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 September 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 1,772,158 at November 10, 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 September 30, 2014 and December 31, 2013	1
	Consolidated Statements of Net Income for the three and nine months ended September 30, 2014 and 2013	2
	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2014 and 2013	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013	4
	Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 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	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	41
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
Signatures		43

PART I - FINANCIAL INFORMATION

Item 1. Interim Financial Statements

Emclaire Financial Corp

Consolidated Balance Sheets

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

(Dollar amounts in thousands, except per share data)

	September 30,			December 31,
	2014			2013
Assets
Cash and due from banks	$	2,615		$	2,485
Interest earning deposits with banks		32,703			14,173
Cash and cash equivalents		35,318			16,658
Securities available for sale		150,321			117,304
Loans receivable, net of allowance for loan losses of $5,130 and $4,869		368,219			352,430
Federal bank stocks, at cost		2,791			3,977
Bank-owned life insurance		10,644			10,401
Accrued interest receivable		1,674			1,466
Premises and equipment, net		14,294			12,310
Goodwill		3,664			3,664
Core deposit intangible, net		798			965
Prepaid expenses and other assets		5,814			6,667
Total Assets	$	593,537		$	525,842
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest bearing	$	112,732		$	104,269
Interest bearing		407,176			327,737
Total deposits		519,908			432,006
Short-term borrowed funds		2,150			24,150
Long-term borrowed funds		15,000			20,000
Accrued interest payable		217			292
Accrued expenses and other liabilities		8,321			4,322
Total Liabilities		545,596			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; 1,873,175 and 1,870,675 shares issued; 1,771,158 and 1,768,658 shares outstanding, respectively		2,341			2,338
Additional paid-in capital		19,650			19,478
Treasury stock, at cost; 102,017 shares		(2,114	)		(2,114	)
Retained earnings		25,148			23,650
Accumulated other comprehensive loss		(2,084	)		(3,280	)
Total Stockholders' Equity		47,941			45,072
Total Liabilities and Stockholders' Equity	$	593,537		$	525,842

See accompanying notes to consolidated financial statements.

1

Emclaire Financial Corp

Consolidated Statements of Net Income (Unaudited)

For the three and nine months ended September 30, 2014 and 2013

(Dollar amounts in thousands, except per share data)

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2014		2013		2014		2013
Interest and dividend income:
Loans receivable, including fees	$	4,140	$	4,114	$	12,259	$	12,411
Securities:
Taxable		521		440		1,417		1,328
Exempt from federal income tax		244		314		763		875
Federal bank stocks		33		18		112		52
Interest earning deposits with banks		30		12		68		44
Total interest and dividend income		4,968		4,898		14,619		14,710
Interest expense:
Deposits		616		662		1,784		2,305
Borrowed funds		174		198		503		590
Total interest expense		790		860		2,287		2,895
Net interest income		4,178		4,038		12,332		11,815
Provision for loan losses		163		143		508		438
Net interest income after provision for loan losses		4,015		3,895		11,824		11,377
Noninterest income:
Fees and service charges		411		428		1,182		1,254
Commissions on financial services		8		48		31		187
Title premiums		16		6		40		55
Net gain on sales of available for sale securities		91		107		748		291
Net gain on sales of loans		-		9		-		9
Earnings on bank-owned life insurance		97		97		289		290
Other		306		307		911		877
Total noninterest income		929		1,002		3,201		2,963
Noninterest expense:
Compensation and employee benefits		1,825		1,847		5,599		5,684
Premises and equipment		634		516		1,837		1,586
Intangible asset amortization		54		67		167		213
Professional fees		142		158		488		513
Federal deposit insurance		90		99		266		307
Other		936		856		3,251		2,447
Total noninterest expense		3,681		3,543		11,608		10,750
Income before provision for income taxes		1,263		1,354		3,417		3,590
Provision for income taxes		241		272		675		711
Net income		1,022		1,082		2,742		2,879
Preferred stock dividends		25		115		75		365
Net income available to common stockholders	$	997	$	967	$	2,667	$	2,514
Basic earnings per common share	$	0.56	$	0.55	$	1.51	$	1.43
Diluted earnings per common share		0.56		0.54		1.49		1.42
Average common shares outstanding		1,770,821		1,762,810		1,770,128		1,761,972

See accompanying notes to consolidated financial statements.

2

Emclaire Financial Corp

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

For the three and nine months ended September 30, 2014 and 2013

(Dollar amounts in thousands)

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income	$	1,022		$	1,082		$	2,742		$	2,879
Other comprehensive income (loss)
Unrealized gains (losses) on securities:
Unrealized holding gain (loss) arising during the period		(194	)		(800	)		2,560			(5,271	)
Reclassification adjustment for gains included in net income		(91	)		(107	)		(748	)		(291	)
		(285	)		(907	)		1,812			(5,562	)
Tax effect		97			308			(616	)		1,891
Net of tax		(188	)		(599	)		1,196			(3,671	)
Comprehensive income (loss)	$	834		$	483		$	3,938		$	(792	)

See accompanying notes to consolidated financial statements.

3

Emclaire Financial Corp

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the nine months ended September 30, 2014 and 2013

(Dollar amounts in thousands)

	For the nine months ended
	September 30,
	2014			2013
Cash flows from operating activities
Net income	$	2,742		$	2,879
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		631			503
Provision for loan losses		508			438
Amortization of premiums, net		198			152
Amortization of intangible assets and mortgage servicing rights		168			213
Realized gains on sales of available for sale securities, net		(748	)		(291	)
Net gains on sales of loans		-			(9	)
Net (gains) losses on foreclosed real estate		(11	)		5
Originations of loans sold		-			(202	)
Proceeds from the sale of loans		-			211
Restricted stock and stock option compensation		126			133
Increase in bank-owned life insurance, net		(243	)		(247	)
Increase in accrued interest receivable		(208	)		(74	)
Decrease in prepaid expenses and other assets		232			1,159
Decrease in accrued interest payable		(75	)		(137	)
Increase in accrued expenses and other liabilities		3,999			644
Net cash provided by operating activities		7,319			5,377
Cash flows from investing activities
Loan originations and principal collections, net		(16,619	)		(14,733	)
Available for sale securities:
Sales		22,462			21,015
Maturities, repayments and calls		10,270			28,767
Purchases		(63,189	)		(60,116	)
Redemption (purchase) of federal bank stocks		1,186			(822	)
Proceeds from the sale of foreclosed real estate		139			167
Write-down of foreclosed real estate		-			19
Additions to premises and equipment		(2,615	)		(2,692	)
Net cash used in investing activities		(48,366	)		(28,395	)
Cash flows from financing activities
Net increase in deposits		87,902			(3,017	)
Repayments on Federal Home Loan Bank advances		(5,000	)		-
Net change in short-term borrowings		(22,000	)		26,650
Proceeds from exercise of stock options, including tax benefit		48			20
Dividends paid		(1,243	)		(1,423	)
Redemption of preferred stock (Series B)		-			(5,000	)
Net cash provided by financing activities		59,707			17,230
Increase (decrease) in cash and cash equivalents		18,660			(5,788	)
Cash and cash equivalents at beginning of period		16,658			20,424
Cash and cash equivalents at end of period	$	35,318		$	14,636
Supplemental information:
Interest paid	$	2,362		$	3,032
Income taxes paid		245			140
Supplemental noncash disclosure:
Transfers from loans to foreclosed real estate		124			159

See accompanying notes to consolidated financial statements.

4

Emclaire Financial Corp

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

For the three and nine months ended September 30, 2014 and 2013

(Dollar amounts in thousands, except per share data)

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Balance at beginning of period	$	47,457		$	49,613		$	45,072		$	51,725
Net income		1,022			1,082			2,742			2,879
Other comprehensive income (loss)		(188	)		(599	)		1,196			(3,671	)
Stock compensation expense		42			34			126			133
Dividends declared on preferred stock		(25	)		(115	)		(75	)		(365	)
Dividends declared on common stock		(390	)		(352	)		(1,168	)		(1,058	)
Exercise of stock options, including tax benefit		23			-			48			20
Redemption of preferred stock (5,000 shares, Series B)		-			(5,000	)		-			(5,000	)
Balance at end of period	$	47,941		$	44,663		$	47,941		$	44,663
Common cash dividend per share	$	0.22		$	0.20		$	0.66		$	0.60

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 September 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 nine months ended
	September 30,				September 30,
	2014		2013		2014		2013
Earnings per common share - basic
Net income	$	1,022	$	1,082	$	2,742	$	2,879
Less: Preferred stock dividends		25		115		75		365
.
Net income available to common stockholders	$	997	$	967	$	2,667	$	2,514
Average common shares outstanding		1,770,821		1,762,810		1,770,128		1,761,972
Basic earnings per common share	$	0.56	$	0.55	$	1.51	$	1.43
Earnings per common share - diluted
Net income available to common stockholders	$	997	$	967	$	2,667	$	2,514
Average common shares outstanding		1,770,821		1,762,810		1,770,128		1,761,972
Add: Dilutive effects of assumed issuance of restricted stock and exercise of stock options		16,410		13,616		14,709		12,777
Average shares and dilutive potential common shares		1,787,231		1,776,426		1,784,837		1,774,749
Diluted earnings per common share	$	0.56	$	0.54	$	1.49	$	1.42
Stock options and restricted stock awards not considered in computing diluted earnings per share because they were antidilutive		66,000		67,000		67,000		67,000

4. Securities

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

(Dollar amounts in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale:
September 30, 2014:
U.S. Treasury and federal agency	$	3,470	$	-	$	(39	)	$	3,431
U.S. government sponsored entities and agencies		35,448		19		(213	)		35,254
U.S. agency mortgage-backed securities: residential		37,664		565		-			38,230
U.S. agency collateralized mortgage obligations: residential		38,730		21		(965	)		37,785
State and political subdivisions		31,668		688		(152	)		32,204
Corporate debt securities		2,006		-		(7	)		2,000
Equity securities		2,356		190		-			2,546
	$	151,342	$	1,482	$	(1,376	)	$	151,449
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 September 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		42,026		41,871
Due after five through ten years		27,992		28,191
Due after ten years		2,519		2,453
Mortgage-backed securities: residential		37,664		37,892
Collateralized mortgage obligations: residential		38,730		37,314
	$	148,986	$	147,777

Information pertaining to securities with gross unrealized losses at September 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
September 30, 2014:
U.S. Treasury and federal agency	$	-	$	-		$	3,338	$	(132	)	$	3,338	$	(132	)
U.S. government sponsored entities and agencies		15,396		(64	)		18,698		(292	)		34,094		(356	)
U.S. agency mortgage-backed securities: residential		7,534		(58	)		-		-			7,534		(58	)
U.S. agency collateralized mortgage obligations: residential		2,740		(31	)		34,574		(1,385	)		37,314		(1,416	)
State and political subdivisions		559		(1	)		11,030		(207	)		11,589		(208	)
Corporate debt securities		1,993		(13	)		-		-			1,993		(13	)
	$	28,222	$	(167	)	$	67,640	$	(2,016	)	$	95,862	$	(2,183	)
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 nine months ended September 30 were as follows:

(Dollar amounts in thousands)	For the three months				For the nine months
	ended September 30,				ended September 30,
	2014		2013		2014		2013
Proceeds	$	903	$	17,701	$	22,462	$	21,015
Gains		91		107		748		291
Tax provision related to gains		31		36		254		99

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 no equity securities in an unrealized loss position as of September 30, 2014. There were 111 debt securities in an unrealized loss position as of September 30, 2014, of which 83 were in an unrealized loss position for more than 12 months. Of these 111 securities, 6 were U.S. Treasury securities, 28 were U.S. government sponsored entity and agency securities, 5 were U.S. agency mortgage-backed securities, 27 were U.S agency collateralized mortgage obligations, 41 were state and political subdivision securities and 4 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 September 30, 2014 to be other-than-temporarily impaired.

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)	September 30,		December 31,
	2014		2013
Mortgage loans on real estate:
Residential first mortgages	$	105,647	$	105,541
Home equity loans and lines of credit		88,515		87,928
Commercial real estate		109,517		101,499
		303,679		294,968
Other loans:
Commercial business		60,507		53,214
Consumer		9,163		9,117
		69,670		62,331
Total loans, gross		373,349		357,299
Less allowance for loan losses		5,130		4,869
Total loans, net	$	368,219	$	352,430

During the three months ended September 30, 2014, the Corporation purchased four syndicated national credits (SNCs) each having a principal amount of $1.0 million. The SNCs were purchased for a total of $4.0 million plus a net premium of $15,000 and other costs totaling $11,000 which are being amortized over the lives of the loans. The SNCs are recorded as commercial business loans and are collateralized by all business assets of the individual borrowers. These credits have been assigned allowance for loan losses equal to 125% of the Corporation’s normal allowance allocation for commercial business loans until sufficient historical performance data can be collected and analyzed.

10

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 September 30, 2014:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of September 30, 2014						ended September 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	$	171	$	171	$	28	$	172	$	1	$	1
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,681		2,740		223		2,724		3		-
Commercial business		2,372		2,372		445		2,291		-		-
Consumer		-		-		-		-		-		-
Total	$	6,224	$	5,283	$	696	$	5,187	$	4	$	1

	For the nine months
	ended September 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	126	$	10	$	10
Home equity and lines of credit		-		-		-
Commercial real estate		2,673		16		-
Commercial business		1,250		53		-
Consumer		-		-		-
Total	$	4,049	$	79	$	10

	Impaired Loans with No Specific Allowance
					For the three months
	As of September 30, 2014				ended September 30, 2014
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	116	$	116	$	117	$	-	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,269		870		980		-		-
Commercial business		52		52		240		-		-
Consumer		1,348		1,348		1,348		-		-
Total	$	2,785	$	2,386	$	2,685	$	-	$	-

	For the nine months
	ended September 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	64	$	2	$	-
Home equity and lines of credit		-		-		-
Commercial real estate		835		14		3
Commercial business		300		1		1
Consumer		1,348		-		-
Total	$	2,547	$	17	$	4

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 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

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 September 30, 2013:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of September 30, 2013						ended September 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	$	82	$	82	$	21	$	81	$	2	$	2
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,633		2,692		209		2,708		2		2
Commercial business		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	3,715	$	2,774	$	230	$	2,789	$	4	$	4

	For the nine months
	ended September 30, 2013
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	41	$	4	$	4
Home equity and lines of credit		-		-		-
Commercial real estate		3,372		11		11
Commercial business		-		-		-
Consumer		-		-		-
Total	$	3,413	$	15	$	15

	Impaired Loans with No Specific Allowance
					For the three months
	As of September 30, 2013				ended September 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		1,012		613		637		2		2
Commercial business		346		346		351		-		-
Consumer		1,348		1,348		1,348		-		-
Total	$	2,706	$	2,307	$	2,336	$	2	$	2

	For the nine months
	ended September 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		561		4		4
Commercial business		359		-		-
Consumer		1,484		-		-
Total	$	2,404	$	4	$	4

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.

13

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 September 30, 2014 and December 31, 2013, the Corporation had $6.9 million and $2.5 million, respectively, of loans classified as TDRs, which are included in impaired loans above. At September 30, 2014 and December 31, 2013, the Corporation had $511,000 and $56,000 of the allowance for loan losses allocated to these specific loans. At September 30, 2013, the Corporation had $2.1 million of loans classified as TDRs with $56,000 of the allowance for loan losses allocated to these specific loans.

