10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2014

or

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

For the transition period from _____________ to _____________

Commission File Number: 001-34527

EMCLAIRE FINANCIAL CORP

(Exact name of registrant as specified in its charter)

Pennsylvania	25-1606091
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
612 Main Street, Emlenton, Pennsylvania	16373
(Address of principal executive offices)	(Zip Code)

(844) 767-2311

(Registrant’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company as defined in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

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

The number of shares outstanding of the Registrant’s common stock was 1,771,158 at August 11, 2014.

EMCLAIRE FINANCIAL CORP

INDEX TO QUARTERLY REPORT ON FORM 10-Q

PART I – FINANCIAL INFORMATION
Item 1.	Interim Financial Statements (Unaudited)
	Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013	1
	Consolidated Statements of Net Income for the  three and six months ended June 30, 2014 and 2013	2
	Consolidated Statements of Comprehensive Income (Loss) for the  three and six months ended June 30, 2014 and 2013	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013	4
	Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2014 and 2013	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
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	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
Signatures		44

PART I - FINANCIAL INFORMATION

Item 1. Interim Financial Statements

Emclaire Financial Corp

Consolidated Balance Sheets

As of June 30, 2014 (Unaudited) and December 31, 2013

(Dollar amounts in thousands, except per share data)

	June 30,			December 31,
	2014			2013
Assets
Cash and due from banks	$	2,426		$	2,485
Interest earning deposits with banks		35,068			14,173
Cash and cash equivalents		37,494			16,658
Securities available for sale		146,527			117,304
Loans receivable, net of allowance for loan losses of $5,046 and $4,869		360,469			352,430
Federal bank stocks, at cost		2,791			3,977
Bank-owned life insurance		10,562			10,401
Accrued interest receivable		1,530			1,466
Premises and equipment, net		14,114			12,310
Goodwill		3,664			3,664
Core deposit intangible, net		852			965
Prepaid expenses and other assets		5,699			6,667
Total Assets	$	583,702		$	525,842
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest bearing	$	115,362		$	104,269
Interest bearing		399,041			327,737
Total deposits		514,403			432,006
Short-term borrowed funds		2,150			24,150
Long-term borrowed funds		15,000			20,000
Accrued interest payable		253			292
Accrued expenses and other liabilities		4,439			4,322
Total Liabilities		536,245			480,770
Commitments and Contingent Liabilities		-			-
Stockholders' Equity:
Preferred stock, $1.00 par value, 3,000,000 shares authorized;
Series B, non-cumulative preferred stock, $5,000 liquidation value, 5,000 shares issued and outstanding		5,000			5,000
Common stock, $1.25 par value, 12,000,000 shares authorized; 1,872,175 and 1,870,675 shares issued; 1,770,158 and 1,768,658 shares outstanding, respectively		2,340			2,338
Additional paid-in capital		19,586			19,478
Treasury stock, at cost; 102,017 shares		(2,114	)		(2,114	)
Retained earnings		24,541			23,650
Accumulated other comprehensive loss		(1,896	)		(3,280	)
Total Stockholders' Equity		47,457			45,072
Total Liabilities and Stockholders' Equity	$	583,702		$	525,842

See accompanying notes to consolidated financial statements.

1

Emclaire Financial Corp

Consolidated Statements of Net Income (Unaudited)

For the three and six months ended June 30, 2014 and 2013

(Dollar amounts in thousands, except per share data)

	For the three months ended				For the six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Interest and dividend income:
Loans receivable, including fees	$	4,089	$	4,098	$	8,119	$	8,297
Securities:
Taxable		493		470		897		887
Exempt from federal income tax		253		295		518		562
Federal bank stocks		44		17		79		35
Interest earning deposits with banks		27		18		38		31
Total interest and dividend income		4,906		4,898		9,651		9,812
Interest expense:
Deposits		607		805		1,169		1,643
Borrowed funds		149		194		329		392
Total interest expense		756		999		1,498		2,035
Net interest income		4,150		3,899		8,153		7,777
Provision for loan losses		183		153		345		295
Net interest income after provision for loan losses		3,967		3,746		7,808		7,482
Noninterest income:
Fees and service charges		394		428		771		826
Commissions on financial services		13		76		22		139
Title premiums		15		27		24		49
Net gain on sales of available for sale securities		-		99		658		184
Earnings on bank-owned life insurance		93		96		192		192
Other		318		305		605		571
Total noninterest income		833		1,031		2,272		1,961
Noninterest expense:
Compensation and employee benefits		1,832		1,932		3,774		3,837
Premises and equipment		604		527		1,204		1,069
Intangible asset amortization		57		73		113		145
Professional fees		183		178		346		355
Federal deposit insurance		88		102		176		208
Other		942		820		2,314		1,593
Total noninterest expense		3,706		3,632		7,927		7,207
Income before provision for income taxes		1,094		1,145		2,153		2,236
Provision for income taxes		216		206		433		439
Net income		878		939		1,720		1,797
Preferred stock dividends		25		125		50		250
Net income available to common stockholders	$	853	$	814	$	1,670	$	1,547
Basic and diluted earnings per common share	$	0.48	$	0.46	$	0.94	$	0.88
Diluted earnings per common share		0.48		0.46		0.94		0.87
Average common shares outstanding		1,770,158		1,762,158		1,769,775		1,761,546

See accompanying notes to consolidated financial statements.

2

Emclaire Financial Corp

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

For the three and six months ended June 30, 2014 and 2013

(Dollar amounts in thousands)

	For the three months ended						For the six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Net income	$	878		$	939		$	1,720		$	1,797
Other comprehensive income (loss)
Unrealized gains (losses) on securities:
Unrealized holding gain (loss) arising during the period		1,525			(4,110	)		2,755			(4,471	)
Reclassification adjustment for gains included in net income		-			(99	)		(658	)		(184	)
		1,525			(4,209	)		2,097			(4,655	)
Tax effect		(519	)		1,431			(713	)		1,583
Net of tax		1,006			(2,778	)		1,384			(3,072	)
Comprehensive income (loss)	$	1,884		$	(1,839	)	$	3,104		$	(1,275	)

See accompanying notes to consolidated financial statements.

3

Emclaire Financial Corp

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the six months ended June 30, 2014 and 2013

(Dollar amounts in thousands)

	For the six months ended
	June 30,
	2014			2013
Cash flows from operating activities
Net income	$	1,720		$	1,797
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		386			336
Provision for loan losses		345			295
Amortization of premiums, net		127			90
Amortization of intangible assets and mortgage servicing rights		113			145
Realized gains on sales of available for sale securities, net		(658	)		(184	)
Net gains on foreclosed real estate		(14	)		(12	)
Restricted stock and stock option compensation		84			98
Increase in bank-owned life insurance, net		(161	)		(164	)
Increase in accrued interest receivable		(64	)		(49	)
Decrease in prepaid expenses and other assets		169			1,111
Decrease in accrued interest payable		(39	)		(65	)
Increase in accrued expenses and other liabilities		117			250
Net cash provided by operating activities		2,125			3,648
Cash flows from investing activities
Loan originations and principal collections, net		(8,531	)		(1,055	)
Available for sale securities:
Sales		21,559			3,314
Maturities, repayments and calls		5,227			26,304
Purchases		(53,255	)		(60,116	)
Redemption (purchase) of federal bank stocks		1,186			(555	)
Proceeds from the sale of foreclosed real estate		121			70
Write-down of foreclosed real estate		-			19
Additions to premises and equipment		(2,190	)		(2,251	)
Net cash used in investing activities		(35,883	)		(34,270	)
Cash flows from financing activities
Net increase in deposits		82,397			17,038
Repayments on Federal Home Loan Bank advances		(5,000	)		-
Net change in short-term borrowings		(22,000	)		5,500
Proceeds from exercise of stock options, including tax benefit		26			20
Dividends paid		(829	)		(955	)
Net cash provided by financing activities		54,594			21,603
Increase (decrease) in cash and cash equivalents		20,836			(9,019	)
Cash and cash equivalents at beginning of period		16,658			20,424
Cash and cash equivalents at end of period	$	37,494		$	11,405
Supplemental information:
Interest paid	$	1,537		$	2,100
Income taxes paid		-			140
Supplemental noncash disclosure:
Transfers from loans to foreclosed real estate		20			92

See accompanying notes to consolidated financial statements.

4

Emclaire Financial Corp

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

For the three and six months ended June 30, 2014 and 2013

(Dollar amounts in thousands, except per share data)

	For the three months ended						For the six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Balance at beginning of period	$	45,945		$	51,866		$	45,072		$	51,725
Net income		878			939			1,720			1,797
Other comprehensive income (loss)		1,006			(2,778	)		1,384			(3,072	)
Stock compensation expense		42			63			84			98
Dividends declared on preferred stock		(25	)		(125	)		(50	)		(250	)
Dividends declared on common stock		(389	)		(352	)		(779	)		(705	)
Exercise of stock options, including tax benefit		-			-			26			20
Balance at end of period	$	47,457		$	49,613		$	47,457		$	49,613
Common cash dividend per share	$	0.22		$	0.20		$	0.44		$	0.40

See accompanying notes to consolidated financial statements.

5

Emclaire Financial Corp

Notes to Consolidated Financial Statements (Unaudited)

1. Nature of Operations and Basis of Presentation

Emclaire Financial Corp (the Corporation) is a Pennsylvania corporation and the holding company of The Farmers National Bank of Emlenton (the Bank) and Emclaire Settlement Services, LLC (the Title Company). The Corporation provides a variety of financial services to individuals and businesses through its offices in Western Pennsylvania. Its primary deposit products are checking, savings and term certificate accounts and its primary lending products are residential and commercial mortgages, commercial business loans and consumer loans.

The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, the Bank and the Title Company. All significant intercompany transactions and balances have been eliminated in preparing the consolidated financial statements.

The accompanying unaudited consolidated financial statements for the interim periods include all adjustments, consisting of normal recurring accruals, which are necessary, in the opinion of management, to fairly reflect the Corporation’s consolidated financial position and results of operations. Additionally, these consolidated financial statements for the interim periods have been prepared in accordance with instructions for the Securities and Exchange Commission’s (SEC’s) Form 10-Q and Article 10 of Regulation S-X and therefore do not include all information or footnotes necessary for a complete presentation of financial condition, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America (GAAP). For further information, refer to the audited consolidated financial statements and footnotes thereto for the year ended December 31, 2013, as contained in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC.

The balance sheet at December 31, 2013 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements.

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, fair value of financial instruments, goodwill, real estate owned, the valuation of deferred tax assets and other-than-temporary impairment charges on securities. The results of operations for interim quarterly or year-to-date periods are not necessarily indicative of the results that may be expected for the entire year or any other period. Certain amounts previously reported may have been reclassified to conform to the current year’s financial statement presentation.

6

2. Participation in the Small Business Lending Fund (SBLF) of the U.S. Treasury Department (U.S. Treasury)

On August 18, 2011, the Corporation entered into a Securities Purchase Agreement (the Agreement) with the U.S. Treasury Department, pursuant to which the Corporation issued and sold to the U.S. Treasury 10,000 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series B (Series B Preferred Stock), having a liquidation preference of $1,000 per share, for aggregate proceeds of $10.0 million, pursuant to the U.S. Treasury’s SBLF program. On September 17, 2013, with the approval of the Corporation’s primary federal banking regulator, the Corporation redeemed 5,000 shares, or 50%, of its Series B Preferred Stock held by the U.S. Treasury at an aggregate redemption price of $5.0 million, plus accrued but unpaid dividends. Following this redemption, the Treasury holds 5,000 shares of the Series B Preferred Stock, representing a remaining liquidation value of $5.0 million.

The Series B Preferred Stock is entitled to receive non-cumulative dividends payable quarterly on each January 1, April 1, July 1 and October 1, beginning October 1, 2011. The dividend rate, which is calculated on the aggregate liquidation amount, was initially set at 5% per annum based upon the current level of Qualified Small Business Lending (QSBL) by the Bank at that time. The dividend rate in the subsequent periods for the first two and one-half years through the quarter ending December 31, 2013 was based upon the percentage change in qualified lending between each dividend period and the baseline QSBL level established at the time the Agreement was entered into. Such dividend rate varied from 1% to 5% per annum. For the two year period beginning January 1, 2014, the dividend rate is fixed at a rate of 2% per annum. If the Series B Preferred Stock remains outstanding for more than four-and-one-half years, beginning January 1, 2016, the dividend rate will be fixed at 9%. The dividend rate was 2.0% and 5.0%, respectively, for the quarters ended June 30, 2014 and 2013. Such dividends are not cumulative, but the Corporation may only declare and pay dividends on its common stock (or any other equity securities junior to the Series B Preferred Stock) if it has declared and paid dividends for the current dividend period on the Series B Preferred Stock, and will be subject to other restrictions on its ability to repurchase or redeem other securities.

Holders of the Series B Preferred Stock have the right to vote as a separate class on certain matters relating to the rights of holders of Series B Preferred Stock and on certain corporate transactions. Except with respect to such matters, the Series B Preferred Stock does not have voting rights.

The Corporation may redeem the shares of Series B Preferred Stock, in whole or in part, at any time at a redemption price equal to the sum of the liquidation amount and the per-share amount of any unpaid dividends for the then-current period, subject to any required prior approval by the Corporation’s primary federal banking regulator. If redeemed in part, payments are required to be at least 25% of the original issuance.

3. Earnings per Common Share

Basic earnings per common share (EPS) excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS includes the dilutive effect of additional potential common shares for assumed issuance of restricted stock and shares issued under stock options.

7

3. Earnings per Common Share (continued)

The factors used in the Corporation’s earnings per common share computation follow:

(Dollar amounts in thousands, except for per share amounts)	For the three months ended				For the six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Earnings per common share - basic
Net income	$	878	$	939	$	1,720	$	1,797
Less: Preferred stock dividends		25		125		50		250
.
Net income available to common stockholders	$	853	$	814	$	1,670	$	1,547
Average common shares outstanding		1,770,158		1,762,158		1,769,775		1,761,546
Basic earnings per common share	$	0.48	$	0.46	$	0.94	$	0.88
Earnings per common share - diluted
Net income available to common stockholders	$	853	$	814	$	1,670	$	1,547
Average common shares outstanding		1,770,158		1,762,158		1,769,775		1,761,546
Add: Dilutive effects of assumed issuance of restricted stock and exercise of stock options		14,691		14,223		13,893		13,350
Average shares and dilutive potential common shares		1,784,849		1,776,381		1,783,668		1,774,896
Diluted earnings per common share	$	0.48	$	0.46	$	0.94	$	0.87
Stock options and restricted stock awards not considered in computing diluted earnings per share because they were antidilutive		67,000		67,000		67,000		67,000

4. Securities

The following table summarizes the Corporation’s securities as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale:
June 30, 2014:
U.S. Treasury and federal agency	$	3,469	$	-	$	(135	)	$	3,334
U.S. government sponsored entities and agencies		32,445		16		(282	)		32,179
U.S. agency mortgage-backed securities: residential		34,533		481		-			35,014
U.S. agency collateralized mortgage obligations: residential		38,910		-		(1,310	)		37,600
State and political subdivisions		34,545		786		(345	)		34,986
Corporate debt securities		1,004		-		(2	)		1,002
Equity securities		2,356		87		(31	)		2,412
	$	147,262	$	1,370	$	(2,105	)	$	146,527
December 31, 2013:
U.S. Treasury and federal agency	$	4,466	$	-	$	(298	)	$	4,168
U.S. government sponsored entities and agencies		23,637		-		(745	)		22,892
U.S. agency mortgage-backed securities: residential		11,020		341		-			11,361
U.S. agency collateralized mortgage obligations: residential		41,751		2		(2,031	)		39,722
State and political subdivisions		36,657		830		(988	)		36,499
Corporate debt securities		250		-		(9	)		241
Equity securities		2,356		131		(66	)		2,421
	$	120,137	$	1,304	$	(4,137	)	$	117,304

8

4. Securities (continued)

The following table summarizes scheduled maturities of the Corporation’s debt securities as of June 30, 2014. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities and collateralized mortgage obligations are not due at a single maturity and are shown separately.

(Dollar amounts in thousands)	Available for sale
	Amortized		Fair
	Cost		Value
Due in one year or less	$	55	$	56
Due after one year through five years		36,461		36,499
Due after five through ten years		31,526		31,564
Due after ten years		3,421		3,382
Mortgage-backed securities: residential		34,533		35,014
Collateralized mortgage obligations: residential		38,910		37,600
	$	144,906	$	144,115

Information pertaining to securities with gross unrealized losses at June 30, 2014 and December 31, 2013, aggregated by investment category and length of time that individual securities have been in a continuous loss position are included in the table below:

(Dollar amounts in thousands)	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
June 30, 2014:
U.S. Treasury and federal agency	$	-	$	-		$	3,334	$	(135	)	$	3,334	$	(135	)
U.S. government sponsored entities and agencies		4,245		(19	)		18,728		(263	)		22,973		(282	)
U.S. agency collateralized mortgage obligations: residential		8,556		(135	)		29,044		(1,175	)		37,600		(1,310	)
State and political subdivisions		1,192		(8	)		12,767		(337	)		13,959		(345	)
Corporate debt securities		1,002		(2	)		-		-			1,002		(2	)
Equity securities		1,161		(31	)		-		-			1,161		(31	)
	$	16,156	$	(195	)	$	63,873	$	(1,910	)	$	80,029	$	(2,105	)
December 31, 2013:
U.S. Treasury and federal agency	$	4,168	$	(298	)	$	-	$	-		$	4,168	$	(298	)
U.S. government sponsored entities and agencies		22,891		(745	)		-		-			22,891		(745	)
U.S. agency mortgage-backed securities: residential		33,805		(1,729	)		4,982		(302	)		38,787		(2,031	)
State and political subdivisions		13,262		(988	)		-		-			13,262		(988	)
Corporate debt securities		242		(9	)		-		-			242		(9	)
Equity securities		1,142		(66	)		-		-			1,142		(66	)
	$	75,510	$	(3,835	)	$	4,982	$	(302	)	$	80,492	$	(4,137	)

Gains on sales of available for sale securities for the three and six months ended June 30 were as follows:

(Dollar amounts in thousands)	For the three months				For the six months
	ended June 30,				ended June 30,
	2014		2013		2014		2013
Proceeds	$	-	$	1,539	$	21,559	$	3,314
Gains		-		99		658		184
Tax provision related to gains		-		34		224		63

9

4. Securities (continued)

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic, market or other conditions warrant such evaluation. Consideration is given to: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions and (4) whether the Corporation has the intent to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the Corporation intends to sell an impaired security, or if it is more likely than not the Corporation will be required to sell the security before its anticipated recovery, the Corporation records an other-than-temporary loss in an amount equal to the entire difference between fair value and amortized cost. Otherwise, only the credit portion of the estimated loss on debt securities is recognized in earnings, with the other portion of the loss recognized in other comprehensive income. For equity securities determined to be other-than-temporarily impaired, the entire amount of impairment is recognized through earnings.

There were two equity securities in an unrealized loss position as of June 30, 2014, none of which were in an unrealized loss position for more than 12 months. Equity securities owned by the Corporation consist of common stock of various financial service providers. The investment securities are in an unrealized loss position as a result of recent market volatility. The Corporation does not invest in these securities with the intent to sell them for a profit in the near term. For investments in equity securities, in addition to the general factors mentioned above for determining whether the decline in market value is other-than-temporary, the analysis of whether an equity security is other-than-temporarily impaired includes a review of the profitability, capital adequacy and other relevant information available to determine the financial position and near term prospects of each issuer. The results of analyzing the aforementioned metrics and financial fundamentals suggest recovery of amortized cost as the sector improves. Based on that evaluation, and given that the Corporation’s current intention is not to sell any impaired security and it is more likely than not it will not be required to sell these securities before the recovery of their amortized cost basis, the Corporation does not consider the equity securities with unrealized losses as of June 30, 2014 to be other-than-temporarily impaired.

There were 105 debt securities in an unrealized loss position as of June 30, 2014, of which 89 were in an unrealized loss position for more than 12 months. Of these 105 securities, 6 were U.S. Treasury securities, 18 were U.S. government sponsored entity and agency securities, 26 were government-backed collateralized mortgage obligations, 53 were state and political subdivision securities and 2 were corporate debt securities. The unrealized losses associated with these securities were not due to the deterioration in the credit quality of the issuer that would likely result in the non-collection of contractual principal and interest, but rather have been caused by a rise in interest rates from the time the securities were purchased. Based on that evaluation and other general considerations, and given that the Corporation’s current intention is not to sell any impaired securities and it is more likely than not it will not be required to sell these securities before the recovery of its amortized cost basis, the Corporation does not consider the debt securities with unrealized losses as of June 30, 2014 to be other-than-temporarily impaired.

10

5. Loans Receivable and Related Allowance for Loan Losses

The Corporation’s loans receivable as of the respective dates are summarized as follows:

(Dollar amounts in thousands)	June 30,		December 31,
	2014		2013
Mortgage loans on real estate:
Residential first mortgages	$	104,618	$	105,541
Home equity loans and lines of credit		88,374		87,928
Commercial real estate		106,273		101,499
		299,265		294,968
Other loans:
Commercial business		56,770		53,214
Consumer		9,480		9,117
		66,250		62,331
Total loans, gross		365,515		357,299
Less allowance for loan losses		5,046		4,869
Total loans, net	$	360,469	$	352,430

11

5. Loans Receivable and Related Allowance for Loan Losses (continued)

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of June 30, 2014:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of June 30, 2014						ended June 30, 2014
											Cash Basis
	Unpaid						Average		Interest Income		Interest
	Principal		Recorded		Related		Recorded		Recognized		Recognized
	Balance		Investment		Allowance		Investment		in Period		in Period
Residential first mortgages	$	172	$	172	$	28	$	127	$	8	$	2
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,649		2,708		227		2,715		10		10
Commercial business		2,210		2,210		540		1,314		51		4
Consumer		-		-		-		-		-		-
Total	$	6,031	$	5,090	$	795	$	4,156	$	69	$	16

	For the six months
	ended June 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	112	$	9	$	3
Home equity and lines of credit		-		-		-
Commercial real estate		2,650		17		12
Commercial business		876		56		4
Consumer		-		-		-
Total	$	3,638	$	82	$	19

	Impaired Loans with No Specific Allowance
					For the three months
	As of June 30, 2014				ended June 30, 2014
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	118	$	118	$	59	$	2	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,488		1,089		896		12		1
Commercial business		430		428		407		1		1
Consumer		1,348		1,348		1,348		-		-
Total	$	3,384	$	2,983	$	2,710	$	15	$	2

	For the six months
	ended June 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	46	$	2	$	-
Home equity and lines of credit		-		-		-
Commercial real estate		823		14		3
Commercial business		383		1		1
Consumer		1,348		-		-
Total	$	2,600	$	17	$	4

12

5. Loans Receivable and Related Allowance for Loan Losses (continued)

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of December 31, 2013:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the year ended
	As of December 31, 2013						December 31, 2013
											Cash Basis
	Unpaid						Average		Interest Income		Interest
	Principal		Recorded		Related		Recorded		Recognized		Recognized
	Balance		Investment		Allowance		Investment		in Period		in Period
Residential first mortgages	$	82	$	82	$	21	$	49	$	5	$	4
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,462		2,521		181		3,202		13		13
Commercial business		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	3,544	$	2,603	$	202	$	3,251	$	18	$	17

	Impaired Loans with No Specific Allowance
					For the year ended
	As of December 31, 2013				December 31, 2013
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	20	$	20	$	4	$	1	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,074		675		584		5		5
Commercial business		336		336		354		-		-
Consumer		1,348		1,348		1,457		-		-
Total	$	2,778	$	2,379	$	2,399	$	6	$	5

13

5.           Loans Receivable and Related Allowance for Loan Losses (continued)

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of June 30, 2013:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of June 30, 2013						ended June 30, 2013
											Cash Basis
	Unpaid						Average		Interest Income		Interest
	Principal		Recorded		Related		Recorded		Recognized		Recognized
	Balance		Investment		Allowance		Investment		in Period		in Period
Residential first mortgages	$	81	$	81	$	20	$	40	$	2	$	2
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,665		2,724		214		3,364		5		5
Commercial business		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	3,746	$	2,805	$	234	$	3,404	$	7	$	7

	For the six months
	ended June 30, 2013
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	27	$	2	$	2
Home equity and lines of credit		-		-		-
Commercial real estate		3,599		9		9
Commercial business		-		-		-
Consumer		-		-		-
Total	$	3,626	$	11	$	11

	Impaired Loans with No Specific Allowance
					For the three months
	As of June 30, 2013				ended June 30, 2013
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	-	$	-	$	-	$	-	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,061		662		563		2		2
Commercial business		356		356		360		-		-
Consumer		1,348		1,348		1,469		-		-
Total	$	2,765	$	2,366	$	2,392	$	2	$	2

	For the six months
	ended June 30, 2013
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	-	$	-	$	-
Home equity and lines of credit		-		-		-
Commercial real estate		544		3		3
Commercial business		363		-		-
Consumer		1,529		-		-
Total	$	2,436	$	3	$	3

Unpaid principal balance includes any loans that have been partially charged off but not forgiven. Accrued interest is not included in the recorded investment in loans based on the amounts not being material.

14

5.           Loans Receivable and Related Allowance for Loan Losses (continued)

Troubled debt restructurings (TDR). The Corporation has certain loans that have been modified in order to maximize collection of loan balances. If, for economic or legal reasons related to the customer’s financial difficulties, management grants a concession compared to the original terms and conditions of the loan that it would not have otherwise considered, the modified loan is classified as a TDR. Concessions related to TDRs generally do not include forgiveness of principal balances. The Corporation generally does not extend additional credit to borrowers with loans classified as TDRs.

At June 30, 2014 and December 31, 2013, the Corporation had $7.1 million and $2.5 million, respectively, of loans classified as TDRs, which are included in impaired loans above. At June 30, 2014 and December 31, 2013, the Corporation had $588,000 and $56,000 of the allowance for loan losses allocated to these specific loans. At June 30, 2013, the Corporation had $2.1 million of loans classified as TDRs with $55,000 of the allowance for loan losses allocated to these specific loans.

