capital Adequacy Purpose		4.00%	4.00%
Total Capital (To RWA), To Be Will Capitalized Under Prompt Corrective Action Regulations	[1]	10.00%	10.00%
Tier 1 Common Equity (To RWA),To Be Will Capitalized Under Prompt Corrective Action Regulations	[1]	6.50%	6.50%
Tier 1 Capital (To RWA), TTo Be Will Capitalized Under Prompt Corrective Action Regulations	[1]	8.00%	8.00%
Tier 1 Capital (To Average Assets), To Be Will Capitalized Under Prompt Corrective Action Regulations	[1]	5.00%	5.00%
Parent Company [Member]
Summarized regulatory capital ratio of company
Total Capital (To RWA), Actual Amount		$ 125,331	$ 125,131
Tier 1 Common Equity (To RWA), Actual Amount		95,143	95,028
Tier 1 Capital (To RWA), Actual Amount		106,987	106,868
Tier 1 Capital (To Average Assets), Actual Amount		$ 106,987	$ 106,868
Total Capital (To RWA), Actual Ratio		13.03%	13.15%
Tier 1 Common Equity (To RWA), Actual Ratio		9.89%	9.99%
Tier 1 Capital (To RWA), Actual Ratio		11.13%	11.23%
Tier 1 Capital (To Average Assets), Actual Ratio		9.33%	9.35%

[1] Applies to the Bank only.

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Regulatory Capital (Details Textual)	Mar. 31, 2017
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tangible Capital to Tangible Assets	7.21%

XML

DERIVATIVE HEDGING INSTRUMENTS (Details)	3 Months Ended
	Mar. 31, 2017 USD ($)
Increase (Decrease) in Fair Value of Interest Rate Fair Value Hedging Instruments	$ 0
Derivative One [Member]
Derivative, Inception Date	Dec. 01, 2017
Derivative, Maturity Date	Dec. 01, 2027
Derivative, Swap Type	FAIR VALUE
Derivative, Notional Amount	$ 5,000,000
Derivative Instruments Interest Rate, Received	4.50%
Derivative Instruments Interest Rate, Paid	3.10%
Derivative Instruments, Repricing Frequency	MONTHLY
Increase (Decrease) in Fair Value of Interest Rate Fair Value Hedging Instruments	$ 15,367
Derivative Two [Member]
Derivative, Inception Date	Dec. 01, 2027
Derivative, Maturity Date	Dec. 01, 2027
Derivative, Swap Type	FAIR VALUE
Derivative, Notional Amount	$ 5,000,000
Derivative Instruments Interest Rate, Received	3.10%
Derivative Instruments Interest Rate, Paid	4.50%
Derivative Instruments, Repricing Frequency	MONTHLY
Increase (Decrease) in Fair Value of Interest Rate Fair Value Hedging Instruments	$ (15,367)

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DERIVATIVE HEDGING INSTRUMENTS (Details Textual)	3 Months Ended
	Mar. 31, 2017 USD ($)
Proceeds from Fees Received	$ 58,000
Derivative Liability	$ 500,000,000

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Segment Results (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Contribution of segments to the consolidated results of operations
Total revenue	$ 12,283	$ 11,995
Net income (loss)	1,348	(1,267)
Retail banking [Member]
Contribution of segments to the consolidated results of operations
Total revenue	6,243	6,297
Net income (loss)	617	583
Commercial Banking [Member]
Contribution of segments to the consolidated results of operations
Total revenue	4,725	4,635
Net income (loss)	1,472	(835)
Trust [Member]
Contribution of segments to the consolidated results of operations
Total revenue	2,326	2,177
Net income (loss)	367	145
Investment/ Parent [Member]
Contribution of segments to the consolidated results of operations
Total revenue	(1,011)	(1,114)
Net income (loss)	$ (1,108)	$ (1,160)

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Commitments and Contingent Liabilities (Details Textual) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Commitments to extend credit [Member]
Loss Contingencies [Line Items]
Amount of commitment	$ 159.8	$ 160.5
Standby letters of credit [Member]
Loss Contingencies [Line Items]
Amount of commitment	$ 8.4	$ 8.5