During the nine month period ended September 30, 2014, the Corporation modified eleven loans to be identified as TDRs. One commercial relationship consisting of eight loans totaling $2.4 million was modified as the Corporation 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 Corporation 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 nine month period ended September 30, 2014 as a result of the modifications. During the three month period ended September 30, 2014, the Corporation did not modify any loans as TDRs.

During the nine month period ended September 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 September 30, 2013, the Corporation did not modify any 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 nine month periods ended September 30, 2014, there were defaults on four loans classified as TDRs which totaled $1.8 million at September 30, 2014. Of these, two loans totaling $344,000 were not past due, one loan for $81,000 was 30-59 days delinquent and one loan for $1.3 million was over 90 days past due at September 30, 2014. During the three and nine month periods ended September 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.

14

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 September 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
					Special
	Not Rated		Pass		Mention		Substandard		Doubtful		Total
Septembert 30, 2014:
Residential first mortgages	$	104,970	$	-	$	-	$	677	$	-	$	105,647
Home equity and lines of credit		88,216		-		-		299		-		88,515
Commercial real estate		-		102,482		525		6,510		-		109,517
Commercial business		-		55,739		1,544		3,224		-		60,507
Consumer		7,815		-		-		1,348		-		9,163
Total	$	201,001	$	158,221	$	2,069	$	12,058	$	-	$	373,349
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

15

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 September 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
September 30, 2014:
Residential first mortgages	$	103,184	$	1,403	$	267	$	122	$	671	$	105,647
Home equity and lines of credit		87,795		292		129		28		271		88,515
Commercial real estate		106,266		82		-		-		3,169		109,517
Commercial business		58,154		26		203		-		2,124		60,507
Consumer		7,741		64		10		-		1,348		9,163
Total loans	$	363,140	$	1,867	$	609	$	150	$	7,583	$	373,349
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 September 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
September 30, 2014:
Residential first mortgages	$	286	$	80	$	-	$	305	$	671
Home equity and lines of credit		-		-		-		271		271
Commercial real estate		2,932		-		-		237		3,169
Commercial business		2,086		-		-		38		2,124
Consumer		-		-		-		1,348		1,348
Total loans	$	5,304	$	80	$	-	$	2,199	$	7,583
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.

16

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 September 30, 2014:
Allowance for loan losses:
Beginning Balance	$	917		$	468		$	2,375		$	1,233		$	53		$	5,046
Charge-offs		(38	)		(30	)		-			-			(24	)		(92	)
Recoveries		-			-			4			-			9			13
Provision		62			101			(11	)		(3	)		14			163
Ending Balance	$	941		$	539		$	2,368		$	1,230		$	52		$	5,130
Nine months ended September 30, 2014:
Allowance for loan losses:
Beginning Balance	$	923		$	625		$	2,450		$	822		$	49		$	4,869
Charge-offs		(135	)		(44	)		(2	)		(17	)		(91	)		(289	)
Recoveries		-			-			13			7			22			42
Provision		153			(42	)		(93	)		418			72			508
Ending Balance	$	941		$	539		$	2,368		$	1,230		$	52		$	5,130
At September 30, 2014:
Ending ALL balance attributable to loans:
Individually evaluated for impairment		28			-			223			445			-			696
Collectively evaluated for impairment		913			539			2,145			785			52			4,434
Total loans:
Individually evaluated for impairment		287			-			3,610			2,424			1,348			7,669
Collectively evaluated for impairment		105,360			88,515			105,907			58,083			7,815			365,680
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 September 30, 2013:
Allowance for loan losses:
Beginning Balance	$	772		$	621		$	2,547		$	677		$	53		$	4,670
Charge-offs		(9	)		(8	)		-			-			(16	)		(33	)
Recoveries		-			-			2			-			5			7
Provision		87			1			(110	)		154			11			143
Ending Balance	$	850		$	614		$	2,439		$	831		$	53		$	4,787
Nine months ended September 30, 2013:
Allowance for loan losses:
Beginning Balance	$	828		$	730		$	3,090		$	636		$	66		$	5,350
Charge-offs		(26	)		(8	)		(941	)		-			(72	)		(1,047	)
Recoveries		1			-			6			-			39			46
Provision		47			(108	)		284			195			20			438
Ending Balance	$	850		$	614		$	2,439		$	831		$	53		$	4,787

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.

17

6. Goodwill and Intangible Assets

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

(Dollar amounts in thousands)	September 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		3,229		4,027		3,062
Total	$	7,691	$	3,229	$	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 nine 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 nine month periods ending September 30, 2014, the Corporation recorded intangible amortization expense totaling $54,000 and $167,000, respectively, compared to $67,000 and $213,000, respectively, for the same periods in 2013.

7. Stock Compensation Plans

In April 2014, the Corporation adopted the 2014 Stock Incentive Plan (the 2014 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 2014 Plan.

In addition, the Corporation’s 2007 Stock Incentive Plan and Trust (the 2007 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 6,013 shares of restricted stock and 45,283 stock options remain available for issuance under the 2007 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 September 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		(2,500	)		19.30		15,340		-
Forfeited		-			-		-		-
Outstanding as of September 30, 2014		76,750		$	25.16	$	59,205		3.0
Exercisable as of September 30, 2014		76,250		$	25.22	$	54,005		3.0

18

7. Stock Compensation Plans (continued)

A summary of the status of the Corporation’s nonvested option shares as of September 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 September 30, 2014		500	$	1.44

A summary of the status of the Corporation’s nonvested restricted stock awards as of September 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 September 30, 2014		25,700	$	20.08

For the three and nine month periods ended September 30, 2014, the Corporation recognized $42,000 and $126,000, respectively, in stock compensation expense, compared to $34,000 and $133,000, respectively, for the same periods in 2013. As of September 30, 2014, there was $224,000 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 1.1 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 Corporation recorded a benefit associated with plan of $15,000 and $45,000, respectively, for the three and nine month periods ended September 30, 2014, compared to an expense of $2,000 and $5,000, respectively, for the three and nine month periods ended September 30, 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.

19

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 September 30, 2014, the fair value of impaired loans consists of loan balances of $2.7 million, net of a valuation allowance of $490,000, compared to loan balances of $2.5 million, net of a valuation allowance of $181,000, at December 31, 2013. There was $41,000 and $707,000 of additional provision for loan losses recorded for impaired loans during the three and nine month period ended September 30, 2014, respectively. There was no additional provision for loan losses and $21,000 of additional provision for loan losses recorded for impaired loans during the three and nine month periods ended September 30, 2013, respectively.

20

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 September 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 nine months ended September 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.

21

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
September 30, 2014:
U.S. Treasury and federal agency	$	3,431	$	3,431	$	-	$	-
U.S. government sponsored entities and agencies		35,254		-		35,254		-
Mortgage-backed securities: residential		38,230		-		38,230		-
Collateralized mortgage obligations: residential		37,785		-		37,785		-
State and political subdivision		32,204		-		32,204		-
Corporate debt securities		2,000		-		2,000		-
Equity securities		2,546		1,893		-		653
	$	151,449	$	5,324	$	145,472	$	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 nine month periods ended September 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 nine month periods ended September 30, 2014 and 2013:

(Dollar amounts in thousands)	Three months ended				Nine months ended
	September 30,				September 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

22

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
September 30, 2014:
Impaired commercial real estate loans	$	557	$	-	$	-	$	557
Impaired commercial business loans		1,662		-		-		1,662
	$	2,219	$	-	$	-	$	2,219
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
September 30, 2014:
Impaired commercial real estate loans	$	557	Sales comparison approach/	Adjustment for differences	10%
			Contractual provision of USDA loan	between comparable sales
Impaired commercial business loans		1,662	Liquidation value of business assets	Adjustment for differences	41% - 78%
				between comparable business assets
December 31, 2013:
Impaired commercial real estate loans		2,340	Sales comparison approach/	Adjustment for differences	0% - 10%
			Contractual provision of USDA loan	between comparable sales
Other residential real estate owned		80	Sales comparison approach	Adjustment for differences	10%
				between comparable sales

The two tables above exclude two impaired residential mortgage loans totaling $144,000, two impaired commercial real estate loans totaling $2.0 million and a $265,000 commercial business loan classified as TDRs which were measured at fair value using a discounted cash flow methodology at September 30, 2014.

Included in impaired commercial real estate loans is a loan guaranteed by the United States Department of Agriculture (USDA) with balances of $344,000 and $350,000 as of September 30, 2014 and December 31, 2013, respectively. 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 September 30, 2014 and December 31, 2013 was 37.9% and 1.5%, respectively.

23

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 September 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Carrying		Fair Value Measurements using:
Description	Amount		Total		Level 1		Level 2		Level 3
September 30, 2014:
Financial Assets:
Cash and cash equivalents	$	35,318	$	35,318	$	35,318	$	-	$	-
Securities available for sale		150,321		151,449		5,324		145,472		653
Loans, net		368,219		371,817		-		-		371,817
Federal bank stock		2,791		N/A		N/A		N/A		N/A
Accrued interest receivable		1,674		1,674		46		498		1,130
		558,323		560,258		40,688		145,970		373,600
Financial Liabilities:
Deposits		519,908		521,578		398,302		123,276		-
Borrowed funds		17,150		18,130		-		18,130		-
Accrued interest payable		217		217		7		210		-
		537,275		539,925		398,309		141,616		-

	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		-

24

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 September 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 July 1, 2014	$	(486	)	$	(1,410	)	$	(1,896	)
Other comprehensive loss before reclassification		(128	)		-			(128	)
Amounts reclassified from accumulated other comprehensive income		(60	)		-			(60	)
Net current period other comprehensive loss		(188	)		-			(188	)
Accumulated Other Comprehensive Loss at September 30, 2014	$	(674	)	$	(1,410	)	$	(2,084	)

(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 September 30, 2014			Income is Presented
Unrealized gains and losses on available-for-sale securities	$	91		Gain on sale of securities
		(31	)	Tax expense
Total reclassifications for the period	$	60		Net of tax

(Dollar amounts in thousands)	Unrealized Gains			Defined
	and Losses on			Benefit
	Available-for-Sale			Pension
	Securities			Items			Totals
Accumulated Other Comprehensive Loss at July 1, 2013	$	(707	)	$	(1,795	)	$	(2,502	)
Other comprehensive loss before reclassification		(528	)		-			(528	)
Amounts reclassified from accumulated other comprehensive income		(71	)		-			(71	)
Net current period other comprehensive loss		(599	)		-			(599	)
Accumulated Other Comprehensive Loss at September 30, 2013	$	(1,306	)	$	(1,795	)	$	(3,101	)

(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 September 30, 2013			Income is Presented
Unrealized gains and losses on available-for-sale securities	$	107		Gain on sale of securities
		(36	)	Tax expense
Total reclassifications for the period	$	71		Net of tax

25

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 nine months ended September 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 January 1, 2014	$	(1,870	)	$	(1,410	)	$	(3,280	)
Other comprehensive income before reclassification		1,690			-			1,690
Amounts reclassified from accumulated other comprehensive income		(494	)		-			(494	)
Net current period other comprehensive income		1,196			-			1,196
Accumulated Other Comprehensive Loss at September 30, 2014	$	(674	)	$	(1,410	)	$	(2,084	)

(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 September 30, 2014			Income is Presented
Unrealized gains and losses on available-for-sale securities	$	748		Gain on sale of securities
		(254	)	Tax expense
Total reclassifications for the period	$	494		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 loss before reclassification		(3,479	)		-			(3,479	)
Amounts reclassified from accumulated other comprehensive income		(192	)		-			(192	)
Net current period other comprehensive loss		(3,671	)		-			(3,671	)
Accumulated Other Comprehensive Loss at September 30, 2013	$	(1,306	)	$	(1,795	)	$	(3,101	)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income			Affected Line Item in the
Details about Accumulated Other	For the nine months			Statement Where Net
Comprehensive Income Components	ended September 30, 2013			Income is Presented
Unrealized gains and losses on available-for-sale securities	$	291		Gain on sale of securities
		(99	)	Tax expense
Total reclassifications for the period	$	192		Net of tax

26

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 nine months ended September 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 26 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 $67.7 million, or 12.9%, to $593.5 million at September 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 $18.7 million, $33.0 million and $15.8 million, respectively, which was funded by an $87.9 million increase in customer deposits. This deposit increase also funded a $27.0 million decrease in borrowed funds. The increase in loans receivable includes four $1.0 million syndicated national credits purchased during the three months ended September 30, 2014.

27

Total liabilities increased $64.8 million, or 13.5%, to $545.6 million at September 30, 2014 from $480.8 million at December 31, 2013, resulting primarily from an $87.9 million increase in customer deposits, partially offset by a $27.0 million decrease in borrowed funds. Deposit growth consisted of an $8.5 million, or 8.1% increase in noninterest bearing deposits and a $79.4 million or 24.2%, 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. Additionally, accrued expenses and other liabilities increased $4.0 million, or 92.5%, to $8.3 million at September 30, 2014 from $4.3 million at December 31, 2013, resulting from the delayed settlement of the aforementioned syndicated national credits. Under the terms of the loan agreements, the loans transferred ownership to the Corporation during September 2014; however, the Corporation will not remit the payment for the loans until the administrative agent completes their due diligence processes.

Stockholders’ equity increased $2.9 million to $47.9 million at September 30, 2014 from $45.1 million at December 31, 2013. Book value and tangible book value per common share were $24.24 and $21.73, respectively, at September 30, 2014, compared to $22.66 and $20.04, respectively, at December 31, 2013.

At September 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 7.76%, 13.53% and 14.79%, 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 September 30, 2014 and 2013

General. Net income decreased $60,000, or 5.5%, to $1.0 million for the three months ended September 30, 2014 from $1.1 million for the same period in 2013. This decrease was the result of a decrease in noninterest income of $73,000 and increases in noninterest expense and the provision for loan losses of $138,000 and $20,000, respectively, partially offset by an increase in net interest income of $140,000 and a decrease in the provision for income taxes of $31,000. Net income available to common stockholders increased $30,000, or 3.1%, to $997,000 for the three months ended September 30, 2014 from $967,000 for the same period in the prior year following a $90,000 decrease in preferred stock dividends.

Net interest income. Net interest income on a tax equivalent basis increased $137,000, or 3.2%, to $4.4 million for the three months ended September 30, 2014 from $4.2 million for the three months ended September 30, 2013. This increase can be attributed to an increase in tax equivalent interest income of $67,000 and a decrease in interest expense of $70,000.

Interest income. Interest income on a tax equivalent basis increased $67,000, or 1.3%, to $5.2 million for the three months ended September 30, 2014 from $5.1 million for the same period in 2013. This increase can be attributed to increases in interest on loans, interest earned on interest-earning deposits with banks and dividends on federal bank stocks of $51,000, $18,000 and $15,000, respectively, partially offset by a decrease in interest on securities of $17,000.

Tax equivalent interest earned on loans receivable increased $51,000, or 1.2%, to $4.2 million for the three months ended September 30, 2014 and for the same period in 2013. This increase resulted from a $24.7 million, or 7.2% increase in average loans, accounting for an increase of $293,000 in interest income. Partially offsetting this favorable volume variance, the average yield on loans decreased 27 basis points to 4.58% for the three months ended September 30, 2014, versus 4.85% for the same period in 2013. This unfavorable yield variance accounted for a $242,000 decrease in interest income.