During the three and six month periods ended June 30, 2014, the Corporation modified eleven additional loans to be identified as TDRs. One commercial relationship consisting of eight loans totaling $2.4 million was modified as the Bank granted repayment concessions due to financial difficulties experienced by the borrower. Concessions on these eight loans included reduced monthly payments through the notes’ maturities. An additional commercial real estate relationship consisting of two loans totaling $2.1 million was modified as the Bank granted a payment concession on one loan and interest rate concessions on both loans due to cash flow considerations caused by vacancy rates. In addition, the Corporation modified a residential mortgage loan with pre- and post-modification recorded investments of $76,000 and $93,000, respectively, due to a bankruptcy court order. The modifications included capitalization of $5,000 of accrued and unpaid interest and $13,000 of legal expenses, a reduction in the interest rate from 6.25% to 5.00% and a 15 year extension of the original term. Because these loans were previously impaired with specific reserves allocated to them, there was no impact to the provision for loan losses for the three and six month periods ended June 30, 2014 as a result of the modifications.

During the six month period ended June 30, 2013, the Corporation modified a residential mortgage loan with a pre- and post-modification recorded investment of $83,000 as a TDR due to financial difficulties experienced by the borrower. The modification included a reduction in the interest rate from 6.75% to 4.00% and a 65 month extension of the original term. During the three month period ended June 30, 2013, the Corporation did not modify any additional loans as TDRs.

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. During the three and six month periods ended June 30, 2014, there were defaults on three loans classified as TDRs which totaled $426,000 at June 30, 2014. Of these loans, two were not past due and one was 30-59 days delinquent at June 30, 2014. During the three and six month periods ended June 30, 2013, the Corporation did not have any loans which were modified as TDRs for which there was a payment default within twelve months following the modification.

Credit Quality Indicators. Management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.

Commercial real estate and commercial business loans not identified as impaired are evaluated as risk rated pools of loans utilizing a risk rating practice that is supported by a quarterly special asset review. In this review process, strengths and weaknesses are identified, evaluated and documented for each criticized and classified loan and borrower, strategic action plans are developed, risk ratings are confirmed and the loan’s performance status is reviewed.

Management has determined certain portions of the loan portfolio to be homogeneous in nature and assigns like reserve factors for the following loan pool types: residential real estate, home equity loans and lines of credit, and consumer installment and personal lines of credit.

15

5.           Loans Receivable and Related Allowance for Loan Losses (continued)

The reserve allocation for risk rated loan pools is developed by applying the following factors:

Historic: Management utilizes a computer model to develop the historical net charge-off experience which is used to formulate the assumptions employed in the migration analysis applied to estimate future losses in the portfolio. Outstanding balance and charge-off information are input into the model and historical loss migration rate assumptions are developed to apply to pass, special mention, substandard and doubtful risk rated loans. A twelve-quarter rolling weighted-average is utilized to anticipate probable incurred losses in the portfolios.

Qualitative: Qualitative adjustment factors for pass, special mention, substandard and doubtful ratings are developed and applied to risk rated loans to allow for: quality of lending policies and procedures; national and local economic and business conditions; changes in the nature and volume of the portfolio; experiences, ability and depth of lending management; changes in trends, volume and severity of past due, nonaccrual and classified loans and loss and recovery trends; quality of loan review systems; concentrations of credit and other external factors.

Management uses the following definitions for risk ratings:

Pass: Loans classified as pass typically exhibit good payment performance and have underlying borrowers with acceptable financial trends where repayment capacity is evident. These borrowers typically would have a sufficient cash flow that would allow them to weather an economic downturn and the value of any underlying collateral could withstand a moderate degree of depreciation due to economic conditions.

Special Mention: Loans classified as special mention are characterized by potential weaknesses that could jeopardize repayment as contractually agreed. These loans may exhibit adverse trends such as increasing leverage, shrinking profit margins and/or deteriorating cash flows. These borrowers would inherently be more vulnerable to the application of economic pressures.

Substandard: Loans classified as substandard exhibit weaknesses that are well-defined to the point that repayment is jeopardized. Typically, the Corporation is no longer adequately protected by both the apparent net worth and repayment capacity of the borrower.

Doubtful: Loans classified as doubtful have advanced to the point that collection or liquidation in full, on the basis of currently ascertainable facts, conditions and value, is highly questionable or improbable.

The following table presents the classes of the loan portfolio summarized by the aggregate pass and the criticized categories of special mention, substandard and doubtful within the Corporation’s internal risk rating system as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
					Special
	Not Rated		Pass		Mention		Substandard		Doubtful		Total
June 30, 2014:
Residential first mortgages	$	103,939	$	-	$	-	$	679	$	-	$	104,618
Home equity and lines of credit		88,277		-		-		97		-		88,374
Commercial real estate		-		99,380		238		6,655		-		106,273
Commercial business		-		52,388		1,485		2,897		-		56,770
Consumer		8,132		-		-		1,348		-		9,480
Total	$	200,348	$	151,768	$	1,723	$	11,676	$	-	$	365,515
December 31, 2013:
Residential first mortgages	$	104,983	$	-	$	-	$	558	$	-	$	105,541
Home equity and lines of credit		87,868		-		-		60		-		87,928
Commercial real estate		-		93,973		256		7,270		-		101,499
Commercial business		-		50,008		674		2,532		-		53,214
Consumer		7,769		-		-		1,348		-		9,117
Total	$	200,620	$	143,981	$	930	$	11,768	$	-	$	357,299

16

5.           Loans Receivable and Related Allowance for Loan Losses (continued)

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 table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonperforming loans as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Performing						Nonperforming
	Accruing		Accruing		Accruing		Accruing
	Loans Not		30-59 Days		60-89 Days		90 Days +				Total
	Past Due		Past Due		Past Due		Past Due		Nonaccrual		Loans
June 30, 2014:
Residential first mortgages	$	101,915	$	1,910	$	114	$	-	$	679	$	104,618
Home equity and lines of credit		87,743		431		103		-		97		88,374
Commercial real estate		102,910		80		-		-		3,283		106,273
Commercial business		54,274		211		-		-		2,285		56,770
Consumer		8,104		27		1		-		1,348		9,480
Total loans	$	354,946	$	2,659	$	218	$	-	$	7,692	$	365,515
December 31, 2013:
Residential first mortgages	$	103,821	$	884	$	278	$	38	$	520	$	105,541
Home equity and lines of credit		87,302		394		172		-		60		87,928
Commercial real estate		98,095		516		22		-		2,866		101,499
Commercial business		52,581		258		-		24		351		53,214
Consumer		7,682		61		26		-		1,348		9,117
Total loans	$	349,481	$	2,113	$	498	$	62	$	5,145	$	357,299

The following table presents the Corporation’s nonaccrual loans by aging category as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Not		30-59 Days		60-89 Days		90 Days +		Total
	Past Due		Past Due		Past Due		Past Due		Loans
June 30, 2014:
Residential first mortgages	$	289	$	81	$	19	$	290	$	679
Home equity and lines of credit		-		-		20		77		97
Commercial real estate		3,016		60		13		194		3,283
Commercial business		2,223		39		-		23		2,285
Consumer		1,348		-		-		-		1,348
Total loans	$	6,876	$	180	$	52	$	584	$	7,692
December 31, 2013:
Residential first mortgages	$	88	$	-	$	82	$	350	$	520
Home equity and lines of credit		-		-		-		60		60
Commercial real estate		412		2,148		-		306		2,866
Commercial business		65		-		-		286		351
Consumer		1,348		-		-		-		1,348
Total loans	$	1,913	$	2,148	$	82	$	1,002	$	5,145

An allowance for loan losses (ALL) is maintained to absorb probable incurred losses 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 nonperforming loans.

17

5.           Loans Receivable and Related Allowance for Loan Losses (continued)

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.

The following table details activity in the ALL and the recorded investment by portfolio segment based on impairment method:

(Dollar amounts in thousands)
				Home Equity
	Residential			& Lines			Commercial			Commercial
	Mortgages			of Credit			Real Estate			Business			Consumer			Total
Three months ended June 30, 2014:
Allowance for loan losses:
Beginning Balance	$	936		$	619		$	2,221		$	1,094		$	51		$	4,921
Charge-offs		(19	)		(14	)		-			-			(33	)		(66	)
Recoveries		-			-			4			-			4			8
Provision		-			(137	)		150			139			31			183
Ending Balance	$	917		$	468		$	2,375		$	1,233		$	53		$	5,046
Six months ended June 30, 2014:
Allowance for loan losses:
Beginning Balance	$	923		$	625		$	2,450		$	822		$	49		$	4,869
Charge-offs		(97	)		(14	)		(2	)		(17	)		(67	)		(197	)
Recoveries		-			-			9			7			13			29
Provision		91			(143	)		(82	)		421			58			345
Ending Balance	$	917		$	468		$	2,375		$	1,233		$	53		$	5,046
At June 30, 2014:
Ending ALL balance attributable to loans:
Individually evaluated for impairment		28			-			227			540			-			795
Collectively evaluated for impairment		889			468			2,148			693			53			4,251
Total loans:
Individually evaluated for impairment		290			-			3,797			2,638			1,348			8,073
Collectively evaluated for impairment		104,328			88,374			102,476			54,132			8,132			357,442
At December 31, 2013:
Ending ALL balance attributable to loans:
Individually evaluated for impairment		21			-			181			-			-			202
Collectively evaluated for impairment		902			625			2,269			822			49			4,667
Total loans:
Individually evaluated for impairment		102			-			3,196			336			1,348			4,982
Collectively evaluated for impairment		105,439			87,928			98,303			52,878			7,769			352,317
Three months ended June 30, 2013:
Allowance for loan losses:
Beginning Balance	$	807		$	727		$	3,189		$	702		$	63		$	5,488
Charge-offs		(12	)		-			(941	)		-			(25	)		(978	)
Recoveries		-			-			2			-			5			7
Provision		(23	)		(106	)		297			(25	)		10			153
Ending Balance	$	772		$	621		$	2,547		$	677		$	53		$	4,670
Six months ended June 30, 2013:
Allowance for loan losses:
Beginning Balance	$	828		$	730		$	3,090		$	636		$	66		$	5,350
Charge-offs		(17	)		-			(941	)		-			(56	)		(1,014	)
Recoveries		1			-			4			-			34			39
Provision		(40	)		(109	)		394			41			9			295
Ending Balance	$	772		$	621		$	2,547		$	677		$	53		$	4,670

The allowance for loan losses is based on estimates and actual losses may vary from current estimates. Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

18

6.           Goodwill and Intangible Assets

The following table summarizes the Corporation’s acquired goodwill and intangible assets as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)	June 30, 2014				December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Goodwill	$	3,664	$	-	$	3,664	$	-
Core deposit intangibles		4,027		3,175		4,027		3,062
Total	$	7,691	$	3,175	$	7,691	$	3,062

Goodwill resulted from three previous branch acquisitions. Goodwill represents the excess of the total purchase price paid for the branch acquisitions over the fair value of the assets acquired, net of the fair value of the liabilities assumed. Goodwill is not amortized but is evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value. The Corporation has selected November 30 as the date to perform the annual impairment test. No goodwill impairment charges were recorded during 2013 or in the first six months of 2014. The core deposit intangible asset is amortized using the double declining balance method over a weighted average estimated life of nine years and is not estimated to have a significant residual value. During the three and six month period ending June 30, 2014, the Corporation recorded intangible amortization expense totaling $57,000 and $113,000, respectively, compared to $73,000 and $145,000, respectively, for the same periods in 2013.

7.           Stock Compensation Plans

In April 2014, the Corporation adopted the 2014 Stock Incentive Plan (the Plan), which is shareholder approved and permits the grant of restricted stock awards and options to its directors, officers and employees for up to 176,866 shares of common stock, of which 88,433 shares of restricted stock and 88,433 stock options remain available for issuance under the Plan.

In addition, the Corporation’s 2007 Stock Incentive Plan and Trust (the Plan), which is shareholder approved, permits the grant of restricted stock awards and options to its directors, officers and employees for up to 177,496 shares of common stock, of which 5,913 shares of restricted stock and 45,283 stock options remain available for issuance under the Plan.

Incentive stock options, non-incentive or compensatory stock options and share awards may be granted under the Plans. The exercise price of each option shall at least equal the market price of a share of common stock on the date of grant and have a contractual term of ten years. Options shall vest and become exercisable at the rate, to the extent and subject to such limitations as may be specified by the Corporation. Compensation cost related to share-based payment transactions must be recognized in the financial statements with measurement based upon the fair value of the equity instruments issued.

A summary of option activity under the Plans as of June 30, 2014, and changes during the period then ended is presented below:

						Aggregate		Weighted-Average
				Weighted-Average		Intrinsic Value		Remaining Term
	Options			Exercise Price		(in thousands)		(in years)
Outstanding as of January 1, 2014		79,250		$	24.97	$	-		3.8
Granted		-			-		-		-
Exercised		(1,500	)		17.00		14,835		-
Forfeited		-			-		-		-
Outstanding as of June 30, 2014		77,750		$	25.12	$	137,268		3.3
Exercisable as of June 30, 2014		77,250		$	25.19	$	131,268		3.2

19

7.           Stock Compensation Plans (continued)

A summary of the status of the Corporation’s nonvested option shares as of June 30, 2014, and changes during the period then ended is presented below:

			Weighted-Average
	Options		Grant-date Fair Value
Nonvested at January 1, 2014		500	$	1.44
Granted		-		-
Vested		-		-
Forfeited		-		-
Nonvested as of June 30, 2014		500	$	1.44

A summary of the status of the Corporation’s nonvested restricted stock awards as of June 30, 2014, and changes during the period then ended is presented below:

			Weighted-Average
	Shares		Grant-date Fair Value
Nonvested at January 1, 2014		25,800	$	20.11
Granted		-		-
Vested		-		-
Forfeited		100		25.50
Nonvested as of June 30, 2014		25,700	$	20.08

For the three and six month periods ended June 30, 2014, the Corporation recognized $42,000 and $84,000, respectively, in stock compensation expense, compared to $63,000 and $98,000, respectively, for the same periods in 2013. As of June 30, 2014, there was $266,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.4 years. It is the Corporation’s policy to issue shares on the vesting date for restricted stock awards. Unvested restricted stock awards do not receive dividends declared by the Corporation.

8.           Employee Benefit Plans

The Corporation provides pension benefits for eligible employees through a defined benefit pension plan. Substantially all employees participate in the retirement plan on a non-contributory basis, and are fully vested after three years of service. Effective January 1, 2009, the plan was closed to new participants.

The Corporation provided the requisite notice to plan participants on March 12, 2013 of the determination to freeze the plan (curtailment). While the freeze was not effective until April 30, 2013, management determined that participants would not satisfy, within the provisions of the plan, 2013 eligibility requirements based on minimum hours worked for 2013. Therefore, employees ceased to earn benefits as of January 1, 2013. This amendment to the plan will not affect benefits earned by the participants prior to the date of the freeze. The expense associated with the plan was immaterial for the three and six month periods ended June 30, 2014 and 2013.

9.           Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value.

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Corporation has the ability to access at the measurement date.

20

9.           Fair Value (continued)

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the Corporation’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

An asset or liability’s level is based on the lowest level of input that is significant to the fair value measurement.

The Corporation used the following methods and significant assumptions to estimate fair value:

Cash and cash equivalents – The carrying value of cash, due from banks and interest bearing deposits approximates fair value and are classified as Level 1.

Securities available for sale – The fair value of all investment securities are based upon the assumptions market participants would use in pricing the security. If available, investment securities are determined by quoted market prices (Level 1). Level 1 includes U.S. Treasury, federal agency securities and certain equity securities. For investment securities where quoted market prices are not available, fair values are calculated based on market prices on similar securities (Level 2). Level 2 includes U.S. Government sponsored entities and agencies, mortgage-backed securities, collateralized mortgage obligations, state and political subdivision securities and corporate debt securities. For investment securities where quoted prices or market prices of similar securities are not available, fair values are calculated by using unobservable inputs (Level 3) and may include certain equity securities held by the Corporation. The Level 3 equity security valuations were supported by an analysis prepared by the Corporation which relies on inputs such as the security issuer’s publicly attainable financial information, multiples derived from prices in observed transactions involving comparable businesses and other market, financial and nonfinancial factors.

Loans – The fair value of loans receivable was estimated based on the discounted value of the future cash flows using the current rates being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.

Impaired loans – At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive a specific allowance for loan losses. For collateral dependent loans, fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. As of June 30, 2014, the fair value of impaired loans consists of loan balances of $2.9 million, net of a valuation allowance of $627,000, compared to loan balances of $2.5 million, net of a valuation allowance of $181,000, at December 31, 2013. There was $393,000 and $665,000 of additional provision for loan losses recorded for impaired loans during the three and six month period ended June 30, 2014, respectively. There was $20,000 of additional provision recorded for impaired loans for the same periods in 2013.

21

9.           Fair Value (continued)

Other Real estate owned (OREO) – Assets acquired through or instead of foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to the valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. At June 30, 2014, the Corporation had no OREO measured at fair value. As of December 31, 2013, OREO measured at fair value less costs to sell had a net carrying amount of $80,000, which was made up of the outstanding balance of $104,000 and write-downs of $24,000. There was no expense recorded during the three and six months ended June 30, 2014 associated with the write-down of OREO, compared to $0 and $19,000 for the same periods in 2013.

Appraisals for both collateral-dependent impaired loans and OREO are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed by the Corporation. Once received, management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On an annual basis, the Corporation compares the actual selling price of OREO that has been sold to the most recent appraisal to determine what additional adjustment should be made to the appraisal value to arrive at fair value. The most recent analysis performed indicated that a discount of 10% should be applied.

Federal bank stock – It is not practical to determine the fair value of federal bank stocks due to restrictions placed on its transferability.

Deposits – The fair value of deposits with no stated maturity, such as non-interest bearing demand deposits, checking with interest, savings and money market accounts, is equal to the amount payable on demand resulting in either a Level 1 or Level 2 classification. The fair values of time deposits are based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar maturities resulting in a Level 2 classification.

Borrowings – The fair value of borrowings with the FHLB is estimated using discounted cash flows based on current incremental borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued interest receivable and payable – The carrying value of accrued interest receivable and payable approximates fair value. The fair value classification is consistent with the related financial instrument.

22

9.            Fair Value (continued)

For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy are as follows:

(Dollar amounts in thousands)			(Level 1)		(Level 2)
			Quoted Prices in		Significant		(Level 3)
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
Description	Total		Assets		Inputs		Inputs
June 30, 2014:
U.S. Treasury and federal agency	$	3,334	$	3,334	$	-	$	-
U.S. government sponsored entities and agencies		32,179		-		32,179		-
Mortgage-backed securities: residential		35,014		-		35,014		-
Collateralized mortgage obligations: residential		37,600		-		37,600		-
State and political subdivision		34,986		-		34,986		-
Corporate debt securities		1,002		-		1,002		-
Equity securities		2,412		1,759		-		653
	$	146,527	$	5,093	$	140,781	$	653
December 31, 2013:
U.S. Treasury and federal agency	$	4,168	$	4,168	$	-	$	-
U.S. government sponsored entities and agencies		22,892		-		22,892		-
U.S. agency mortgage-backed securities: residential		11,361		-		11,361		-
U.S. agency collateralized mortgage obligations: residential		39,722		-		39,722		-
State and political subdivisions		36,499		-		36,499		-
Corporate debt securities		241		241		-		-
Equity securities		2,421		1,768		-		653
	$	117,304	$	6,177	$	110,474	$	653

The Corporation’s policy is to transfer assets or liabilities from one level to another when the methodology to obtain the fair value changes such that there are more or fewer unobservable inputs as of the end of the reporting period. During the three and six month periods ended June 30, 2014, the Corporation had no transfers between levels. The following table presents changes in Level 3 assets measured on a recurring basis for the three and six month periods ended June 30, 2014 and 2013:

(Dollar amounts in thousands)	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Balance at the beginning of the period	$	653	$	653	$	653	$	653
Total gains or losses (realized/unrealized):		-		-		-		-
Included in earnings		-		-		-		-
Included in other comprehensive income		-		-		-		-
Issuances		-		-		-		-
Transfers in and/or out of Level 3		-		-		-		-
Balance at the end of the period	$	653	$	653	$	653	$	653

23

9.           Fair Value (continued)

For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy are as follows:

(Dollar amounts in thousands)			(Level 1)		(Level 2)
			Quoted Prices in		Significant		(Level 3)
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
Description	Total		Assets		Inputs		Inputs
June 30, 2014:
Impaired commercial real estate loans	$	558	$	-	$	-	$	558
Impaired commercial business loans		1,670		-		-		1,670
	$	2,228	$	-	$	-	$	2,228
December 31, 2013:
Impaired commercial real estate loans	$	2,340	$	-	$	-	$	2,340
Other residential real estate owned		80		-		-		80
	$	2,420	$	-	$	-	$	2,420

The following table presents quantitative information about Level 3 fair value measurements for assets measured at fair value on a non-recurring basis:

(Dollar amounts in thousands)			Valuation	Unobservable
			Techniques(s)	Input (s)	Range
June 30, 2014:
Impaired commercial real estate loans	$	558	Sales comparison approach/ Contractual provision of USDA loan	Adjustment for differences between comparable sales	10%
Impaired commercial business loans		1,670	Liquidation value of business assets	Adjustment for differences between comparable business assets	44% - 76%
December 31, 2013:
Impaired commercial real estate loans		2,340	Sales comparison approach/ Contractual provision of USDA loan	Adjustment for differences between comparable sales	0% - 10%
Other residential real estate owned		80	Sales comparison approach	Adjustment for differences between comparable sales	10%

The two tables above exclude two impaired residential mortgage loans totaling $144,000 and a $1.9 million commercial real estate loan classified as troubled debt restructures which were measured at fair value using a discounted cash flow methodology at June 30, 2014.

Included in impaired commercial real estate loans is a loan guaranteed by the United States Department of Agriculture (USDA) with balances of $346,000 and $350,000, respectively, as of June 30, 2014 and December 31, 2013. The guarantee covers 90% of the principal balance outstanding. In determining the fair value of this loan, the Corporation considered the contractual provisions of the loan and did not rely on the fair value of the underlying collateral. As such, the Corporation applied a 10% discount to the loan which represents the portion of the loan at risk. The weighted average discount on impaired loans as of June 30, 2014 and December 31, 2013 was 40.4% and 1.5%, respectively.

24

9.           Fair Value (continued)

The following table sets forth the carrying amount and estimated fair values of the Corporation’s financial instruments included in the consolidated balance sheet as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Carrying		Fair Value Measurements using:
Description	Amount		Total		Level 1		Level 2		Level 3
June 30, 2014:
Financial Assets:
Cash and cash equivalents	$	37,494	$	37,494	$	37,494	$	-	$	-
Securities available for sale		146,527		146,527		5,093		140,781		653
Loans, net		360,469		364,670		-		-		364,670
Federal bank stock		2,791		N/A		N/A		N/A		N/A
Accrued interest receivable		1,530		1,530		52		477		1,001
		548,812		550,221		42,639		141,258		366,324
Financial Liabilities:
Deposits		514,403		516,772		394,222		122,550		-
Borrowed funds		17,150		18,078		-		18,078		-
Accrued interest payable		253		253		6		247		-
		531,806		535,103		394,228		140,875		-

	Carrying		Fair Value Measurements using:
	Amount		Total		Level 1		Level 2		Level 3
December 31, 2013:
Financial Assets:
Cash and cash equivalents	$	16,658	$	16,658	$	16,658	$	-	$	-
Securities available for sale		117,304		117,304		5,936		110,715		653
Loans, net		352,430		356,123		-		-		356,123
Federal bank stock		3,977		N/A		N/A		N/A		N/A
Accrued interest receivable		1,466		1,466		34		430		1,002
		491,835		491,551		22,628		111,145		357,778
Financial Liabilities:
Deposits		432,006		434,552		325,983		108,569		-
Borrowed funds		44,150		45,241		-		45,241		-
Accrued interest payable		292		292		5		287		-
		476,448		480,085		325,988		154,097		-

25

10.         Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss), net of tax, for the three months ended June 30, 2014 and 2013 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

(Dollar amounts in thousands)	Unrealized Gains			Defined
	and Losses on			Benefit
	Available-for-Sale			Pension
	Securities			Items			Totals
Accumulated Other Comprehensive Loss at April 1, 2014	$	(1,492	)	$	(1,410	)	$	(2,902	)
Other comprehensive income before reclassification		1,006			-			1,006
Amounts reclassified from accumulated other comprehensive income		-			-			-
Net current period other comprehensive income		1,006			-			1,006
Accumulated Other Comprehensive Loss at June 30, 2014	$	(486	)	$	(1,410	)	$	(1,896	)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the three months		Statement Where Net
Comprehensive Income Components	ended June 30, 2014		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	-	Gain on sale of securities
		-	Tax expense
Total reclassifications for the period	$	-	Net of tax

(Dollar amounts in thousands)	Unrealized Gains			Defined
	and Losses on			Benefit
	Available-for-Sale			Pension
	Securities			Items			Totals
Accumulated Other Comprehensive Income at April 1, 2013	$	2,071		$	(1,795	)	$	276
Other comprehensive income before reclassification		(2,713	)		-			(2,713	)
Amounts reclassified from accumulated other comprehensive income		(65	)		-			(65	)
Net current period other comprehensive loss		(2,778	)		-			(2,778	)
Accumulated Other Comprehensive Loss at June 30, 2013	$	(707	)	$	(1,795	)	$	(2,502	)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income			Affected Line Item in the
Details about Accumulated Other	For the three months			Statement Where Net
Comprehensive Income Components	ended June 30, 2013			Income is Presented
Unrealized gains and losses on available-for-sale securities	$	99		Gain on sale of securities
		(34	)	Tax expense
Total reclassifications for the period	$	65		Net of tax

26

10.        Accumulated Other Comprehensive Income (Loss) (continued)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2014 and 2013 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

(Dollar amounts in thousands)	Unrealized Gains			Defined
	and Losses on			Benefit
	Available-for-Sale			Pension
	Securities			Items			Totals
Accumulated Other Comprehensive Income at January 1, 2014	$	(1,870	)	$	(1,410	)	$	(3,280	)
Other comprehensive income before reclassification		1,818			-			1,818
Amounts reclassified from accumulated other comprehensive income		(434	)		-			(434	)
Net current period other comprehensive loss		1,384			-			1,384
Accumulated Other Comprehensive Income at June 30, 2014	$	(486	)	$	(1,410	)	$	(1,896	)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income			Affected Line Item in the
Details about Accumulated Other	For the six months			Statement Where Net
Comprehensive Income Components	ended June 30, 2014			Income is Presented
Unrealized gains and losses on available-for-sale securities	$	658		Gain on sale of securities
		(224	)	Tax expense
Total reclassifications for the period	$	434		Net of tax

(Dollar amounts in thousands)	Unrealized Gains			Defined
	and Losses on			Benefit
	Available-for-Sale			Pension
	Securities			Items			Totals
Accumulated Other Comprehensive Income at January 1, 2013	$	2,365		$	(1,795	)	$	570
Other comprehensive income before reclassification		(2,951	)		-			(2,951	)
Amounts reclassified from accumulated other comprehensive income		(121	)		-			(121	)
Net current period other comprehensive loss		(3,072	)		-			(3,072	)
Accumulated Other Comprehensive Income at June 30, 2013	$	(707	)	$	(1,795	)	$	(2,502	)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income			Affected Line Item in the
Details about Accumulated Other	For the six months			Statement Where Net
Comprehensive Income Components	ended June 30, 2013			Income is Presented
Unrealized gains and losses on available-for-sale securities	$	184		Gain on sale of securities
		(63	)	Tax expense
Total reclassifications for the period	$	121		Net of tax

27

11.         New Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 5, 2016. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Corporation’s financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section discusses the consolidated financial condition and results of operations of Emclaire Financial Corp and its wholly owned subsidiaries, the Bank and the Title Company, for the three and six months ended June 30, 2014, compared to the same periods in 2013 and should be read in conjunction with the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC and with the accompanying consolidated financial statements and notes presented on pages 1 through 28 of this Form 10-Q.

