FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2015

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	September 30, 2015				December 31, 2014
	Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Amount		Value		Amount		Value
Financial Assets:
Cash and due from banks	Level 1	$	97,800	$	97,800	$	54,516	$	54,516
Federal funds sold	Level 2		-		-		1,000		1,000
Interest-bearing time deposits in other banks	Level 2		-		-		10,000		10,017
Investment securities held to maturity	Level 2		66,427		69,402		62,270		64,796
Investment securities available for sale	Level 2		261,232		261,232		298,670		298,670
Loans held for sale	Level 2		745		745		26,495		26,495
Loans, net of allowance	Level 2, 3 (1)		1,539,205		1,537,750		1,336,227		1,329,041
Accrued interest and loan fees receivable	Level 2		6,349		6,349		5,676		5,676
Financial Liabilities:
Non-maturity deposits	Level 2		1,560,292		1,560,292		1,337,301		1,337,301
Time deposits	Level 2		235,539		235,883		218,759		219,089
Borrowings	Level 2		50,000		50,052		130,000		130,004
Accrued interest payable	Level 2		187		187		136		136
Derivatives	Level 3		752		752		752		752

(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:	September 30, 2015		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Impaired loans	$	3,304	$	3,304
Total	$	3,304	$	3,304

Assets:	December 31, 2014		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Impaired loans	$	3,293	$	3,293
Total	$	3,293	$	3,293

Fair value inputs, 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
Assets:	September 30, 2015		December 31, 2014		Valuation Technique	Unobservable Inputs	Discount
Impaired loans:
Residential mortgages		2,918		3,097	Third party appraisal	Discount to appraised value		25	% (1)
Home equity		272		98	Third party appraisal	Discount to appraised value		25	% (1)
Consumer		114		98	Third party appraisal	Discount to appraised value		25	% (2)
Total	$	3,304	$	3,293

(1) Of which estimated selling costs are approximately 9% - 15% of the total discount.

(2) Of which estimated selling costs are approximately 10% - 12% of the total discount.

Valuation of financial instruments measured at fair value on recurring basis

The following presents fair value measurements on a recurring basis at September 30, 2015 and December 31, 2014 (in thousands):

			Fair Value Measurements Using
			Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	September 30, 2015		(Level 2)		(Level 3)
U.S. Government agency securities	$	38,794	$	38,794	$	-
Obligations of states and political subdivisions		110,372		110,372		-
Collateralized mortgage obligations		16,466		16,466		-
Mortgage-backed securities		89,630		89,630		-
Corporate bonds		5,970		5,970		-
Total	$	261,232	$	261,232	$	-
Liabilities:
Derivatives		752	$	-	$	752
Total	$	752	$	-	$	752

			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	$	-
Obligations of states and political subdivisions		137,769		137,769		-
Collateralized mortgage obligations		21,997		21,997		-
Mortgage-backed securities		90,919		90,919		-
Corporate bonds		6,408		6,408		-
Total	$	298,670	$	298,670	$	-
Liabilities:
Derivatives		752	$	-	$	752
Total	$	752	$	-	$	752

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) follow (in thousands).

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	Liabilities Derivatives		Liabilities Derivatives		Liabilities Derivatives		Liabilities Derivatives
Beginning balance	$	752	$	932	$	752	$	932
Net change		-		-		-		-
Ending balance	$	752	$	932	$	752	$	932