FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2014

FAIR VALUE [Abstract]

Carrying amounts and fair values of financial instruments

The following table presents the carrying amounts and fair values of the Company’s financial instruments (in thousands).

	Level in	December 31, 2014				December 31, 2013
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Assets:
Cash and due from banks	Level 1	$	54,516	$	54,516	$	131,352	$	131,352
Federal funds sold	Level 2		1,000		1,000		1,000		1,000
Interest-bearing time deposits in other banks	Level 2		10,000		10,017		10,000		10,000
Federal Reserve Bank, Federal Home Loan
Bank and other stock	N/A		8,600		N/A		2,863		N/A
Investment securities held to maturity	Level 2		62,270		64,796		11,666		12,234
Investment securities available for sale	Level 2		298,670		298,670		400,780		400,780
Loans held for sale	Level 2		26,495		26,495		175		175
Loans, net of allowance	Level 2, 3 (1)		1,336,227		1,329,041		1,051,585		1,056,279
Accrued interest and loan fees receivable	Level 2		5,676		5,676		5,441		5,441
Financial Liabilities:
Non-maturity deposits	Level 2		1,337,301		1,337,301		1,284,982		1,284,982
Time deposits	Level 2		218,759		219,089		225,079		225,946
Borrowings	Level 2		130,000		130,004		-		-
Accrued interest payable	Level 2		136		136		160		160
Derivatives	Level 3		752		752		932		932

(1) Impaired loans are generally classified within Level 3 of the fair value hierarchy.

Assets measured at fair value on a non-recurring basis

Assets measured at fair value on a non-recurring basis are as follows (in thousands):

Assets:	December 31, 2014		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Impaired loans (1)	$	16,559	$	16,559
Total	$	16,559	$	16,559

                       (1) Collateral dependent.

Assets:	December 31, 2013		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Impaired loans (1)	$	16,942	$	16,942
Total	$	16,942	$	16,942

                       (1) Collateral dependent.

Fair Value Inputs, Liabilities, Quantitative Information

The following presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis (dollars in thousands):

	Fair Value at December 31,				Valuation	Unobservable
Assets:	2014		2013		Technique	Inputs	Discount
Impaired loans (1):
Commercial and industrial	$	3,049	$	3,384	Third party appraisal and/or internal evaluation	Discount to appraised value (2), (3); estimated selling costs	5.6% to 50%
Commercial real estate		6,521		7,426	Third party appraisal and/or internal evaluation	Discount to appraised value (3); estimated selling costs	5.6% to 6.6%
Residential mortgages		5,422		5,050	Third party appraisal	Discount to appraised value (3); estimated selling costs		25%
Home equity		1,567		1,082	Third party appraisal	Discount to appraised value (3); estimated selling costs		25%
Total	$	16,559	$	16,942

(1) Collateral dependent.

(2) The Company also makes adjustments to the appraised value based upon evaluation of corporate assets, such as inventory and accounts receivable, and other factors. Higher discounts may be applied to certain assets, such as inventory and accounts receivable.

(3) The Company also makes adjustments to the appraised value based upon various information known to management about the property, market conditions and other factors.

Valuation of financial instruments measured at fair value on recurring basis

The following presents fair value measurements on a recurring basis as of December 31, 2014 and 2013 (in thousands):

			Fair Value Measurements Using
			Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	December 31, 2014		(Level 2)		(Level 3)
U.S. Government agency securities	$	41,577	$	41,577	$	-
Corporate bonds		6,408		6,408		-
Collateralized mortgage obligations		21,997		21,997		-
Mortgage-backed securities		90,919		90,919		-
Obligations of states and political
subdivisions		137,769		137,769		-
Total	$	298,670	$	298,670	$	-
Liabilities:
Derivatives		752	$	-	$	752
Total	$	752	$	-	$	752

			Fair Value Measurements Using
			Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	December 31, 2013		(Level 2)		(Level 3)
U.S. Government agency securities	$	100,095	$	100,095	$	-
Corporate bonds		15,651		15,651		-
Collateralized mortgage obligations		30,104		30,104		-
Mortgage-backed securities		97,767		97,767		-
Obligations of states and political
subdivisions		157,163		157,163		-
Total	$	400,780	$	400,780	$	-
Liabilities:
Derivatives		932	$	-	$	932
Total	$	932	$	-	$	932

Changes in Level 3 assets and liabilities measured at fair value on a recurring basis

Reconciliations for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2014, 2013 and 2012 follow (in thousands).

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Assets			Liabilities
	Collateralized Mortgage Obligations			Derivatives
Balance at January 1, 2012	$	7,994		$	-
Sales		(7,994	)		-
Balance at December 31, 2012		-			-
Net increases		-			932
Balance at December 31, 2013		-			932
Net decreases		-			(180	)
Balance at December 31, 2014	$	-		$	752