This Form 10-Q, including the financial statements and related notes, contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan” or words or phrases of similar meaning. We caution that the forward looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performances or achievements could differ materially from those contemplated, expressed or implied by the forward looking statements. Therefore, we caution you not to place undue reliance on our forward looking information and statements. Except as required by applicable law or regulation, we will not update the forward looking statements to reflect actual results or changes in factors affecting the forward looking statements.

CHANGES IN FINANCIAL CONDITION

Total assets increased $57.9 million, or 11.0%, to $583.7 million at June 30, 2014 from $525.8 million at December 31, 2013. This increase resulted primarily from increases in cash and equivalents, securities and loans receivable of $20.8 million, $29.2 million and $8.0 million, respectively, which was funded by an $82.4 million increase in customer deposits. This deposit increase also funded a $27.0 million decrease in borrowed funds.

Total liabilities increased $55.5 million, or 11.5%, to $536.2 million at June 30, 2014 from $480.8 million at December 31, 2013, resulting primarily from an $82.4 million increase in customer deposits, partially offset by a $27.0 million decrease in borrowed funds. Deposit growth consisted of an $11.1 million, or 10.6%, increase in noninterest bearing deposits and a $71.3 million, or 21.8%, increase in interest bearing deposits. The decrease in borrowed funds resulted from the repayment of a $5.0 million FHLB long term advance and $22.0 million of FHLB short term advances utilized to fund normal operating fluctuations.

Stockholders’ equity increased $2.4 million to $47.5 million at June 30, 2014 from $45.1 million at December 31, 2013. Book value and tangible book value per common share were $23.99 and $21.43, respectively, at June 30, 2014, compared to $22.66 and $20.04, respectively, at December 31, 2013.

28

At June 30, 2014, the Bank was considered “well-capitalized” under regulatory guidelines with a Tier 1 leverage ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio of 8.03%, 13.79% and 15.04%, respectively, compared to 8.58%, 14.08% and 15.34%, respectively, at December 31, 2013.

RESULTS OF OPERATIONS

Comparison of Results for the Three Months Ended June 30, 2014 and 2013

General. Net income decreased $61,000, or 6.5%, to $878,000 for the three months ended June 30, 2014 from $939,000 for the same period in 2013. This decrease was the result of a decrease in noninterest income of $198,000 and increases in noninterest expense, the provision for loan losses and the provision for income taxes of $74,000, $30,000 and $10,000, respectively, partially offset by an increase in net interest income of $251,000.

Net interest income. Net interest income on a tax equivalent basis increased $242,000, or 5.9%, to $4.3 million for the three months ended June 30, 2014 from $4.1 million for the three months ended June 30, 2013. This increase can be attributed to a decrease in interest expense of $243,000, as interest income was essentially unchanged.

Interest income. Interest income on a tax equivalent basis decreased $1,000, to $5.1 million for the three months ended June 30, 2014 and for the same period in 2013. This decrease can be attributed to decreases in interest on securities and loans of $35,000 and $2,000, respectively, partially offset by increases in dividends on federal bank stocks and interest earned on interest-earning deposits with banks of $27,000 and $9,000, respectively.

Tax equivalent interest earned on loans receivable decreased $2,000, to $4.2 million for the three months ended June 30, 2014 and for the same period in 2013. This decrease resulted from a 24 basis point decline in the average yield on loans to 4.71% for the three months ended June 30, 2014, versus 4.95% for the same period in 2013. This unfavorable yield variance accounted for a $212,000 decrease in interest income. Partially offsetting this unfavorable yield variance, average loans increased $17.5 million, or 5.2%, accounting for an increase of $210,000 in loan interest income.

Tax equivalent interest earned on securities decreased $35,000, or 4.0%, to $850,000 for the three months ended June 30, 2014 as compared to $885,000 for the three months ended June 30, 2013. This decrease resulted from an 8 basis point decline in the average yield on securities to 2.40% for the three months ended June 30, 2014, versus 2.48% for the same period in 2013. This unfavorable yield variance accounted for a $28,000 decrease in interest income. Also contributing to this unfavorable yield variance, the average balance of securities decreased $1.1 million, or 0.8%, accounting for a $7,000 decrease in interest income.

Dividends on federal bank stocks increased $27,000 to $44,000 for the three months ended June 30, 2014 from $17,000 for the same period in 2013. This increased resulted from a 401 basis point increase in the average yield on federal bank stocks to 6.33% for the three months ended June 30, 2014, compared to 2.32% for the same period in 2013. The increase in the yield was the result of an increase in the FHLB’s dividend rate to 4.0% for the quarter ended June 30, 2014, compared to 1.0% for the same period in 2013.

Interest expense. Interest expense decreased $243,000, or 24.3%, to $756,000 for the three months ended June 30, 2014 from $999,000 for the same period in 2013. This decrease in interest expense can be attributed to a decrease in interest incurred on deposits and borrowed funds of $198,000 and $45,000, respectively.

Interest expense incurred on deposits decreased $198,000, or 24.6%, to $607,000 for the three months ended June 30, 2014 compared to $805,000 for the same period in 2013. The average cost of interest-bearing deposits decreased 30 basis points to 0.63% for the three months ended June 30, 2014, compared to 0.93% for the same period in 2013, resulting in a $288,000 decrease in interest expense. This decrease in the cost of deposits was primarily due to deposits repricing during 2013 and the first half of 2014 in the prevailing low interest-rate environment. Partially offsetting this favorable variance, the average balance of interest-bearing deposits increased $42.2 million, or 12.2%, to $387.7 million for the three months ended June 30, 2014, compared to $345.5 million for the same period in 2013 causing a $90,000 increase in interest expense. Average noninterest bearing deposits increased $8.7 million, or 8.2%, to $114.4 million from $105.7 million, facilitating the overall decline in the Corporation’s cost of funds.

29

Interest expense incurred on borrowed funds decreased $45,000, or 23.2%, to $149,000 for the three months ended June 30, 2014, compared to $194,000 for the same period in the prior year. The average cost of long term borrowed funds decreased 50 basis points to 3.36% for the three months ended June 30, 2014, compared to 3.86% for the same period in 2013, causing a $23,000 decrease in interest expense. This was due primarily to the capitalization of $24,000 of interest during the quarter ended June 30, 2014 related to the Cranberry Township banking office construction compared to $10,000 for the same period in the prior year. Additionally, the average balance of long term borrowed funds decreased $5.0 million, or 25.0%, accounting for a $44,000 decrease in interest expense. This resulted from the early repayment of a $5.0 million FHLB long term advance during the first quarter of 2014. The Corporation recognized a $550,000 prepayment penalty associated with this early repayment. Partially offsetting the favorable variance related to long term borrowings, the average cost of short term borrowed funds increased 406 basis points, which caused a $22,000 increase in interest expense. Short-term borrowings at June 30, 2014 included a $2.2 million line of credit balance with a correspondent bank with a rate of 4.25%. The Corporation advanced $2.2 million on this line of credit during the third quarter of 2013 and utilized the proceeds to partially fund the $5.0 million SBLF preferred stock redemption.

30

Average Balance Sheet and Yield/Rate Analysis. The following table sets forth, for the periods indicated, information concerning the total dollar amounts of interest income from interest-earning assets and the resulting average yields, the total dollar amounts of interest expense on interest-bearing liabilities and the resulting average costs, net interest income, interest rate spread and the net interest margin earned on average interest-earning assets. For purposes of this table, average loan balances include nonaccrual loans and exclude the allowance for loan losses and interest income includes accretion of net deferred loan fees. Interest and yields on tax-exempt loans and securities (tax-exempt for federal income tax purposes) are shown on a fully tax equivalent basis. The information is based on average daily balances during the periods presented.

(Dollar amounts in thousands)	Three months ended June 30,
	2014							2013
	Average				Yield /			Average				Yield /
	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Loans, taxable	$	334,796	$	3,903		4.68	%	$	318,536	$	3,928		4.95	%
Loans, tax exempt		20,450		266		5.22	%		19,217		243		5.06	%
Total loans receivable		355,246		4,169		4.71	%		337,753		4,171		4.95	%
Securities, taxable		106,789		493		1.85	%		100,690		470		1.87	%
Securities, tax exempt		35,141		357		4.07	%		42,346		415		3.93	%
Total securities		141,930		850		2.40	%		143,036		885		2.48	%
Interest-earning deposits with banks		37,192		27		0.29	%		16,628		18		0.43	%
Federal bank stocks		2,788		44		6.33	%		2,935		17		2.32	%
Total interest-earning cash equivalents		39,980		71		0.71	%		19,563		35		0.72	%
Total interest-earning assets		537,156		5,090		3.80	%		500,352		5,091		4.08	%
Cash and due from banks		2,205							2,062
Other noninterest-earning assets		31,461							27,241
Total Assets	$	570,822						$	529,655
Interest-bearing liabilities:
Interest-bearing demand deposits	$	266,833	$	106		0.16	%	$	225,068	$	94		0.17	%
Time deposits		120,846		501		1.66	%		120,455		711		2.37	%
Total interest-bearing deposits		387,679		607		0.63	%		345,523		805		0.93	%
Borrowed funds, short-term		2,150		23		4.31	%		1,447		1		0.25	%
Borrowed funds, long-term (1)		15,000		126		3.36	%		20,000		193		3.86	%
Total borrowed funds		17,150		149		3.48	%		21,447		194		3.62	%
Total interest-bearing liabilities		404,829		756		0.75	%		366,970		999		1.09	%
Noninterest-bearing demand deposits		114,363		-		-			105,684		-		-
Funding and cost of funds		519,192		756		0.58	%		472,654		999		0.85	%
Other noninterest-bearing liabilities		4,819							5,195
Total Liabilities		524,011							477,849
Stockholders' Equity		46,811							51,806
Total Liabilities and Stockholders' Equity	$	570,822						$	529,655
Net interest income			$	4,334						$	4,092
Interest rate spread (difference between weighted average rate on interest-earning assets and interest-bearing liabilities)						3.05	%						2.99	%
Net interest margin (net interest income as a percentage of average interest-earning assets)						3.24	%						3.28	%

(1) Interest on long-term borrowed funds for the quarterly periods ended June 30, 2014 and 2013 was reduced by $24,000 and $10,000, respectively, related to capitalized interest costs on construction in progress.

31

Analysis of Changes in Net Interest Income. The following table analyzes the changes in interest income and interest expense in terms of: (1) changes in volume of interest-earning assets and interest-bearing liabilities and (2) changes in yields and rates. The table reflects the extent to which changes in the Corporation’s interest income and interest expense are attributable to changes in volume (changes in volume multiplied by prior year rate), rate (change in rate multiplied by prior year volume) and changes attributable to the combined impact of volume/rate (change in rate multiplied by change in volume). The changes attributable to the combined impact of volume/rate are allocated on a consistent basis between the volume and rate variances. Changes in interest income on loans and securities reflect the changes in interest income on a fully tax equivalent basis.

(Dollar amounts in thousands)	Three months ended June 30,
	2014 versus 2013
	Increase (Decrease) due to
	Volume			Rate			Total
Interest income:
Loans	$	210		$	(212	)	$	(2	)
Securities		(7	)		(28	)		(35	)
Interest-earning deposits with banks		17			(8	)		9
Federal bank stocks		(1	)		28			27
Total interest-earning assets		219			(220	)		(1	)
Interest expense:
Interest-bearing deposits		90			(288	)		(198	)
Borrowed funds, short-term		-			22			22
Borrowed funds, long-term		(44	)		(23	)		(67	)
Total interest-bearing liabilities		46			(289	)		(243	)
Net interest income	$	173		$	69		$	242

Provision for loan losses. The Corporation records provisions for loan losses to maintain a level of total allowance for loan losses that management believes, to the best of its knowledge, covers all probable incurred losses estimable at each reporting date. Management considers historical loss experience, the present and prospective financial condition of borrowers, current conditions (particularly as they relate to markets where the Corporation originates loans), the status of nonperforming assets, the estimated underlying value of the collateral and other factors related to the collectability of the loan portfolio.

Information pertaining to the allowance for loan losses and nonperforming assets for the three months ended June 30, 2014 and 2013 is as follows:

(Dollar amounts in thousands)	At or for the three months ended
	June 30,
	2014			2013
Balance at the beginning of the period	$	4,921		$	5,488
Provision for loan losses		183			153
Charge-offs		(66	)		(978	)
Recoveries		8			7
Balance at the end of the period	$	5,046		$	4,670
Nonperforming loans	$	7,692		$	5,329
Nonperforming assets		7,712			5,564
Nonperforming loans to total loans		2.10	%		1.57	%
Nonperforming assets to total assets		1.32	%		1.05	%
Allowance for loan losses to total loans		1.38	%		1.38	%
Allowance for loan losses to non-performing loans		65.60	%		87.63	%

32

Nonperforming loans increased $2.4 million to $7.7 million at June 30, 2014 from $5.3 million at June 30, 2013. The increase in nonperforming loans during the quarter ended June 30, 2014 was primarily due to a $2.4 million loan relationship being placed on nonaccrual status due to the borrower’s inadequate working capital and liquidity sources. This relationship, which is considered impaired, consists of six commercial business loans, one commercial real estate loan and one residential mortgage. The loans are secured by commercial real estate, residential real estate, equipment, accounts receivable and inventory. This relationship was assigned specific reserves of $385,000 during the quarter ended June 30, 2014. In addition, a $637,000 commercial relationship was placed on nonaccrual status during the quarter ended March 31, 2014, after the Corporation received information from the borrower which reflected a weakened financial condition. This relationship consists of a commercial real estate loan secured by a commercial property and a commercial line of credit secured by accounts receivable, inventory and other business assets, both of which were considered impaired at June 30, 2014. The commercial real estate loan and commercial line of credit had specific reserves of $52,000 and $154,000, respectively, at June 30, 2014. Partially offsetting these increases were principal reductions of $121,000 resulting from credit workouts and repayments. Of the $7.7 million in nonperforming loans, $6.9 million were not past due at June 30, 2014. During the three months ended June 30, 2014, nonperforming loans increased $1.7 million, primarily due to the aforementioned eight loan relationship being put on nonaccrual status during the quarter.

As of June 30, 2014, the Corporation’s classified and criticized assets amounted to $13.4 million, or 2.3% of total assets, with $11.7 million classified as substandard and $1.7 identified as special mention. This compares to classified and criticized assets of $12.7 million, or 2.4% of total assets, with $11.8 million classified as substandard and $930,000 identified as special mention at December 31, 2013. The $1.6 million increase in criticized and classified assets was primarily the result of two commercial loan relationships being downgraded to special mention during the quarter ended March 31, 2014.

The provision for loan losses increased $30,000, or 19.6%, to $183,000 for the three months ended June 30, 2014 from $153,000 for the same period in the prior year. While the Corporation allocated $385,000 of the allowance for loan losses to the aforementioned loans placed on nonaccrual status and recognized as impaired during the quarter, the provision for loan losses only increased marginally as the general reserve pool previously had $224,000 attributable to these loans and there was a positive impact in the allowance for loan losses due to an improvement in the historical loss ratios.

Noninterest income. Noninterest income decreased $198,000, or 19.2%, to $833,000 for the three months ended June 30, 2014, compared to $1.0 million for the same period in the prior year. This decrease resulted from a $99,000 decrease in net gains on the sale of securities and decreases in commissions on financial services and fees and service charges of $63,000 and $34,000, respectively. During the quarter ended June 30, 2013, the Corporation realized securities gains of $99,000 related to the sale of certain mortgage-backed securities that were experiencing accelerated prepayments compared to no security gains in the 2014 quarterly period.

Noninterest expense. Noninterest expense increased $74,000, or 2.0%, to $3.7 million for the three months ended June 30, 2014, compared to $3.6 million for the same period in the prior year. This increase in noninterest expense can be attributed to increases in other noninterest expense, premises and equipment, and professional fees of $122,000, $77,000 and $5,000, respectively, partially offset by decreases in compensation and employee benefits, intangible asset amortization and FDIC expense of $100,000, $16,000 and $14,000, respectively. Noninterest expense for the second quarter of 2014 included $151,000 related to the Bank’s new branch offices in Cranberry Township, Pennsylvania and Saint Marys, Pennsylvania, which opened in May 2014 and October 2013, respectively.

Compensation and employee benefits expense decreased $100,000, or 5.2%, to $1.8 million for the three months ended June 30, 2014, compared to $1.9 million for the same period in the prior year. This decrease can be attributed to a $35,000 decrease in commission expense as the Corporation discontinued providing retail brokerage and other investment services during the third quarter of 2013 and a $20,000 reduction in retirement benefits costs resulting from the 2013 curtailment of the Bank’s pension plan. Payroll taxes also decreased $22,000 as the Corporation received a refund from prior year overpayments of state unemployment taxes.

Premise and equipment expense increased $77,000, or 14.6%, to $604,000 for the three months ended June 30, 2014, compared to $527,000 for the same period in the prior year. Premise and equipment expense for the second quarter of 2014 included $50,000 in expenses related to the Bank’s new branch offices in Cranberry Township, Pennsylvania and Saint Marys, Pennsylvania.

33

Professional fees increased $5,000, or 2.8%, to $183,000 for the three months ended June 30, 2014, compared to $178,000 for the same period in the prior year.

The Corporation recognized $57,000 of core deposit intangible amortization expense during the second quarter of 2014 compared to $73,000 for the same period in the prior year. This amortization relates to a branch acquisition completed in the third quarter of 2009. Further discussion of goodwill and intangible assets related to the branch office acquisition can be found in the “Notes to Consolidated Financial Statements” beginning on page 6.

FDIC insurance decreased $14,000, or 13.7%, to $88,000 for the three months ended June 30, 2014, compared to $102,000 for the same period in the prior year. The decrease was primarily the result of a decrease in the Bank’s FDIC insurance assessment rate.

Provision for income taxes. The provision for income taxes increased $10,000, or 4.9%, to $216,000 for the three months ended June 30, 2014 compared to $206,000 for the same period in the prior year. The Corporation’s effective tax rate increased to 19.7% for the second quarter of 2014 from 18.0% for the same quarter in the prior year. The difference between the statutory rate of 34% and the Corporation’s effective tax rate of 19.7% for the quarter ended June 30, 2014 was due to tax-exempt income earned on certain tax-free loans and securities and bank-owned life insurance.

Comparison of Results for the Six Months Ended June 30, 2014 and 2013

General. Net income decreased $77,000, or 4.3%, to $1.7 million for the six months ended June 30, 2014 from $1.8 million for the same period in 2013. This decrease was the result of increases in noninterest expense and the provision for loan losses of $720,000 and $50,000, respectively, partially offset by increases in net interest income and noninterest income of $376,000 and $311,000, respectively, and a decrease in the provision for income taxes of $6,000.

Net interest income. Net interest income on a tax equivalent basis increased $371,000, or 4.6%, to $8.5 million for the six months ended June 30, 2014 from $8.1 million for the six months ended June 30, 2013. This increase can be attributed to a decrease in interest expense of $537,000, partially offset by a decrease in tax equivalent interest income of $166,000.

Interest income. Interest income on a tax equivalent basis decreased $166,000, or 1.6%, to $10.0 million for the six months ended June 30, 2014 compared to $10.2 million for the six months ended June 30, 2013. This decrease can be attributed to decreases in interest on loans and securities of $166,000 and $51,000, respectively, partially offset by an increase in interest-earning deposits with banks and interest earned on federal bank stocks of $7,000 and $44,000, respectively.

Tax equivalent interest earned on loans receivable decreased $166,000, or 2.0%, to $8.3 million for the six months ended June 30, 2014 compared to $8.4 million for the six months ended June 30, 2013. This decrease resulted from a 28 basis point decline in the average yield on loans to 4.72% for the six months ended June 30, 2014, versus 5.00% for the same period in 2013. This unfavorable yield variance accounted for a $487,000 decrease in interest income. Partially offsetting this unfavorable yield variance, average loans increased $13.3 million, or 3.9%, accounting for an increase of $321,000 in loan interest income.

Tax equivalent interest earned on securities decreased $51,000, or 3.0%, to $1.6 million for the six months ended June 30, 2014 compared to $1.7 million for the six months ended June 30, 2013. This decrease resulted from a 14 basis point decline in the average yield on securities to 2.49% for the six months ended June 30, 2014, versus 2.63% for the same period in 2013, due primarily to the sale of higher-yielding securities. This unfavorable yield variance accounted for a $94,000 decrease in interest income. Partially offsetting this unfavorable yield variance, the average balance of securities increased $3.3 million, or 2.6%, accounting for a $43,000 increase in interest income.

Interest expense. Interest expense decreased $537,000, or 26.4%, to $1.5 million for the six months ended June 30, 2014 from $2.0 million for the same period in 2013. This decrease in interest expense can be attributed to a decrease in interest incurred on deposits and borrowed funds of $474,000 and $63,000, respectively.

34

Interest expense incurred on deposits decreased $474,000, or 28.9%, to $1.2 million for the six months ended June 30, 2014 compared to $1.6 million for the same period in 2013. The average cost of interest-bearing deposits decreased 34 basis points to 0.65% for the six months ended June 30, 2014, compared to 0.99% for the same period in 2013, resulting in a $605,000 decrease in interest expense. This decrease in the cost of deposits was primarily due to deposits repricing during 2013 and the first half of 2014 in the prevailing low interest-rate environment. Partially offsetting this favorable variance, the average balance of interest-bearing deposits increased $28.7 million, or 8.6%, to $364.2 million for the six months ended June 30, 2014, compared to $335.5 million for the same period in 2013 causing a $131,000 increase in interest expense. Average noninterest bearing deposits increased $7.5 million, or 7.4%, to $110.0 million from $102.5 million, facilitating the overall decline in the Corporation’s cost of funds.

Interest expense incurred on borrowed funds decreased $63,000, or 16.1%, to $329,000 for the six months ended June 30, 2014, compared to $392,000 for the same period in the prior year. The average cost of long term borrowed funds decreased 55 basis points to 3.39% for the six months ended June 30, 2014, compared to 3.94% for the same period in 2013, causing a $50,000 decrease in interest expense. This was due primarily to the capitalization of $53,000 of interest during the six months ended June 30, 2014 related to the Cranberry Township banking office construction compared to $10,000 for the same period in the prior year. Additionally, the average balance of long term borrowed funds decreased $3.3 million, or 16.6%, accounting for a $61,000 decrease in interest expense. This resulted from the early repayment of a $5.0 million FHLB long term advance during the first quarter of 2014. The Corporation recognized a $550,000 prepayment penalty associated with this early repayment. Partially offsetting the favorable variance related to long term borrowings, the average balance of short term borrowed funds increased $3.5 million, which caused an $18,000 increase in interest expense. Short-term borrowings at June 30, 2014 included a $2.2 million line of credit balance with a correspondent bank with a rate of 4.25% advanced by the Corporation during the third quarter of 2013 to partially fund the $5.0 million SBLF preferred stock redemption. Additionally, the average cost of short term borrowed funds increased 202 basis points to 2.28% for the six months ended June 30, 2014, compared to 0.26% for the same period in 2013, causing a $30,000 increase in interest expense.

35

Average Balance Sheet and Yield/Rate Analysis. The following table sets forth, for the periods indicated, information concerning the total dollar amounts of interest income from interest-earning assets and the resulting average yields, the total dollar amounts of interest expense on interest-bearing liabilities and the resulting average costs, net interest income, interest rate spread and the net interest margin earned on average interest-earning assets. For purposes of this table, average loan balances include nonaccrual loans and exclude the allowance for loan losses and interest income includes accretion of net deferred loan fees. Interest and yields on tax-exempt loans and securities (tax-exempt for federal income tax purposes) are shown on a fully tax equivalent basis. The information is based on average daily balances during the periods presented.