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Pension Benefits (Details) - Pension Plans, Defined Benefit [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service cost	$ 390	$ 368
Interest cost	326	344
Expected return on plan assets	(631)	(563)
Recognized net actuarial loss	367	314
Net periodic pension cost	$ 452	$ 463

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Pension Benefits (Details Textual)	3 Months Ended
	Mar. 31, 2017
Pension Benefits [Line Items]
Minimum number of annual hours	1,000
Vesting term	5 years
Maximum percent of plan assets comprised of AmeriServ Financial, Inc. common stock	10.00%

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Disclosures about Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	$ 129,044	$ 127,077
U.S. Agency Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	1,391	398
Taxable Municipal Bonds [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	5,287	3,622
Corporate Bond Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	33,476	33,873
U.S. Agency mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	88,890	89,184
Fair value swap asset [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	5
Level 1 [Member] | U.S. Agency Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0	0
Level 1 [Member] | Taxable Municipal Bonds [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0	0
Level 1 [Member] | Corporate Bond Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0	0
Level 1 [Member] | U.S. Agency mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0	0
Level 1 [Member] | Fair value swap asset [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0
Level 2 [Member] | U.S. Agency Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	1,391	398
Level 2 [Member] | Taxable Municipal Bonds [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	5,287	3,622
Level 2 [Member] | Corporate Bond Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	33,476	33,873
Level 2 [Member] | U.S. Agency mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	88,890	89,184
Level 2 [Member] | Fair value swap asset [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0
Level 3 [Member] | U.S. Agency Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0	0
Level 3 [Member] | Taxable Municipal Bonds [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0	0
Level 3 [Member] | Corporate Bond Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0	0
Level 3 [Member] | U.S. Agency mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	0	$ 0
Level 3 [Member] | Fair value swap asset [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale	$ 5

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Disclosures about Fair Value Measurements (Details 1) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
		Mar. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans		$ 657	$ 674
Fair Value Measurements, Nonrecurring Basis [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans		150	147
Other real estate owned		25	21
Fair Value Measurements, Nonrecurring Basis [Member] | Impaired Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans		$ 150	$ 147
Valuation Techniques	[1],[2]	Appraisal of collateral	Appraisal of collateral
Appraisal of Adjustment	[3]	42.00%	0.00%
Fair Value Measurements, Nonrecurring Basis [Member] | Other Real Estate Owned [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other real estate owned		$ 25	$ 21
Valuation Techniques	[1],[2]	Appraisal of collateral	Appraisal of collateral
Appraisal of Adjustment	[3]	17.00%	42.00%
Liquidation expenses		108.00%	37.00%
Fair Value Measurements, Nonrecurring Basis [Member] | Minimum [Member] | Impaired Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Appraisal of Adjustment	[3]	40.00%	40.00%
Fair Value Measurements, Nonrecurring Basis [Member] | Minimum [Member] | Other Real Estate Owned [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Appraisal of Adjustment	[3]	0.00%	20.00%
Liquidation expenses		2.00%	3.00%
Fair Value Measurements, Nonrecurring Basis [Member] | Maximum [Member] | Impaired Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Appraisal of Adjustment	[3]	77.00%	99.00%
Fair Value Measurements, Nonrecurring Basis [Member] | Maximum [Member] | Other Real Estate Owned [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Appraisal of Adjustment	[3]	43.00%	77.00%
Liquidation expenses		206.00%	199.00%
Fair Value Measurements, Nonrecurring Basis [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans		$ 0	$ 0
Other real estate owned		0	0
Fair Value Measurements, Nonrecurring Basis [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans		0	0
Other real estate owned		0	0
Fair Value Measurements, Nonrecurring Basis [Member] | Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans		150	147
Other real estate owned		$ 25	$ 21

[1] Fair Value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

[2] Includes qualitative adjustments by management and estimated liquidation expenses.

