FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2017

Summary of Assets Measured at Estimated Fair Value on Recurring Basis

The following table summarizes assets measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016.



(Dollars in Thousands)	Level 1		Level 2		Level 3		Total Fair Value Measurements
September 30, 2017
AFS Securities:
States and political subdivisions	$	0	$	158,260	$	0	$	158,260
GSE residential MBSs	0		51,552		0		51,552
GSE residential CMOs	0		113,899		0		113,899
Private label residential CMOs	0		2,398		0		2,398
Private label commercial CMOs	0		7,671		0		7,671
Asset-backed	0		87,566		0		87,566
Total debt securities	0		421,346		0		421,346
Equity securities	0		109		0		109
Total securities	$	0	$	421,455	$	0	$	421,455

December 31, 2016
AFS Securities:
U.S. Government Agencies	$	0	$	39,592	$	0	$	39,592
States and political subdivisions	0		164,282		0		164,282
GSE residential MBSs	0		116,944		0		116,944
GSE residential CMOs	0		69,383		0		69,383
GSE commercial CMOs	0		4,856		0		4,856
Private label residential CMOs	0		5,006		0		5,006
Total debt securities	0		400,063		0		400,063
Equity securities	0		91		0		91
Total securities	$	0	$	400,154	$	0	$	400,154

Schedule of Changes in Fair Value of Impaired Loans

The following table presents changes in the fair value for impaired loans still held at September 30, considered in the determination of the provision for loan losses, for the three and nine months ended September 30, 2017 and 2016.



	Three months ended September 30,				Nine months ended September 30,
(Dollars in thousands)	2017		2016		2017		2016

Changes in fair value of impaired loans still held	$	43	$	684	$	41	$	815

Schedule of Changes in Fair Value of Foreclosed Real Estate Held

The following table presents changes in the fair value of OREO for properties still held at September 30, charged to real estate expenses, for the three and nine months ended September 30, 2017 and 2016.



	Three months ended September 30,				Nine months ended September 30,
(Dollars in thousands)	2017		2016		2017		2016

Changes in fair value of OREO still held	$	0	$	42	$	0	$	109

Summary of Assets Measured at Fair Value on Nonrecurring Basis

The following table summarizes assets measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016.



(Dollars in thousands)	Level 1		Level 2		Level 3		Total Fair Value Measurements
September 30, 2017
Impaired Loans
Commercial real estate:
Owner-occupied	$	0	$	0	$	474	$	474
Multi-family	0		0		173		173
Non-owner occupied residential	0		0		363		363
Commercial and industrial	0		0		59		59
Residential mortgage:
First lien	0		0		1,619		1,619
Home equity - lines of credit	0		0		164		164
Installment and other loans	0		0		5		5
Total impaired loans	$	0	$	0	$	2,857	$	2,857

December 31, 2016
Impaired Loans
Commercial real estate:
Owner-occupied	$	0	$	0	$	777	$	777
Non-owner occupied	0		0		736		736
Multi-family	0		0		199		199
Non-owner occupied residential	0		0		409		409
Acquisition and development:
Commercial and land development	0		0		1		1
Commercial and industrial	0		0		66		66
Residential mortgage:
First lien	0		0		1,994		1,994
Home equity - lines of credit	0		0		162		162
Installment and other loans	0		0		6		6
Total impaired loans	$	0	$	0	$	4,350	$	4,350

Foreclosed real estate
Residential	$	0	$	0	$	88	$	88

Summary of Additional Qualitative Information

The following table presents additional qualitative information about assets measured on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value.



(Dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range
September 30, 2017
Impaired loans	$	2,857	Appraisal of collateral	Management adjustments on appraisals for property type and recent activity	10% - 75% discount
				- Management adjustments for liquidation expenses	0% - 20% discount
December 31, 2016
Impaired loans	$	4,350	Appraisal of collateral	Management adjustments on appraisals for property type and recent activity	10% - 75% discount
				- Management adjustments for liquidation expenses	0% - 41% discount
Foreclosed real estate	88		Appraisal of collateral	Management adjustments on appraisals for property type and recent activity	13% - 17% discount
				- Management adjustments for liquidation expenses	10% - 18% discount

Financial Instruments at Estimated Fair Values

The following table presents estimated fair values of the Company’s financial instruments at September 30, 2017 and December 31, 2016:



(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
September 30, 2017
Financial Assets
Cash and due from banks	$	18,296	$	18,296	$	18,296	$	0	$	0
Interest-bearing deposits with banks	4,178		4,178		4,178		0		0
Restricted investments in bank stocks	9,469		n/a		n/a		n/a		n/a
AFS securities	421,455		421,455		0		421,455		0
Loans held for sale	8,217		8,463		0		8,463		0
Loans, net of allowance for loan losses	968,449		968,428		0		0		968,428
Accrued interest receivable	4,252		4,252		0		1,858		2,394
Financial Liabilities
Deposits	1,216,727		1,213,148		0		1,213,148		0
Short-term borrowings	91,571		91,571		0		91,571		0
Long-term debt	63,903		64,369		0		64,369		0
Accrued interest payable	462		462		0		462		0
Off-balance sheet instruments	0		0		0		0		0
December 31, 2016
Financial Assets
Cash and due from banks	$	16,072	$	16,072	$	16,072	$	0	$	0
Interest-bearing deposits with banks	14,201		14,201		14,201		0		0
Restricted investments in bank stocks	7,970		n/a		n/a		n/a		n/a
AFS securities	400,154		400,154		0		400,154		0
Loans held for sale	2,768		2,843		0		2,843		0
Loans, net of allowance for loan losses	870,616		870,470		0		0		870,470
Accrued interest receivable	4,672		4,672		0		2,643		2,029
Financial Liabilities
Deposits	1,152,452		1,149,727		0		1,149,727		0
Short-term borrowings	87,864		87,864		0		87,864		0
Long-term debt	24,163		24,966		0		24,966		0
Accrued interest payable	437		437		0		437		0
Off-balance sheet instruments	0		0		0		0		0