(Dollar amounts in thousands)	Six months ended June 30,
	2014							2013
	Average				Yield /			Average				Yield /
	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Loans, taxable	$	334,252	$	7,772		4.69	%	$	322,241	$	7,977		4.99	%
Loans, tax exempt		19,277		497		5.20	%		18,019		458		5.13	%
Total loans receivable		353,529		8,269		4.72	%		340,260		8,435		5.00	%
Securities, taxable		96,417		897		1.88	%		89,182		887		2.01	%
Securities, tax exempt		35,559		731		4.15	%		39,455		792		4.05	%
Total securities		131,976		1,628		2.49	%		128,637		1,679		2.63	%
Interest-earning deposits with banks		24,724		38		0.31	%		15,196		31		0.41	%
Federal bank stocks		3,126		79		5.10	%		2,897		35		2.44	%
Total interest-earning cash equivalents		27,850		117		0.85	%		18,093		66		0.74	%
Total interest-earning assets		513,355		10,014		3.93	%		486,990		10,180		4.22	%
Cash and due from banks		2,162							1,996
Other noninterest-earning assets		30,914							26,755
Total Assets	$	546,431						$	515,741
Interest-bearing liabilities:
Interest-bearing demand deposits	$	246,199	$	186		0.15	%	$	211,812	$	164		0.16	%
Time deposits		118,002		983		1.68	%		123,698		1,479		2.41	%
Total interest-bearing deposits		364,201		1,169		0.65	%		335,510		1,643		0.99	%
Borrowed funds, short-term		4,298		49		2.28	%		822		1		0.26	%
Borrowed funds, long-term (1)		16,685		280		3.39	%		20,000		391		3.94	%
Total borrowed funds		20,983		329		3.16	%		20,822		392		3.79	%
Total interest-bearing liabilities		385,184		1,498		0.78	%		356,332		2,035		1.15	%
Noninterest-bearing demand deposits		110,008		-		-			102,467		-		-
Funding and cost of funds		495,192		1,498		0.61	%		458,799		2,035		0.89	%
Other noninterest-bearing liabilities		4,705							5,142
Total Liabilities		499,897							463,941
Stockholders' Equity		46,534							51,800
Total Liabilities and Stockholders' Equity	$	546,431						$	515,741
Net interest income			$	8,516						$	8,145
Interest rate spread (difference between weighted average rate on interest-earning assets and interest-bearing liabilities)						3.15	%						3.07	%
Net interest margin (net interest income as a percentage of average interest-earning assets)						3.35	%						3.37	%

(1) Interest on long-term borrowed funds for the periods ended June 30, 2014 and 2013 was reduced by $53,000 and $10,000, respectively, related to capitalized interest costs on construction in progress.

36

Analysis of Changes in Net Interest Income. The following table analyzes the changes in interest income and interest expense in terms of: (1) changes in volume of interest-earning assets and interest-bearing liabilities and (2) changes in yields and rates. The table reflects the extent to which changes in the Corporation’s interest income and interest expense are attributable to changes in volume (changes in volume multiplied by prior year rate), rate (change in rate multiplied by prior year volume) and changes attributable to the combined impact of volume/rate (change in rate multiplied by change in volume). The changes attributable to the combined impact of volume/rate are allocated on a consistent basis between the volume and rate variances. Changes in interest income on loans and securities reflect the changes in interest income on a fully tax equivalent basis.

(Dollar amounts in thousands)	Six months ended June 30,
	2014 versus 2013
	Increase (Decrease) due to
	Volume			Rate			Total
Interest income:
Loans	$	321		$	(487	)	$	(166	)
Securities		43			(94	)		(51	)
Interest-earning deposits with banks		16			(9	)		7
Federal bank stocks		3			41			44
Total interest-earning assets		383			(549	)		(166	)
Interest expense:
Interest-bearing deposits		131			(605	)		(474	)
Borrowed funds, short-term		18			30			48
Borrowed funds, long-term		(61	)		(50	)		(111	)
Total interest-bearing liabilities		88			(625	)		(537	)
Net interest income	$	295		$	76		$	371

Provision for loan losses. The Corporation records provisions for loan losses to maintain a level of total allowance for loan losses that management believes, to the best of its knowledge, covers all probable incurred losses estimable at each reporting date. Management considers historical loss experience, the present and prospective financial condition of borrowers, current conditions (particularly as they relate to markets where the Corporation originates loans), the status of nonperforming assets, the estimated underlying value of the collateral and other factors related to the collectability of the loan portfolio.

Information pertaining to the allowance for loan losses and nonperforming assets for the six months ended June 30, 2014 and 2013 is as follows:

(Dollar amounts in thousands)	At or for the six months ended
	June 30,
	2014			2013
Balance at the beginning of the period	$	4,869		$	5,350
Provision for loan losses		345			295
Charge-offs		(197	)		(1,014	)
Recoveries		29			39
Balance at the end of the period	$	5,046		$	4,670
Non-performing loans	$	7,692		$	5,329
Non-performing assets		7,712			5,564
Non-performing loans to total loans		2.10	%		1.57	%
Non-performing assets to total assets		1.32	%		1.05	%
Allowance for loan losses to total loans		1.38	%		1.38	%
Allowance for loan losses to non-performing loans		65.60	%		87.63	%

37

Nonperforming loans increased $2.4 million to $7.7 million at June 30, 2014 from $5.3 million at June 30, 2013. The increase in nonperforming loans was primarily due to a $2.4 million loan relationship being placed on nonaccrual status during the quarter ended June 30, 2014. This relationship, which is considered impaired, consists of six commercial business loans, one commercial real estate loan and one residential mortgage. This relationship was assigned specific reserves of $385,000 during the quarter ended June 30, 2014. In addition, a $637,000 commercial relationship was placed on nonaccrual status during the quarter ended March 31, 2014, after the Corporation received information from the borrower which reflected a weakened financial condition. This relationship consists of a commercial real estate loan secured by a commercial property and a commercial line of credit secured by accounts receivable, inventory and other business assets, both of which were considered impaired at June 30, 2014. The commercial real estate loan and commercial line of credit had specific reserves of $52,000 and $154,000, respectively, at June 30, 2014. Partially offsetting these increases were principal reductions resulting from credit workouts and repayments. Of the $7.7 million in nonperforming loans, $6.9 million were not past due at June 30, 2014. During the six months ended June 30, 2014, nonperforming loans increased $2.6 million, primarily due to the aforementioned loan relationships being put on nonaccrual status during the period.

As of June 30, 2014, the Corporation’s classified and criticized assets amounted to $13.4 million, or 2.3% of total assets, with $11.7 million classified as substandard and $1.7 identified as special mention. This compares to classified and criticized assets of $12.7 million, or 2.4% of total assets, with $11.8 million classified as substandard and $930,000 identified as special mention at December 31, 2013. The overall increase in criticized and classified assets was primarily the result of two commercial loan relationships being downgraded to special mention during the six months ended June 30, 2014.

The provision for loan losses increased $50,000, or 17.0%, to $345,000 for the six months ended June 30, 2014 from $295,000 for the same period in the prior year. While the Corporation allocated $600,000 of the allowance for loan losses to the aforementioned loans placed on nonaccrual status and recognized as impaired during the six months ended June 30, 2014, the provision for loan losses only increased marginally as the general reserve pool previously had amounts attributable to these loans and there was a positive impact in the allowance for loan losses due to an improvement in the historical loss ratios.

Noninterest income. Noninterest income increased $311,000, or 15.9%, to $2.3 million for the six months ended June 30, 2014, compared to $2.0 million for the same period in the prior year. This increase resulted from a $474,000 increase in net gains on the sale of securities. During the six months ended June 30, 2014, the Corporation realized securities gains of $658,000 primarily related to a balance sheet management strategy whereby securities were sold to prepay a $5.0 million FHLB long term advance and associated securities gains were used to offset the impact of prepayment penalties associated with the early retirement of the advance. During the six months ended June 30, 2013, the Corporation realized securities gains of $184,000 related to the sale of certain mortgage backed securities that were experiencing accelerated prepayments. Partially offsetting this increase related to security gains, commissions on financial services and fees and service charges decreased $117,000 and $55,000, respectively.

Noninterest expense. Noninterest expense increased $720,000, or 10.0%, to $7.9 million for the six months ended June 30, 2014, compared to $7.2 million for the same period in the prior year. This increase in noninterest expense can be attributed primarily to an increase in other noninterest expense of $720,000, primarily related to a $550,000 prepayment penalty assessed on the aforementioned early retirement of debt. Also contributing to the increase in noninterest expense was an increase in premises and equipment of $135,000, primarily related to expenses for two new full-service banking offices opened during 2014. These increases were partially offset by decreases in compensation and employee benefits, intangible asset amortization, professional fees and FDIC expense of $63,000, $31,000, $9,000 and $32,000, respectively.

Compensation and employee benefits expense decreased $63,000, or 1.6%, to $3.8 million for the six months ended June 30, 2014. This decrease can be attributed to a $61,000 decrease in commission expense as the Corporation discontinued providing retail brokerage and other investment services during the third quarter of 2013 and a $42,000 reduction in retirement benefits costs resulting from the 2013 curtailment of the Bank’s pension plan. Payroll taxes also decreased $31,000 primarily from the receipt of a refund from prior year overpayments of state unemployment taxes.

38

Premise and equipment expense increased $135,000, or 12.6%, to $1.2 million for the six months ended June 30, 2014, compared to $1.1 million for the same period in the prior year. Premise and equipment expense for the first half of 2014 included $83,000 in expenses related to the Bank’s new branch offices in Saint Marys and Cranberry Township, Pennsylvania.

Professional fees decreased $9,000, or 2.5%, to $346,000 for the six months ended June 30, 2014, compared to $355,000 for the same period in the prior year.

The Corporation recognized $113,000 of core deposit intangible amortization expense during the first half of 2014 compared to $145,000 for the same period in the prior year. This amortization relates to a branch acquisition completed in the third quarter of 2009. Further discussion of goodwill and intangible assets related to the branch office acquis3ition can be found in the “Notes to Consolidated Financial Statements” beginning on page 6.

FDIC insurance decreased $32,000, or 15.4%, to $176,000 for the six months ended June 30, 2014, compared to $208,000 for the same period in the prior year. The decrease was primarily the result of a decrease in the Bank’s FDIC insurance assessment rate.

Provision for income taxes. The provision for income taxes decreased $6,000, or 1.4%, to $433,000 for the six months ended June 30, 2014 compared to $439,000 for the same period in the prior year. The Corporation’s effective tax rate increased to 20.1% for the first half of 2014 from 19.6% for the same period in the prior year. The difference between the statutory rate of 34% and the Corporation’s effective tax rate of 20.1% for the six months ended June 30, 2014 was due to tax-exempt income earned on certain tax-free loans and securities and bank-owned life insurance.

LIQUIDITY

The Corporation’s primary sources of funds generally have been deposits obtained through the offices of the Bank, borrowings from the FHLB and Federal Reserve, and amortization and prepayments of outstanding loans and maturing securities. During the three months ended June 30, 2014, the Corporation used its sources of funds primarily to fund security purchases and loan advances and to repay borrowed funds. As of June 30, 2014, the Corporation had outstanding loan commitments, including undisbursed loans and amounts available under credit lines, totaling $52.1 million, and standby letters of credit totaling $188,000.

At June 30, 2014, time deposits amounted to $120.8 million, or 23.5% of the Corporation’s total consolidated deposits, including approximately $43.1 million of which are scheduled to mature within the next year. Management of the Corporation believes (i) it has adequate resources to fund all of its commitments, (ii) all of its commitments will be funded as required by related maturity dates and (iii) based upon past experience and current pricing policies, it can adjust the rates of time deposits to retain a substantial portion of maturing liabilities if necessary.

Aside from liquidity available from customer deposits or through sales and maturities of securities, the Corporation has alternative sources of funds such as a term borrowing capacity from the FHLB and the Federal Reserve’s discount window. At June 30, 2014, the Corporation had borrowed funds of $17.2 million consisting of $15.0 million in long-term FHLB advances and a $2.2 million short-term advance on a line of credit with a correspondent bank. At June 30, 2014, the Corporation’s borrowing capacity with the FHLB, net of funds borrowed and other committments, was $145.3 million.

Management is not aware of any conditions, including any regulatory recommendations or requirements, which would adversely impact its liquidity or its ability to meet funding needs in the ordinary course of business.

39

RECENT REGULATORY DEVELOPMENTS

In July 2013, the Office of the Comptroller of the Currency and the other federal bank regulatory agencies issued a final rule that will revise their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. Among other things, the rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increases the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets), phases out certain kinds of intangibles and instruments treated as capital and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out is exercised. The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. The new capital rules maintain the general structure of the prompt corrective action rules, but incorporate the new common equity Tier 1 capital requirement and the increased Tier 1 risk-weighted asset requirement into the prompt corrective action framework.

The final rule becomes effective for the Bank on January 1, 2015. The capital conservation buffer requirement will be phased in beginning January 1, 2016 and ending January 1, 2019, when the full capital conservation buffer requirement will be effective. The final rule also implements consolidated capital requirements for bank holding companies, such as the Corporation, effective January 1, 2015.

CRITICAL ACCOUNTING POLICIES

The Corporation’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and follow general practices within the industry in which it operates. Application of these principles requires management to make estimates or judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates or judgments. Certain policies inherently have a greater reliance on the use of estimates, and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates or judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by third-party sources, when available. When third-party information is not available, valuation adjustments are estimated in good faith by management primarily though the use of internal cash flow modeling techniques.

The most significant accounting policies followed by the Corporation are presented in Note 1 to the consolidated financial statements included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013. These policies, along with the disclosures presented in the other financial statement notes provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions and where changes in those estimates and assumptions could have a significant impact on the financial statements. Management has identified the following as critical accounting policies.

40

Allowance for loan losses. The Corporation considers that the determination of the allowance for loan losses involves a higher degree of judgment and complexity than its other significant accounting policies. The balance in the allowance for loan losses is determined based on management’s review and evaluation of the loan portfolio in relation to past loss experience, the size and composition of the portfolio, current economic events and conditions and other pertinent factors, including management’s assumptions as to future delinquencies, recoveries and losses. All of these factors may be susceptible to significant change. Among the many factors affecting the allowance for loan losses, some are quantitative while others require qualitative judgment. Although management believes its process for determining the allowance adequately considers all of the potential factors that could potentially result in credit losses, the process includes subjective elements and may be susceptible to significant change. To the extent actual outcomes differ from management’s estimates, additional provisions for loan losses may be required that would adversely impact the Corporation’s financial condition or earnings in future periods.

Other-than-temporary impairment. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic, market or other concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions and (4) whether the Corporation has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.

Goodwill and intangible assets. Goodwill represents the excess cost over fair value of assets acquired in a business combination. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values. The impairment test is a two-step process that begins with an initial impairment evaluation. If the initial evaluation suggests that an impairment of the asset value exists, the second step is to determine the amount of the impairment. If the tests conclude that goodwill is impaired, the carrying value is adjusted and an impairment charge is recorded. As of November 30, 2013, the required annual impairment test of goodwill was performed and management concluded that no impairment existed as of that date.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk for the Corporation consists primarily of interest rate risk exposure and liquidity risk. Since virtually all of the interest-earning assets and interest-bearing liabilities are at the Bank, virtually all of the interest rate risk and liquidity risk lies at the Bank level. The Bank is not subject to currency exchange risk or commodity price risk, and has no trading portfolio, and therefore, is not subject to any trading risk. In addition, the Bank does not participate in hedging transactions such as interest rate swaps and caps. Changes in interest rates will impact both income and expense recorded and also the market value of long-term interest-earning assets and interest-bearing liabilities. Interest rate risk and liquidity risk management is performed at the Bank level. Although the Bank has a diversified loan portfolio, loans outstanding to individuals and businesses depend upon the local economic conditions in the immediate trade area.

One of the primary functions of the Corporation’s asset/liability management committee is to monitor the level to which the balance sheet is subject to interest rate risk. The goal of the asset/liability committee is to manage the relationship between interest rate sensitive assets and liabilities, thereby minimizing the fluctuations in the net interest margin, which achieves consistent growth of net interest income during periods of changing interest rates.

Interest rate sensitivity is the result of differences in the amounts and repricing dates of the Bank’s rate sensitive assets and rate sensitive liabilities. These differences, or interest rate repricing “gap”, provide an indication of the extent that the Corporation’s net interest income is affected by future changes in interest rates. A gap is considered positive when the amount of interest rate-sensitive assets exceeds the amount of interest rate-sensitive liabilities and is considered negative when the amount of interest rate-sensitive liabilities exceeds the amount of interest rate-sensitive assets. Generally, during a period of rising interest rates, a negative gap would adversely affect net interest income while a positive gap would result in an increase in net interest income. Conversely, during a period of falling interest rates, a negative gap would result in an increase in net interest income and a positive gap would adversely affect net interest income. The closer to zero that gap is maintained, generally, the lesser the impact of market interest rate changes on net interest income.

41

Assumptions about the timing and variability of cash flows are critical in gap analysis. Particularly important are the assumptions driving mortgage prepayments and the expected attrition of the core deposits portfolios. These assumptions are based on the Corporation’s historical experience, industry standards and assumptions provided by a federal regulatory agency, which management believes most accurately represents the sensitivity of the Corporation’s assets and liabilities to interest rate changes. As of June 30, 2014, the Corporation’s interest-earning assets maturing or repricing within one year totaled $191.6 million while the Corporation’s interest-bearing liabilities maturing or repricing within one-year totaled $171.8 million, providing an excess of interest-earning assets over interest-bearing liabilities of $19.8 million. At June 30, 2014, the percentage of the Corporation’s assets to liabilities maturing or repricing within one year was 111.5%.

For more information, see “Market Risk Management” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.

Item 4. Controls and Procedures

The Corporation maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Corporation’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Corporation’s management, including its Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e).

As of June 30, 2014, the Corporation carried out an evaluation, under the supervision and with the participation of the Corporation’s management, including the Corporation’s CEO and CFO, of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures. Based on the foregoing, the Corporation’s CEO and CFO concluded that the Corporation’s disclosure controls and procedures were effective. There have been no significant changes in the Corporation’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Corporation completed its evaluation.

There has been no change made in the Corporation’s internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Corporation is involved in various legal proceedings occurring in the ordinary course of business. It is the opinion of management, after consultation with legal counsel, that these matters will not materially affect the Corporation’s consolidated financial position or results of operations.

Item 1A. Risk Factors

Not applicable.

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

None.

Item 3. Defaults Upon Senior Securities

None.

42

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(a) Not applicable.

(b)Not applicable.

Item 6. Exhibits

Exhibit 31.1	Rule 13a-14(a) Certification of Principal Executive Officer
Exhibit 31.2	Rule 13a-14(a) Certification of Principal Financial Officer
Exhibit 32.1	CEO Certification Pursuant to 18 U.S.C. Section 1350
Exhibit 32.2	CFO Certification Pursuant to 18 U.S.C. Section 1350
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

43

Signatures

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

	EMCLAIRE FINANCIAL CORP
Date: August 11, 2014	By:	/s/ William C. Marsh
	William C. Marsh
	Chairman of the Board,
	President and Chief Executive Officer
Date: August 11, 2014	By:	/s/ Matthew J. Lucco
	Matthew J. Lucco
	Chief Financial Officer
	Treasurer

44

EX-31.1

Exhibit 31.1

Certification of the Principal Executive Officer

(Pursuant to Rule 13a-14(a))

I, William C. Marsh, Chairman of the Board, President and Chief Executive Officer, certify that:

1. I have reviewed this Form 10-Q of Emclaire Financial Corp;

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 consolidated financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, 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 controls over financial reporting or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 11, 2014	By:	/s/ William C. Marsh
	William C. Marsh
	Chairman of the Board,
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of the Principal Financial Officer

(Pursuant to Rule 13a-14(a))

I, Matthew J. Lucco, Chief Financial Officer and Treasurer, certify that:

1. I have reviewed this Form 10-Q of Emclaire Financial Corp;

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 consolidated financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, 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 controls over financial reporting or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 11, 2014	By:	/s/ Matthew J. Lucco
	Matthew J. Lucco
	Chief Financial Officer
	Treasurer

EX-32.1

Exhibit 32.1

CEO CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Emclaire Financial Corp (the Corporation) on Form 10-Q for the period ending June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, William C. Marsh, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/  William C. Marsh

William C. Marsh

Chairman of the Board,

President and Chief Executive Officer

August 11, 2014

Note: A signed original of this written statement has been provided to Emclaire Financial Corp and will be retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CFO CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Emclaire Financial Corp (the Corporation) on Form 10-Q for the period ending June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Matthew J. Lucco, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/  Matthew J. Lucco

Matthew J. Lucco

Chief Financial Officer

August 11, 2014

Note: A signed original of this written statement has been provided to Emclaire Financial Corp and will be retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Goodwill, Gross Carrying Amount	$ 3,664	$ 3,664
Core deposit intangibles, Gross Carrying Amount	4,027	4,027
Goodwill, Gross Carrying Amount, Total	7,691	7,691
Goodwill, Accumulated Amortization	0	0
Core deposit intangibles, Accumulated Amortization	3,175	3,062
Accumulated Amortization, Total	$ 3,175	$ 3,062

XML

Fair Value (Details 3) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 2,228	$ 2,420
Impaired commercial real estate loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	558	2,340
Impaired commercial business loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,670
Other residential real estate owned [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance		80
Fair Value, Inputs, Level 3 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	2,228	2,420
Fair Value, Inputs, Level 3 [Member] | Impaired commercial real estate loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	558	2,340
Fair Value Measurements, Valuation Techniques	Sales comparison approach/ Contractual provision of USDA loan	Sales comparison approach/ Contractual provision of USDA loan
Fair Value Measurements Unobservable Inputs	Adjustment for differences between comparable sales	Adjustment for differences between comparable sales
Mortgage Loans on Real Estate, Minimum Interest Rate in Range		0.00%
Mortgage Loans on Real Estate, Maximum Interest Rate in Range		10.00%
Mortgage Loans on Real Estate, Interest Rate	10.00%
Fair Value, Inputs, Level 3 [Member] | Impaired commercial business loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,670
Fair Value Measurements, Valuation Techniques	Liquidation value of business assets
Fair Value Measurements Unobservable Inputs	Adjustment for differences between comparable business assets
Mortgage Loans on Real Estate, Minimum Interest Rate in Range	44.00%
Mortgage Loans on Real Estate, Maximum Interest Rate in Range	76.00%
Fair Value, Inputs, Level 3 [Member] | Other residential real estate owned [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance		$ 80
Fair Value Measurements, Valuation Techniques		Sales comparison approach
Fair Value Measurements Unobservable Inputs		Adjustment for differences between comparable sales
Mortgage Loans on Real Estate, Interest Rate		10.00%

XML

Fair Value (Details 1) (Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Fair Value, Inputs, Level 3 [Member]
Balance at the beginning of the period	$ 653	$ 653	$ 653	$ 653
Total gains or losses (realized/unrealized):
Included in earnings	0	0	0	0
Included in other comprehensive income	0	0	0	0
Issuances	0	0	0	0
Transfers in and/or out of Level 3	0	0	0	0
Balance at the end of the period	$ 653	$ 653	$ 653	$ 653

XML

Loans Receivable and Related Allowance for Loan Losses (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 2,228		$ 2,228		$ 2,420
Recorded Investment	2,900		2,900		2,500
Related Allowance	627		627		181
Loans Receivable With Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	6,031	3,746	6,031	3,746	3,544
Recorded Investment	5,090	2,805	5,090	2,805	2,603
Related Allowance	795	234	795	234	202
Average Recorded Investment	4,156	3,404	3,638	3,626	3,251
Interest Income Recognized in Period	69	7	82	11	18
Cash Basis Interest Recognized in Period	16	7	19	11	17
Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	3,384	2,765	3,384	2,765	2,778
Recorded Investment	2,983	2,366	2,983	2,366	2,379
Average Recorded Investment	2,710	2,392	2,600	2,436	2,399
Interest Income Recognized in Period	15	2	17	3	6
Cash Basis Interest Recognized in Period	2	2	4	3	5
Residential First Mortgages [Member] | Loans Receivable With Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	172	81	172	81	82
Recorded Investment	172	81	172	81	82
Related Allowance	28	20	28	20	21
Average Recorded Investment	127	40	112	27	49
Interest Income Recognized in Period	8	2	9	2	5
Cash Basis Interest Recognized in Period	2	2	3	2	4
Residential First Mortgages [Member] | Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	118	0	118	0	20
Recorded Investment	118	0	118	0	20
Average Recorded Investment	59	0	46	0	4
Interest Income Recognized in Period	2	0	2	0	1
Cash Basis Interest Recognized in Period	0	0	0	0	0
Home equity and lines of credit [Member] | Loans Receivable With Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0	0	0	0	0
Recorded Investment	0	0	0	0	0
Related Allowance	0	0	0	0	0
Average Recorded Investment	0	0	0	0	0
Interest Income Recognized in Period	0	0	0	0	0
Cash Basis Interest Recognized in Period	0	0	0	0	0
Home equity and lines of credit [Member] | Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0	0	0	0	0
Recorded Investment	0	0	0	0	0
Average Recorded Investment	0	0	0	0	0
Interest Income Recognized in Period	0	0	0	0	0
Cash Basis Interest Recognized in Period	0	0	0	0	0
Commercial real estate [Member] | Loans Receivable With Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	3,649	3,665	3,649	3,665	3,462
Recorded Investment	2,708	2,724	2,708	2,724	2,521
Related Allowance	227	214	227	214	181
Average Recorded Investment	2,715	3,364	2,650	3,599	3,202
Interest Income Recognized in Period	10	5	17	9	13
Cash Basis Interest Recognized in Period	10	5	12	9	13
Commercial real estate [Member] | Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,488	1,061	1,488	1,061	1,074
Recorded Investment	1,089	662	1,089	662	675
Average Recorded Investment	896	563	823	544	584
Interest Income Recognized in Period	12	2	14	3	5
Cash Basis Interest Recognized in Period	1	2	3	3	5
Commercial business [Member] | Loans Receivable With Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	2,210	0	2,210	0	0
Recorded Investment	2,210	0	2,210	0	0
Related Allowance	540	0	540	0	0
Average Recorded Investment	1,314	0	876	0	0
Interest Income Recognized in Period	51	0	56	0	0
Cash Basis Interest Recognized in Period	4	0	4	0	0
Commercial business [Member] | Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	430	356	430	356	336
Recorded Investment	428	356	428	356	336
Average Recorded Investment	407	360	383	363	354
Interest Income Recognized in Period	1	0	1	0	0
Cash Basis Interest Recognized in Period	1	0	1	0	0
Consumer [Member] | Loans Receivable With Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0	0	0	0	0
Recorded Investment	0	0	0	0	0
Related Allowance	0	0	0	0	0
Average Recorded Investment	0	0	0	0	0
Interest Income Recognized in Period	0	0	0	0	0
Cash Basis Interest Recognized in Period	0	0	0	0	0
Consumer [Member] | Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,348	1,348	1,348	1,348	1,348
Recorded Investment	1,348	1,348	1,348	1,348	1,348
Average Recorded Investment	1,348	1,469	1,348	1,529	1,457
Interest Income Recognized in Period	0	0	0	0	0
Cash Basis Interest Recognized in Period	$ 0	$ 0	$ 0	$ 0	$ 0