Interest earned on deposits with banks increased $18,000 to $30,000 for the three months ended September 30, 2014 compared to $12,000 for the three months ended September 30, 2013. The average balance of interest-earning deposits increased $38.3 million, causing a $27,000 increase in interest income. Partially offsetting this favorable variance, the average yield on these accounts decreased 25 basis points, causing a $9,000 decrease in interest income.

28

Dividends on federal bank stocks increased $15,000 to $33,000 for the three months ended September 30, 2014 from $18,000 for the same period in 2013. This increased resulted from a 269 basis point increase in the average yield on federal bank stocks to 4.69% for the three months ended September 30, 2014, compared to 2.00% 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 September 30, 2014, compared to 1.0% for the same period in 2013.

Tax equivalent interest earned on securities decreased $17,000, or 1.9%, to $865,000 for the three months ended September 30, 2014 compared to $882,000 for the three months ended September 30, 2013. This decrease resulted from a 22 basis point decline in the average yield on securities to 2.31% for the three months ended September 30, 2014, versus 2.53% for the same period in 2013. This unfavorable yield variance accounted for a $78,000 decrease in interest income. Partially offsetting this unfavorable yield variance, the average balance of securities increased $9.9 million, or 7.2%, accounting for a $61,000 increase in interest income.

Interest expense. Interest expense decreased $70,000, or 8.1%, to $790,000 for the three months ended September 30, 2014 from $860,000 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 $46,000 and $24,000, respectively.

Interest expense incurred on deposits decreased $46,000, or 6.9%, to $616,000 for the three months ended September 30, 2014 compared to $662,000 for the same period in 2013. The average cost of interest-bearing deposits decreased 20 basis points to 0.59% for the three months ended September 30, 2014, compared to 0.79% for the same period in 2013, resulting in a $188,000 decrease in interest expense. This decrease in the cost of deposits was primarily due to deposits repricing during 2013 and the first nine months of 2014 in the prevailing low interest-rate environment. Partially offsetting this favorable variance, the average balance of interest-bearing deposits increased $81.6 million, or 24.5%, to $414.0 million for the three months ended September 30, 2014, compared to $332.4 million for the same period in 2013 causing a $142,000 increase in interest expense. Average noninterest bearing deposits increased $10.7 million, or 10.2%, to $115.5 million from $104.8 million, facilitating the overall decline in the Corporation’s cost of funds.

Interest expense incurred on borrowed funds decreased $24,000, or 12.1%, to $174,000 for the three months ended September 30, 2014, compared to $198,000 for the same period in the prior year. The average balance of long term borrowed funds decreased $5.0 million, or 25.0%, accounting for a $49,000 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 volume variance, the average cost of long term borrowed funds increased 31 basis points to 3.98% for the three months ended September 30, 2014, compared to 3.67% for the same period in 2013, causing a $15,000 increase in interest expense. This was due primarily to no capitalization of interest during the quarter ended September 30, 2014 compared to the capitalization of $19,000 of interest related to the Cranberry Township banking office construction for the same period in 2013. Partially offsetting the favorable variance related to long term borrowings, the average cost of short term borrowed funds increased 396 basis points, which caused a $30,000 increase in interest expense. Partially offsetting the unfavorable rate variance, the average balance of short term borrowed funds decreased $12.4 million, accounting for a $20,000 decrease in interest expense. Short-term borrowings at September 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.

29

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 September 30,
	2014							2013
	Average				Yield /			Average				Yield /
	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Loans, taxable	$	340,810	$	3,913		4.56	%	$	323,605	$	3,946		4.84	%
Loans, tax exempt		26,088		324		4.93	%		18,567		240		5.12	%
Total loans receivable		366,898		4,237		4.58	%		342,172		4,186		4.85	%
Securities, taxable		114,147		521		1.81	%		94,579		440		1.85	%
Securities, tax exempt		34,156		344		3.99	%		43,822		442		4.00	%
Total securities		148,303		865		2.31	%		138,401		882		2.53	%
Interest-earning deposits with banks		47,867		30		0.25	%		9,559		12		0.50	%
Federal bank stocks		2,791		33		4.69	%		3,571		18		2.00	%
Total interest-earning cash equivalents		50,658		63		0.49	%		13,130		30		0.91	%
Total interest-earning assets		565,859		5,165		3.62	%		493,703		5,098		4.10	%
Cash and due from banks		2,403							2,076
Other noninterest-earning assets		31,505							29,890
Total Assets	$	599,767						$	525,669
Interest-bearing liabilities:
Interest-bearing demand deposits	$	292,847	$	120		0.16	%	$	221,695	$	94		0.17	%
Time deposits		121,144		496		1.62	%		110,697		568		2.03	%
Total interest-bearing deposits		413,991		616		0.59	%		332,392		662		0.79	%
Borrowed funds, short-term		2,150		23		4.31	%		14,557		13		0.35	%
Borrowed funds, long-term (1)		15,000		151		3.98	%		20,000		185		3.67	%
Total borrowed funds		17,150		174		4.02	%		34,557		198		2.27	%
Total interest-bearing liabilities		431,141		790		0.73	%		366,949		860		0.93	%
Noninterest-bearing demand deposits		115,485		-		-			104,795		-		-
Funding and cost of funds		546,626		790		0.57	%		471,744		860		0.72	%
Other noninterest-bearing liabilities		5,415							5,425
Total Liabilities		552,041							477,169
Stockholders' Equity		47,726							48,500
Total Liabilities and Stockholders' Equity	$	599,767						$	525,669
Net interest income			$	4,375						$	4,238
Interest rate spread (difference between weighted average rate on interest-earning assets and interest-bearing liabilities)						2.89	%						3.17	%
Net interest margin (net interest income as a percentage of average interest-earning assets)						3.07	%						3.41	%

(1) Interest on long-term borrowed funds for the quarterly period ended September 30, 2013 was reduced by $19,000 related to capitalized interest costs on construction in progress.

30

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 September 30,
	2014 versus 2013
	Increase (Decrease) due to
	Volume			Rate			Total
Interest income:
Loans	$	293		$	(242	)	$	51
Securities		61			(78	)		(17	)
Interest-earning deposits with banks		27			(9	)		18
Federal bank stocks		(5	)		20			15
Total interest-earning assets		376			(309	)		67
Interest expense:
Interest-bearing deposits		142			(188	)		(46	)
Borrowed funds, short-term		(20	)		30			10
Borrowed funds, long-term		(49	)		15			(34	)
Total interest-bearing liabilities		73			(143	)		(70	)
Net interest income	$	303		$	(166	)	$	137

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 September 30, 2014 and 2013 is as follows:

(Dollar amounts in thousands)	As of or for the three months ended
	September 30,
	2014			2013
Balance at the beginning of the period	$	5,046		$	4,670
Provision for loan losses		163			143
Charge-offs		(92	)		(33	)
Recoveries		13			7
Balance at the end of the period	$	5,130		$	4,787
Nonperforming loans	$	7,733		$	5,310
Nonperforming assets		7,837			5,458
Nonperforming loans to total loans		2.07	%		1.51	%
Nonperforming assets to total assets		1.32	%		1.04	%
Allowance for loan losses to total loans		1.37	%		1.36	%
Allowance for loan losses to non-performing loans		66.34	%		90.14	%

31

Nonperforming loans increased $2.4 million to $7.7 million at September 30, 2014 from $5.3 million at September 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 due to the borrower’s inadequate cash flow, 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 had specific reserves of $271,000 at September 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 September 30, 2014. The commercial real estate loan and commercial line of credit had specific reserves of $45,000 and $140,000, respectively, at September 30, 2014. Partially offsetting these increases were principal reductions of $242,000 resulting from credit workouts and repayments. Of the $7.7 million in nonperforming loans, $5.3 million were not past due at September 30, 2014. At September 30, 2014, nonperforming loans remained unchanged at $7.7 million, compared to the same level recorded at June 30, 2014.

As of September 30, 2014, the Corporation’s classified and criticized assets amounted to $14.1 million, or 2.4% of total assets, with $12.1 million classified as substandard and $2.1 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 $1.4 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 $20,000, or 14.0%, to $163,000 for the three months ended September 30, 2014 from $143,000 for the same period in the prior year. While the Corporation’s average loan balances increased $24.7 million for the three months ended September 30, 2014 compared to the same period in the prior year, the provision for loan losses only increased marginally due a positive impact in the allowance for loan losses due to an improvement in the historical loss ratios.

Noninterest income. Noninterest income decreased $73,000, or 7.3%, to $929,000 for the three months ended September 30, 2014, compared to $1.0 million for the same period in the prior year. This decrease resulted from decreases in commissions on financial services, fees and service charges and net gains on the sale of securities of $40,000, $17,000 and $16,000, respectively. The decrease in commissions of financial services relates to the Corporation discontinuing retail brokerage and other investment services during the third quarter of 2013.

Noninterest expense. Noninterest expense increased $138,000, or 3.9%, to $3.7 million for the three months ended September 30, 2014, compared to $3.5 million for the same period in the prior year. This increase in noninterest expense can be attributed to increases in premises and equipment and other noninterest expense of $118,000 and $80,000, respectively, partially offset by decreases in compensation and employee benefits, professional fees, intangible asset amortization and FDIC expense of $22,000, $16,000, $13,000 and $9,000, respectively. Noninterest expense for the third quarter of 2014 included $175,000 related to the Bank’s new full-service branch banking offices in Cranberry Township, Pennsylvania and Saint Marys, Pennsylvania, which opened in May 2014 and October 2013, respectively. Excluding these new expenses, noninterest expense decreased $37,000, or 1.0%.

Compensation and employee benefits expense decreased $22,000, or 1.2%, to $1.8 million for the three months ended September 30, 2014 compared to the same period in the prior year. This decrease can be attributed to a $15,000 reduction in retirement benefits costs resulting from the 2013 curtailment of the Bank’s pension plan, a $14,000 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.

Premise and equipment expense increased $118,000, or 22.9%, to $634,000 for the three months ended September 30, 2014 compared to $516,000 for the same period in the prior year. Premise and equipment expense for the third quarter of 2014 included $69,000 in operating expenses related to the Bank’s new full-service branch banking offices in Cranberry Township, Pennsylvania and Saint Marys, Pennsylvania.

32

Professional fees decreased $16,000, or 10.1%, to $142,000 for the three months ended September 30, 2014 compared to $158,000 for the same period in the prior year.

The Corporation recognized $54,000 of core deposit intangible amortization expense during the third quarter of 2014 compared to $67,000 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 $9,000, or 9.1%, to $90,000 for the three months ended September 30, 2014 compared to $99,000 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.

Other noninterest expense increased $80,000, or 9.3%, to $936,000 for the three months ended September 30, 2014 compared to $856,000 for the same period in the prior year. Other noninterest expense for the third quarter of 2014 included $33,000 in operating expenses related to the Bank’s new branch offices in Cranberry Township, Pennsylvania and Saint Marys, Pennsylvania.

Provision for income taxes. The provision for income taxes decreased $31,000, or 11.4%, to $241,000 for the three months ended September 30, 2014 compared to $272,000 for the same period in the prior year. The Corporation’s effective tax rate decreased to 19.1% for the third quarter of 2014 from 20.1% for the same quarter in the prior year. The difference between the statutory rate of 34% and the Corporation’s effective tax rate of 19.1% for the quarter ended September 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 Nine months Ended September 30, 2014 and 2013

General. Net income decreased $137,000, or 4.8%, to $2.7 million for the nine months ended September 30, 2014 from $2.9 million for the same period in 2013. This decrease was the result of increases in noninterest expense and the provision for loan losses of $858,000 and $70,000, respectively, partially offset by increases in net interest income and noninterest income of $517,000 and $238,000, respectively, and a decrease in the provision for income taxes of $36,000.

Net interest income. Net interest income on a tax equivalent basis increased $510,000, or 4.1%, to $12.9 million for the nine months ended September 30, 2014 from $12.4 million for the nine months ended September 30, 2013. This increase can be attributed to a decrease in interest expense of $608,000, partially offset by a decrease in tax equivalent interest income of $98,000.

Interest income. Interest income on a tax equivalent basis decreased $98,000 to $15.2 million for the nine months ended September 30, 2014 compared to $15.3 million for the nine months ended September 30, 2013. This decrease can be attributed to decreases in interest on loans and securities of $115,000 and $67,000, respectively, partially offset by an increase in interest-earning deposits with banks and interest earned on federal bank stocks of $24,000 and $60,000, respectively.

Tax equivalent interest earned on loans receivable decreased $115,000 to $12.5 million for the nine months ended September 30, 2014 compared to $12.6 million for the nine months ended September 30, 2013. This decrease resulted from a 28 basis point decline in the average yield on loans to 4.67% for the nine months ended September 30, 2014 versus 4.95% for the same period in 2013. This unfavorable yield variance accounted for a $733,000 decrease in interest income. Partially offsetting this unfavorable yield variance, average loans increased $17.1 million, or 5.0%, accounting for an increase of $618,000 in loan interest income.

Tax equivalent interest earned on securities decreased $67,000, or 2.6%, to $2.5 million for the nine months ended September 30, 2014 compared to $2.6 million for the nine months ended September 30, 2013. This decrease resulted from a 16 basis point decline in the average yield on securities to 2.43% for the nine months ended September 30, 2014 versus 2.59% for the same period in 2013, due primarily to the sale of higher-yielding securities in a strategy designed to redeem a $5.0 million higher cost FHLB long term advance. This unfavorable yield variance accounted for a $171,000 decrease in interest income. Partially offsetting this unfavorable yield variance, the average balance of securities increased $5.5 million, or 4.2%, accounting for a $104,000 increase in interest income.

33

Interest expense. Interest expense decreased $608,000, or 21.0%, to $2.3 million for the nine months ended September 30, 2014 from $2.9 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 $521,000 and $87,000, respectively.

Interest expense incurred on deposits decreased $521,000, or 22.6%, to $1.8 million for the nine months ended September 30, 2014 compared to $2.3 million for the same period in 2013. The average cost of interest-bearing deposits decreased 29 basis points to 0.63% for the nine months ended September 30, 2014, compared to 0.92% for the same period in 2013, resulting in an $810,000 decrease in interest expense. This decrease in the cost of deposits was primarily due to deposits repricing during 2013 and the first nine months of 2014 in the prevailing low interest-rate environment. Partially offsetting this favorable variance, the average balance of interest-bearing deposits increased $46.5 million, or 13.9%, to $381.0 million for the nine months ended September 30, 2014, compared to $334.5 million for the same period in 2013 causing a $289,000 increase in interest expense. Average noninterest bearing deposits increased $8.6 million, or 8.3%, to $111.9 million from $103.3 million, facilitating the overall decline in the Corporation’s cost of funds.

Interest expense incurred on borrowed funds decreased $87,000, or 14.7%, to $503,000 for the nine months ended September 30, 2014 compared to $590,000 for the same period in the prior year. The average balance of long term borrowed funds decreased $3.9 million, or 19.4%, accounting for a $106,000 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 which was fully offset with gains from the sale of securities. Additionally, the average cost of long term borrowed funds decreased 27 basis points to 3.58% for the nine months ended September 30, 2014 compared to 3.85% for the same period in 2013, causing a $39,000 decrease in interest expense. This was due primarily to the capitalization of $53,000 of interest during the nine months ended September 30, 2014 related to the Cranberry Township banking office construction compared to $29,000 for the same period in the prior year. Partially offsetting the favorable variance related to long term borrowings, the average cost of short term borrowed funds increased 235 basis points to 2.69% for the nine months ended September 30, 2014 compared to 0.34% for the same period in 2013, causing a $64,000 increase in interest expense. The average balance of short term borrowed funds decreased $1.9 million, accounting for a $6,000 decrease in interest expense. Short-term borrowings at September 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.

