FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2015

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

Summary of assets measured at fair value on a recurring basis

The following tables present the assets reported on the consolidated balance sheet at their fair value on a recurring basis as of December 31, 2015 and 2014 (in thousands) 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.

2015	Level I	Level II	Level III	Total
Fair value measurements on a recurring basis:
Securities available for sale:
U.S. agency securities	$                  -	$           199,591	$               -	$         199,591
U.S. treasuries securities	10,082	-	-	10,082
Obligations of state and
political subdivisions	-	102,863	-	102,863
Corporate obligations	-	14,565	-	14,565
Mortgage-backed securities in
government sponsored entities	-	30,204	-	30,204
Equity securities in financial institutions	2,432	-	-	2,432

2014	Level I	Level II	Level III	Total
Fair value measurements on a recurring basis:
Securities available for sale:
U.S. agency securities	$                  -	$           150,885	$               -	$         150,885
U.S. treasuries	4,849	-	-	4,849
Obligations of state and
political subdivisions	-	105,036	-	105,036
Corporate obligations	-	13,958	-	13,958
Mortgage-backed securities in
government sponsored entities	-	29,728	-	29,728
Equity securities in financial institutions	1,690	-	-	1,690

Summary of assets measured at fair value on non-recurring basis

Assets measured at fair value on a nonrecurring basis as of December 31, 2015 and 2014 (in thousands) are included in the table below:

2015	Level I	Level II	Level III	Total
Impaired Loans	$                  -	$                      -	$          894	$                  894
Other real estate owned	-	-	1,197	1,197
2014	Level I	Level II	Level III	Total
Impaired Loans	$                  -	$                      -	$          846	$                  846
Other real estate owned	-	-	893	893

Significant unobservable inputs used in fair value measurement process

The following table provides a listing of the significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques.

Quantitative Information about Level 3 Fair Value Measurements
2015	Fair Value	Valuation Technique(s)	Unobservable input	Range	Weighted average
Impaired Loans	894	Appraised Collateral Values	Discount for time since appraisal	0-70%	46.50%
			Selling costs	4%-10%	7.75%
			Holding period	0 - 12 months	10 months
Other real estate owned	1,197	Appraised Collateral Values	Discount for time since appraisal	0-75%	25%
2014	Fair Value	Valuation Technique(s)	Unobservable input	Range	Weighted average
Impaired Loans	846	Appraised Collateral Values	Discount for time since appraisal	0-20%	2.00%
			Selling costs	4%-10%	8.54%
			Holding period	12 months	12 months
Other real estate owned	893	Appraised Collateral Values	Discount for time since appraisal	0-20%	20%

Fair value of financial instruments

The fair values of the Company’s financial instruments are as follows (in thousands):

	Carrying
December 31, 2015	Amount	Fair Value	Level I	Level II	Level III
Financial assets:
Cash and due from banks	$        24,384	$     24,384	$       24,384	$              -	$              -
Interest bearing time deposits with other banks	7,696	7,705	-	-	7,705
Available-for-sale securities	359,737	359,737	12,514	347,223	-
Loans held for sale	603	603	603
Net loans	687,925	712,524	-	-	712,524
Bank owned life insurance	25,535	25,535	25,535	-	-
Regulatory stock	3,459	3,459	3,459	-	-
Accrued interest receivable	4,211	4,211	4,211	-	-
Financial liabilities:
Deposits	$      988,031	$   987,542	$     706,121	$              -	$  281,421
Borrowed funds	41,631	38,863	1,598	-	37,265
Accrued interest payable	734	734	734	-	-

	Carrying
December 31, 2014	Amount	Fair Value	Level I	Level II	Level III
Financial assets:
Cash and due from banks	$        11,423	$     11,423	$       11,423	$              -	$              -
Interest bearing time deposits with other banks	5,960	5,969	-	-	5,969
Available-for-sale securities	306,146	306,146	6,539	299,607	-
Loans held for sale	497	497	497
Net loans	547,290	564,944	-	-	564,944
Bank owned life insurance	20,309	20,309	20,309	-	-
Regulatory stock	2,035	2,035	2,035	-	-
Accrued interest receivable	3,644	3,644	3,644	-	-
Financial liabilities:
Deposits	$      773,933	$   774,387	$     525,166	$              -	$  249,221
Borrowed funds	41,799	38,219	16,593	-	21,626
Accrued interest payable	756	756	756	-	-