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss), net of tax, for the three months ended June 30, 2014 and 2013 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Loss at April 1, 2014	$	(1,492)	$	(1,410)	$	(2,902)
Other comprehensive income before reclassification		1,006		-		1,006
Amounts reclassified from accumulated other comprehensive income		-		-		-
Net current period other comprehensive income		1,006		-		1,006
Accumulated Other Comprehensive Loss at June 30, 2014	$	(486)	$	(1,410)	$	(1,896)

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Income at April 1, 2013	$	2,071	$	(1,795)	$	276
Other comprehensive income before reclassification		(2,713)		-		(2,713)
Amounts reclassified from accumulated other comprehensive income		(65)		-		(65)
Net current period other comprehensive loss		(2,778)		-		(2,778)
Accumulated Other Comprehensive Loss at June 30, 2013	$	(707)	$	(1,795)	$	(2,502)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2014 and 2013 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Income at January 1, 2014	$	(1,870)	$	(1,410)	$	(3,280)
Other comprehensive income before reclassification		1,818		-		1,818
Amounts reclassified from accumulated other comprehensive income		(434)		-		(434)
Net current period other comprehensive loss		1,384		-		1,384
Accumulated Other Comprehensive Income at June 30, 2014	$	(486)	$	(1,410)	$	(1,896)

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Income at January 1, 2013	$	2,365	$	(1,795)	$	570
Other comprehensive income before reclassification		(2,951)		-		(2,951)
Amounts reclassified from accumulated other comprehensive income		(121)		-		(121)
Net current period other comprehensive loss		(3,072)		-		(3,072)
Accumulated Other Comprehensive Income at June 30, 2013	$	(707)	$	(1,795)	$	(2,502)

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

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the three months		Statement Where Net
Comprehensive Income Components	ended June 30, 2014		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	-	Gain on sale of securities
		-	Tax expense
Total reclassifications for the period	$	-	Net of tax

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the three months		Statement Where Net
Comprehensive Income Components	ended June 30, 2013		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	99	Gain on sale of securities
		(34)	Tax expense
Total reclassifications for the period	$	65	Net of tax

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the six months		Statement Where Net
Comprehensive Income Components	ended June 30, 2014		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	658	Gain on sale of securities
		(224)	Tax expense
Total reclassifications for the period	$	434	Net of tax

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the six months		Statement Where Net
Comprehensive Income Components	ended June 30, 2013		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	184	Gain on sale of securities
		(63)	Tax expense
Total reclassifications for the period	$	121	Net of tax

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Fair Value (Details Textual) (USD $)	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Fair Values Of Financial Instruments [Line Items]
Impaired Financing Receivable, Recorded Investment	$ 2,900,000			$ 2,900,000		$ 2,500,000
Impaired Financing Receivable, Related Allowance	627,000			627,000		181,000
Other Real Estate and Foreclosed Assets						80,000
Real Estate, Gross						104,000
Commercial Real Estate Loan Discounting Rate		10.00%		10.00%
Provision For Loan Losses Expensed	183,000		153,000	345,000	295,000
SEC Schedule III, Real Estate, Write-down or Reserve, Amount						24,000
SEC Schedule III Real Estate Estate	0		0	0	19,000
Financing Receivable, Modifications, Recorded Investment	7,100,000		2,100,000	7,100,000	2,100,000	2,500,000
Impaired Loans [Member]
Fair Values Of Financial Instruments [Line Items]
Provision For Loan Losses Expensed	393,000		20,000	665,000	20,000
Impaired Residential Mortgage Loan One [Member]
Fair Values Of Financial Instruments [Line Items]
Financing Receivable, Modifications, Recorded Investment	144,000			144,000
Impaired Residential Mortgage Loan Two [Member]
Fair Values Of Financial Instruments [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,900,000			1,900,000
United States Department Of Agriculture [Member]
Fair Values Of Financial Instruments [Line Items]
Percentage Of Commercial Real Estate Loan Principal Balance Outstanding Guarantee By Third Party		90.00%
Percentage Of Weighted Average Discount On Impaired Commercial Real Estate Loans	40.40%			40.40%		1.50%
Loans Held-for-sale, Commercial, Real Estate	$ 346,000			$ 346,000		$ 350,000

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Stock Compensation Plans (Details 1) (USD $)	6 Months Ended
	Jun. 30, 2014
Nonvested, Options (in shares)	500
Granted, Options (in shares)	0
Vested, Options (in shares)	0
Forfeited, Options (in shares)	0
Nonvested, Options (in shares)	500
Nonvested, Weighted-Average Grant-date Fair Value	$ 1.44
Granted, Weighted-Average Grant-date Fair Value	$ 0
Vested, Weighted-Average Grant-date Fair Value	$ 0
Forfeited, Weighted-Average Grant-date Fair Value	$ 0
Nonvested, Weighted-Average Grant-date Fair Value	$ 1.44

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Loans Receivable and Related Allowance for Loan Losses (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 4,921	$ 5,488	$ 4,869	$ 5,350
Charge-offs	(66)	(978)	(197)	(1,014)
Recoveries	8	7	29	39
Provision	183	153	345	295
Ending Balance	5,046	4,670	5,046	4,670
Ending ALL balance attributable to loans:
Individually evaluated for impairment	795		795		202
Collectively evaluated for impairment	4,251		4,251		4,667
Total loans:
Individually evaluated for impairment	8,073		8,073		4,982
Collectively evaluated for impairment	357,442		357,442		352,317
Residential first mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	936	807	923	828
Charge-offs	(19)	(12)	(97)	(17)
Recoveries	0	0	0	1
Provision	0	(23)	91	(40)
Ending Balance	917	772	917	772
Ending ALL balance attributable to loans:
Individually evaluated for impairment	28		28		21
Collectively evaluated for impairment	889		889		902
Total loans:
Individually evaluated for impairment	290		290		102
Collectively evaluated for impairment	104,328		104,328		105,439
Home equity and lines of credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	619	727	625	730
Charge-offs	(14)	0	(14)	0
Recoveries	0	0	0	0
Provision	(137)	(106)	(143)	(109)
Ending Balance	468	621	468	621
Ending ALL balance attributable to loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	468		468		625
Total loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	88,374		88,374		87,928
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	2,221	3,189	2,450	3,090
Charge-offs	0	(941)	(2)	(941)
Recoveries	4	2	9	4
Provision	150	297	(82)	394
Ending Balance	2,375	2,547	2,375	2,547
Ending ALL balance attributable to loans:
Individually evaluated for impairment	227		227		181
Collectively evaluated for impairment	2,148		2,148		2,269
Total loans:
Individually evaluated for impairment	3,797		3,797		3,196
Collectively evaluated for impairment	102,476		102,476		98,303
Commercial business [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,094	702	822	636
Charge-offs	0	0	(17)	0
Recoveries	0	0	7	0
Provision	139	(25)	421	41
Ending Balance	1,233	677	1,233	677
Ending ALL balance attributable to loans:
Individually evaluated for impairment	540		540		0
Collectively evaluated for impairment	693		693		822
Total loans:
Individually evaluated for impairment	2,638		2,638		336
Collectively evaluated for impairment	54,132		54,132		52,878
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	51	63	49	66
Charge-offs	(33)	(25)	(67)	(56)
Recoveries	4	5	13	34
Provision	31	10	58	9
Ending Balance	53	53	53	53
Ending ALL balance attributable to loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	53		53		49
Total loans:
Individually evaluated for impairment	1,348		1,348		1,348
Collectively evaluated for impairment	$ 8,132		$ 8,132		$ 7,769

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Accumulated Other Comprehensive Income (Loss) (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Unrealized gains and losses on available-for-sale securities
Gain on sale of securities	$ 0	$ 99	$ 658	$ 184
Tax expense	0	(34)	(224)	(63)
Net of tax	$ 0	$ 65	$ 434	$ 121

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Fair Value (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 2,228	$ 2,420
Fair Value, Inputs, Level 1 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0	0
Fair Value, Inputs, Level 2 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0	0
Fair Value, Inputs, Level 3 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	2,228	2,420
Impaired commercial real estate loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	558	2,340
Impaired commercial real estate loans [Member] | Fair Value, Inputs, Level 1 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0	0
Impaired commercial real estate loans [Member] | Fair Value, Inputs, Level 2 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0	0
Impaired commercial real estate loans [Member] | Fair Value, Inputs, Level 3 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	558	2,340
Impaired commercial business loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,670
Impaired commercial business loans [Member] | Fair Value, Inputs, Level 1 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0
Impaired commercial business loans [Member] | Fair Value, Inputs, Level 2 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0
Impaired commercial business loans [Member] | Fair Value, Inputs, Level 3 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,670
Other residential real estate owned [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance		80
Other residential real estate owned [Member] | Fair Value, Inputs, Level 1 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance		0
Other residential real estate owned [Member] | Fair Value, Inputs, Level 2 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance		0
Other residential real estate owned [Member] | Fair Value, Inputs, Level 3 [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance		$ 80

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Participation in the Small Business Lending Fund (SBLF) of the U.S. Treasury Department (U.S. Treasury)

6 Months Ended

Jun. 30, 2014

Participation In Small Business Lending Fund Self Of U S Treasury Department U S Treasury and Repurchase Of Shares Issued Under Troubled Asset Relief Program Tarp [Abstract]

Participation In Small Business Lending Fund and Repurchase Of Shares Issued Under Troubled Asset Relief Program [Text Block]

2. Participation in the Small Business Lending Fund (SBLF) of the U.S. Treasury Department (U.S. Treasury)

On August 18, 2011, the Corporation entered into a Securities Purchase Agreement (the Agreement) with the U.S. Treasury Department, pursuant to which the Corporation issued and sold to the U.S. Treasury 10,000 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series B (Series B Preferred Stock), having a liquidation preference of $1,000 per share, for aggregate proceeds of $10.0 million, pursuant to the U.S. Treasury’s SBLF program. On September 17, 2013, with the approval of the Corporation’s primary federal banking regulator, the Corporation redeemed 5,000 shares, or 50%, of its Series B Preferred Stock held by the U.S. Treasury at an aggregate redemption price of $5.0 million, plus accrued but unpaid dividends. Following this redemption, the Treasury holds 5,000 shares of the Series B Preferred Stock, representing a remaining liquidation value of $5.0 million.

The Series B Preferred Stock is entitled to receive non-cumulative dividends payable quarterly on each January 1, April 1, July 1 and October 1, beginning October 1, 2011. The dividend rate, which is calculated on the aggregate liquidation amount, was initially set at 5% per annum based upon the current level of Qualified Small Business Lending (QSBL) by the Bank at that time. The dividend rate in the subsequent periods for the first two and one-half years through the quarter ending December 31, 2013 was based upon the percentage change in qualified lending between each dividend period and the baseline QSBL level established at the time the Agreement was entered into. Such dividend rate varied from 1% to 5% per annum. For the two year period beginning January 1, 2014, the dividend rate is fixed at a rate of 2% per annum. If the Series B Preferred Stock remains outstanding for more than four-and-one-half years, beginning January 1, 2016, the dividend rate will be fixed at 9%. The dividend rate was 2.0% and 5.0%, respectively, for the quarters ended June 30, 2014 and 2013. Such dividends are not cumulative, but the Corporation may only declare and pay dividends on its common stock (or any other equity securities junior to the Series B Preferred Stock) if it has declared and paid dividends for the current dividend period on the Series B Preferred Stock, and will be subject to other restrictions on its ability to repurchase or redeem other securities.

Holders of the Series B Preferred Stock have the right to vote as a separate class on certain matters relating to the rights of holders of Series B Preferred Stock and on certain corporate transactions. Except with respect to such matters, the Series B Preferred Stock does not have voting rights.

The Corporation may redeem the shares of Series B Preferred Stock, in whole or in part, at any time at a redemption price equal to the sum of the liquidation amount and the per-share amount of any unpaid dividends for the then-current period, subject to any required prior approval by the Corporation’s primary federal banking regulator. If redeemed in part, payments are required to be at least 25% of the original issuance.

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Stock Compensation Plans (Details 2) (USD $)	6 Months Ended
	Jun. 30, 2014
Nonvested, Shares (in shares)	25,800
Granted, Shares (in shares)	0
Vested, Shares (in shares)	0
Forfeited, Shares (in shares)	100
Nonvested, Shares (in shares)	25,700
Nonvested, Weighted-Average Grant-date Fair Value	$ 20.11
Granted, Weighted-Average Grant-date Fair Value	$ 0
Vested, Weighted-Average Grant-date Fair Value	$ 0
Forfeited, Weighted-Average Grant-date Fair Value	$ 25.50
Nonvested, Weighted-Average Grant-date Fair Value	$ 20.08

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Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Schedule of Available-for-sale Securities [Line Items]
Due in one year or less, amortized cost	$ 55
Due after one year through five years, amortized cost	36,461
Due after five through ten years, amortized cost	31,526
Due after ten years, amortized cost	3,421
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	144,906
Due in one year or less, fair value	56
Due after one year through five years, fair value	36,499
Due after five through ten years, fair value	31,564
Due after ten years, fair value	3,382
Available-for-sale Securities, Debt Securities	144,115
Mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	34,533
Fair value	35,014
Collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	38,910
Fair value	$ 37,600

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Securities (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 147,262	$ 120,137
Gross Unrealized Gains	1,370	1,304
Gross Unrealized Losses	(2,105)	(4,137)
Fair value	146,527	117,304
U.S. Treasury and federal agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,469	4,466
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(135)	(298)
Fair value	3,334	4,168
U.S. government sponsored entities and agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	32,445	23,637
Gross Unrealized Gains	16	0
Gross Unrealized Losses	(282)	(745)
Fair value	32,179	22,892
U.S. agency mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	34,533	11,020
Gross Unrealized Gains	481	341
Gross Unrealized Losses	0	0
Fair value	35,014	11,361
U.S. agency collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	38,910	41,751
Gross Unrealized Gains	0	2
Gross Unrealized Losses	(1,310)	(2,031)
Fair value	37,600	39,722
State and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	34,545	36,657
Gross Unrealized Gains	786	830
Gross Unrealized Losses	(345)	(988)
Fair value	34,986	36,499
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,004	250
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(2)	(9)
Fair value	1,002	241
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,356	2,356
Gross Unrealized Gains	87	131
Gross Unrealized Losses	(31)	(66)
Fair value	$ 2,412	$ 2,421

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Stock Compensation Plans (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Apr. 30, 2014 2014 Stock Incentive Plan [Member]	Apr. 30, 2014 2014 Stock Incentive Plan [Member] Restricted Stock [Member]	Apr. 30, 2014 2014 Stock Incentive Plan [Member] Employee Stock Option [Member]	Apr. 30, 2014 2007 Stock Incentive Plan and Trust [Member]	Apr. 30, 2014 2007 Stock Incentive Plan and Trust [Member] Restricted Stock [Member]	Apr. 30, 2014 2007 Stock Incentive Plan and Trust [Member] Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized					176,866			177,496
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	$ 266,000		$ 266,000
Allocated Share-based Compensation Expense	$ 42,000	$ 63,000	$ 84,000	$ 98,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			1 year 4 months 24 days
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant						88,433	88,433		5,913	45,283

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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	$ 16,156	$ 75,510
Unrealized Loss, Less than 12 Months	(195)	(3,835)
Fair Value, 12 Months or More	63,873	4,982
Unrealized Loss, 12 Months or More	(1,910)	(302)
Fair Value, Total	80,029	80,492
Unrealized Loss, Total	(2,105)	(4,137)
U.S. Treasury and federal agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	0	4,168
Unrealized Loss, Less than 12 Months	0	(298)
Fair Value, 12 Months or More	3,334	0
Unrealized Loss, 12 Months or More	(135)	0
Fair Value, Total	3,334	4,168
Unrealized Loss, Total	(135)	(298)
U.S. government sponsored entities and agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	4,245	22,891
Unrealized Loss, Less than 12 Months	(19)	(745)
Fair Value, 12 Months or More	18,728	0
Unrealized Loss, 12 Months or More	(263)	0
Fair Value, Total	22,973	22,891
Unrealized Loss, Total	(282)	(745)
U.S. agency mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months		33,805
Unrealized Loss, Less than 12 Months		(1,729)
Fair Value, 12 Months or More		4,982
Unrealized Loss, 12 Months or More		(302)
Fair Value, Total		38,787
Unrealized Loss, Total		(2,031)
U.S. agency collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	8,556
Unrealized Loss, Less than 12 Months	(135)
Fair Value, 12 Months or More	29,044
Unrealized Loss, 12 Months or More	(1,175)
Fair Value, Total	37,600
Unrealized Loss, Total	(1,310)
State and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	1,192	13,262
Unrealized Loss, Less than 12 Months	(8)	(988)
Fair Value, 12 Months or More	12,767	0
Unrealized Loss, 12 Months or More	(337)	0
Fair Value, Total	13,959	13,262
Unrealized Loss, Total	(345)	(988)
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	1,002	242
Unrealized Loss, Less than 12 Months	(2)	(9)
Fair Value, 12 Months or More	0	0
Unrealized Loss, 12 Months or More	0	0
Fair Value, Total	1,002	242
Unrealized Loss, Total	(2)	(9)
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	1,161	1,142
Unrealized Loss, Less than 12 Months	(31)	(66)
Fair Value, 12 Months or More	0	0
Unrealized Loss, 12 Months or More	0	0
Fair Value, Total	1,161	1,142
Unrealized Loss, Total	$ (31)	$ (66)

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Securities (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Proceeds	$ 0	$ 1,539	$ 21,559	$ 3,314
Gains	0	99	658	184
Tax provision related to gains	$ 0	$ 34	$ 224	$ 63

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Nature of Operations and Basis of Presentation

6 Months Ended

Jun. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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

1. Nature of Operations and Basis of Presentation

Emclaire Financial Corp (the Corporation) is a Pennsylvania corporation and the holding company of The Farmers National Bank of Emlenton (the Bank) and Emclaire Settlement Services, LLC (the Title Company). The Corporation provides a variety of financial services to individuals and businesses through its offices in Western Pennsylvania. Its primary deposit products are checking, savings and term certificate accounts and its primary lending products are residential and commercial mortgages, commercial business loans and consumer loans.

The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, the Bank and the Title Company. All significant intercompany transactions and balances have been eliminated in preparing the consolidated financial statements.

The accompanying unaudited consolidated financial statements for the interim periods include all adjustments, consisting of normal recurring accruals, which are necessary, in the opinion of management, to fairly reflect the Corporation’s consolidated financial position and results of operations. Additionally, these consolidated financial statements for the interim periods have been prepared in accordance with instructions for the Securities and Exchange Commission’s (SEC’s) Form 10-Q and Article 10 of Regulation S-X and therefore do not include all information or footnotes necessary for a complete presentation of financial condition, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America (GAAP). For further information, refer to the audited consolidated financial statements and footnotes thereto for the year ended December 31, 2013, as contained in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC.

The balance sheet at December 31, 2013 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements.

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, fair value of financial instruments, goodwill, real estate owned, the valuation of deferred tax assets and other-than-temporary impairment charges on securities. The results of operations for interim quarterly or year-to-date periods are not necessarily indicative of the results that may be expected for the entire year or any other period. Certain amounts previously reported may have been reclassified to conform to the current year’s financial statement presentation.

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Loans Receivable and Related Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Mortgage loans on real estate:
Residential first mortgages	$ 104,618	$ 105,541
Home equity loans and lines of credit	88,374	87,928
Commercial real estate	106,273	101,499
Mortgage Loans on Real Estate	299,265	294,968
Other loans:
Commercial business	56,770	53,214
Consumer	9,480	9,117
Loans Receivable Commercial and Consumer	66,250	62,331
Total loans, gross	365,515	357,299
Less allowance for loan losses	5,046	4,869
Total loans, net	$ 360,469	$ 352,430

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Goodwill and Intangible Assets (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Intangible asset amortization	$ 57	$ 73	$ 113	$ 145

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Assets
Cash and due from banks	$ 2,426	$ 2,485
Interest earning deposits with banks	35,068	14,173
Cash and cash equivalents	37,494	16,658
Securities available for sale	146,527	117,304
Loans receivable, net of allowance for loan losses of $5,046 and $4,869	360,469	352,430
Federal bank stocks, at cost	2,791	3,977
Bank-owned life insurance	10,562	10,401
Accrued interest receivable	1,530	1,466
Premises and equipment, net	14,114	12,310
Goodwill	3,664	3,664
Core deposit intangible, net	852	965
Prepaid expenses and other assets	5,699	6,667
Total Assets	583,702	525,842
Deposits:
Non-interest bearing	115,362	104,269
Interest bearing	399,041	327,737
Total deposits	514,403	432,006
Short-term borrowed funds	2,150	24,150
Long-term borrowed funds	15,000	20,000
Accrued interest payable	253	292
Accrued expenses and other liabilities	4,439	4,322
Total Liabilities	536,245	480,770
Commitments and Contingent Liabilities	0	0
Stockholders' Equity:
Common stock, $1.25 par value, 12,000,000 shares authorized; 1,872,175 and 1,870,675 shares issued; 1,770,158 and 1,768,658 shares outstanding, respectively	2,340	2,338
Additional paid-in capital	19,586	19,478
Treasury stock, at cost; 102,017 shares	(2,114)	(2,114)
Retained earnings	24,541	23,650
Accumulated other comprehensive loss	(1,896)	(3,280)
Total Stockholders' Equity	47,457	45,072
Total Liabilities and Stockholders' Equity	583,702	525,842
Series B Non Cumulative Preferred Stock [Member]
Stockholders' Equity:
Preferred stock, $1.00 par value, 3,000,000 shares authorized; Series B, non-cumulative preferred stock, $5,000 liquidation value, 5,000 shares issued and outstanding	$ 5,000	$ 5,000

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Fair Value (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	$ 146,527	$ 117,304
U.S. Treasury and federal agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	3,334	4,168
U.S. government sponsored entities and agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	32,179	22,892
U.S. agency mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	35,014	11,361
U.S. agency collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	37,600	39,722
State and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	34,986	36,499
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	1,002	241
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	2,412	2,421
Fair Value, Inputs, Level 1 [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	5,093	6,177
Fair Value, Inputs, Level 1 [Member] | U.S. Treasury and federal agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	3,334	4,168
Fair Value, Inputs, Level 1 [Member] | U.S. government sponsored entities and agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 1 [Member] | U.S. agency mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 1 [Member] | U.S. agency collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 1 [Member] | State and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 1 [Member] | Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	241
Fair Value, Inputs, Level 1 [Member] | Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	1,759	1,768
Fair Value, Inputs, Level 2 [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	140,781	110,474
Fair Value, Inputs, Level 2 [Member] | U.S. Treasury and federal agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 2 [Member] | U.S. government sponsored entities and agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	32,179	22,892
Fair Value, Inputs, Level 2 [Member] | U.S. agency mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	35,014	11,361
Fair Value, Inputs, Level 2 [Member] | U.S. agency collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	37,600	39,722
Fair Value, Inputs, Level 2 [Member] | State and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	34,986	36,499
Fair Value, Inputs, Level 2 [Member] | Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	1,002	0
Fair Value, Inputs, Level 2 [Member] | Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	653	653
Fair Value, Inputs, Level 3 [Member] | U.S. Treasury and federal agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | U.S. government sponsored entities and agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | U.S. agency mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | U.S. agency collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | State and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	$ 653	$ 653

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities
Net income	$ 1,720	$ 1,797
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	386	336
Provision for loan losses	345	295
Amortization of premiums, net	127	90
Amortization of intangible assets and mortgage servicing rights	113	145
Realized gains on sales of available for sale securities, net	(658)	(184)
Net gains on foreclosed real estate	(14)	(12)
Restricted stock and stock option compensation	84	98
Increase in bank-owned life insurance, net	(161)	(164)
Increase in accrued interest receivable	(64)	(49)
Decrease in prepaid expenses and other assets	169	1,111
Decrease in accrued interest payable	(39)	(65)
Increase in accrued expenses and other liabilities	117	250
Net cash provided by operating activities	2,125	3,648
Cash flows from investing activities
Loan originations and principal collections, net	(8,531)	(1,055)
Available for sale securities:
Sales	21,559	3,314
Maturities, repayments and calls	5,227	26,304
Purchases	(53,255)	(60,116)
Redemption (purchase) of federal bank stocks	1,186	(555)
Proceeds from the sale of foreclosed real estate	121	70
Write-down of foreclosed real estate	0	19
Additions to premises and equipment	(2,190)	(2,251)
Net cash used in investing activities	(35,883)	(34,270)
Cash flows from financing activities
Net increase in deposits	82,397	17,038
Repayments on Federal Home Loan Bank advances	(5,000)	0
Net change in short-term borrowings	(22,000)	5,500
Proceeds from exercise of stock options, including tax benefit	26	20
Dividends paid	(829)	(955)
Net cash provided by financing activities	54,594	21,603
Increase (decrease) in cash and cash equivalents	20,836	(9,019)
Cash and cash equivalents at beginning of period	16,658	20,424
Cash and cash equivalents at end of period	37,494	11,405
Supplemental information:
Interest paid	1,537	2,100
Income taxes paid	0	140
Supplemental noncash disclosure:
Transfers from loans to foreclosed real estate	$ 20	$ 92

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Loans Receivable and Related Allowance for Loan Losses (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	$ 354,946	$ 349,481
Performing, Accruing 30-59 Days Past Due	2,659	2,113
Performing, Accruing 60-89 Days Past Due	218	498
Nonperforming, Accruing 90 Days + Past Due	0	62
Nonperforming, Nonaccrual	7,692	5,145
Total Loans	365,515	357,299
Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	101,915	103,821
Performing, Accruing 30-59 Days Past Due	1,910	884
Performing, Accruing 60-89 Days Past Due	114	278
Nonperforming, Accruing 90 Days + Past Due	0	38
Nonperforming, Nonaccrual	679	520
Total Loans	104,618	105,541
Home equity and lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	87,743	87,302
Performing, Accruing 30-59 Days Past Due	431	394
Performing, Accruing 60-89 Days Past Due	103	172
Nonperforming, Accruing 90 Days + Past Due	0	0
Nonperforming, Nonaccrual	97	60
Total Loans	88,374	87,928
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	102,910	98,095
Performing, Accruing 30-59 Days Past Due	80	516
Performing, Accruing 60-89 Days Past Due	0	22
Nonperforming, Accruing 90 Days + Past Due	0	0
Nonperforming, Nonaccrual	3,283	2,866
Total Loans	106,273	101,499
Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	54,274	52,581
Performing, Accruing 30-59 Days Past Due	211	258
Performing, Accruing 60-89 Days Past Due	0	0
Nonperforming, Accruing 90 Days + Past Due	0	24
Nonperforming, Nonaccrual	2,285	351
Total Loans	56,770	53,214
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	8,104	7,682
Performing, Accruing 30-59 Days Past Due	27	61
Performing, Accruing 60-89 Days Past Due	1	26
Nonperforming, Accruing 90 Days + Past Due	0	0
Nonperforming, Nonaccrual	1,348	1,348
Total Loans	$ 9,480	$ 9,117