[3] Appraisals may be adjusted by management for qualitative factors such as economic conditions.

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Disclosures about Fair Value Measurements (Details 2) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
FINANCIAL ASSETS: Carrying Value
Cash and cash equivalents	$ 31,016	$ 34,073	$ 23,623	$ 48,510
Investment securities - AFS	129,044	127,077
Investment securities - HTM	36,737	30,665
Regulatory stock	6,409	5,484
Loans held for sale	2,613	3,094
Loans, net of allowance for loan loss and unearned income	886,763	873,832
Accrued interest income receivable	3,200	3,116
Bank owned life insurance	38,044	37,903
Fair value swap asset	5
Cash and cash equivalents	31,016	34,073
Investment securities - AFS	129,044	127,077
Investment securities - HTM	36,594	30,420
Regulatory stock	6,409	5,484
Loans held for sale	2,660	3,158
Loans, net of allowance for loan loss and unearned income	882,004	869,960
Accrued interest income receivable	3,200	3,116
Bank owned life insurance	38,044	37,903
Fair value swap asset	5
FINANCIAL LIABILITIES: Carrying Value
Deposits with no stated maturities	709,932	708,062
Deposits with stated maturities	254,844	259,724
Short-term borrowings	33,676	12,754
All other borrowings	66,401	65,891
Accrued interest payable	1,501	1,640
Fair value swap liability	500,000
Deposits with no stated maturities	709,932	708,062
Deposits with stated maturities	255,220	261,446
Short-term borrowings	33,676	12,754
All other borrowings	69,833	69,348
Accrued interest payable	1,501	1,640
Fair value swap liability	5
Level 1 [Member]
FINANCIAL ASSETS: Carrying Value
Cash and cash equivalents	31,016	34,073
Investment securities - AFS	0	0
Investment securities - HTM	0	0
Regulatory stock	6,409	5,484
Loans held for sale	2,660	3,158
Loans, net of allowance for loan loss and unearned income	0	0
Accrued interest income receivable	3,200	3,116
Bank owned life insurance	38,044	37,903
Fair value swap asset	0
FINANCIAL LIABILITIES: Carrying Value
Deposits with no stated maturities	709,932	708,062
Deposits with stated maturities	0	0
Short-term borrowings	33,676	12,754
All other borrowings	0	0
Accrued interest payable	1,501	1,640
Fair value swap liability	0
Level 2 [Member]
FINANCIAL ASSETS: Carrying Value
Cash and cash equivalents	0	0
Investment securities - AFS	129,044	127,077
Investment securities - HTM	33,648	27,473
Regulatory stock	0	0
Loans held for sale	0	0
Loans, net of allowance for loan loss and unearned income	0	0
Accrued interest income receivable	0	0
Bank owned life insurance	0	0
Fair value swap asset	0
FINANCIAL LIABILITIES: Carrying Value
Deposits with no stated maturities	0	0
Deposits with stated maturities	0	0
Short-term borrowings	0	0
All other borrowings	0	0
Accrued interest payable	0	0
Fair value swap liability	0
Level 3 [Member]
FINANCIAL ASSETS: Carrying Value
Cash and cash equivalents	0	0
Investment securities - AFS	0	0
Investment securities - HTM	2,946	2,947
Regulatory stock	0	0
Loans held for sale	0	0
Loans, net of allowance for loan loss and unearned income	882,004	869,960
Accrued interest income receivable	0	0
Bank owned life insurance	0	0
Fair value swap asset	5
FINANCIAL LIABILITIES: Carrying Value
Deposits with no stated maturities	0	0
Deposits with stated maturities	255,220	261,446
Short-term borrowings	0	0
All other borrowings	69,833	69,348
Accrued interest payable	0	$ 0
Fair value swap liability	$ 5

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Disclosures about Fair Value Measurements (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying value of impaired loans	$ 657,000	$ 674,000
Specific valuation allowance	507,000	527,000
Net fair value of impaired loans	$ 150,000	$ 147,000
Assets and liabilities considered financial instruments, percentage	90.00%