34

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)	Nine months ended September 30,
	2014							2013
	Average				Yield /			Average				Yield /
	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Loans, taxable	$	336,455	$	11,685		4.64	%	$	322,675	$	11,923		4.94	%
Loans, tax exempt		21,572		821		5.09	%		18,204		698		5.13	%
Total loans receivable		358,027		12,506		4.67	%		340,879		12,621		4.95	%
Securities, taxable		102,382		1,417		1.85	%		91,020		1,328		1.95	%
Securities, tax exempt		35,090		1,077		4.10	%		40,937		1,233		4.03	%
Total securities		137,472		2,494		2.43	%		131,957		2,561		2.59	%
Interest-earning deposits with banks		32,511		68		0.28	%		13,295		44		0.44	%
Federal bank stocks		3,013		112		4.97	%		3,124		52		2.23	%
Total interest-earning cash equivalents		35,524		180		0.68	%		16,419		96		0.78	%
Total interest-earning assets		531,023		15,180		3.82	%		489,255		15,278		4.17	%
Cash and due from banks		2,243							2,023
Other noninterest-earning assets		31,127							28,167
Total Assets	$	564,393						$	519,445
Interest-bearing liabilities:
Interest-bearing demand deposits	$	261,903	$	306		0.16	%	$	215,136	$	258		0.16	%
Time deposits		119,057		1,478		1.66	%		119,327		2,047		2.29	%
Total interest-bearing deposits		380,960		1,784		0.63	%		334,463		2,305		0.92	%
Borrowed funds, short-term		3,574		72		2.69	%		5,438		14		0.34	%
Borrowed funds, long-term (1)		16,117		431		3.58	%		20,000		576		3.85	%
Total borrowed funds		19,691		503		3.42	%		25,438		590		3.10	%
Total interest-bearing liabilities		400,651		2,287		0.76	%		359,901		2,895		1.08	%
Noninterest-bearing demand deposits		111,854		-		-			103,255		-		-
Funding and cost of funds		512,505		2,287		0.60	%		463,156		2,895		0.84	%
Other noninterest-bearing liabilities		4,954							5,594
Total Liabilities		517,459							468,750
Stockholders' Equity		46,934							50,695
Total Liabilities and Stockholders' Equity	$	564,393						$	519,445
Net interest income			$	12,893						$	12,383
Interest rate spread (difference between weighted average rate on interest-earning assets and interest-bearing liabilities)						3.06	%						3.09	%
Net interest margin (net interest income as a percentage of average interest-earning assets)						3.25	%						3.38	%

(1) Interest on long-term borrowed funds for the periods ended September 30, 2014 and 2013 was reduced by $53,000 and $29,000, respectively, related to capitalized interest costs on construction in progress.

35

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)	Nine months ended September 30,
	2014 versus 2013
	Increase (Decrease) due to
	Volume			Rate			Total
Interest income:
Loans	$	618		$	(733	)	$	(115	)
Securities		104			(171	)		(67	)
Interest-earning deposits with banks		45			(21	)		24
Federal bank stocks		(2	)		62			60
Total interest-earning assets		765			(863	)		(98	)
Interest expense:
Interest-bearing deposits		289			(810	)		(521	)
Borrowed funds, short-term		(6	)		64			58
Borrowed funds, long-term		(106	)		(39	)		(145	)
Total interest-bearing liabilities		177			(785	)		(608	)
Net interest income	$	588		$	(78	)	$	510

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 nine months ended September 30, 2014 and 2013 is as follows:

(Dollar amounts in thousands)	As of or for the nine months ended
	September 30,
	2014			2013
Balance at the beginning of the period	$	4,869		$	5,350
Provision for loan losses		508			438
Charge-offs		(289	)		(1,047	)
Recoveries		42			46
Balance at the end of the period	$	5,130		$	4,787
Non-performing loans	$	7,733		$	5,310
Non-performing assets		7,837			5,458
Non-performing loans to total loans		2.07	%		1.51	%
Non-performing assets to total assets		1.32	%		1.04	%
Allowance for loan losses to total loans		1.37	%		1.36	%
Allowance for loan losses to non-performing loans		66.34	%		90.14	%

36

Nonperforming loans increased $2.4 million to $7.7 million at September 30, 2014 from $5.3 million at September 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 had specific reserves of $271,000 at September 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 September 30, 2014. The commercial real estate loan and commercial line of credit had specific reserves of $45,000 and $140,000, respectively, at September 30, 2014. Partially offsetting these increases were principal reductions resulting from credit workouts and repayments. Of the $7.7 million in nonperforming loans, $5.3 million were not past due at September 30, 2014. During the nine months ended September 30, 2014, nonperforming loans increased $2.5 million, primarily due to the aforementioned loan relationships being put on nonaccrual status during the period.

As of September 30, 2014, the Corporation’s classified and criticized assets amounted to $14.1 million, or 2.4% of total assets, with $12.1 million classified as substandard and $2.1 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 nine months ended September 30, 2014.

The provision for loan losses increased $70,000, or 16.0%, to $508,000 for the nine months ended September 30, 2014 from $438,000 for the same period in the prior year. While the Corporation has $456,000 of the allowance for loan losses allocated to the aforementioned loans placed on nonaccrual status and recognized as impaired during the nine months ended September 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 $238,000, or 8.0%, to $3.2 million for the nine months ended September 30, 2014 compared to $3.0 million for the same period in the prior year. This increase resulted from a $457,000 increase in net gains on the sale of securities. During the nine months ended September 30, 2014, the Corporation realized securities gains of $748,000; $657,000 of which 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 nine months ended September 30, 2013, the Corporation realized securities gains of $291,000 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 $156,000 and $72,000, respectively.

Noninterest expense. Noninterest expense increased $858,000, or 8.0%, to $11.6 million for the nine months ended September 30, 2014 compared to $10.8 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 $804,000, 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 $251,000, primarily related to normal operating expenses for two new full-service branch banking offices opened during the fourth quarter of 2013 and the second quarter of 2014, respectively. These increases were partially offset by decreases in compensation and employee benefits, intangible asset amortization, professional fees and FDIC expense of $85,000, $46,000, $25,000 and $41,000, respectively. Excluding the aforementioned prepayment penalty and $408,000 of normal operating expenses related to the new banking offices, noninterest expense decreased $100,000.

37

Compensation and employee benefits expense decreased $85,000, or 1.5%, to $5.6 million for the nine months ended September 30, 2014 compared to $5.7 million for the same period in the prior year. This decrease can be attributed to a $72,000 decrease in commission expense as the Corporation discontinued providing retail brokerage and other investment services during the third quarter of 2013 and a $57,000 reduction in retirement benefits costs resulting primarily from the 2013 curtailment of the Bank’s pension plan. Payroll taxes also decreased $30,000 primarily from the receipt of a refund from prior year overpayments of state unemployment taxes.

Premise and equipment expense increased $251,000, or 15.8%, to $1.8 million for the nine months ended September 30, 2014 compared to $1.6 million for the same period in the prior year. Premise and equipment expense for the first nine months of 2014 included $153,000 in expenses related to the Bank’s new branch offices in Saint Marys and Cranberry Township, Pennsylvania.

Professional fees decreased $25,000, or 4.9%, to $488,000 for the nine months ended September 30, 2014 compared to $513,000 for the same period in the prior year.

The Corporation recognized $167,000 of core deposit intangible amortization expense during the first nine months of 2014 compared to $213,000 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 $41,000, or 13.4%, to $266,000 for the nine months ended September 30, 2014 compared to $307,000 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 $36,000, or 5.1%, to $675,000 for the nine months ended September 30, 2014 compared to $711,000 for the same period in the prior year. The Corporation’s effective tax rate was 19.8% for the first nine months of 2014, unchanged from the same period in the prior year. The difference between the statutory rate of 34% and the Corporation’s effective tax rate of 19.8% for the nine months ended September 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 nine months ended September 30, 2014, the Corporation used its sources of funds primarily to fund security purchases and loan advances and to repay borrowed funds. As of September 30, 2014, the Corporation had outstanding loan commitments, including undisbursed loans and amounts available under credit lines, totaling $52.4 million, and standby letters of credit totaling $578,000.

At September 30, 2014, time deposits amounted to $121.6 million, or 23.4% of the Corporation’s total consolidated deposits, including approximately $38.3 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 September 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 September 30, 2014, the Corporation’s borrowing capacity with the FHLB, net of funds borrowed and other commitments, was $147.0 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.

38

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.

39

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.

40

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 September 30, 2014, the Corporation’s interest-earning assets maturing or repricing within one year totaled $189.9 million while the Corporation’s interest-bearing liabilities maturing or repricing within one-year totaled $188.9 million, providing an excess of interest-earning assets over interest-bearing liabilities of $1.0 million. At September 30, 2014, the percentage of the Corporation’s assets to liabilities maturing or repricing within one year was 100.5%.

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 September 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.

41

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

42

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:  November 10, 2014	By:    /s/ William C. Marsh
	William C. Marsh
	Chairman of the Board,
	President and Chief Executive Officer
Date:  November 10, 2014	By:    /s/ Matthew J. Lucco
	Matthew J. Lucco
	Chief Financial Officer
	Treasurer

43

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:  November 10, 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:  November 10, 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 September 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

November 10, 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 September 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

November 10, 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.

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Loans Receivable and Related Allowance for Loan Losses (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 6,900,000	$ 2,100,000	$ 2,500,000
Allowance For Losses Allocated To Loans Classified As Tdrs	511,000	56,000	56,000
Troubled Debt Restructuring Pre Modification Interest Rate	6.25%	6.75%
Troubled Debt Restructuring Post Modification Interest Rate	5.00%	4.00%
Troubled Debt Restructuring Extended Term	15 years	65 months
Payments for Loans	1,800,000
Financing Receivable, Modifications, Accrued and Unpaid Interest	5,000
Financing Receivable, Modifications, Legal Expenses	13,000
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	150,000		62,000
Loans and Leases Receivable, Gross, Carrying Amount	373,349,000		357,299,000
Financing Receivable, Net	4,000,000
Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modifications, Recorded Investment	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
Troubled debt restructurings [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	1,300,000
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	0		0
Loans and Leases Receivable, Gross, Carrying Amount	9,163,000		9,117,000
Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modifications, Pre-Modification Recorded Investment	76,000	83,000
Financing Receivable, Modifications, Post-Modification Recorded Investment	93,000	83,000
Two loans [Member] | Troubled debt restructurings [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	344,000
One loan [Member] | Troubled debt restructurings [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	81,000
Four Syndicated National Credits [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing recievable, Premium on purchase	15,000
Financing receivable, Cost of purchase	11,000
Financing Receivable, Net	$ 1,000,000

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Accumulated Other Comprehensive Income (Loss) (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Unrealized gains and losses on available-for-sale securities
Gain on sale of securities	$ 91	$ 107	$ 748	$ 291
Tax expense	(31)	(36)	(254)	(99)
Net of tax	$ 60	$ 71	$ 494	$ 192

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Fair Value (Details 1) (Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 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

Employee Benefit Plans (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Pension and Other Postretirement Benefit Expense	$ 15,000	$ 2,000	$ 45,000	$ 5,000

XML

Loans Receivable and Related Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Mortgage loans on real estate:
Residential first mortgages	$ 105,647	$ 105,541
Home equity loans and lines of credit	88,515	87,928
Commercial real estate	109,517	101,499
Mortgage Loans on Real Estate	303,679	294,968
Other loans:
Commercial business	60,507	53,214
Consumer	9,163	9,117
Loans Receivable Commercial and Consumer	69,670	62,331
Total loans, gross	373,349	357,299
Less allowance for loan losses	5,130	4,869
Total loans, net	$ 368,219	$ 352,430

XML

Fair Value (Tables)

9 Months Ended

Sep. 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
September 30, 2014:
U.S. Treasury and federal agency	$	3,431	$	3,431	$	-	$	-
U.S. government sponsored entities and agencies		35,254		-		35,254		-
Mortgage-backed securities: residential		38,230		-		38,230		-
Collateralized mortgage obligations: residential		37,785		-		37,785		-
State and political subdivision		32,204		-		32,204		-
Corporate debt securities		2,000		-		2,000		-
Equity securities		2,546		1,893		-		653
	$	151,449	$	5,324	$	145,472	$	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 nine month periods ended September 30, 2014 and 2013:

(Dollar amounts in thousands)	Three months ended				Nine months ended
	September 30,				September 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
September 30, 2014:
Impaired commercial real estate loans	$	557	$	-	$	-	$	557
Impaired commercial business loans		1,662		-		-		1,662
	$	2,219	$	-	$	-	$	2,219
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
September 30, 2014:
Impaired commercial real estate loans	$	557	Sales comparison approach/	Adjustment for differences	10%
			Contractual provision of USDA loan	between comparable sales
Impaired commercial business loans		1,662	Liquidation value of business assets	Adjustment for differences	41% - 78%
				between comparable business assets
December 31, 2013:
Impaired commercial real estate loans		2,340	Sales comparison approach/	Adjustment for differences	0% - 10%
			Contractual provision of USDA loan	between comparable sales
Other residential real estate owned		80	Sales comparison approach	Adjustment for differences	10%
				between comparable sales

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 September 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Carrying		Fair Value Measurements using:
Description	Amount		Total		Level 1		Level 2		Level 3
September 30, 2014:
Financial Assets:
Cash and cash equivalents	$	35,318	$	35,318	$	35,318	$	-	$	-
Securities available for sale		150,321		151,449		5,324		145,472		653
Loans, net		368,219		371,817		-		-		371,817
Federal bank stock		2,791		N/A		N/A		N/A		N/A
Accrued interest receivable		1,674		1,674		46		498		1,130
		558,323		560,258		40,688		145,970		373,600
Financial Liabilities:
Deposits		519,908		521,578		398,302		123,276		-
Borrowed funds		17,150		18,130		-		18,130		-
Accrued interest payable		217		217		7		210		-
		537,275		539,925		398,309		141,616		-

	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		-

XML

Fair Value (Details 3) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 2,219	$ 2,420
Impaired commercial real estate loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	557	2,340
Impaired commercial business loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,662
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	2,219	2,420
Fair Value, Inputs, Level 3 [Member] | Impaired commercial real estate loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	557	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	1,662
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	41.00%
Mortgage Loans on Real Estate, Maximum Interest Rate in Range	78.00%
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

Stock Compensation Plans (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Options - Outstanding (in shares)	79,250
Options - Granted (in shares)	0
Options - Exercised (in shares)	(2,500)
Options - Forfeited (in shares)	0
Options - Outstanding (in shares)	76,750	79,250
Options - Exercisable (in shares)	76,250
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)	$ 19.30
Weighted-Average Exercise Price - Forfeited (in dollars per share)	$ 0
Weighted-Average Exercise Price - Outstanding (in dollars per share)	$ 25.16	$ 24.97
Weighted-Average Exercise Price - Exercisable (in dollars per share)	$ 25.22
Aggregate Intrinsic Value - Outstanding	$ 0
Aggregate Intrinsic Value - Exercised	15,340
Aggregate Intrinsic Value - Outstanding	59,205	0
Aggregate Intrinsic Value - Exercisable	$ 54,005
Weighted-Average Remaining Term - Outstanding (in years)	3 years	3 years 9 months 18 days
Weighted-Average Remaining Term - Exercisable (in years)	3 years