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

The following table summarizes the Corporation’s acquired goodwill and intangible assets as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)	June 30, 2014				December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Goodwill	$	3,664	$	-	$	3,664	$	-
Core deposit intangibles		4,027		3,175		4,027		3,062
Total	$	7,691	$	3,175	$	7,691	$	3,062

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Loans Receivable and Related Allowance for Loan Losses (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	$ 7,692	$ 5,145
Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	679	520
Home equity and lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	97	60
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	3,283	2,866
Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	2,285	351
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	1,348	1,348
Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	6,876	1,913
Not Past Due [Member] | Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	289	88
Not Past Due [Member] | Home equity and lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	0
Not Past Due [Member] | Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	3,016	412
Not Past Due [Member] | Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	2,223	65
Not Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	1,348	1,348
Thirty To Fifty Nine Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	180	2,148
Thirty To Fifty Nine Days Past Due [Member] | Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	81	0
Thirty To Fifty Nine Days Past Due [Member] | Home equity and lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	0
Thirty To Fifty Nine Days Past Due [Member] | Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	60	2,148
Thirty To Fifty Nine Days Past Due [Member] | Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	39	0
Thirty To Fifty Nine Days Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	0
Sixty To Eighty Nine Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	52	82
Sixty To Eighty Nine Days Past Due [Member] | Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	19	82
Sixty To Eighty Nine Days Past Due [Member] | Home equity and lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	20	0
Sixty To Eighty Nine Days Past Due [Member] | Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	13	0
Sixty To Eighty Nine Days Past Due [Member] | Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	0
Sixty To Eighty Nine Days Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	0
Ninty Days Or More Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	584	1,002
Ninty Days Or More Past Due [Member] | Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	290	350
Ninty Days Or More Past Due [Member] | Home equity and lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	77	60
Ninty Days Or More Past Due [Member] | Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	194	306
Ninty Days Or More Past Due [Member] | Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	23	286
Ninty Days Or More Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	$ 0	$ 0

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

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

For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy are as follows:

(Dollar amounts in thousands)			(Level 1)		(Level 2)
			Quoted Prices in		Significant		(Level 3)
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
Description	Total		Assets		Inputs		Inputs
June 30, 2014:
U.S. Treasury and federal agency	$	3,334	$	3,334	$	-	$	-
U.S. government sponsored entities and agencies		32,179		-		32,179		-
Mortgage-backed securities: residential		35,014		-		35,014		-
Collateralized mortgage obligations: residential		37,600		-		37,600		-
State and political subdivision		34,986		-		34,986		-
Corporate debt securities		1,002		-		1,002		-
Equity securities		2,412		1,759		-		653
	$	146,527	$	5,093	$	140,781	$	653
December 31, 2013:
U.S. Treasury and federal agency	$	4,168	$	4,168	$	-	$	-
U.S. government sponsored entities and agencies		22,892		-		22,892		-
U.S. agency mortgage-backed securities: residential		11,361		-		11,361		-
U.S. agency collateralized mortgage obligations: residential		39,722		-		39,722		-
State and political subdivisions		36,499		-		36,499		-
Corporate debt securities		241		241		-		-
Equity securities		2,421		1,768		-		653
	$	117,304	$	6,177	$	110,474	$	653

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The following table presents changes in Level 3 assets measured on a recurring basis for the three and six month periods ended June 30, 2014 and 2013:

(Dollar amounts in thousands)	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Balance at the beginning of the period	$	653	$	653	$	653	$	653
Total gains or losses (realized/unrealized):		-		-		-		-
Included in earnings		-		-		-		-
Included in other comprehensive income		-		-		-		-
Issuances		-		-		-		-
Transfers in and/or out of Level 3		-		-		-		-
Balance at the end of the period	$	653	$	653	$	653	$	653

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

For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy are as follows:

(Dollar amounts in thousands)			(Level 1)		(Level 2)
			Quoted Prices in		Significant		(Level 3)
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
Description	Total		Assets		Inputs		Inputs
June 30, 2014:
Impaired commercial real estate loans	$	558	$	-	$	-	$	558
Impaired commercial business loans		1,670		-		-		1,670
	$	2,228	$	-	$	-	$	2,228
December 31, 2013:
Impaired commercial real estate loans	$	2,340	$	-	$	-	$	2,340
Other residential real estate owned		80		-		-		80
	$	2,420	$	-	$	-	$	2,420

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

The following table presents quantitative information about Level 3 fair value measurements for assets measured at fair value on a non-recurring basis:

(Dollar amounts in thousands)			Valuation	Unobservable
			Techniques(s)	Input (s)	Range
June 30, 2014:
Impaired commercial real estate loans	$	558	Sales comparison approach/ Contractual provision of USDA loan	Adjustment for differences between comparable sales		10%
Impaired commercial business loans		1,670	Liquidation value of business assets	Adjustment for differences between comparable business assets		44% - 76%
December 31, 2013:
Impaired commercial real estate loans		2,340	Sales comparison approach/ Contractual provision of USDA loan	Adjustment for differences between comparable sales		0% - 10%
Other residential real estate owned		80	Sales comparison approach	Adjustment for differences between comparable sales		10%

Schedule Of Carrying Amount and Fair Values Of Financial Instruments [Table Text Block]

The following table sets forth the carrying amount and estimated fair values of the Corporation’s financial instruments included in the consolidated balance sheet as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Carrying		Fair Value Measurements using:
Description	Amount		Total		Level 1		Level 2		Level 3
June 30, 2014:
Financial Assets:
Cash and cash equivalents	$	37,494	$	37,494	$	37,494	$	-	$	-
Securities available for sale		146,527		146,527		5,093		140,781		653
Loans, net		360,469		364,670		-		-		364,670
Federal bank stock		2,791		N/A		N/A		N/A		N/A
Accrued interest receivable		1,530		1,530		52		477		1,001
		548,812		550,221		42,639		141,258		366,324
Financial Liabilities:
Deposits		514,403		516,772		394,222		122,550		-
Borrowed funds		17,150		18,078		-		18,078		-
Accrued interest payable		253		253		6		247		-
		531,806		535,103		394,228		140,875		-

	Carrying		Fair Value Measurements using:
	Amount		Total		Level 1		Level 2		Level 3
December 31, 2013:
Financial Assets:
Cash and cash equivalents	$	16,658	$	16,658	$	16,658	$	-	$	-
Securities available for sale		117,304		117,304		5,936		110,715		653
Loans, net		352,430		356,123		-		-		356,123
Federal bank stock		3,977		N/A		N/A		N/A		N/A
Accrued interest receivable		1,466		1,466		34		430		1,002
		491,835		491,551		22,628		111,145		357,778
Financial Liabilities:
Deposits		432,006		434,552		325,983		108,569		-
Borrowed funds		44,150		45,241		-		45,241		-
Accrued interest payable		292		292		5		287		-
		476,448		480,085		325,988		154,097		-

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Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Balance at beginning of period	$ 45,945	$ 51,866	$ 45,072	$ 51,725
Net income	878	939	1,720	1,797
Other comprehensive income (loss)	1,006	(2,778)	1,384	(3,072)
Stock compensation expense	42	63	84	98
Dividends declared on preferred stock	(25)	(125)	(50)	(250)
Dividends declared on common stock	(389)	(352)	(779)	(705)
Exercise of stock options, including tax benefit	0	0	26	20
Balance at end of period	$ 47,457	$ 49,613	$ 47,457	$ 49,613
Common cash dividend per share (in dollars per share)	$ 0.22	$ 0.20	$ 0.44	$ 0.40

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Consolidated Balance Sheets [Parenthetical] (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Allowance for loan losses (in dollars)	$ 5,046	$ 4,869
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, shares authorized	3,000,000	3,000,000
Common stock, par value (in dollars per share)	$ 1.25	$ 1.25
Common stock, shares authorized	12,000,000	12,000,000
Common stock, shares issued	1,872,175	1,870,675
Common stock, shares outstanding	1,770,158	1,768,658
Treasury stock, shares	102,017	102,017
Series B Non Cumulative Preferred Stock [Member]
Preferred stock, liquidation value (in dollars)	$ 5,000	$ 5,000
Preferred stock, shares issued	5,000	5,000
Preferred stock, shares outstanding	5,000	5,000

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Other Comprehensive Income, Noncontrolling Interest [Text Block]

10. Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss), net of tax, for the three months ended June 30, 2014 and 2013 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Loss at April 1, 2014	$	(1,492)	$	(1,410)	$	(2,902)
Other comprehensive income before reclassification		1,006		-		1,006
Amounts reclassified from accumulated other comprehensive income		-		-		-
Net current period other comprehensive income		1,006		-		1,006
Accumulated Other Comprehensive Loss at June 30, 2014	$	(486)	$	(1,410)	$	(1,896)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the three months		Statement Where Net
Comprehensive Income Components	ended June 30, 2014		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	-	Gain on sale of securities
		-	Tax expense
Total reclassifications for the period	$	-	Net of tax

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Income at April 1, 2013	$	2,071	$	(1,795)	$	276
Other comprehensive income before reclassification		(2,713)		-		(2,713)
Amounts reclassified from accumulated other comprehensive income		(65)		-		(65)
Net current period other comprehensive loss		(2,778)		-		(2,778)
Accumulated Other Comprehensive Loss at June 30, 2013	$	(707)	$	(1,795)	$	(2,502)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the three months		Statement Where Net
Comprehensive Income Components	ended June 30, 2013		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	99	Gain on sale of securities
		(34)	Tax expense
Total reclassifications for the period	$	65	Net of tax

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2014 and 2013 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Income at January 1, 2014	$	(1,870)	$	(1,410)	$	(3,280)
Other comprehensive income before reclassification		1,818		-		1,818
Amounts reclassified from accumulated other comprehensive income		(434)		-		(434)
Net current period other comprehensive loss		1,384		-		1,384
Accumulated Other Comprehensive Income at June 30, 2014	$	(486)	$	(1,410)	$	(1,896)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the six months		Statement Where Net
Comprehensive Income Components	ended June 30, 2014		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	658	Gain on sale of securities
		(224)	Tax expense
Total reclassifications for the period	$	434	Net of tax

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Income at January 1, 2013	$	2,365	$	(1,795)	$	570
Other comprehensive income before reclassification		(2,951)		-		(2,951)
Amounts reclassified from accumulated other comprehensive income		(121)		-		(121)
Net current period other comprehensive loss		(3,072)		-		(3,072)
Accumulated Other Comprehensive Income at June 30, 2013	$	(707)	$	(1,795)	$	(2,502)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the six months		Statement Where Net
Comprehensive Income Components	ended June 30, 2013		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	184	Gain on sale of securities
		(63)	Tax expense
Total reclassifications for the period	$	121	Net of tax

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Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 11, 2014
Document Information [Line Items]
Entity Registrant Name	EMCLAIRE FINANCIAL CORP
Entity Central Index Key	0000858800
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	EMCF
Entity Common Stock, Shares Outstanding		1,771,158
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2014

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New Accounting Standards

6 Months Ended

Jun. 30, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

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

11.         New Accounting Standards

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 5, 2016. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Corporation’s financial statements.

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Consolidated Statements of Net Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Interest and dividend income:
Loans receivable, including fees	$ 4,089	$ 4,098	$ 8,119	$ 8,297
Securities:
Taxable	493	470	897	887
Exempt from federal income tax	253	295	518	562
Federal bank stocks	44	17	79	35
Interest earning deposits with banks	27	18	38	31
Total interest and dividend income	4,906	4,898	9,651	9,812
Interest expense:
Deposits	607	805	1,169	1,643
Borrowed funds	149	194	329	392
Total interest expense	756	999	1,498	2,035
Net interest income	4,150	3,899	8,153	7,777
Provision for loan losses	183	153	345	295
Net interest income after provision for loan losses	3,967	3,746	7,808	7,482
Noninterest income:
Fees and service charges	394	428	771	826
Commissions on financial services	13	76	22	139
Title premiums	15	27	24	49
Net gain on sales of available for sale securities	0	99	658	184
Earnings on bank-owned life insurance	93	96	192	192
Other	318	305	605	571
Total noninterest income	833	1,031	2,272	1,961
Noninterest expense:
Compensation and employee benefits	1,832	1,932	3,774	3,837
Premises and equipment	604	527	1,204	1,069
Intangible asset amortization	57	73	113	145
Professional fees	183	178	346	355
Federal deposit insurance	88	102	176	208
Other	942	820	2,314	1,593
Total noninterest expense	3,706	3,632	7,927	7,207
Income before provision for income taxes	1,094	1,145	2,153	2,236
Provision for income taxes	216	206	433	439
Net income	878	939	1,720	1,797
Preferred stock dividends	25	125	50	250
Net income available to common stockholders	$ 853	$ 814	$ 1,670	$ 1,547
Basic and diluted earnings per common share (in dollars per share)	$ 0.48	$ 0.46	$ 0.94	$ 0.88
Diluted earnings per common share (in dollars per share)	$ 0.48	$ 0.46	$ 0.94	$ 0.87
Average common shares outstanding (in shares)	1,770,158	1,762,158	1,769,775	1,761,546

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Loans Receivable and Related Allowance for Loan Losses

6 Months Ended

Jun. 30, 2014

Loans Notes Trade and Other Receivables Disclosure [Abstract]

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

5.            Loans Receivable and Related Allowance for Loan Losses

The Corporation’s loans receivable as of the respective dates are summarized as follows:

(Dollar amounts in thousands)	June 30,		December 31,
	2014		2013
Mortgage loans on real estate:
Residential first mortgages	$	104,618	$	105,541
Home equity loans and lines of credit		88,374		87,928
Commercial real estate		106,273		101,499
		299,265		294,968
Other loans:
Commercial business		56,770		53,214
Consumer		9,480		9,117
		66,250		62,331
Total loans, gross		365,515		357,299
Less allowance for loan losses		5,046		4,869
Total loans, net	$	360,469	$	352,430

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of June 30, 2014:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of June 30, 2014						ended June 30, 2014
											Cash Basis
	Unpaid						Average		Interest Income		Interest
	Principal		Recorded		Related		Recorded		Recognized		Recognized
	Balance		Investment		Allowance		Investment		in Period		in Period
Residential first mortgages	$	172	$	172	$	28	$	127	$	8	$	2
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,649		2,708		227		2,715		10		10
Commercial business		2,210		2,210		540		1,314		51		4
Consumer		-		-		-		-		-		-
Total	$	6,031	$	5,090	$	795	$	4,156	$	69	$	16

	For the six months
	ended June 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	112	$	9	$	3
Home equity and lines of credit		-		-		-
Commercial real estate		2,650		17		12
Commercial business		876		56		4
Consumer		-		-		-
Total	$	3,638	$	82	$	19

	Impaired Loans with No Specific Allowance
					For the three months
	As of June 30, 2014				ended June 30, 2014
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	118	$	118	$	59	$	2	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,488		1,089		896		12		1
Commercial business		430		428		407		1		1
Consumer		1,348		1,348		1,348		-		-
Total	$	3,384	$	2,983	$	2,710	$	15	$	2

	For the six months
	ended June 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	46	$	2	$	-
Home equity and lines of credit		-		-		-
Commercial real estate		823		14		3
Commercial business		383		1		1
Consumer		1,348		-		-
Total	$	2,600	$	17	$	4

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of December 31, 2013:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the year ended
	As of December 31, 2013						December 31, 2013
											Cash Basis
	Unpaid						Average		Interest Income		Interest
	Principal		Recorded		Related		Recorded		Recognized		Recognized
	Balance		Investment		Allowance		Investment		in Period		in Period
Residential first mortgages	$	82	$	82	$	21	$	49	$	5	$	4
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,462		2,521		181		3,202		13		13
Commercial business		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	3,544	$	2,603	$	202	$	3,251	$	18	$	17

	Impaired Loans with No Specific Allowance
					For the year ended
	As of December 31, 2013				December 31, 2013
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	20	$	20	$	4	$	1	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,074		675		584		5		5
Commercial business		336		336		354		-		-
Consumer		1,348		1,348		1,457		-		-
Total	$	2,778	$	2,379	$	2,399	$	6	$	5

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of June 30, 2013:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of June 30, 2013						ended June 30, 2013
											Cash Basis
	Unpaid						Average		Interest Income		Interest
	Principal		Recorded		Related		Recorded		Recognized		Recognized
	Balance		Investment		Allowance		Investment		in Period		in Period
Residential first mortgages	$	81	$	81	$	20	$	40	$	2	$	2
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,665		2,724		214		3,364		5		5
Commercial business		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	3,746	$	2,805	$	234	$	3,404	$	7	$	7

	For the six months
	ended June 30, 2013
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	27	$	2	$	2
Home equity and lines of credit		-		-		-
Commercial real estate		3,599		9		9
Commercial business		-		-		-
Consumer		-		-		-
Total	$	3,626	$	11	$	11

	Impaired Loans with No Specific Allowance
					For the three months
	As of June 30, 2013				ended June 30, 2013
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	-	$	-	$	-	$	-	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,061		662		563		2		2
Commercial business		356		356		360		-		-
Consumer		1,348		1,348		1,469		-		-
Total	$	2,765	$	2,366	$	2,392	$	2	$	2

	For the six months
	ended June 30, 2013
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	-	$	-	$	-
Home equity and lines of credit		-		-		-
Commercial real estate		544		3		3
Commercial business		363		-		-
Consumer		1,529		-		-
Total	$	2,436	$	3	$	3

Unpaid principal balance includes any loans that have been partially charged off but not forgiven. Accrued interest is not included in the recorded investment in loans based on the amounts not being material.

 

Troubled debt restructurings (TDR). The Corporation has certain loans that have been modified in order to maximize collection of loan balances. If, for economic or legal reasons related to the customer’s financial difficulties, management grants a concession compared to the original terms and conditions of the loan that it would not have otherwise considered, the modified loan is classified as a TDR. Concessions related to TDRs generally do not include forgiveness of principal balances. The Corporation generally does not extend additional credit to borrowers with loans classified as TDRs.

At June 30, 2014 and December 31, 2013, the Corporation had $7.1 million and $2.5 million, respectively, of loans classified as TDRs, which are included in impaired loans above. At June 30, 2014 and December 31, 2013, the Corporation had $588,000 and $56,000 of the allowance for loan losses allocated to these specific loans. At June 30, 2013, the Corporation had $2.1 million of loans classified as TDRs with $55,000 of the allowance for loan losses allocated to these specific loans.

During the three and six month periods ended June 30, 2014, the Corporation modified eleven additional loans to be identified as TDRs. One commercial relationship consisting of eight loans totaling $2.4 million was modified as the Bank granted repayment concessions due to financial difficulties experienced by the borrower. Concessions on these eight loans included reduced monthly payments through the notes’ maturities. An additional commercial real estate relationship consisting of two loans totaling $2.1 million was modified as the Bank granted a payment concession on one loan and interest rate concessions on both loans due to cash flow considerations caused by vacancy rates. In addition, the Corporation modified a residential mortgage loan with pre- and post-modification recorded investments of $76,000 and $93,000, respectively, due to a bankruptcy court order. The modifications included capitalization of $5,000 of accrued and unpaid interest and $13,000 of legal expenses, a reduction in the interest rate from 6.25% to 5.00% and a 15 year extension of the original term. Because these loans were previously impaired with specific reserves allocated to them, there was no impact to the provision for loan losses for the three and six month periods ended June 30, 2014 as a result of the modifications.

During the six month period ended June 30, 2013, the Corporation modified a residential mortgage loan with a pre- and post-modification recorded investment of $83,000 as a TDR due to financial difficulties experienced by the borrower. The modification included a reduction in the interest rate from 6.75% to 4.00% and a 65 month extension of the original term. During the three month period ended June 30, 2013, the Corporation did not modify any additional loans as TDRs.

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. During the three and six month periods ended June 30, 2014, there were defaults on three loans classified as TDRs which totaled $426,000 at June 30, 2014. Of these loans, two were not past due and one was 30-59 days delinquent at June 30, 2014. During the three and six month periods ended June 30, 2013, the Corporation did not have any loans which were modified as TDRs for which there was a payment default within twelve months following the modification.

Credit Quality Indicators. Management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.

Commercial real estate and commercial business loans not identified as impaired are evaluated as risk rated pools of loans utilizing a risk rating practice that is supported by a quarterly special asset review. In this review process, strengths and weaknesses are identified, evaluated and documented for each criticized and classified loan and borrower, strategic action plans are developed, risk ratings are confirmed and the loan’s performance status is reviewed.

Management has determined certain portions of the loan portfolio to be homogeneous in nature and assigns like reserve factors for the following loan pool types: residential real estate, home equity loans and lines of credit, and consumer installment and personal lines of credit.

The reserve allocation for risk rated loan pools is developed by applying the following factors:

Historic: Management utilizes a computer model to develop the historical net charge-off experience which is used to formulate the assumptions employed in the migration analysis applied to estimate future losses in the portfolio. Outstanding balance and charge-off information are input into the model and historical loss migration rate assumptions are developed to apply to pass, special mention, substandard and doubtful risk rated loans. A twelve-quarter rolling weighted-average is utilized to anticipate probable incurred losses in the portfolios.

Qualitative: Qualitative adjustment factors for pass, special mention, substandard and doubtful ratings are developed and applied to risk rated loans to allow for: quality of lending policies and procedures; national and local economic and business conditions; changes in the nature and volume of the portfolio; experiences, ability and depth of lending management; changes in trends, volume and severity of past due, nonaccrual and classified loans and loss and recovery trends; quality of loan review systems; concentrations of credit and other external factors.

Management uses the following definitions for risk ratings:

Pass: Loans classified as pass typically exhibit good payment performance and have underlying borrowers with acceptable financial trends where repayment capacity is evident. These borrowers typically would have a sufficient cash flow that would allow them to weather an economic downturn and the value of any underlying collateral could withstand a moderate degree of depreciation due to economic conditions.

Special Mention: Loans classified as special mention are characterized by potential weaknesses that could jeopardize repayment as contractually agreed. These loans may exhibit adverse trends such as increasing leverage, shrinking profit margins and/or deteriorating cash flows. These borrowers would inherently be more vulnerable to the application of economic pressures.

Substandard: Loans classified as substandard exhibit weaknesses that are well-defined to the point that repayment is jeopardized. Typically, the Corporation is no longer adequately protected by both the apparent net worth and repayment capacity of the borrower.

Doubtful: Loans classified as doubtful have advanced to the point that collection or liquidation in full, on the basis of currently ascertainable facts, conditions and value, is highly questionable or improbable.

The following table presents the classes of the loan portfolio summarized by the aggregate pass and the criticized categories of special mention, substandard and doubtful within the Corporation’s internal risk rating system as of June 30, 2014 and December 31, 2013: 

(Dollar amounts in thousands)
					Special
	Not Rated		Pass		Mention		Substandard		Doubtful		Total
June 30, 2014:
Residential first mortgages	$	103,939	$	-	$	-	$	679	$	-	$	104,618
Home equity and lines of credit		88,277		-		-		97		-		88,374
Commercial real estate		-		99,380		238		6,655		-		106,273
Commercial business		-		52,388		1,485		2,897		-		56,770
Consumer		8,132		-		-		1,348		-		9,480
Total	$	200,348	$	151,768	$	1,723	$	11,676	$	-	$	365,515
December 31, 2013:
Residential first mortgages	$	104,983	$	-	$	-	$	558	$	-	$	105,541
Home equity and lines of credit		87,868		-		-		60		-		87,928
Commercial real estate		-		93,973		256		7,270		-		101,499
Commercial business		-		50,008		674		2,532		-		53,214
Consumer		7,769		-		-		1,348		-		9,117
Total	$	200,620	$	143,981	$	930	$	11,768	$	-	$	357,299

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 table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonperforming loans as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Performing						Nonperforming
	Accruing		Accruing		Accruing		Accruing
	Loans Not		30-59 Days		60-89 Days		90 Days +				Total
	Past Due		Past Due		Past Due		Past Due		Nonaccrual		Loans
June 30, 2014:
Residential first mortgages	$	101,915	$	1,910	$	114	$	-	$	679	$	104,618
Home equity and lines of credit		87,743		431		103		-		97		88,374
Commercial real estate		102,910		80		-		-		3,283		106,273
Commercial business		54,274		211		-		-		2,285		56,770
Consumer		8,104		27		1		-		1,348		9,480
Total loans	$	354,946	$	2,659	$	218	$	-	$	7,692	$	365,515
December 31, 2013:
Residential first mortgages	$	103,821	$	884	$	278	$	38	$	520	$	105,541
Home equity and lines of credit		87,302		394		172		-		60		87,928
Commercial real estate		98,095		516		22		-		2,866		101,499
Commercial business		52,581		258		-		24		351		53,214
Consumer		7,682		61		26		-		1,348		9,117
Total loans	$	349,481	$	2,113	$	498	$	62	$	5,145	$	357,299

The following table presents the Corporation’s nonaccrual loans by aging category as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Not		30-59 Days		60-89 Days		90 Days +		Total
	Past Due		Past Due		Past Due		Past Due		Loans
June 30, 2014:
Residential first mortgages	$	289	$	81	$	19	$	290	$	679
Home equity and lines of credit		-		-		20		77		97
Commercial real estate		3,016		60		13		194		3,283
Commercial business		2,223		39		-		23		2,285
Consumer		1,348		-		-		-		1,348
Total loans	$	6,876	$	180	$	52	$	584	$	7,692
December 31, 2013:
Residential first mortgages	$	88	$	-	$	82	$	350	$	520
Home equity and lines of credit		-		-		-		60		60
Commercial real estate		412		2,148		-		306		2,866
Commercial business		65		-		-		286		351
Consumer		1,348		-		-		-		1,348
Total loans	$	1,913	$	2,148	$	82	$	1,002	$	5,145

An allowance for loan losses (ALL) is maintained to absorb probable incurred losses 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 nonperforming loans.

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.

