FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2015

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at March 31, 2015 were as follows:

				Fair Value Measurements at March 31, 2015 Using
	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets
Cash and due from banks	$	85,816		$	85,816		$	-		$	-	$	85,816
Federal funds sold		24,417			24,417			-			-		24,417
Securities available for sale		225,137			-			225,137			-		225,137
Loans held for sale		633			-			-			633		633
Loans, net		861,944			-			-			865,188		865,188
Federal Home Loan Bank stock		2,996			n/a			n/a			n/a		n/a
Interest receivable		3,105			-			621			2,484		3,105

Financial liabilities
Deposits	$	(1,089,798	)	$	(731,723	)	$	(357,997	)	$	-	$	(1,089,720	)
Securities sold under agreements to repurchase		(18,099	)		-			(18,099	)		-		(18,099	)
Other borrowed funds		(11,115	)		-			(11,127	)		-		(11,127	)
Interest payable		(386	)		(6	)		(380	)		-		(386	)

The carrying amounts and estimated fair values of financial instruments at December 31, 2014 were as follows:

				Fair Value Measurements at December 31, 2014 Using
	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets
Cash and due from banks	$	70,398		$	70,398		$	-		$	-	$	70,398
Federal funds sold		4,986			4,986			-			-		4,986
Securities available for sale		229,750			-			229,610			140		229,750
Loans held for sale		226			-			-			226		226
Loans, net		869,364			-			-			870,273		870,273
Federal Home Loan Bank stock		2,996			n/a			n/a			n/a		n/a
Interest receivable		3,219			-			625			2,594		3,219

Financial liabilities
Deposits	$	(1,075,243	)	$	(711,118	)	$	(363,481	)	$	-	$	(1,074,599	)
Securities sold under agreements to repurchase		(15,580	)		-			(15,580	)		-		(15,580	)
Other borrowed funds		(11,722	)		-			(11,760	)		-		(11,760	)
Interest payable		(434	)		(6	)		(428	)		-		(434	)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements at March 31, 2015 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale
Mortgage-backed securities
U. S. agency MBS - residential	$	59,538	$	-	$	59,538	$	-
U. S. agency CMO’s - residential		136,348		-		136,348		-
Total mortgage-backed securities of government sponsored agencies		195,886		-		195,886		-
U. S. government sponsored agency securities		18,600		-		18,600		-
Obligations of states and political subdivisions		10,651		-		10,651		-
Total available for sale	$	225,137	$	-	$	225,137	$	-

			Fair Value Measurements at December 31, 2014 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale
Mortgage-backed securities
U. S. agency MBS - residential	$	52,780	$	-	$	52,780	$	-
U. S. agency CMO’s		144,188		-		144,188		-
Total mortgage-backed securities of government sponsored agencies		196,968		-		196,968		-
U. S. government sponsored agency securities		22,506		-		22,506		-
Obligations of states and political subdivisions		10,276		-		10,136		140
Total securities available for sale	$	229,750	$	-	$	229,610	$	140
Mortgage-backed securities

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarter ended March 31, 2015:

	Securities Available-for-sale
	Quarter Ended March 31, 2015
Balance of recurring Level 3 assets at beginning of period	$	140
Total gains or losses (realized/unrealized):
Included in earnings – realized		-
Included in earnings – unrealized		-
Included in other comprehensive income		-
Purchases, sales, issuances and settlements, net		(140	)
Transfers in and/or out of Level 3		-
Balance of recurring Level 3 assets at period-end	$	-

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Assets and liabilities measured at fair value on a non-recurring basis at March 31, 2015 are summarized below:

			Fair Value Measurements at March 31, 2015 Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial real estate
Owner occupied	$	346		-		-	$	346
Non-owner occupied		589		-		-		589
Commercial and industrial		68		-		-		68
All other		4,246		-		-		4,246
Total impaired loans	$	5,249	$	-	$	-	$	5,249

Other real estate owned:
Commercial real estate
Non-owner occupied	$	2,003		-		-	$	2,003
All other		7,711		-		-		7,711
Total OREO	$	9,714	$	-	$	-	$	9,714

Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2014 are summarized below:

			Fair Value Measurements at December 31, 2014 Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial real estate
Owner occupied		600		-		-		600
Non-owner occupied		630		-		-		630
Commercial and industrial		341		-		-		341
All other		4,229		-		-		4,229
Total impaired loans		5,800	$	-	$	-	$	5,800

Other real estate owned:
Commercial real estate
Non-owner occupied		2,003		-		-		2,003
All other		8,203		-		-		8,203
Total OREO	$	10,206	$	-	$	-	$	10,206

Fair Value Inputs, Assets, Quantitative Information

The significant unobservable inputs related to assets and liabilities measured at fair value on a non-recurring basis at March 31, 2015 are summarized below:

	March 31, 2015		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired loans:
Commercial real estate
Owner occupied		346	sales comparison	adjustment for limited salability of specialized property	65.5%-72.4%(52.4%)
Non-owner occupied		589	sales comparison	adjustment for limited salability of specialized property	41.1%-41.1%(41.1%)
Commercial and industrial		68	sales comparison	adjustment for limited salability of specialized property	8.0%-8.0%(8.0%)
All other		4,246	sales comparison	adjustment for percentage of completion of construction	57.2%-57.2%(57.2%)
Total impaired loans		5,249

Other real estate owned:
Commercial real estate
Non-owner occupied		2,003	sales comparison	adjustment for differences between the comparable sales	17.2%-17.2%(17.2%)
All other		7,711	sales comparison	adjustment for estimated realizable value	24.6%-67.4%(25.0%)
Total OREO	$	9,714

The significant unobservable inputs related to assets and liabilities measured at fair value on a non-recurring basis at December 31, 2014 are summarized below:

	December 31, 2014		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired loans:
Commercial real estate
Owner occupied		600	sales comparison	adjustment for limited salability of specialized property	44.8%-72.4%(58.9%)
Non-owner occupied		630	sales comparison	adjustment for differences between the comparable sales	16.9%-54.6%(16.9%)
Commercial and industrial		341	sales comparison	adjustment for limited salability of specialized property	26.2%-41.2%(27.0%)
All other		4,229	sales comparison	adjustment for percentage of completion of construction	57.3%-57.3%(57.3%)
Total impaired loans		5,800

Other real estate owned:
Commercial real estate
Non-owner occupied		2,003	sales comparison	adjustment for differences between the comparable sales	17.8%-17.8%(17.8%)
All other		8,203	sales comparison	adjustment for estimated realizable value	24.6%-50.3%(45.0%)
Total OREO	$	10,206

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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