XML

Loans Receivable and Related Allowance for Loan Losses (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	$ 7,583	$ 5,145
Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	671	520
Home equity and lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	271	60
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	3,169	2,866
Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	2,124	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	5,304	1,913
Not Past Due [Member] | Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	286	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	2,932	412
Not Past Due [Member] | Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	2,086	65
Not Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	1,348
Thirty To Fifty Nine Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	80	2,148
Thirty To Fifty Nine Days Past Due [Member] | Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	80	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	0	2,148
Thirty To Fifty Nine Days Past Due [Member] | Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	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	0	82
Sixty To Eighty Nine Days Past Due [Member] | Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	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	0	0
Sixty To Eighty Nine Days Past Due [Member] | Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	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	2,199	1,002
Ninty Days Or More Past Due [Member] | Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	305	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	271	60
Ninty Days Or More Past Due [Member] | Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	237	306
Ninty Days Or More Past Due [Member] | Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	38	286
Ninty Days Or More Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	$ 1,348	$ 0

XML

Fair Value (Details Textual) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Fair Values Of Financial Instruments [Line Items]
Impaired Financing Receivable, Recorded Investment	$ 2,700,000		$ 2,700,000		$ 2,500,000
Impaired Financing Receivable, Related Allowance	490,000		490,000		181,000
Other Real Estate and Foreclosed Assets	0		0		80,000
Real Estate, Gross					104,000
Commercial Real Estate Loan Discounting Rate			10.00%
Provision For Loan Losses Expensed	163,000	143,000	508,000	438,000
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	6,900,000	2,100,000	6,900,000	2,100,000	2,500,000
Impaired Loans [Member]
Fair Values Of Financial Instruments [Line Items]
Provision For Loan Losses Expensed	41,000	21,000	707,000	21,000
Two Impaired Commercial Real Estate Loan [Member]
Fair Values Of Financial Instruments [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,000,000		2,000,000
Impaired Residential Mortgage Loan Two [Member]
Fair Values Of Financial Instruments [Line Items]
Financing Receivable, Modifications, Recorded Investment	144,000		144,000
Commercial Business Loan [Member]
Fair Values Of Financial Instruments [Line Items]
Financing Receivable, Modifications, Recorded Investment	265,000		265,000
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	37.90%		37.90%		1.50%
Loans Held-for-sale, Commercial, Real Estate	$ 344,000		$ 344,000		$ 350,000

XML

Fair Value (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	$ 150,321	$ 117,304
U.S. Treasury and federal agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	3,431	4,168
U.S. government sponsored entities and agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	35,254	22,892
U.S. agency mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	38,230	11,361
U.S. agency collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	37,785	39,722
State and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	32,204	36,499
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	2,000	241
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	2,546	2,421
Fair Value, Inputs, Level 1 [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	5,324	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	3,431	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	1,893	1,768
Fair Value, Inputs, Level 2 [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	145,472	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	35,254	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	38,230	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	37,785	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	32,204	36,499
Fair Value, Inputs, Level 2 [Member] | Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale	2,000	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

XML

Nature of Operations and Basis of Presentation

9 Months Ended

Sep. 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.

XML

Stock Compensation Plans (Details 1) (USD $)	9 Months Ended
	Sep. 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

XML

Securities (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 151,342	$ 120,137
Gross Unrealized Gains	1,482	1,304
Gross Unrealized Losses	(1,376)	(4,137)
Fair value	151,449	117,304
U.S. Treasury and federal agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,470	4,466
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(39)	(298)
Fair value	3,431	4,168
U.S. government sponsored entities and agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	35,448	23,637
Gross Unrealized Gains	19	0
Gross Unrealized Losses	(213)	(745)
Fair value	35,254	22,892
U.S. agency mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	37,664	11,020
Gross Unrealized Gains	565	341
Gross Unrealized Losses	0	0
Fair value	38,230	11,361
U.S. agency collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	38,730	41,751
Gross Unrealized Gains	21	2
Gross Unrealized Losses	(965)	(2,031)
Fair value	37,785	39,722
State and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	31,668	36,657
Gross Unrealized Gains	688	830
Gross Unrealized Losses	(152)	(988)
Fair value	32,204	36,499
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,006	250
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(7)	(9)
Fair value	2,000	241
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,356	2,356
Gross Unrealized Gains	190	131
Gross Unrealized Losses	0	(66)
Fair value	$ 2,546	$ 2,421

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Earnings per Common Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings per common share - basic
Net income	$ 1,022	$ 1,082	$ 2,742	$ 2,879
Less: Preferred stock dividends	25	115	75	365
Net income available to common stockholders	997	967	2,667	2,514
Average common shares outstanding (in shares)	1,770,821	1,762,810	1,770,128	1,761,972
Basic earnings per common share (in dollars per share)	$ 0.56	$ 0.55	$ 1.51	$ 1.43
Earnings per common share - diluted
Net income available to common stockholders	$ 997	$ 967	$ 2,667	$ 2,514
Average common shares outstanding (in shares)	1,770,821	1,762,810	1,770,128	1,761,972
Add: Dilutive effects of assumed issuance of restricted stock and exercise of stock options	16,410	13,616	14,709	12,777
Average shares and dilutive potential common shares	1,787,231	1,776,426	1,784,837	1,774,749
Diluted earnings per common share (in dollars per share)	$ 0.56	$ 0.54	$ 1.49	$ 1.42
Stock options and restricted stock awards not considered in computing diluted earnings per share because they were antidilutive (in shares)	66,000	67,000	67,000	67,000

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Stock Compensation Plans (Details 2) (USD $)	9 Months Ended
	Sep. 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	Sep. 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	42,026
Due after five through ten years, amortized cost	27,992
Due after ten years, amortized cost	2,519
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	148,986
Due in one year or less, fair value	56
Due after one year through five years, fair value	41,871
Due after five through ten years, fair value	28,191
Due after ten years, fair value	2,453
Available-for-sale Securities, Debt Securities	147,777
Mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	37,664
Fair value	37,892
Collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	38,730
Fair value	$ 37,314

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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	$ 28,222	$ 75,510
Unrealized Loss, Less than 12 Months	(167)	(3,835)
Fair Value, 12 Months or More	67,640	4,982
Unrealized Loss, 12 Months or More	(2,016)	(302)
Fair Value, Total	95,862	80,492
Unrealized Loss, Total	(2,183)	(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	3,338	0
Unrealized Loss, 12 Months or More	(132)	0
Fair Value, Total	3,338	4,168
Unrealized Loss, Total	(132)	(298)
U.S. government sponsored entities and agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	15,396	22,891
Unrealized Loss, Less than 12 Months	(64)	(745)
Fair Value, 12 Months or More	18,698	0
Unrealized Loss, 12 Months or More	(292)	0
Fair Value, Total	34,094	22,891
Unrealized Loss, Total	(356)	(745)
U.S. agency mortgage-backed securities: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	7,534	33,805
Unrealized Loss, Less than 12 Months	(58)	(1,729)
Fair Value, 12 Months or More	0	4,982
Unrealized Loss, 12 Months or More	0	(302)
Fair Value, Total	7,534	38,787
Unrealized Loss, Total	(58)	(2,031)
U.S. agency collateralized mortgage obligations: residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	2,740
Unrealized Loss, Less than 12 Months	(31)
Fair Value, 12 Months or More	34,574
Unrealized Loss, 12 Months or More	(1,385)
Fair Value, Total	37,314
Unrealized Loss, Total	(1,416)
State and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	559	13,262
Unrealized Loss, Less than 12 Months	(1)	(988)
Fair Value, 12 Months or More	11,030	0
Unrealized Loss, 12 Months or More	(207)	0
Fair Value, Total	11,589	13,262
Unrealized Loss, Total	(208)	(988)
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	1,993	242
Unrealized Loss, Less than 12 Months	(13)	(9)
Fair Value, 12 Months or More	0	0
Unrealized Loss, 12 Months or More	0	0
Fair Value, Total	1,993	242
Unrealized Loss, Total	(13)	(9)
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months		1,142
Unrealized Loss, Less than 12 Months		(66)
Fair Value, 12 Months or More		0
Unrealized Loss, 12 Months or More		0
Fair Value, Total		1,142
Unrealized Loss, Total		$ (66)

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Consolidated Statements of Changes in Stockholders' Equity [Parenthetical]	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013
Stock Redeemed or Called During Period, Shares	5,000	5,000

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Securities (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Proceeds	$ 903	$ 17,701	$ 22,462	$ 21,015
Gains	91	107	748	291
Tax provision related to gains	$ 31	$ 36	$ 254	$ 99

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Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Sep. 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	3,229	3,062
Accumulated Amortization, Total	$ 3,229	$ 3,062

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Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accumulated Other Comprehensive Income (Loss), Unrealized Gains and Losses on Available-for-Sale Securities, Beginning Balance	$ (486)	$ (707)	$ (1,870)	$ 2,365
Other comprehensive income before reclassification, Unrealized Gains and Losses on Available-for-Sale Securities	(128)	(528)	1,690	(3,479)
Amounts reclassified from accumulated other comprehensive income, Totals, Unrealized Gains and Losses on Available-for-Sale Securities	(60)	(71)	(494)	(192)
Net current period other comprehensive Income (Loss), Totals, Unrealized Gains and Losses on Available-for-Sale Securities	(188)	(599)	1,196	(3,671)
Accumulated Other Comprehensive Income (Loss), Unrealized Gains and Losses on Available-for-Sale Securities, Ending Balance	(674)	(1,306)	(674)	(1,306)
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	(1,896)	(2,502)	(3,280)	570
Other comprehensive income before reclassification, Totals	(128)	(528)	1,690	(3,479)
Amounts reclassified from accumulated other comprehensive income, Defined Benefit Pension Items	(60)	(71)	(494)	(192)
Net current period other comprehensive income (loss), Totals	(188)	(599)	1,196	(3,671)
Accumulated Other Comprehensive Income (Loss), Totals, Ending Balance	$ (2,084)	$ (3,101)	$ (2,084)	$ (3,101)

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Assets
Cash and due from banks	$ 2,615	$ 2,485
Interest earning deposits with banks	32,703	14,173
Cash and cash equivalents	35,318	16,658
Securities available for sale	150,321	117,304
Loans receivable, net of allowance for loan losses of $5,130 and $4,869	368,219	352,430
Federal bank stocks, at cost	2,791	3,977
Bank-owned life insurance	10,644	10,401
Accrued interest receivable	1,674	1,466
Premises and equipment, net	14,294	12,310
Goodwill	3,664	3,664
Core deposit intangible, net	798	965
Prepaid expenses and other assets	5,814	6,667
Total Assets	593,537	525,842
Deposits:
Non-interest bearing	112,732	104,269
Interest bearing	407,176	327,737
Total deposits	519,908	432,006
Short-term borrowed funds	2,150	24,150
Long-term borrowed funds	15,000	20,000
Accrued interest payable	217	292
Accrued expenses and other liabilities	8,321	4,322
Total Liabilities	545,596	480,770
Commitments and Contingent Liabilities	0	0
Stockholders' Equity:
Common stock, $1.25 par value, 12,000,000 shares authorized; 1,873,175 and 1,870,675 shares issued; 1,771,158 and 1,768,658 shares outstanding, respectively	2,341	2,338
Additional paid-in capital	19,650	19,478
Treasury stock, at cost; 102,017 shares	(2,114)	(2,114)
Retained earnings	25,148	23,650
Accumulated other comprehensive loss	(2,084)	(3,280)
Total Stockholders' Equity	47,941	45,072
Total Liabilities and Stockholders' Equity	593,537	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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Stock Compensation Plans (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 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	$ 224,000		$ 224,000
Allocated Share-based Compensation Expense	$ 42,000	$ 34,000	$ 126,000	$ 133,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			1 year 1 month 6 days
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant						88,433	88,433		6,013	45,283

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities
Net income	$ 2,742	$ 2,879
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	631	503
Provision for loan losses	508	438
Amortization of premiums, net	198	152
Amortization of intangible assets and mortgage servicing rights	168	213
Realized gains on sales of available for sale securities, net	(748)	(291)
Net gains on sales of loans	0	(9)
Net (gains) losses on foreclosed real estate	(11)	5
Originations of loans sold	0	(202)
Proceeds from the sale of loans	0	211
Restricted stock and stock option compensation	126	133
Increase in bank-owned life insurance, net	(243)	(247)
Increase in accrued interest receivable	(208)	(74)
Decrease in prepaid expenses and other assets	232	1,159
Decrease in accrued interest payable	(75)	(137)
Increase in accrued expenses and other liabilities	3,999	644
Net cash provided by operating activities	7,319	5,377
Cash flows from investing activities
Loan originations and principal collections, net	(16,619)	(14,733)
Available for sale securities:
Sales	22,462	21,015
Maturities, repayments and calls	10,270	28,767
Purchases	(63,189)	(60,116)
Redemption (purchase) of federal bank stocks	1,186	(822)
Proceeds from the sale of foreclosed real estate	139	167
Write-down of foreclosed real estate	0	19
Additions to premises and equipment	(2,615)	(2,692)
Net cash used in investing activities	(48,366)	(28,395)
Cash flows from financing activities
Net increase in deposits	87,902	(3,017)
Repayments on Federal Home Loan Bank advances	(5,000)	0
Net change in short-term borrowings	(22,000)	26,650
Proceeds from exercise of stock options, including tax benefit	48	20
Dividends paid	(1,243)	(1,423)
Redemption of preferred stock (Series B)	0	(5,000)
Net cash provided by financing activities	59,707	17,230
Increase (decrease) in cash and cash equivalents	18,660	(5,788)
Cash and cash equivalents at beginning of period	16,658	20,424
Cash and cash equivalents at end of period	35,318	14,636
Supplemental information:
Interest paid	2,362	3,032
Income taxes paid	245	140
Supplemental noncash disclosure:
Transfers from loans to foreclosed real estate	$ 124	$ 159

XML

Loans Receivable and Related Allowance for Loan Losses (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 373,349	$ 357,299
Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	201,001	200,620
Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	158,221	143,981
Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	2,069	930
Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	12,058	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	105,647	105,541
Residential first mortgages [Member] | Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	104,970	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	677	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	88,515	87,928
Home equity and lines of credit [Member] | Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	88,216	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	299	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	109,517	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	102,482	93,973
Commercial real estate [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	525	256
Commercial real estate [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	6,510	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	60,507	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	55,739	50,008
Commercial business [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,544	674
Commercial business [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	3,224	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	9,163	9,117
Consumer [Member] | Not Rated [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	7,815	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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Loans Receivable and Related Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 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)	September 30,		December 31,
	2014		2013
Mortgage loans on real estate:
Residential first mortgages	$	105,647	$	105,541
Home equity loans and lines of credit		88,515		87,928
Commercial real estate		109,517		101,499
		303,679		294,968
Other loans:
Commercial business		60,507		53,214
Consumer		9,163		9,117
		69,670		62,331
Total loans, gross		373,349		357,299
Less allowance for loan losses		5,130		4,869
Total loans, net	$	368,219	$	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 September 30, 2014:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of September 30, 2014						ended September 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	$	171	$	171	$	28	$	172	$	1	$	1
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,681		2,740		223		2,724		3		-
Commercial business		2,372		2,372		445		2,291		-		-
Consumer		-		-		-		-		-		-
Total	$	6,224	$	5,283	$	696	$	5,187	$	4	$	1