The following table details activity in the ALL and the recorded investment by portfolio segment based on impairment method:

(Dollar amounts in thousands)
			Home Equity
	Residential		& Lines		Commercial		Commercial
	Mortgages		of Credit		Real Estate		Business		Consumer		Total
Three months ended June 30, 2014:
Allowance for loan losses:
Beginning Balance	$	936	$	619	$	2,221	$	1,094	$	51	$	4,921
Charge-offs		(19)		(14)		-		-		(33)		(66)
Recoveries		-		-		4		-		4		8
Provision		-		(137)		150		139		31		183
Ending Balance	$	917	$	468	$	2,375	$	1,233	$	53	$	5,046
Six months ended June 30, 2014:
Allowance for loan losses:
Beginning Balance	$	923	$	625	$	2,450	$	822	$	49	$	4,869
Charge-offs		(97)		(14)		(2)		(17)		(67)		(197)
Recoveries		-		-		9		7		13		29
Provision		91		(143)		(82)		421		58		345
Ending Balance	$	917	$	468	$	2,375	$	1,233	$	53	$	5,046
At June 30, 2014:
Ending ALL balance attributable to loans:
Individually evaluated for impairment		28		-		227		540		-		795
Collectively evaluated for impairment		889		468		2,148		693		53		4,251
Total loans:
Individually evaluated for impairment		290		-		3,797		2,638		1,348		8,073
Collectively evaluated for impairment		104,328		88,374		102,476		54,132		8,132		357,442
At December 31, 2013:
Ending ALL balance attributable to loans:
Individually evaluated for impairment		21		-		181		-		-		202
Collectively evaluated for impairment		902		625		2,269		822		49		4,667
Total loans:
Individually evaluated for impairment		102		-		3,196		336		1,348		4,982
Collectively evaluated for impairment		105,439		87,928		98,303		52,878		7,769		352,317
Three months ended June 30, 2013:
Allowance for loan losses:
Beginning Balance	$	807	$	727	$	3,189	$	702	$	63	$	5,488
Charge-offs		(12)		-		(941)		-		(25)		(978)
Recoveries		-		-		2		-		5		7
Provision		(23)		(106)		297		(25)		10		153
Ending Balance	$	772	$	621	$	2,547	$	677	$	53	$	4,670
Six months ended June 30, 2013:
Allowance for loan losses:
Beginning Balance	$	828	$	730	$	3,090	$	636	$	66	$	5,350
Charge-offs		(17)		-		(941)		-		(56)		(1,014)
Recoveries		1		-		4		-		34		39
Provision		(40)		(109)		394		41		9		295
Ending Balance	$	772	$	621	$	2,547	$	677	$	53	$	4,670

The allowance for loan losses is based on estimates and actual losses may vary from current estimates. Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

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Securities

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Marketable Securities [Text Block]

4. Securities

The following table summarizes the Corporation’s securities as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for sale:
June 30, 2014:
U.S. Treasury and federal agency	$	3,469	$	-	$	(135)	$	3,334
U.S. government sponsored entities and agencies		32,445		16		(282)		32,179
U.S. agency mortgage-backed securities: residential		34,533		481		-		35,014
U.S. agency collateralized mortgage obligations: residential		38,910		-		(1,310)		37,600
State and political subdivisions		34,545		786		(345)		34,986
Corporate debt securities		1,004		-		(2)		1,002
Equity securities		2,356		87		(31)		2,412
	$	147,262	$	1,370	$	(2,105)	$	146,527
December 31, 2013:
U.S. Treasury and federal agency	$	4,466	$	-	$	(298)	$	4,168
U.S. government sponsored entities and agencies		23,637		-		(745)		22,892
U.S. agency mortgage-backed securities: residential		11,020		341		-		11,361
U.S. agency collateralized mortgage obligations: residential		41,751		2		(2,031)		39,722
State and political subdivisions		36,657		830		(988)		36,499
Corporate debt securities		250		-		(9)		241
Equity securities		2,356		131		(66)		2,421
	$	120,137	$	1,304	$	(4,137)	$	117,304

The following table summarizes scheduled maturities of the Corporation’s debt securities as of June 30, 2014. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities and collateralized mortgage obligations are not due at a single maturity and are shown separately.

(Dollar amounts in thousands)	Available for sale
	Amortized		Fair
	Cost		Value
Due in one year or less	$	55	$	56
Due after one year through five years		36,461		36,499
Due after five through ten years		31,526		31,564
Due after ten years		3,421		3,382
Mortgage-backed securities: residential		34,533		35,014
Collateralized mortgage obligations: residential		38,910		37,600
	$	144,906	$	144,115

Information pertaining to securities with gross unrealized losses at June 30, 2014 and December 31, 2013, aggregated by investment category and length of time that individual securities have been in a continuous loss position are included in the table below:

(Dollar amounts in thousands)	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
June 30, 2014:
U.S. Treasury and federal agency	$	-	$	-	$	3,334	$	(135)	$	3,334	$	(135)
U.S. government sponsored entities and agencies		4,245		(19)		18,728		(263)		22,973		(282)
U.S. agency collateralized mortgage obligations: residential		8,556		(135)		29,044		(1,175)		37,600		(1,310)
State and political subdivisions		1,192		(8)		12,767		(337)		13,959		(345)
Corporate debt securities		1,002		(2)		-		-		1,002		(2)
Equity securities		1,161		(31)		-		-		1,161		(31)
	$	16,156	$	(195)	$	63,873	$	(1,910)	$	80,029	$	(2,105)
December 31, 2013:
U.S. Treasury and federal agency	$	4,168	$	(298)	$	-	$	-	$	4,168	$	(298)
U.S. government sponsored entities and agencies		22,891		(745)		-		-		22,891		(745)
U.S. agency mortgage-backed securities: residential		33,805		(1,729)		4,982		(302)		38,787		(2,031)
State and political subdivisions		13,262		(988)		-		-		13,262		(988)
Corporate debt securities		242		(9)		-		-		242		(9)
Equity securities		1,142		(66)		-		-		1,142		(66)
	$	75,510	$	(3,835)	$	4,982	$	(302)	$	80,492	$	(4,137)

Gains on sales of available for sale securities for the three and six months ended June 30 were as follows:

(Dollar amounts in thousands)	For the three months				For the six months
	ended June 30,				ended June 30,
	2014		2013		2014		2013
Proceeds	$	-	$	1,539	$	21,559	$	3,314
Gains		-		99		658		184
Tax provision related to gains		-		34		224		63

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic, market or other conditions warrant such evaluation. Consideration is given to: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions and (4) whether the Corporation has the intent to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the Corporation intends to sell an impaired security, or if it is more likely than not the Corporation will be required to sell the security before its anticipated recovery, the Corporation records an other-than-temporary loss in an amount equal to the entire difference between fair value and amortized cost. Otherwise, only the credit portion of the estimated loss on debt securities is recognized in earnings, with the other portion of the loss recognized in other comprehensive income. For equity securities determined to be other-than-temporarily impaired, the entire amount of impairment is recognized through earnings.

There were two equity securities in an unrealized loss position as of June 30, 2014, none of which were in an unrealized loss position for more than 12 months. Equity securities owned by the Corporation consist of common stock of various financial service providers. The investment securities are in an unrealized loss position as a result of recent market volatility. The Corporation does not invest in these securities with the intent to sell them for a profit in the near term. For investments in equity securities, in addition to the general factors mentioned above for determining whether the decline in market value is other-than-temporary, the analysis of whether an equity security is other-than-temporarily impaired includes a review of the profitability, capital adequacy and other relevant information available to determine the financial position and near term prospects of each issuer. The results of analyzing the aforementioned metrics and financial fundamentals suggest recovery of amortized cost as the sector improves. Based on that evaluation, and given that the Corporation’s current intention is not to sell any impaired security and it is more likely than not it will not be required to sell these securities before the recovery of their amortized cost basis, the Corporation does not consider the equity securities with unrealized losses as of June 30, 2014 to be other-than-temporarily impaired.

There were 105 debt securities in an unrealized loss position as of June 30, 2014, of which 89 were in an unrealized loss position for more than 12 months. Of these 105 securities, 6 were U.S. Treasury securities, 18 were U.S. government sponsored entity and agency securities, 26 were government-backed collateralized mortgage obligations, 53 were state and political subdivision securities and 2 were corporate debt securities. The unrealized losses associated with these securities were not due to the deterioration in the credit quality of the issuer that would likely result in the non-collection of contractual principal and interest, but rather have been caused by a rise in interest rates from the time the securities were purchased. Based on that evaluation and other general considerations, and given that the Corporation’s current intention is not to sell any impaired securities and it is more likely than not it will not be required to sell these securities before the recovery of its amortized cost basis, the Corporation does not consider the debt securities with unrealized losses as of June 30, 2014 to be other-than-temporarily impaired.

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Stock Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of option activity under the Plans as of June 30, 2014, and changes during the period then ended is presented below:

					Aggregate		Weighted-Average
			Weighted-Average		Intrinsic Value		Remaining Term
	Options		Exercise Price		(in thousands)		(in years)
Outstanding as of January 1, 2014		79,250	$	24.97	$	-		3.8
Granted		-		-		-		-
Exercised		(1,500)		17.00		14,835		-
Forfeited		-		-		-		-
Outstanding as of June 30, 2014		77,750	$	25.12	$	137,268		3.3
Exercisable as of June 30, 2014		77,250	$	25.19	$	131,268		3.2

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

A summary of the status of the Corporation’s nonvested option shares as of June 30, 2014, and changes during the period then ended is presented below:

			Weighted-Average
	Options		Grant-date Fair Value
Nonvested at January 1, 2014		500	$	1.44
Granted		-		-
Vested		-		-
Forfeited		-		-
Nonvested as of June 30, 2014		500	$	1.44

Schedule of Nonvested Share Activity [Table Text Block]

A summary of the status of the Corporation’s nonvested restricted stock awards as of June 30, 2014, and changes during the period then ended is presented below:

			Weighted-Average
	Shares		Grant-date Fair Value
Nonvested at January 1, 2014		25,800	$	20.11
Granted		-		-
Vested		-		-
Forfeited		100		25.50
Nonvested as of June 30, 2014		25,700	$	20.08

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Earnings per Common Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

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

The factors used in the Corporation’s earnings per common share computation follow:

(Dollar amounts in thousands, except for per share amounts)	For the three months ended				For the six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Earnings per common share - basic
Net income	$	878	$	939	$	1,720	$	1,797
Less: Preferred stock dividends		25		125		50		250
.
Net income available to common stockholders	$	853	$	814	$	1,670	$	1,547
Average common shares outstanding		1,770,158		1,762,158		1,769,775		1,761,546
Basic earnings per common share	$	0.48	$	0.46	$	0.94	$	0.88
Earnings per common share - diluted
Net income available to common stockholders	$	853	$	814	$	1,670	$	1,547
Average common shares outstanding		1,770,158		1,762,158		1,769,775		1,761,546
Add: Dilutive effects of assumed issuance of restricted stock and exercise of stock options		14,691		14,223		13,893		13,350
Average shares and dilutive potential common shares		1,784,849		1,776,381		1,783,668		1,774,896
Diluted earnings per common share	$	0.48	$	0.46	$	0.94	$	0.87
Stock options and restricted stock awards not considered in computing diluted earnings per share because they were antidilutive		67,000		67,000		67,000		67,000

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Compensation and Employee Benefit Plans [Text Block]

8. Employee Benefit Plans

The Corporation provides pension benefits for eligible employees through a defined benefit pension plan. Substantially all employees participate in the retirement plan on a non-contributory basis, and are fully vested after three years of service. Effective January 1, 2009, the plan was closed to new participants.

The Corporation provided the requisite notice to plan participants on March 12, 2013 of the determination to freeze the plan (curtailment). While the freeze was not effective until April 30, 2013, management determined that participants would not satisfy, within the provisions of the plan, 2013 eligibility requirements based on minimum hours worked for 2013. Therefore, employees ceased to earn benefits as of January 1, 2013. This amendment to the plan will not affect benefits earned by the participants prior to the date of the freeze. The expense associated with the plan was immaterial for the three and six month periods ended June 30, 2014 and 2013.

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

6.            Goodwill and Intangible Assets

The following table summarizes the Corporation’s acquired goodwill and intangible assets as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)	June 30, 2014				December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Goodwill	$	3,664	$	-	$	3,664	$	-
Core deposit intangibles		4,027		3,175		4,027		3,062
Total	$	7,691	$	3,175	$	7,691	$	3,062

Goodwill resulted from three previous branch acquisitions. Goodwill represents the excess of the total purchase price paid for the branch acquisitions over the fair value of the assets acquired, net of the fair value of the liabilities assumed. Goodwill is not amortized but is evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value. The Corporation has selected November 30 as the date to perform the annual impairment test. No goodwill impairment charges were recorded during 2013 or in the first six months of 2014. The core deposit intangible asset is amortized using the double declining balance method over a weighted average estimated life of nine years and is not estimated to have a significant residual value. During the three and six month period ending June 30, 2014, the Corporation recorded intangible amortization expense totaling $57,000 and $113,000, respectively, compared to $73,000 and $145,000, respectively, for the same periods in 2013.

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Stock Compensation Plans

6 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

7.            Stock Compensation Plans

In April 2014, the Corporation adopted the 2014 Stock Incentive Plan (the Plan), which is shareholder approved and permits the grant of restricted stock awards and options to its directors, officers and employees for up to 176,866 shares of common stock, of which 88,433 shares of restricted stock and 88,433 stock options remain available for issuance under the Plan.

In addition, the Corporation’s 2007 Stock Incentive Plan and Trust (the Plan), which is shareholder approved, permits the grant of restricted stock awards and options to its directors, officers and employees for up to 177,496 shares of common stock, of which 5,913 shares of restricted stock and 45,283 stock options remain available for issuance under the Plan.

Incentive stock options, non-incentive or compensatory stock options and share awards may be granted under the Plans. The exercise price of each option shall at least equal the market price of a share of common stock on the date of grant and have a contractual term of ten years. Options shall vest and become exercisable at the rate, to the extent and subject to such limitations as may be specified by the Corporation. Compensation cost related to share-based payment transactions must be recognized in the financial statements with measurement based upon the fair value of the equity instruments issued.

A summary of option activity under the Plans as of June 30, 2014, and changes during the period then ended is presented below:

					Aggregate		Weighted-Average
			Weighted-Average		Intrinsic Value		Remaining Term
	Options		Exercise Price		(in thousands)		(in years)
Outstanding as of January 1, 2014		79,250	$	24.97	$	-		3.8
Granted		-		-		-		-
Exercised		(1,500)		17.00		14,835		-
Forfeited		-		-		-		-
Outstanding as of June 30, 2014		77,750	$	25.12	$	137,268		3.3
Exercisable as of June 30, 2014		77,250	$	25.19	$	131,268		3.2

A summary of the status of the Corporation’s nonvested option shares as of June 30, 2014, and changes during the period then ended is presented below:

			Weighted-Average
	Options		Grant-date Fair Value
Nonvested at January 1, 2014		500	$	1.44
Granted		-		-
Vested		-		-
Forfeited		-		-
Nonvested as of June 30, 2014		500	$	1.44

A summary of the status of the Corporation’s nonvested restricted stock awards as of June 30, 2014, and changes during the period then ended is presented below:

			Weighted-Average
	Shares		Grant-date Fair Value
Nonvested at January 1, 2014		25,800	$	20.11
Granted		-		-
Vested		-		-
Forfeited		100		25.50
Nonvested as of June 30, 2014		25,700	$	20.08

For the three and six month periods ended June 30, 2014, the Corporation recognized $42,000 and $84,000, respectively, in stock compensation expense, compared to $63,000 and $98,000, respectively, for the same periods in 2013. As of June 30, 2014, there was $266,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.4 years. It is the Corporation’s policy to issue shares on the vesting date for restricted stock awards. Unvested restricted stock awards do not receive dividends declared by the Corporation.

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Fair Value

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

9. Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value.

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Corporation has the ability to access at the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the Corporation’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

An asset or liability’s level is based on the lowest level of input that is significant to the fair value measurement.

The Corporation used the following methods and significant assumptions to estimate fair value:

Cash and cash equivalents – The carrying value of cash, due from banks and interest bearing deposits approximates fair value and are classified as Level 1.

Securities available for sale – The fair value of all investment securities are based upon the assumptions market participants would use in pricing the security. If available, investment securities are determined by quoted market prices (Level 1). Level 1 includes U.S. Treasury, federal agency securities and certain equity securities. For investment securities where quoted market prices are not available, fair values are calculated based on market prices on similar securities (Level 2). Level 2 includes U.S. Government sponsored entities and agencies, mortgage-backed securities, collateralized mortgage obligations, state and political subdivision securities and corporate debt securities. For investment securities where quoted prices or market prices of similar securities are not available, fair values are calculated by using unobservable inputs (Level 3) and may include certain equity securities held by the Corporation. The Level 3 equity security valuations were supported by an analysis prepared by the Corporation which relies on inputs such as the security issuer’s publicly attainable financial information, multiples derived from prices in observed transactions involving comparable businesses and other market, financial and nonfinancial factors.

Loans – The fair value of loans receivable was estimated based on the discounted value of the future cash flows using the current rates being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.

Impaired loans – At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive a specific allowance for loan losses. For collateral dependent loans, fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. As of June 30, 2014, the fair value of impaired loans consists of loan balances of $2.9 million, net of a valuation allowance of $627,000, compared to loan balances of $2.5 million, net of a valuation allowance of $181,000, at December 31, 2013. There was $393,000 and $665,000 of additional provision for loan losses recorded for impaired loans during the three and six month period ended June 30, 2014, respectively. There was $20,000 of additional provision recorded for impaired loans for the same periods in 2013. 

Other Real estate owned (OREO) – Assets acquired through or instead of foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to the valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. At June 30, 2014, the Corporation had no OREO measured at fair value. As of December 31, 2013, OREO measured at fair value less costs to sell had a net carrying amount of $80,000, which was made up of the outstanding balance of $104,000 and write-downs of $24,000. There was no expense recorded during the three and six months ended June 30, 2014 associated with the write-down of OREO, compared to $0 and $19,000 for the same periods in 2013.

Appraisals for both collateral-dependent impaired loans and OREO are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed by the Corporation. Once received, management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On an annual basis, the Corporation compares the actual selling price of OREO that has been sold to the most recent appraisal to determine what additional adjustment should be made to the appraisal value to arrive at fair value. The most recent analysis performed indicated that a discount of 10% should be applied.

Federal bank stock – It is not practical to determine the fair value of federal bank stocks due to restrictions placed on its transferability.

Deposits – The fair value of deposits with no stated maturity, such as non-interest bearing demand deposits, checking with interest, savings and money market accounts, is equal to the amount payable on demand resulting in either a Level 1 or Level 2 classification. The fair values of time deposits are based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar maturities resulting in a Level 2 classification.

Borrowings – The fair value of borrowings with the FHLB is estimated using discounted cash flows based on current incremental borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued interest receivable and payable – The carrying value of accrued interest receivable and payable approximates fair value. The fair value classification is consistent with the related financial instrument.

For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy are as follows:

(Dollar amounts in thousands)			(Level 1)		(Level 2)
			Quoted Prices in		Significant		(Level 3)
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
Description	Total		Assets		Inputs		Inputs
June 30, 2014:
U.S. Treasury and federal agency	$	3,334	$	3,334	$	-	$	-
U.S. government sponsored entities and agencies		32,179		-		32,179		-
Mortgage-backed securities: residential		35,014		-		35,014		-
Collateralized mortgage obligations: residential		37,600		-		37,600		-
State and political subdivision		34,986		-		34,986		-
Corporate debt securities		1,002		-		1,002		-
Equity securities		2,412		1,759		-		653
	$	146,527	$	5,093	$	140,781	$	653
December 31, 2013:
U.S. Treasury and federal agency	$	4,168	$	4,168	$	-	$	-
U.S. government sponsored entities and agencies		22,892		-		22,892		-
U.S. agency mortgage-backed securities: residential		11,361		-		11,361		-
U.S. agency collateralized mortgage obligations: residential		39,722		-		39,722		-
State and political subdivisions		36,499		-		36,499		-
Corporate debt securities		241		241		-		-
Equity securities		2,421		1,768		-		653
	$	117,304	$	6,177	$	110,474	$	653

The Corporation’s policy is to transfer assets or liabilities from one level to another when the methodology to obtain the fair value changes such that there are more or fewer unobservable inputs as of the end of the reporting period. During the three and six month periods ended June 30, 2014, the Corporation had no transfers between levels. The following table presents changes in Level 3 assets measured on a recurring basis for the three and six month periods ended June 30, 2014 and 2013:

(Dollar amounts in thousands)	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Balance at the beginning of the period	$	653	$	653	$	653	$	653
Total gains or losses (realized/unrealized):		-		-		-		-
Included in earnings		-		-		-		-
Included in other comprehensive income		-		-		-		-
Issuances		-		-		-		-
Transfers in and/or out of Level 3		-		-		-		-
Balance at the end of the period	$	653	$	653	$	653	$	653

For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy are as follows:

(Dollar amounts in thousands)			(Level 1)		(Level 2)
			Quoted Prices in		Significant		(Level 3)
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
Description	Total		Assets		Inputs		Inputs
June 30, 2014:
Impaired commercial real estate loans	$	558	$	-	$	-	$	558
Impaired commercial business loans		1,670		-		-		1,670
	$	2,228	$	-	$	-	$	2,228
December 31, 2013:
Impaired commercial real estate loans	$	2,340	$	-	$	-	$	2,340
Other residential real estate owned		80		-		-		80
	$	2,420	$	-	$	-	$	2,420

The following table presents quantitative information about Level 3 fair value measurements for assets measured at fair value on a non-recurring basis:

(Dollar amounts in thousands)			Valuation	Unobservable
			Techniques(s)	Input (s)	Range
June 30, 2014:
Impaired commercial real estate loans	$	558	Sales comparison approach/ Contractual provision of USDA loan	Adjustment for differences between comparable sales		10%
Impaired commercial business loans		1,670	Liquidation value of business assets	Adjustment for differences between comparable business assets		44% - 76%
December 31, 2013:
Impaired commercial real estate loans		2,340	Sales comparison approach/ Contractual provision of USDA loan	Adjustment for differences between comparable sales		0% - 10%
Other residential real estate owned		80	Sales comparison approach	Adjustment for differences between comparable sales		10%

The two tables above exclude two impaired residential mortgage loans totaling $144,000 and a $1.9 million commercial real estate loan classified as troubled debt restructures which were measured at fair value using a discounted cash flow methodology at June 30, 2014.

Included in impaired commercial real estate loans is a loan guaranteed by the United States Department of Agriculture (USDA) with balances of $346,000 and $350,000, respectively, as of June 30, 2014 and December 31, 2013. The guarantee covers 90% of the principal balance outstanding. In determining the fair value of this loan, the Corporation considered the contractual provisions of the loan and did not rely on the fair value of the underlying collateral. As such, the Corporation applied a 10% discount to the loan which represents the portion of the loan at risk. The weighted average discount on impaired loans as of June 30, 2014 and December 31, 2013 was 40.4% and 1.5%, respectively.