	For the nine months
	ended September 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	126	$	10	$	10
Home equity and lines of credit		-		-		-
Commercial real estate		2,673		16		-
Commercial business		1,250		53		-
Consumer		-		-		-
Total	$	4,049	$	79	$	10

	Impaired Loans with No Specific Allowance
					For the three months
	As of September 30, 2014				ended September 30, 2014
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	116	$	116	$	117	$	-	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,269		870		980		-		-
Commercial business		52		52		240		-		-
Consumer		1,348		1,348		1,348		-		-
Total	$	2,785	$	2,386	$	2,685	$	-	$	-

	For the nine months
	ended September 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	64	$	2	$	-
Home equity and lines of credit		-		-		-
Commercial real estate		835		14		3
Commercial business		300		1		1
Consumer		1,348		-		-
Total	$	2,547	$	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 September 30, 2013:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of September 30, 2013						ended September 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	$	82	$	82	$	21	$	81	$	2	$	2
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,633		2,692		209		2,708		2		2
Commercial business		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	3,715	$	2,774	$	230	$	2,789	$	4	$	4

	For the nine months
	ended September 30, 2013
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	41	$	4	$	4
Home equity and lines of credit		-		-		-
Commercial real estate		3,372		11		11
Commercial business		-		-		-
Consumer		-		-		-
Total	$	3,413	$	15	$	15

	Impaired Loans with No Specific Allowance
					For the three months
	As of September 30, 2013				ended September 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		1,012		613		637		2		2
Commercial business		346		346		351		-		-
Consumer		1,348		1,348		1,348		-		-
Total	$	2,706	$	2,307	$	2,336	$	2	$	2

	For the nine months
	ended September 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		561		4		4
Commercial business		359		-		-
Consumer		1,484		-		-
Total	$	2,404	$	4	$	4

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 September 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Septembert 30, 2014:
Residential first mortgages	$	104,970	$	-	$	-	$	677	$	-	$	105,647
Home equity and lines of credit		88,216		-		-		299		-		88,515
Commercial real estate		-		102,482		525		6,510		-		109,517
Commercial business		-		55,739		1,544		3,224		-		60,507
Consumer		7,815		-		-		1,348		-		9,163
Total	$	201,001	$	158,221	$	2,069	$	12,058	$	-	$	373,349
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 September 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
September 30, 2014:
Residential first mortgages	$	103,184	$	1,403	$	267	$	122	$	671	$	105,647
Home equity and lines of credit		87,795		292		129		28		271		88,515
Commercial real estate		106,266		82		-		-		3,169		109,517
Commercial business		58,154		26		203		-		2,124		60,507
Consumer		7,741		64		10		-		1,348		9,163
Total loans	$	363,140	$	1,867	$	609	$	150	$	7,583	$	373,349
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 September 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
September 30, 2014:
Residential first mortgages	$	286	$	80	$	-	$	305	$	671
Home equity and lines of credit		-		-		-		271		271
Commercial real estate		2,932		-		-		237		3,169
Commercial business		2,086		-		-		38		2,124
Consumer		-		-		-		1,348		1,348
Total loans	$	5,304	$	80	$	-	$	2,199	$	7,583
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 September 30, 2014:
Allowance for loan losses:
Beginning Balance	$	917	$	468	$	2,375	$	1,233	$	53	$	5,046
Charge-offs		(38)		(30)		-		-		(24)		(92)
Recoveries		-		-		4		-		9		13
Provision		62		101		(11)		(3)		14		163
Ending Balance	$	941	$	539	$	2,368	$	1,230	$	52	$	5,130
Nine months ended September 30, 2014:
Allowance for loan losses:
Beginning Balance	$	923	$	625	$	2,450	$	822	$	49	$	4,869
Charge-offs		(135)		(44)		(2)		(17)		(91)		(289)
Recoveries		-		-		13		7		22		42
Provision		153		(42)		(93)		418		72		508
Ending Balance	$	941	$	539	$	2,368	$	1,230	$	52	$	5,130
At September 30, 2014:
Ending ALL balance attributable to loans:
Individually evaluated for impairment		28		-		223		445		-		696
Collectively evaluated for impairment		913		539		2,145		785		52		4,434
Total loans:
Individually evaluated for impairment		287		-		3,610		2,424		1,348		7,669
Collectively evaluated for impairment		105,360		88,515		105,907		58,083		7,815		365,680
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 September 30, 2013:
Allowance for loan losses:
Beginning Balance	$	772	$	621	$	2,547	$	677	$	53	$	4,670
Charge-offs		(9)		(8)		-		-		(16)		(33)
Recoveries		-		-		2		-		5		7
Provision		87		1		(110)		154		11		143
Ending Balance	$	850	$	614	$	2,439	$	831	$	53	$	4,787
Nine months ended September 30, 2013:
Allowance for loan losses:
Beginning Balance	$	828	$	730	$	3,090	$	636	$	66	$	5,350
Charge-offs		(26)		(8)		(941)		-		(72)		(1,047)
Recoveries		1		-		6		-		39		46
Provision		47		(108)		284		195		20		438
Ending Balance	$	850	$	614	$	2,439	$	831	$	53	$	4,787

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Loans Receivable and Related Allowance for Loan Losses (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	$ 363,140	$ 349,481
Performing, Accruing 30-59 Days Past Due	1,867	2,113
Performing, Accruing 60-89 Days Past Due	609	498
Nonperforming, Accruing 90 Days + Past Due	150	62
Nonperforming, Nonaccrual	7,583	5,145
Total Loans	373,349	357,299
Residential first mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	103,184	103,821
Performing, Accruing 30-59 Days Past Due	1,403	884
Performing, Accruing 60-89 Days Past Due	267	278
Nonperforming, Accruing 90 Days + Past Due	122	38
Nonperforming, Nonaccrual	671	520
Total Loans	105,647	105,541
Home equity and lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	87,795	87,302
Performing, Accruing 30-59 Days Past Due	292	394
Performing, Accruing 60-89 Days Past Due	129	172
Nonperforming, Accruing 90 Days + Past Due	28	0
Nonperforming, Nonaccrual	271	60
Total Loans	88,515	87,928
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	106,266	98,095
Performing, Accruing 30-59 Days Past Due	82	516
Performing, Accruing 60-89 Days Past Due	0	22
Nonperforming, Accruing 90 Days + Past Due	0	0
Nonperforming, Nonaccrual	3,169	2,866
Total Loans	109,517	101,499
Commercial business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	58,154	52,581
Performing, Accruing 30-59 Days Past Due	26	258
Performing, Accruing 60-89 Days Past Due	203	0
Nonperforming, Accruing 90 Days + Past Due	0	24
Nonperforming, Nonaccrual	2,124	351
Total Loans	60,507	53,214
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Performing, Accruing Loans Not Past Due	7,741	7,682
Performing, Accruing 30-59 Days Past Due	64	61
Performing, Accruing 60-89 Days Past Due	10	26
Nonperforming, Accruing 90 Days + Past Due	0	0
Nonperforming, Nonaccrual	1,348	1,348
Total Loans	$ 9,163	$ 9,117

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Stock Compensation Plans (Tables)

9 Months Ended

Sep. 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 September 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		(2,500)		19.30		15,340		-
Forfeited		-		-		-		-
Outstanding as of September 30, 2014		76,750	$	25.16	$	59,205		3.0
Exercisable as of September 30, 2014		76,250	$	25.22	$	54,005		3.0

Schedule of Nonvested Share Activity [Table Text Block]

A summary of the status of the Corporation’s nonvested option shares as of September 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 September 30, 2014		500	$	1.44

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

A summary of the status of the Corporation’s nonvested restricted stock awards as of September 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 September 30, 2014		25,700	$	20.08

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Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Balance at beginning of period	$ 47,457	$ 49,613	$ 45,072	$ 51,725
Net income	1,022	1,082	2,742	2,879
Other comprehensive income (loss)	(188)	(599)	1,196	(3,671)
Stock compensation expense	42	34	126	133
Dividends declared on preferred stock	(25)	(115)	(75)	(365)
Dividends declared on common stock	(390)	(352)	(1,168)	(1,058)
Exercise of stock options, including tax benefit	23	0	48	20
Redemption of preferred stock (5,000 shares, Series B)	0	(5,000)	0	(5,000)
Balance at end of period	$ 47,941	$ 44,663	$ 47,941	$ 44,663
Common cash dividend per share (in dollars per share)	$ 0.22	$ 0.20	$ 0.66	$ 0.60

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Consolidated Balance Sheets [Parenthetical] (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Allowance for loan losses (in dollars)	$ 5,130	$ 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	1,873,175	1,870,675
Common stock, shares outstanding	1,771,158	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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Fair Value

9 Months Ended

Sep. 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 September 30, 2014, the fair value of impaired loans consists of loan balances of $2.7 million, net of a valuation allowance of $490,000, compared to loan balances of $2.5 million, net of a valuation allowance of $181,000, at December 31, 2013. There was $41,000 and $707,000 of additional provision for loan losses recorded for impaired loans during the three and nine month period ended September 30, 2014, respectively. There was no additional provision for loan losses and $21,000 of additional provision for loan losses recorded for impaired loans during the three and nine month periods ended September 30, 2013, respectively.

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 September 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 nine months ended September 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
September 30, 2014:
U.S. Treasury and federal agency	$	3,431	$	3,431	$	-	$	-
U.S. government sponsored entities and agencies		35,254		-		35,254		-
Mortgage-backed securities: residential		38,230		-		38,230		-
Collateralized mortgage obligations: residential		37,785		-		37,785		-
State and political subdivision		32,204		-		32,204		-
Corporate debt securities		2,000		-		2,000		-
Equity securities		2,546		1,893		-		653
	$	151,449	$	5,324	$	145,472	$	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 nine month periods ended September 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 nine month periods ended September 30, 2014 and 2013:

(Dollar amounts in thousands)	Three months ended				Nine months ended
	September 30,				September 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
September 30, 2014:
Impaired commercial real estate loans	$	557	$	-	$	-	$	557
Impaired commercial business loans		1,662		-		-		1,662
	$	2,219	$	-	$	-	$	2,219
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
September 30, 2014:
Impaired commercial real estate loans	$	557	Sales comparison approach/	Adjustment for differences	10%
			Contractual provision of USDA loan	between comparable sales
Impaired commercial business loans		1,662	Liquidation value of business assets	Adjustment for differences	41% - 78%
				between comparable business assets
December 31, 2013:
Impaired commercial real estate loans		2,340	Sales comparison approach/	Adjustment for differences	0% - 10%
			Contractual provision of USDA loan	between comparable sales
Other residential real estate owned		80	Sales comparison approach	Adjustment for differences	10%
				between comparable sales

The two tables above exclude two impaired residential mortgage loans totaling $144,000, two impaired commercial real estate loans totaling $2.0 million and a $265,000 commercial business loan classified as TDRs which were measured at fair value using a discounted cash flow methodology at September 30, 2014.

Included in impaired commercial real estate loans is a loan guaranteed by the United States Department of Agriculture (USDA) with balances of $344,000 and $350,000 as of September 30, 2014 and December 31, 2013, respectively. 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 September 30, 2014 and December 31, 2013 was 37.9% 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 September 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Carrying		Fair Value Measurements using:
Description	Amount		Total		Level 1		Level 2		Level 3
September 30, 2014:
Financial Assets:
Cash and cash equivalents	$	35,318	$	35,318	$	35,318	$	-	$	-
Securities available for sale		150,321		151,449		5,324		145,472		653
Loans, net		368,219		371,817		-		-		371,817
Federal bank stock		2,791		N/A		N/A		N/A		N/A
Accrued interest receivable		1,674		1,674		46		498		1,130
		558,323		560,258		40,688		145,970		373,600
Financial Liabilities:
Deposits		519,908		521,578		398,302		123,276		-
Borrowed funds		17,150		18,130		-		18,130		-
Accrued interest payable		217		217		7		210		-
		537,275		539,925		398,309		141,616		-

	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		-

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 10, 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		1,772,158
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2014

XML

Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 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 September 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 July 1, 2014	$	(486)	$	(1,410)	$	(1,896)
Other comprehensive loss before reclassification		(128)		-		(128)
Amounts reclassified from accumulated other comprehensive income		(60)		-		(60)
Net current period other comprehensive loss		(188)		-		(188)
Accumulated Other Comprehensive Loss at September 30, 2014	$	(674)	$	(1,410)	$	(2,084)

(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 September 30, 2014		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	91	Gain on sale of securities
		(31)	Tax expense
Total reclassifications for the period	$	60	Net of tax

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Loss at July 1, 2013	$	(707)	$	(1,795)	$	(2,502)
Other comprehensive loss before reclassification		(528)		-		(528)
Amounts reclassified from accumulated other comprehensive income		(71)		-		(71)
Net current period other comprehensive loss		(599)		-		(599)
Accumulated Other Comprehensive Loss at September 30, 2013	$	(1,306)	$	(1,795)	$	(3,101)

(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 September 30, 2013		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	107	Gain on sale of securities
		(36)	Tax expense
Total reclassifications for the period	$	71	Net of tax

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss), net of tax, for the nine months ended September 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 January 1, 2014	$	(1,870)	$	(1,410)	$	(3,280)
Other comprehensive income before reclassification		1,690		-		1,690
Amounts reclassified from accumulated other comprehensive income		(494)		-		(494)
Net current period other comprehensive income		1,196		-		1,196
Accumulated Other Comprehensive Loss at September 30, 2014	$	(674)	$	(1,410)	$	(2,084)

(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 September 30, 2014		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	748	Gain on sale of securities
		(254)	Tax expense
Total reclassifications for the period	$	494	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 loss before reclassification		(3,479)		-		(3,479)
Amounts reclassified from accumulated other comprehensive income		(192)		-		(192)
Net current period other comprehensive loss		(3,671)		-		(3,671)
Accumulated Other Comprehensive Loss at September 30, 2013	$	(1,306)	$	(1,795)	$	(3,101)

(Dollar amounts in thousands)	Amount Reclassified
	from Accumulated
	Other Comprehensive
	Income		Affected Line Item in the
Details about Accumulated Other	For the nine months		Statement Where Net
Comprehensive Income Components	ended September 30, 2013		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	291	Gain on sale of securities
		(99)	Tax expense
Total reclassifications for the period	$	192	Net of tax