The following table sets forth the carrying amount and estimated fair values of the Corporation’s financial instruments included in the consolidated balance sheet as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Carrying		Fair Value Measurements using:
Description	Amount		Total		Level 1		Level 2		Level 3
June 30, 2014:
Financial Assets:
Cash and cash equivalents	$	37,494	$	37,494	$	37,494	$	-	$	-
Securities available for sale		146,527		146,527		5,093		140,781		653
Loans, net		360,469		364,670		-		-		364,670
Federal bank stock		2,791		N/A		N/A		N/A		N/A
Accrued interest receivable		1,530		1,530		52		477		1,001
		548,812		550,221		42,639		141,258		366,324
Financial Liabilities:
Deposits		514,403		516,772		394,222		122,550		-
Borrowed funds		17,150		18,078		-		18,078		-
Accrued interest payable		253		253		6		247		-
		531,806		535,103		394,228		140,875		-

	Carrying		Fair Value Measurements using:
	Amount		Total		Level 1		Level 2		Level 3
December 31, 2013:
Financial Assets:
Cash and cash equivalents	$	16,658	$	16,658	$	16,658	$	-	$	-
Securities available for sale		117,304		117,304		5,936		110,715		653
Loans, net		352,430		356,123		-		-		356,123
Federal bank stock		3,977		N/A		N/A		N/A		N/A
Accrued interest receivable		1,466		1,466		34		430		1,002
		491,835		491,551		22,628		111,145		357,778
Financial Liabilities:
Deposits		432,006		434,552		325,983		108,569		-
Borrowed funds		44,150		45,241		-		45,241		-
Accrued interest payable		292		292		5		287		-
		476,448		480,085		325,988		154,097		-

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Loans Receivable and Related Allowance for Loan Losses (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 365,515	$ 357,299
Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	200,348	200,620
Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	151,768	143,981
Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,723	930
Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	11,676	11,768
Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Residential first mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	104,618	105,541
Residential first mortgages [Member] | Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	103,939	104,983
Residential first mortgages [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Residential first mortgages [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Residential first mortgages [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	679	558
Residential first mortgages [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Home equity and lines of credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	88,374	87,928
Home equity and lines of credit [Member] | Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	88,277	87,868
Home equity and lines of credit [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Home equity and lines of credit [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Home equity and lines of credit [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	97	60
Home equity and lines of credit [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	106,273	101,499
Commercial real estate [Member] | Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Commercial real estate [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	99,380	93,973
Commercial real estate [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	238	256
Commercial real estate [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	6,655	7,270
Commercial real estate [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Commercial business [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	56,770	53,214
Commercial business [Member] | Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Commercial business [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	52,388	50,008
Commercial business [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,485	674
Commercial business [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	2,897	2,532
Commercial business [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	9,480	9,117
Consumer [Member] | Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	8,132	7,769
Consumer [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Consumer [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	0	0
Consumer [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,348	1,348
Consumer [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 0	$ 0

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Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Accumulated Other Comprehensive Income (Loss), Unrealized Gains and Losses on Available-for-Sale Securities, Beginning Balance	$ (1,492)	$ 2,071	$ (1,870)	$ 2,365
Other comprehensive income before reclassification, Unrealized Gains and Losses on Available-for-Sale Securities	1,006	(2,713)	1,818	(2,951)
Amounts reclassified from accumulated other comprehensive income, Totals, Unrealized Gains and Losses on Available-for-Sale Securities	0	(65)	(434)	(121)
Net current period other comprehensive Income (Loss), Totals, Unrealized Gains and Losses on Available-for-Sale Securities	1,006	(2,778)	1,384	(3,072)
Accumulated Other Comprehensive Income (Loss), Unrealized Gains and Losses on Available-for-Sale Securities, Ending Balance	(486)	(707)	(486)	(707)
Accumulated Other Comprehensive Income (Loss), Defined Benefit Pension Items, Beginning Balance	(1,410)	(1,795)	(1,410)	(1,795)
Other comprehensive income before reclassification, Defined Benefit Pension Items	0	0	0	0
Amounts reclassified from accumulated other comprehensive income, Defined Benefit Pension Items	0	0	0	0
Net current period other comprehensive Income (Loss), Defined Benefit Pension Items	0	0	0	0
Accumulated Other Comprehensive Income (Loss), Defined Benefit Pension Items, Ending Balance	(1,410)	(1,795)	(1,410)	(1,795)
Accumulated Other Comprehensive Income (Loss), Totals, Beginning Balance	(2,902)	276	(3,280)	570
Other comprehensive income before reclassification, Totals	1,006	(2,713)	1,818	(2,951)
Amounts reclassified from accumulated other comprehensive income, Defined Benefit Pension Items	0	(65)	(434)	(121)
Net current period other comprehensive income (loss), Totals	1,006	(2,778)	1,384	(3,072)
Accumulated Other Comprehensive Income (Loss), Totals, Ending Balance	$ (1,896)	$ (2,502)	$ (1,896)	$ (2,502)

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Loans Receivable and Related Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2014

Loans Notes Trade and Other Receivables Disclosure [Abstract]

Schedule Of Classification Of Loans Receivable [Table Text Block]

The Corporation’s loans receivable as of the respective dates are summarized as follows:

(Dollar amounts in thousands)	June 30,		December 31,
	2014		2013
Mortgage loans on real estate:
Residential first mortgages	$	104,618	$	105,541
Home equity loans and lines of credit		88,374		87,928
Commercial real estate		106,273		101,499
		299,265		294,968
Other loans:
Commercial business		56,770		53,214
Consumer		9,480		9,117
		66,250		62,331
Total loans, gross		365,515		357,299
Less allowance for loan losses		5,046		4,869
Total loans, net	$	360,469	$	352,430

Schedule Of Impaired Loans Receivable, Additional Information [Table Text Block]

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of June 30, 2014:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of June 30, 2014						ended June 30, 2014
											Cash Basis
	Unpaid						Average		Interest Income		Interest
	Principal		Recorded		Related		Recorded		Recognized		Recognized
	Balance		Investment		Allowance		Investment		in Period		in Period
Residential first mortgages	$	172	$	172	$	28	$	127	$	8	$	2
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,649		2,708		227		2,715		10		10
Commercial business		2,210		2,210		540		1,314		51		4
Consumer		-		-		-		-		-		-
Total	$	6,031	$	5,090	$	795	$	4,156	$	69	$	16

	For the six months
	ended June 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	112	$	9	$	3
Home equity and lines of credit		-		-		-
Commercial real estate		2,650		17		12
Commercial business		876		56		4
Consumer		-		-		-
Total	$	3,638	$	82	$	19

	Impaired Loans with No Specific Allowance
					For the three months
	As of June 30, 2014				ended June 30, 2014
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	118	$	118	$	59	$	2	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,488		1,089		896		12		1
Commercial business		430		428		407		1		1
Consumer		1,348		1,348		1,348		-		-
Total	$	3,384	$	2,983	$	2,710	$	15	$	2

	For the six months
	ended June 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	46	$	2	$	-
Home equity and lines of credit		-		-		-
Commercial real estate		823		14		3
Commercial business		383		1		1
Consumer		1,348		-		-
Total	$	2,600	$	17	$	4

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of December 31, 2013:

(Dollar amounts in thousands)

	Impaired Loans with Specific Allowance
							For the year ended
	As of December 31, 2013						December 31, 2013
											Cash Basis
	Unpaid						Average		Interest Income		Interest
	Principal		Recorded		Related		Recorded		Recognized		Recognized
	Balance		Investment		Allowance		Investment		in Period		in Period
Residential first mortgages	$	82	$	82	$	21	$	49	$	5	$	4
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,462		2,521		181		3,202		13		13
Commercial business		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	3,544	$	2,603	$	202	$	3,251	$	18	$	17

	Impaired Loans with No Specific Allowance
					For the year ended
	As of December 31, 2013				December 31, 2013
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	20	$	20	$	4	$	1	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,074		675		584		5		5
Commercial business		336		336		354		-		-
Consumer		1,348		1,348		1,457		-		-
Total	$	2,778	$	2,379	$	2,399	$	6	$	5

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of June 30, 2013:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of June 30, 2013						ended June 30, 2013
											Cash Basis
	Unpaid						Average		Interest Income		Interest
	Principal		Recorded		Related		Recorded		Recognized		Recognized
	Balance		Investment		Allowance		Investment		in Period		in Period
Residential first mortgages	$	81	$	81	$	20	$	40	$	2	$	2
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,665		2,724		214		3,364		5		5
Commercial business		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	3,746	$	2,805	$	234	$	3,404	$	7	$	7

	For the six months
	ended June 30, 2013
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	27	$	2	$	2
Home equity and lines of credit		-		-		-
Commercial real estate		3,599		9		9
Commercial business		-		-		-
Consumer		-		-		-
Total	$	3,626	$	11	$	11

	Impaired Loans with No Specific Allowance
					For the three months
	As of June 30, 2013				ended June 30, 2013
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	-	$	-	$	-	$	-	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,061		662		563		2		2
Commercial business		356		356		360		-		-
Consumer		1,348		1,348		1,469		-		-
Total	$	2,765	$	2,366	$	2,392	$	2	$	2

	For the six months
	ended June 30, 2013
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	-	$	-	$	-
Home equity and lines of credit		-		-		-
Commercial real estate		544		3		3
Commercial business		363		-		-
Consumer		1,529		-		-
Total	$	2,436	$	3	$	3

Financing Receivable Credit Quality Indicators [Table Text Block]

The following table presents the classes of the loan portfolio summarized by the aggregate pass and the criticized categories of special mention, substandard and doubtful within the Corporation’s internal risk rating system as of June 30, 2014 and December 31, 2013: 

(Dollar amounts in thousands)
					Special
	Not Rated		Pass		Mention		Substandard		Doubtful		Total
June 30, 2014:
Residential first mortgages	$	103,939	$	-	$	-	$	679	$	-	$	104,618
Home equity and lines of credit		88,277		-		-		97		-		88,374
Commercial real estate		-		99,380		238		6,655		-		106,273
Commercial business		-		52,388		1,485		2,897		-		56,770
Consumer		8,132		-		-		1,348		-		9,480
Total	$	200,348	$	151,768	$	1,723	$	11,676	$	-	$	365,515
December 31, 2013:
Residential first mortgages	$	104,983	$	-	$	-	$	558	$	-	$	105,541
Home equity and lines of credit		87,868		-		-		60		-		87,928
Commercial real estate		-		93,973		256		7,270		-		101,499
Commercial business		-		50,008		674		2,532		-		53,214
Consumer		7,769		-		-		1,348		-		9,117
Total	$	200,620	$	143,981	$	930	$	11,768	$	-	$	357,299

Past Due Financing Receivables [Table Text Block]

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonperforming loans as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Performing						Nonperforming
	Accruing		Accruing		Accruing		Accruing
	Loans Not		30-59 Days		60-89 Days		90 Days +				Total
	Past Due		Past Due		Past Due		Past Due		Nonaccrual		Loans
June 30, 2014:
Residential first mortgages	$	101,915	$	1,910	$	114	$	-	$	679	$	104,618
Home equity and lines of credit		87,743		431		103		-		97		88,374
Commercial real estate		102,910		80		-		-		3,283		106,273
Commercial business		54,274		211		-		-		2,285		56,770
Consumer		8,104		27		1		-		1,348		9,480
Total loans	$	354,946	$	2,659	$	218	$	-	$	7,692	$	365,515
December 31, 2013:
Residential first mortgages	$	103,821	$	884	$	278	$	38	$	520	$	105,541
Home equity and lines of credit		87,302		394		172		-		60		87,928
Commercial real estate		98,095		516		22		-		2,866		101,499
Commercial business		52,581		258		-		24		351		53,214
Consumer		7,682		61		26		-		1,348		9,117
Total loans	$	349,481	$	2,113	$	498	$	62	$	5,145	$	357,299

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

The following table presents the Corporation’s nonaccrual loans by aging category as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Not		30-59 Days		60-89 Days		90 Days +		Total
	Past Due		Past Due		Past Due		Past Due		Loans
June 30, 2014:
Residential first mortgages	$	289	$	81	$	19	$	290	$	679
Home equity and lines of credit		-		-		20		77		97
Commercial real estate		3,016		60		13		194		3,283
Commercial business		2,223		39		-		23		2,285
Consumer		1,348		-		-		-		1,348
Total loans	$	6,876	$	180	$	52	$	584	$	7,692
December 31, 2013:
Residential first mortgages	$	88	$	-	$	82	$	350	$	520
Home equity and lines of credit		-		-		-		60		60
Commercial real estate		412		2,148		-		306		2,866
Commercial business		65		-		-		286		351
Consumer		1,348		-		-		-		1,348
Total loans	$	1,913	$	2,148	$	82	$	1,002	$	5,145

Allowance For Credit Losses On Loans Receivables, Additional Information [Table Text Block]

The following table details activity in the ALL and the recorded investment by portfolio segment based on impairment method:

(Dollar amounts in thousands)
			Home Equity
	Residential		& Lines		Commercial		Commercial
	Mortgages		of Credit		Real Estate		Business		Consumer		Total
Three months ended June 30, 2014:
Allowance for loan losses:
Beginning Balance	$	936	$	619	$	2,221	$	1,094	$	51	$	4,921
Charge-offs		(19)		(14)		-		-		(33)		(66)
Recoveries		-		-		4		-		4		8
Provision		-		(137)		150		139		31		183
Ending Balance	$	917	$	468	$	2,375	$	1,233	$	53	$	5,046
Six months ended June 30, 2014:
Allowance for loan losses:
Beginning Balance	$	923	$	625	$	2,450	$	822	$	49	$	4,869
Charge-offs		(97)		(14)		(2)		(17)		(67)		(197)
Recoveries		-		-		9		7		13		29
Provision		91		(143)		(82)		421		58		345
Ending Balance	$	917	$	468	$	2,375	$	1,233	$	53	$	5,046
At June 30, 2014:
Ending ALL balance attributable to loans:
Individually evaluated for impairment		28		-		227		540		-		795
Collectively evaluated for impairment		889		468		2,148		693		53		4,251
Total loans:
Individually evaluated for impairment		290		-		3,797		2,638		1,348		8,073
Collectively evaluated for impairment		104,328		88,374		102,476		54,132		8,132		357,442
At December 31, 2013:
Ending ALL balance attributable to loans:
Individually evaluated for impairment		21		-		181		-		-		202
Collectively evaluated for impairment		902		625		2,269		822		49		4,667
Total loans:
Individually evaluated for impairment		102		-		3,196		336		1,348		4,982
Collectively evaluated for impairment		105,439		87,928		98,303		52,878		7,769		352,317
Three months ended June 30, 2013:
Allowance for loan losses:
Beginning Balance	$	807	$	727	$	3,189	$	702	$	63	$	5,488
Charge-offs		(12)		-		(941)		-		(25)		(978)
Recoveries		-		-		2		-		5		7
Provision		(23)		(106)		297		(25)		10		153
Ending Balance	$	772	$	621	$	2,547	$	677	$	53	$	4,670
Six months ended June 30, 2013:
Allowance for loan losses:
Beginning Balance	$	828	$	730	$	3,090	$	636	$	66	$	5,350
Charge-offs		(17)		-		(941)		-		(56)		(1,014)
Recoveries		1		-		4		-		34		39
Provision		(40)		(109)		394		41		9		295
Ending Balance	$	772	$	621	$	2,547	$	677	$	53	$	4,670

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Participation in the Small Business Lending Fund (SBLF) of the U.S. Treasury Department (U.S. Treasury) (Details Textual) (USD $)	0 Months Ended	6 Months Ended			6 Months Ended			0 Months Ended			0 Months Ended	12 Months Ended	6 Months Ended
	Aug. 18, 2011	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Two Year from January 1 2014 [Member]	Jun. 30, 2014 Minimum [Member]	Jun. 30, 2014 Maximum [Member]	Aug. 18, 2011 Series B Non Cumulative Preferred Stock [Member]	Jun. 30, 2014 Series B Non Cumulative Preferred Stock [Member]	Dec. 31, 2013 Series B Non Cumulative Preferred Stock [Member]	Sep. 17, 2013 Series B Preferred Stock [Member]	Dec. 31, 2013 Series B Preferred Stock [Member]	Jun. 30, 2014 Series B Preferred Stock [Member] Four and half Years from March 31 2016 [Member]
Non-Cumulative Perpetual Series B Preferred Stock Issued, Shares Pursuant To U.S. Treasury's Small Business Lending Fund Program (in shares)	10,000
Preferred Stock, Dividend Rate, Percentage		2.00%	5.00%		2.00%	1.00%	5.00%					5.00%	9.00%
Preferred Stock, Redemption Terms		The Corporation may redeem the shares of Series B Preferred Stock, in whole or in part, at any time at a redemption price equal to the sum of the liquidation amount and the per-share amount of any unpaid dividends for the then-current period, subject to any required prior approval by the Corporation’s primary federal banking regulator. If redeemed in part, payments are required to be at least 25% of the original issuance.
Preferred Stock Redemption Shares											5,000
Preferred Stock Redemption Percentage											50.00%
Preferred Stock, Redemption Amount											$ 5,000,000
Preferred Stock, Liquidation Preference Per Share								$ 1,000
Proceeds from Issuance or Sale of Equity, Total								10,000,000
Treasury Stock, Shares		102,017		102,017							5,000
Preferred Stock, Liquidation Preference, Value									$ 5,000,000	$ 5,000,000	$ 5,000,000

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Fair Value (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Financial assets:
Cash and cash equivalents - Carrying Amount	$ 37,494	$ 16,658	$ 11,405	$ 20,424
Securities available for sale - Carrying Amount	146,527	117,304
Loans, net - Carrying Amount	360,469	352,430
Federal bank stock - Carrying Amount	2,791	3,977
Accrued interest receivable - Carrying Amount	1,530	1,466
Financial Assets - Carrying Amount, Total	583,702	525,842
Financial liabilities:
Deposits - Carrying Amount	514,403	432,006
Borrowed funds - Carrying Amount	17,150	44,150
Accrued interest payable - Carrying Amount	253	292
Financial Liabilities - Carrying Amount, Total	536,245	480,770
Financial assets:
Cash and cash equivalents - Fair Value	37,494	16,658
Securities available for sale - Fair Value	146,527	117,304
Loans, net - Fair Value	364,670	356,123
Federal bank stock - Fair Value	0	0
Accrued interest receivable - Fair value	1,530	1,466
Financial Assets - Fair Value, Total	550,221	491,551
Financial liabilities:
Deposits - Fair Value	516,772	434,552
Borrowed funds - Fair Value	18,078	45,241
Accrued interest payable - Fair Value	253	292
Financial Liabilities - Fair Value, Total	535,103	480,085
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Securities available for sale - Carrying Amount	5,093	6,177
Financial assets:
Cash and cash equivalents - Fair Value	37,494	16,658
Securities available for sale - Fair Value	5,093	6,177
Loans, net - Fair Value	0	0
Federal bank stock - Fair Value	0	0
Accrued interest receivable - Fair value	52	34
Financial Assets - Fair Value, Total	42,639	22,628
Financial liabilities:
Deposits - Fair Value	394,222	325,983
Borrowed funds - Fair Value	0	0
Accrued interest payable - Fair Value	6	5
Financial Liabilities - Fair Value, Total	394,228	325,988
Fair Value, Inputs, Level 2 [Member]
Financial assets:
Securities available for sale - Carrying Amount	140,781	110,474
Financial assets:
Cash and cash equivalents - Fair Value	0	0
Securities available for sale - Fair Value	140,781	110,474
Loans, net - Fair Value	0	0
Federal bank stock - Fair Value	0	0
Accrued interest receivable - Fair value	477	430
Financial Assets - Fair Value, Total	141,258	111,145
Financial liabilities:
Deposits - Fair Value	122,550	108,569
Borrowed funds - Fair Value	18,078	45,241
Accrued interest payable - Fair Value	247	287
Financial Liabilities - Fair Value, Total	140,875	154,097
Fair Value, Inputs, Level 3 [Member]
Financial assets:
Securities available for sale - Carrying Amount	653	653
Financial assets:
Cash and cash equivalents - Fair Value	0	0
Securities available for sale - Fair Value	653	653
Loans, net - Fair Value	364,670	356,123
Federal bank stock - Fair Value	0	0
Accrued interest receivable - Fair value	1,001	1,002
Financial Assets - Fair Value, Total	366,324	357,778
Financial liabilities:
Deposits - Fair Value	0	0
Borrowed funds - Fair Value	0	0
Accrued interest payable - Fair Value	0	0
Financial Liabilities - Fair Value, Total	$ 0	$ 0

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Stock Compensation Plans (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Options - Outstanding (in shares)	79,250
Options - Granted (in shares)	0
Options - Exercised (in shares)	(1,500)
Options - Forfeited (in shares)	0
Options - Outstanding (in shares)	77,750	79,250
Options - Exercisable (in shares)	77,250
Weighted-Average Exercise Price - Outstanding (in dollars per share)	$ 24.97
Weighted-Average Exercise Price - Granted (in dollars per share)	$ 0
Weighted-Average Exercise Price - Exercised (in dollars per share)	$ 17.00
Weighted-Average Exercise Price - Forfeited (in dollars per share)	$ 0
Weighted-Average Exercise Price - Outstanding (in dollars per share)	$ 25.12	$ 24.97
Weighted-Average Exercise Price - Exercisable (in dollars per share)	$ 25.19
Aggregate Intrinsic Value - Outstanding	$ 0
Aggregate Intrinsic Value - Exercised	14,835
Aggregate Intrinsic Value - Outstanding	137,268	0
Aggregate Intrinsic Value - Exercisable	$ 131,268
Weighted-Average Remaining Term - Outstanding (in years)	3 years 3 months 18 days	3 years 9 months 18 days
Weighted-Average Remaining Term - Exercisable (in years)	3 years 2 months 12 days

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Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net income	$ 878	$ 939	$ 1,720	$ 1,797
Unrealized gains (losses) on securities:
Unrealized holding gain (loss) arising during the period	1,525	(4,110)	2,755	(4,471)
Reclassification adjustment for gains included in net income	0	(99)	(658)	(184)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, before Tax, Total	1,525	(4,209)	2,097	(4,655)
Tax effect	(519)	1,431	(713)	1,583
Net of tax	1,006	(2,778)	1,384	(3,072)
Comprehensive income (loss)	$ 1,884	$ (1,839)	$ 3,104	$ (1,275)

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Earnings per Common Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

3. Earnings per Common Share

Basic earnings per common share (EPS) excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS includes the dilutive effect of additional potential common shares for assumed issuance of restricted stock and shares issued under stock options.

The factors used in the Corporation’s earnings per common share computation follow:

(Dollar amounts in thousands, except for per share amounts)	For the three months ended				For the six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Earnings per common share - basic
Net income	$	878	$	939	$	1,720	$	1,797
Less: Preferred stock dividends		25		125		50		250
.
Net income available to common stockholders	$	853	$	814	$	1,670	$	1,547
Average common shares outstanding		1,770,158		1,762,158		1,769,775		1,761,546
Basic earnings per common share	$	0.48	$	0.46	$	0.94	$	0.88
Earnings per common share - diluted
Net income available to common stockholders	$	853	$	814	$	1,670	$	1,547
Average common shares outstanding		1,770,158		1,762,158		1,769,775		1,761,546
Add: Dilutive effects of assumed issuance of restricted stock and exercise of stock options		14,691		14,223		13,893		13,350
Average shares and dilutive potential common shares		1,784,849		1,776,381		1,783,668		1,774,896
Diluted earnings per common share	$	0.48	$	0.46	$	0.94	$	0.87
Stock options and restricted stock awards not considered in computing diluted earnings per share because they were antidilutive		67,000		67,000		67,000		67,000

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Earnings per Common Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings per common share - basic
Net income	$ 878	$ 939	$ 1,720	$ 1,797
Less: Preferred stock dividends	25	125	50	250
Net income available to common stockholders	853	814	1,670	1,547
Average common shares outstanding (in shares)	1,770,158	1,762,158	1,769,775	1,761,546
Basic earnings per common share (in dollars per share)	$ 0.48	$ 0.46	$ 0.94	$ 0.88
Earnings per common share - diluted
Net income available to common stockholders	$ 853	$ 814	$ 1,670	$ 1,547
Average common shares outstanding (in shares)	1,770,158	1,762,158	1,769,775	1,761,546
Add: Dilutive effects of assumed issuance of restricted stock and exercise of stock options	14,691	14,223	13,893	13,350
Average shares and dilutive potential common shares	1,784,849	1,776,381	1,783,668	1,774,896
Diluted earnings per common share (in dollars per share)	$ 0.48	$ 0.46	$ 0.94	$ 0.87
Stock options and restricted stock awards not considered in computing diluted earnings per share because they were antidilutive (in shares)	67,000	67,000	67,000	67,000

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Loans Receivable and Related Allowance for Loan Losses (Details Textual) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 7,100,000	$ 7,100,000	$ 2,100,000	$ 2,500,000
Allowance For Losses Allocated To Loans Classified As Tdrs	588,000	588,000	55,000	56,000
Troubled Debt Restructuring Pre Modification Interest Rate			6.75%
Troubled Debt Restructuring Post Modification Interest Rate			4.00%
Troubled Debt Restructuring Extended Term			65 years
Payments for Loans		426,000
Financing Receivable, Modifications, Number of Contracts	11	11
Financing Receivable, Modifications, Nature and Extent of Transaction		15
Financing Receivable, Modifications, Accrued and Unpaid Interest		5,000
Financing Receivable, Modifications, Legal Expenses		13,000
Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,400,000	2,400,000
Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,100,000	2,100,000
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance For Losses Allocated To Loans Classified As Tdrs			83,000
Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modifications, Pre-Modification Recorded Investment		76,000
Financing Receivable, Modifications, Post-Modification Recorded Investment		$ 93,000

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Securities (Tables)

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule Of Classification Of Available For Sale Securities Investment [Table Text Block]

The following table summarizes the Corporation’s securities as of June 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for sale:
June 30, 2014:
U.S. Treasury and federal agency	$	3,469	$	-	$	(135)	$	3,334
U.S. government sponsored entities and agencies		32,445		16		(282)		32,179
U.S. agency mortgage-backed securities: residential		34,533		481		-		35,014
U.S. agency collateralized mortgage obligations: residential		38,910		-		(1,310)		37,600
State and political subdivisions		34,545		786		(345)		34,986
Corporate debt securities		1,004		-		(2)		1,002
Equity securities		2,356		87		(31)		2,412
	$	147,262	$	1,370	$	(2,105)	$	146,527
December 31, 2013:
U.S. Treasury and federal agency	$	4,466	$	-	$	(298)	$	4,168
U.S. government sponsored entities and agencies		23,637		-		(745)		22,892
U.S. agency mortgage-backed securities: residential		11,020		341		-		11,361
U.S. agency collateralized mortgage obligations: residential		41,751		2		(2,031)		39,722
State and political subdivisions		36,657		830		(988)		36,499
Corporate debt securities		250		-		(9)		241
Equity securities		2,356		131		(66)		2,421
	$	120,137	$	1,304	$	(4,137)	$	117,304

Schedule Of Contractual Maturities Of Available For Sale Securities Debt Maturities [Table Text Block]

The following table summarizes scheduled maturities of the Corporation’s debt securities as of June 30, 2014. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities and collateralized mortgage obligations are not due at a single maturity and are shown separately.

(Dollar amounts in thousands)	Available for sale
	Amortized		Fair
	Cost		Value
Due in one year or less	$	55	$	56
Due after one year through five years		36,461		36,499
Due after five through ten years		31,526		31,564
Due after ten years		3,421		3,382
Mortgage-backed securities: residential		34,533		35,014
Collateralized mortgage obligations: residential		38,910		37,600
	$	144,906	$	144,115

Schedule of Unrealized Loss on Investments [Table Text Block]

Information pertaining to securities with gross unrealized losses at June 30, 2014 and December 31, 2013, aggregated by investment category and length of time that individual securities have been in a continuous loss position are included in the table below:

(Dollar amounts in thousands)	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
June 30, 2014:
U.S. Treasury and federal agency	$	-	$	-	$	3,334	$	(135)	$	3,334	$	(135)
U.S. government sponsored entities and agencies		4,245		(19)		18,728		(263)		22,973		(282)
U.S. agency collateralized mortgage obligations: residential		8,556		(135)		29,044		(1,175)		37,600		(1,310)
State and political subdivisions		1,192		(8)		12,767		(337)		13,959		(345)
Corporate debt securities		1,002		(2)		-		-		1,002		(2)
Equity securities		1,161		(31)		-		-		1,161		(31)
	$	16,156	$	(195)	$	63,873	$	(1,910)	$	80,029	$	(2,105)
December 31, 2013:
U.S. Treasury and federal agency	$	4,168	$	(298)	$	-	$	-	$	4,168	$	(298)
U.S. government sponsored entities and agencies		22,891		(745)		-		-		22,891		(745)
U.S. agency mortgage-backed securities: residential		33,805		(1,729)		4,982		(302)		38,787		(2,031)
State and political subdivisions		13,262		(988)		-		-		13,262		(988)
Corporate debt securities		242		(9)		-		-		242		(9)
Equity securities		1,142		(66)		-		-		1,142		(66)
	$	75,510	$	(3,835)	$	4,982	$	(302)	$	80,492	$	(4,137)

Available-for-sale Securities [Table Text Block]

Gains on sales of available for sale securities for the three and six months ended June 30 were as follows:

(Dollar amounts in thousands)	For the three months				For the six months
	ended June 30,				ended June 30,
	2014		2013		2014		2013
Proceeds	$	-	$	1,539	$	21,559	$	3,314
Gains		-		99		658		184
Tax provision related to gains		-		34		224		63