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Consolidated Statements of Net Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Interest and dividend income:
Loans receivable, including fees	$ 4,140	$ 4,114	$ 12,259	$ 12,411
Securities:
Taxable	521	440	1,417	1,328
Exempt from federal income tax	244	314	763	875
Federal bank stocks	33	18	112	52
Interest earning deposits with banks	30	12	68	44
Total interest and dividend income	4,968	4,898	14,619	14,710
Interest expense:
Deposits	616	662	1,784	2,305
Borrowed funds	174	198	503	590
Total interest expense	790	860	2,287	2,895
Net interest income	4,178	4,038	12,332	11,815
Provision for loan losses	163	143	508	438
Net interest income after provision for loan losses	4,015	3,895	11,824	11,377
Noninterest income:
Fees and service charges	411	428	1,182	1,254
Commissions on financial services	8	48	31	187
Title premiums	16	6	40	55
Net gain on sales of available for sale securities	91	107	748	291
Net gain on sales of loans	0	9	0	9
Earnings on bank-owned life insurance	97	97	289	290
Other	306	307	911	877
Total noninterest income	929	1,002	3,201	2,963
Noninterest expense:
Compensation and employee benefits	1,825	1,847	5,599	5,684
Premises and equipment	634	516	1,837	1,586
Intangible asset amortization	54	67	167	213
Professional fees	142	158	488	513
Federal deposit insurance	90	99	266	307
Other	936	856	3,251	2,447
Total noninterest expense	3,681	3,543	11,608	10,750
Income before provision for income taxes	1,263	1,354	3,417	3,590
Provision for income taxes	241	272	675	711
Net income	1,022	1,082	2,742	2,879
Preferred stock dividends	25	115	75	365
Net income available to common stockholders	$ 997	$ 967	$ 2,667	$ 2,514
Basic earnings per common share (in dollars per share)	$ 0.56	$ 0.55	$ 1.51	$ 1.43
Diluted earnings per common share (in dollars per share)	$ 0.56	$ 0.54	$ 1.49	$ 1.42
Average common shares outstanding (in shares)	1,770,821	1,762,810	1,770,128	1,761,972

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Securities

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Marketable Securities [Text Block]

4. Securities

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

(Dollar amounts in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for sale:
September 30, 2014:
U.S. Treasury and federal agency	$	3,470	$	-	$	(39)	$	3,431
U.S. government sponsored entities and agencies		35,448		19		(213)		35,254
U.S. agency mortgage-backed securities: residential		37,664		565		-		38,230
U.S. agency collateralized mortgage obligations: residential		38,730		21		(965)		37,785
State and political subdivisions		31,668		688		(152)		32,204
Corporate debt securities		2,006		-		(7)		2,000
Equity securities		2,356		190		-		2,546
	$	151,342	$	1,482	$	(1,376)	$	151,449
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 September 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		42,026		41,871
Due after five through ten years		27,992		28,191
Due after ten years		2,519		2,453
Mortgage-backed securities: residential		37,664		37,892
Collateralized mortgage obligations: residential		38,730		37,314
	$	148,986	$	147,777

Information pertaining to securities with gross unrealized losses at September 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
September 30, 2014:
U.S. Treasury and federal agency	$	-	$	-	$	3,338	$	(132)	$	3,338	$	(132)
U.S. government sponsored entities and agencies		15,396		(64)		18,698		(292)		34,094		(356)
U.S. agency mortgage-backed securities: residential		7,534		(58)		-		-		7,534		(58)
U.S. agency collateralized mortgage obligations: residential		2,740		(31)		34,574		(1,385)		37,314		(1,416)
State and political subdivisions		559		(1)		11,030		(207)		11,589		(208)
Corporate debt securities		1,993		(13)		-		-		1,993		(13)
	$	28,222	$	(167)	$	67,640	$	(2,016)	$	95,862	$	(2,183)
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 nine months ended September 30 were as follows:

(Dollar amounts in thousands)	For the three months				For the nine months
	ended September 30,				ended September 30,
	2014		2013		2014		2013
Proceeds	$	903	$	17,701	$	22,462	$	21,015
Gains		91		107		748		291
Tax provision related to gains		31		36		254		99

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 no equity securities in an unrealized loss position as of September 30, 2014. There were 111 debt securities in an unrealized loss position as of September 30, 2014, of which 83 were in an unrealized loss position for more than 12 months. Of these 111 securities, 6 were U.S. Treasury securities, 28 were U.S. government sponsored entity and agency securities, 5 were U.S. agency mortgage-backed securities, 27 were U.S agency collateralized mortgage obligations, 41 were state and political subdivision securities and 4 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 September 30, 2014 to be other-than-temporarily impaired.

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Earnings per Common Share

9 Months Ended

Sep. 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 nine months ended
	September 30,				September 30,
	2014		2013		2014		2013
Earnings per common share - basic
Net income	$	1,022	$	1,082	$	2,742	$	2,879
Less: Preferred stock dividends		25		115		75		365
Net income available to common stockholders	$	997	$	967	$	2,667	$	2,514
Average common shares outstanding		1,770,821		1,762,810		1,770,128		1,761,972
Basic earnings per common share	$	0.56	$	0.55	$	1.51	$	1.43
Earnings per common share - diluted
Net income available to common stockholders	$	997	$	967	$	2,667	$	2,514
Average common shares outstanding		1,770,821		1,762,810		1,770,128		1,761,972
Add: Dilutive effects of assumed issuance of restricted stock and exercise of stock options		16,410		13,616		14,709		12,777
Average shares and dilutive potential common shares		1,787,231		1,776,426		1,784,837		1,774,749
Diluted earnings per common share	$	0.56	$	0.54	$	1.49	$	1.42
Stock options and restricted stock awards not considered in computing diluted earnings per share because they were antidilutive		66,000		67,000		67,000		67,000

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 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 September 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)	September 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		3,229		4,027		3,062
Total	$	7,691	$	3,229	$	7,691	$	3,062

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New Accounting Standards

9 Months Ended

Sep. 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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Stock Compensation Plans

9 Months Ended

Sep. 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 2014 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 2014 Plan.

In addition, the Corporation’s 2007 Stock Incentive Plan and Trust (the 2007 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 6,013 shares of restricted stock and 45,283 stock options remain available for issuance under the 2007 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 September 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		(2,500)		19.30		15,340		-
Forfeited		-		-		-		-
Outstanding as of September 30, 2014		76,750	$	25.16	$	59,205		3.0
Exercisable as of September 30, 2014		76,250	$	25.22	$	54,005		3.0

A summary of the status of the Corporation’s nonvested option shares as of September 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 September 30, 2014		500	$	1.44

A summary of the status of the Corporation’s nonvested restricted stock awards as of September 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 September 30, 2014		25,700	$	20.08

For the three and nine month periods ended September 30, 2014, the Corporation recognized $42,000 and $126,000, respectively, in stock compensation expense, compared to $34,000 and $133,000, respectively, for the same periods in 2013. As of September 30, 2014, there was $224,000 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 1.1 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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Loans Receivable and Related Allowance for Loan Losses

9 Months Ended

Sep. 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)	September 30,		December 31,
	2014		2013
Mortgage loans on real estate:
Residential first mortgages	$	105,647	$	105,541
Home equity loans and lines of credit		88,515		87,928
Commercial real estate		109,517		101,499
		303,679		294,968
Other loans:
Commercial business		60,507		53,214
Consumer		9,163		9,117
		69,670		62,331
Total loans, gross		373,349		357,299
Less allowance for loan losses		5,130		4,869
Total loans, net	$	368,219	$	352,430

 

During the three months ended September 30, 2014, the Corporation purchased four syndicated national credits (SNCs) each having a principal amount of $1.0 million. The SNCs were purchased for a total of $4.0 million plus a net premium of $15,000 and other costs totaling $11,000 which are being amortized over the lives of the loans. The SNCs are recorded as commercial business loans and are collateralized by all business assets of the individual borrowers. These credits have been assigned allowance for loan losses equal to 125% of the Corporation’s normal allowance allocation for commercial business loans until sufficient historical performance data can be collected and analyzed.

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 September 30, 2014:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of September 30, 2014						ended September 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	$	171	$	171	$	28	$	172	$	1	$	1
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,681		2,740		223		2,724		3		-
Commercial business		2,372		2,372		445		2,291		-		-
Consumer		-		-		-		-		-		-
Total	$	6,224	$	5,283	$	696	$	5,187	$	4	$	1

	For the nine months
	ended September 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	126	$	10	$	10
Home equity and lines of credit		-		-		-
Commercial real estate		2,673		16		-
Commercial business		1,250		53		-
Consumer		-		-		-
Total	$	4,049	$	79	$	10

	Impaired Loans with No Specific Allowance
					For the three months
	As of September 30, 2014				ended September 30, 2014
									Cash Basis
	Unpaid				Average		Interest Income		Interest
	Principal		Recorded		Recorded		Recognized		Recognized
	Balance		Investment		Investment		in Period		in Period
Residential first mortgages	$	116	$	116	$	117	$	-	$	-
Home equity and lines of credit		-		-		-		-		-
Commercial real estate		1,269		870		980		-		-
Commercial business		52		52		240		-		-
Consumer		1,348		1,348		1,348		-		-
Total	$	2,785	$	2,386	$	2,685	$	-	$	-

	For the nine months
	ended September 30, 2014
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	64	$	2	$	-
Home equity and lines of credit		-		-		-
Commercial real estate		835		14		3
Commercial business		300		1		1
Consumer		1,348		-		-
Total	$	2,547	$	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 September 30, 2013:

(Dollar amounts in thousands)
	Impaired Loans with Specific Allowance
							For the three months
	As of September 30, 2013						ended September 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	$	82	$	82	$	21	$	81	$	2	$	2
Home equity and lines of credit		-		-		-		-		-		-
Commercial real estate		3,633		2,692		209		2,708		2		2
Commercial business		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	3,715	$	2,774	$	230	$	2,789	$	4	$	4

	For the nine months
	ended September 30, 2013
					Cash Basis
	Average		Interest Income		Interest
	Recorded		Recognized		Recognized
	Investment		in Period		in Period
Residential first mortgages	$	41	$	4	$	4
Home equity and lines of credit		-		-		-
Commercial real estate		3,372		11		11
Commercial business		-		-		-
Consumer		-		-		-
Total	$	3,413	$	15	$	15

	Impaired Loans with No Specific Allowance
					For the three months
	As of September 30, 2013				ended September 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		1,012		613		637		2		2
Commercial business		346		346		351		-		-
Consumer		1,348		1,348		1,348		-		-
Total	$	2,706	$	2,307	$	2,336	$	2	$	2

	For the nine months
	ended September 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		561		4		4
Commercial business		359		-		-
Consumer		1,484		-		-
Total	$	2,404	$	4	$	4

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 September 30, 2014 and December 31, 2013, the Corporation had $6.9 million and $2.5 million, respectively, of loans classified as TDRs, which are included in impaired loans above. At September 30, 2014 and December 31, 2013, the Corporation had $511,000 and $56,000 of the allowance for loan losses allocated to these specific loans. At September 30, 2013, the Corporation had $2.1 million of loans classified as TDRs with $56,000 of the allowance for loan losses allocated to these specific loans.

During the nine month period ended September 30, 2014, the Corporation modified eleven loans to be identified as TDRs. One commercial relationship consisting of eight loans totaling $2.4 million was modified as the Corporation 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 Corporation 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 nine month period ended September 30, 2014 as a result of the modifications. During the three month period ended September 30, 2014, the Corporation did not modify any loans as TDRs.

During the nine month period ended September 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 September 30, 2013, the Corporation did not modify any 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 nine month periods ended September 30, 2014, there were defaults on four loans classified as TDRs which totaled $1.8 million at September 30, 2014. Of these, two loans totaling $344,000 were not past due, one loan for $81,000 was 30-59 days delinquent and one loan for $1.3 million was over 90 days past due at September 30, 2014. During the three and nine month periods ended September 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 September 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Septembert 30, 2014:
Residential first mortgages	$	104,970	$	-	$	-	$	677	$	-	$	105,647
Home equity and lines of credit		88,216		-		-		299		-		88,515
Commercial real estate		-		102,482		525		6,510		-		109,517
Commercial business		-		55,739		1,544		3,224		-		60,507
Consumer		7,815		-		-		1,348		-		9,163
Total	$	201,001	$	158,221	$	2,069	$	12,058	$	-	$	373,349
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 September 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
September 30, 2014:
Residential first mortgages	$	103,184	$	1,403	$	267	$	122	$	671	$	105,647
Home equity and lines of credit		87,795		292		129		28		271		88,515
Commercial real estate		106,266		82		-		-		3,169		109,517
Commercial business		58,154		26		203		-		2,124		60,507
Consumer		7,741		64		10		-		1,348		9,163
Total loans	$	363,140	$	1,867	$	609	$	150	$	7,583	$	373,349
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 September 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
September 30, 2014:
Residential first mortgages	$	286	$	80	$	-	$	305	$	671
Home equity and lines of credit		-		-		-		271		271
Commercial real estate		2,932		-		-		237		3,169
Commercial business		2,086		-		-		38		2,124
Consumer		-		-		-		1,348		1,348
Total loans	$	5,304	$	80	$	-	$	2,199	$	7,583
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 September 30, 2014:
Allowance for loan losses:
Beginning Balance	$	917	$	468	$	2,375	$	1,233	$	53	$	5,046
Charge-offs		(38)		(30)		-		-		(24)		(92)
Recoveries		-		-		4		-		9		13
Provision		62		101		(11)		(3)		14		163
Ending Balance	$	941	$	539	$	2,368	$	1,230	$	52	$	5,130
Nine months ended September 30, 2014:
Allowance for loan losses:
Beginning Balance	$	923	$	625	$	2,450	$	822	$	49	$	4,869
Charge-offs		(135)		(44)		(2)		(17)		(91)		(289)
Recoveries		-		-		13		7		22		42
Provision		153		(42)		(93)		418		72		508
Ending Balance	$	941	$	539	$	2,368	$	1,230	$	52	$	5,130
At September 30, 2014:
Ending ALL balance attributable to loans:
Individually evaluated for impairment		28		-		223		445		-		696
Collectively evaluated for impairment		913		539		2,145		785		52		4,434
Total loans:
Individually evaluated for impairment		287		-		3,610		2,424		1,348		7,669
Collectively evaluated for impairment		105,360		88,515		105,907		58,083		7,815		365,680
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 September 30, 2013:
Allowance for loan losses:
Beginning Balance	$	772	$	621	$	2,547	$	677	$	53	$	4,670
Charge-offs		(9)		(8)		-		-		(16)		(33)
Recoveries		-		-		2		-		5		7
Provision		87		1		(110)		154		11		143
Ending Balance	$	850	$	614	$	2,439	$	831	$	53	$	4,787
Nine months ended September 30, 2013:
Allowance for loan losses:
Beginning Balance	$	828	$	730	$	3,090	$	636	$	66	$	5,350
Charge-offs		(26)		(8)		(941)		-		(72)		(1,047)
Recoveries		1		-		6		-		39		46
Provision		47		(108)		284		195		20		438
Ending Balance	$	850	$	614	$	2,439	$	831	$	53	$	4,787

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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Goodwill and Intangible Assets

9 Months Ended

Sep. 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 September 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)	September 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		3,229		4,027		3,062
Total	$	7,691	$	3,229	$	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 nine 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 nine month periods ending September 30, 2014, the Corporation recorded intangible amortization expense totaling $54,000 and $167,000, respectively, compared to $67,000 and $213,000, respectively, for the same periods in 2013.

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Employee Benefit Plans

9 Months Ended

Sep. 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 Corporation recorded a benefit associated with plan of $15,000 and $45,000, respectively, for the three and nine month periods ended September 30, 2014, compared to an expense of $2,000 and $5,000, respectively, for the three and nine month periods ended September 30, 2013.

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Loans Receivable and Related Allowance for Loan Losses (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 2,219		$ 2,219		$ 2,420
Recorded Investment	2,700		2,700		2,500
Related Allowance	490		490		181
Loans Receivable With Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	6,224	3,715	6,224	3,715	3,544
Recorded Investment	5,283	2,774	5,283	2,774	2,603
Related Allowance	696	230	696	230	202
Average Recorded Investment	5,187	2,789	4,049	3,413	3,251
Interest Income Recognized in Period	4	4	79	15	18
Cash Basis Interest Recognized in Period	1	4	10	15	17
Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	2,785	2,706	2,785	2,706	2,778
Recorded Investment	2,386	2,307	2,386	2,307	2,379
Average Recorded Investment	2,685	2,336	2,547	2,404	2,399
Interest Income Recognized in Period	0	2	17	4	6
Cash Basis Interest Recognized in Period	0	2	4	4	5
Residential First Mortgages [Member] | Loans Receivable With Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	171	82	171	82	82
Recorded Investment	171	82	171	82	82
Related Allowance	28	21	28	21	21
Average Recorded Investment	172	81	126	41	49
Interest Income Recognized in Period	1	2	10	4	5
Cash Basis Interest Recognized in Period	1	2	10	4	4
Residential First Mortgages [Member] | Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	116	0	116	0	20
Recorded Investment	116	0	116	0	20
Average Recorded Investment	117	0	64	0	4
Interest Income Recognized in Period	0	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	3,681	3,633	3,681	3,633	3,462
Recorded Investment	2,740	2,692	2,740	2,692	2,521
Related Allowance	223	209	223	209	181
Average Recorded Investment	2,724	2,708	2,673	3,372	3,202
Interest Income Recognized in Period	3	2	16	11	13
Cash Basis Interest Recognized in Period	0	2	0	11	13
Commercial real estate [Member] | Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,269	1,012	1,269	1,012	1,074
Recorded Investment	870	613	870	613	675
Average Recorded Investment	980	637	835	561	584
Interest Income Recognized in Period	0	2	14	4	5
Cash Basis Interest Recognized in Period	0	2	3	4	5
Commercial business [Member] | Loans Receivable With Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	2,372	0	2,372	0	0
Recorded Investment	2,372	0	2,372	0	0
Related Allowance	445	0	445	0	0
Average Recorded Investment	2,291	0	1,250	0	0
Interest Income Recognized in Period	0	0	53	0	0
Cash Basis Interest Recognized in Period	0	0	0	0	0
Commercial business [Member] | Loans Receivable With No Specific Allowance [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	52	346	52	346	336
Recorded Investment	52	346	52	346	336
Average Recorded Investment	240	351	300	359	354
Interest Income Recognized in Period	0	0	1	0	0
Cash Basis Interest Recognized in Period	0	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	1,348	1,348	1,484	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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Fair Value (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
Financial Assets:
Cash and cash equivalents - Carrying Amount	$ 35,318	$ 16,658	$ 14,636	$ 20,424
Securities available for sale - Carrying Amount	150,321	117,304
Loans, net - Carrying Amount	368,219	352,430
Federal bank stock - Carrying Amount	2,791	3,977
Accrued interest receivable - Carrying Amount	1,674	1,466
Financial Assets - Carrying Amount, Total	593,537	525,842
Financial Liabilities:
Deposits - Carrying Amount	519,908	432,006
Borrowed funds - Carrying Amount	17,150	44,150
Accrued interest payable - Carrying Amount	217	292
Financial Liabilities - Carrying Amount, Total	545,596	480,770
Financial assets:
Cash and cash equivalents - Fair Value	35,318	16,658
Securities available for sale - Fair Value	150,321	117,304
Loans, net - Fair Value	371,817	356,123
Federal bank stock - Fair Value	0	0
Accrued interest receivable - Fair value	1,674	1,466
Financial Assets - Fair Value, Total	560,258	491,551
Financial liabilities:
Deposits - Fair Value	521,578	434,552
Borrowed funds - Fair Value	18,130	45,241
Accrued interest payable - Fair Value	217	292
Financial Liabilities - Fair Value, Total	539,925	480,085
Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities available for sale - Carrying Amount	5,324	6,177
Financial assets:
Cash and cash equivalents - Fair Value	35,318	16,658
Securities available for sale - Fair Value	5,324	6,177
Loans, net - Fair Value	0	0
Federal bank stock - Fair Value	0	0
Accrued interest receivable - Fair value	46	34
Financial Assets - Fair Value, Total	40,688	22,628
Financial liabilities:
Deposits - Fair Value	398,302	325,983
Borrowed funds - Fair Value	0	0
Accrued interest payable - Fair Value	7	5
Financial Liabilities - Fair Value, Total	398,309	325,988
Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Securities available for sale - Carrying Amount	145,472	110,474
Financial assets:
Cash and cash equivalents - Fair Value	0	0
Securities available for sale - Fair Value	145,472	110,474
Loans, net - Fair Value	0	0
Federal bank stock - Fair Value	0	0
Accrued interest receivable - Fair value	498	430
Financial Assets - Fair Value, Total	145,970	111,145
Financial liabilities:
Deposits - Fair Value	123,276	108,569
Borrowed funds - Fair Value	18,130	45,241
Accrued interest payable - Fair Value	210	287
Financial Liabilities - Fair Value, Total	141,616	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	371,817	356,123
Federal bank stock - Fair Value	0	0
Accrued interest receivable - Fair value	1,130	1,002
Financial Assets - Fair Value, Total	373,600	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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Securities (Tables)

9 Months Ended

Sep. 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 September 30, 2014 and December 31, 2013:

(Dollar amounts in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for sale:
September 30, 2014:
U.S. Treasury and federal agency	$	3,470	$	-	$	(39)	$	3,431
U.S. government sponsored entities and agencies		35,448		19		(213)		35,254
U.S. agency mortgage-backed securities: residential		37,664		565		-		38,230
U.S. agency collateralized mortgage obligations: residential		38,730		21		(965)		37,785
State and political subdivisions		31,668		688		(152)		32,204
Corporate debt securities		2,006		-		(7)		2,000
Equity securities		2,356		190		-		2,546
	$	151,342	$	1,482	$	(1,376)	$	151,449
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 September 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		42,026		41,871
Due after five through ten years		27,992		28,191
Due after ten years		2,519		2,453
Mortgage-backed securities: residential		37,664		37,892
Collateralized mortgage obligations: residential		38,730		37,314
	$	148,986	$	147,777

Schedule of Unrealized Loss on Investments [Table Text Block]

Information pertaining to securities with gross unrealized losses at September 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
September 30, 2014:
U.S. Treasury and federal agency	$	-	$	-	$	3,338	$	(132)	$	3,338	$	(132)
U.S. government sponsored entities and agencies		15,396		(64)		18,698		(292)		34,094		(356)
U.S. agency mortgage-backed securities: residential		7,534		(58)		-		-		7,534		(58)
U.S. agency collateralized mortgage obligations: residential		2,740		(31)		34,574		(1,385)		37,314		(1,416)
State and political subdivisions		559		(1)		11,030		(207)		11,589		(208)
Corporate debt securities		1,993		(13)		-		-		1,993		(13)
	$	28,222	$	(167)	$	67,640	$	(2,016)	$	95,862	$	(2,183)
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 nine months ended September 30 were as follows:

(Dollar amounts in thousands)	For the three months				For the nine months
	ended September 30,				ended September 30,
	2014		2013		2014		2013
Proceeds	$	903	$	17,701	$	22,462	$	21,015
Gains		91		107		748		291
Tax provision related to gains		31		36		254		99

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 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 September 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 July 1, 2014	$	(486)	$	(1,410)	$	(1,896)
Other comprehensive loss before reclassification		(128)		-		(128)
Amounts reclassified from accumulated other comprehensive income		(60)		-		(60)
Net current period other comprehensive loss		(188)		-		(188)
Accumulated Other Comprehensive Loss at September 30, 2014	$	(674)	$	(1,410)	$	(2,084)

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Loss at July 1, 2013	$	(707)	$	(1,795)	$	(2,502)
Other comprehensive loss before reclassification		(528)		-		(528)
Amounts reclassified from accumulated other comprehensive income		(71)		-		(71)
Net current period other comprehensive loss		(599)		-		(599)
Accumulated Other Comprehensive Loss at September 30, 2013	$	(1,306)	$	(1,795)	$	(3,101)

(Dollar amounts in thousands)	Unrealized Gains		Defined
	and Losses on		Benefit
	Available-for-Sale		Pension
	Securities		Items		Totals
Accumulated Other Comprehensive Loss at January 1, 2014	$	(1,870)	$	(1,410)	$	(3,280)
Other comprehensive income before reclassification		1,690		-		1,690
Amounts reclassified from accumulated other comprehensive income		(494)		-		(494)
Net current period other comprehensive income		1,196		-		1,196
Accumulated Other Comprehensive Loss at September 30, 2014	$	(674)	$	(1,410)	$	(2,084)

(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 loss before reclassification		(3,479)		-		(3,479)
Amounts reclassified from accumulated other comprehensive income		(192)		-		(192)
Net current period other comprehensive loss		(3,671)		-		(3,671)
Accumulated Other Comprehensive Loss at September 30, 2013	$	(1,306)	$	(1,795)	$	(3,101)

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 September 30, 2014		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	91	Gain on sale of securities
		(31)	Tax expense
Total reclassifications for the period	$	60	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 September 30, 2013		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	107	Gain on sale of securities
		(36)	Tax expense
Total reclassifications for the period	$	71	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 September 30, 2014		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	748	Gain on sale of securities
		(254)	Tax expense
Total reclassifications for the period	$	494	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 nine months		Statement Where Net
Comprehensive Income Components	ended September 30, 2013		Income is Presented
Unrealized gains and losses on available-for-sale securities	$	291	Gain on sale of securities
		(99)	Tax expense
Total reclassifications for the period	$	192	Net of tax

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Fair Value (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 2,219	$ 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	2,219	2,420
Impaired commercial real estate loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	557	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	557	2,340
Impaired commercial business loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,662
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	1,662
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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Goodwill and Intangible Assets (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Intangible asset amortization	$ 54	$ 67	$ 167	$ 213

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Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net income	$ 1,022	$ 1,082	$ 2,742	$ 2,879
Unrealized gains (losses) on securities:
Unrealized holding gain (loss) arising during the period	(194)	(800)	2,560	(5,271)
Reclassification adjustment for gains included in net income	(91)	(107)	(748)	(291)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, before Tax, Total	(285)	(907)	1,812	(5,562)
Tax effect	97	308	(616)	1,891
Net of tax	(188)	(599)	1,196	(3,671)
Comprehensive income (loss)	$ 834	$ 483	$ 3,938	$ (792)

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

9 Months Ended

Sep. 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 September 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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Participation in the Small Business Lending Fund (SBLF) of the U.S. Treasury Department (U.S. Treasury) (Details Textual) (USD $)	0 Months Ended	3 Months Ended		9 Months Ended		9 Months Ended			0 Months Ended			0 Months Ended	9 Months Ended
	Aug. 18, 2011	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Two Year from January 1 2014 [Member]	Sep. 30, 2014 Minimum [Member]	Sep. 30, 2014 Maximum [Member]	Aug. 18, 2011 Series B Non Cumulative Preferred Stock [Member]	Sep. 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]	Sep. 30, 2014 Series B Preferred Stock [Member]	Sep. 30, 2014 Series B Preferred Stock [Member] Four and half years from January 1, 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 Corporations 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	102,017							5,000
Preferred Stock, Liquidation Preference, Value										$ 5,000,000	$ 5,000,000	$ 5,000,000

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Loans Receivable and Related Allowance for Loan Losses (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 5,046	$ 4,670	$ 4,869	$ 5,350
Charge-offs	(92)	(33)	(289)	(1,047)
Recoveries	13	7	42	46
Provision	163	143	508	438
Ending Balance	5,130	4,787	5,130	4,787
Ending ALL balance attributable to loans:
Individually evaluated for impairment	696		696		202
Collectively evaluated for impairment	4,434		4,434		4,667
Total loans:
Individually evaluated for impairment	7,669		7,669		4,982
Collectively evaluated for impairment	365,680		365,680		352,317
Residential first mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	917	772	923	828
Charge-offs	(38)	(9)	(135)	(26)
Recoveries	0	0	0	1
Provision	62	87	153	47
Ending Balance	941	850	941	850
Ending ALL balance attributable to loans:
Individually evaluated for impairment	28		28		21
Collectively evaluated for impairment	913		913		902
Total loans:
Individually evaluated for impairment	287		287		102
Collectively evaluated for impairment	105,360		105,360		105,439
Home equity and lines of credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	468	621	625	730
Charge-offs	(30)	(8)	(44)	(8)
Recoveries	0	0	0	0
Provision	101	1	(42)	(108)
Ending Balance	539	614	539	614
Ending ALL balance attributable to loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	539		539		625
Total loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	88,515		88,515		87,928
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	2,375	2,547	2,450	3,090
Charge-offs	0	0	(2)	(941)
Recoveries	4	2	13	6
Provision	(11)	(110)	(93)	284
Ending Balance	2,368	2,439	2,368	2,439
Ending ALL balance attributable to loans:
Individually evaluated for impairment	223		223		181
Collectively evaluated for impairment	2,145		2,145		2,269
Total loans:
Individually evaluated for impairment	3,610		3,610		3,196
Collectively evaluated for impairment	105,907		105,907		98,303
Commercial business [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,233	677	822	636
Charge-offs	0	0	(17)	0
Recoveries	0	0	7	0
Provision	(3)	154	418	195
Ending Balance	1,230	831	1,230	831
Ending ALL balance attributable to loans:
Individually evaluated for impairment	445		445		0
Collectively evaluated for impairment	785		785		822
Total loans:
Individually evaluated for impairment	2,424		2,424		336
Collectively evaluated for impairment	58,083		58,083		52,878
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	53	53	49	66
Charge-offs	(24)	(16)	(91)	(72)
Recoveries	9	5	22	39
Provision	14	11	72	20
Ending Balance	52	53	52	53
Ending ALL balance attributable to loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	52		52		49
Total loans:
Individually evaluated for impairment	1,348		1,348		1,348
Collectively evaluated for impairment	$ 7,815		$ 7,815		$ 7,769

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Earnings per Common Share (Tables)

9 Months Ended

Sep. 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 nine months ended
	September 30,				September 30,
	2014		2013		2014		2013
Earnings per common share - basic
Net income	$	1,022	$	1,082	$	2,742	$	2,879
Less: Preferred stock dividends		25		115		75		365
Net income available to common stockholders	$	997	$	967	$	2,667	$	2,514
Average common shares outstanding		1,770,821		1,762,810		1,770,128		1,761,972
Basic earnings per common share	$	0.56	$	0.55	$	1.51	$	1.43
Earnings per common share - diluted
Net income available to common stockholders	$	997	$	967	$	2,667	$	2,514
Average common shares outstanding		1,770,821		1,762,810		1,770,128		1,761,972
Add: Dilutive effects of assumed issuance of restricted stock and exercise of stock options		16,410		13,616		14,709		12,777
Average shares and dilutive potential common shares		1,787,231		1,776,426		1,784,837		1,774,749
Diluted earnings per common share	$	0.56	$	0.54	$	1.49	$	1.42
Stock options and restricted stock awards not considered in computing diluted earnings per share because they were antidilutive		66,000		67,000		67,000		67,000