FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of changes in asset subject to fair value measurement by Level

	(Dollars in Thousands)
									Fair
	Level 1		Level 2			Level 3			Value
December 31, 2013
Recurring:
Investment securities available for sale (AFS)	$	574	$	73,516		$	224		$	74,314

Non-recurring:
Maryland Financial Bank stock		-		-			30			30
Impaired loans		-		-			4,745			4,745
OREO		-		1,171			-			1,171
		574		74,687			4,999			80,260

Activity:
Investment securities AFS
Purchases of investment securities		-		16,117			-			16,117
Sales, calls and maturities of investment securities		-		(9,747	)		-			(9,747	)
Amortization/accretion of premium/discount		-		(182	)		-			(182	)
Increase (decrease) in market value		119		3,206			(67	)		3,258

Loans
New impaired loans		-		-			3,870			3,870
Payments and other loan reductions		-		-			(382	)		(382	)
Change in total provision		-		-			259			259

OREO
Sales of OREO		-		(917	)		-			(917	)
Loss on disposal of OREO		-		(16	)		-			(16	)
Write-down of OREO		-		(75	)		-			(75	)

June 30, 2014
Recurring:
Investment securities AFS		693		82,910			157			83,760

Non-recurring:
Maryland Financial Bank stock		-		-			30			30
Impaired loans		-		-			8,492			8,492
OREO		-		163			-			163
	$	693	$	83,073		$	8,679		$	92,445

Schedule of estimated fair values of financial instruments

	June 30, 2014				December 31, 2013
(In Thousands)	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Cash and due from banks	$	9,499	$	9,499	$	9,214	$	9,214
Interest-bearing deposits		4,651		4,651		1,636		1,636
Federal funds sold		2,415		2,415		103		103
Investment securities		83,760		83,760		74,314		74,314
Investments in restricted stock		1,328		1,328		1,453		1,453
Ground rents		169		169		169		169
Loans, net		281,282		275,749		270,684		270,684
Accrued interest receivable		1,330		1,330		1,509		1,509

Financial liabilities:
Deposits		345,087		314,768		323,803		291,046
Long-term borrowings		20,000		21,087		20,000		21,032
Dividends payable		275		275		275		275
Accrued interest payable		37		37		29		29

Off-balance sheet commitments		24,345		24,345		23,901		23,901

Schedule of gross unrealized losses and fair value, aggregated by investment category and length of time in continuous unrealized loss position

Securities available for sale:	Less than 12 months				12 months or more				Total
(Dollars in Thousands)
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss

Obligations of U.S. Govt Agencies	$	-	$	-	$	-	$	-	$	-	$	-
State and Municipal		1,520		6		9,279		301		10,799		307
Corporate Trust Preferred		-		-		157		91		157		91
Mortgage Backed		10,734		43		21,621		967		32,355		1,010
	$	12,254	$	49	$	31,057	$	1,359	$	43,311	$	1,408

Schedule of rollforward of the cumulative other-than-temporary credit losses recognized in earnings for debt securities

	At		At
	June 30,		December 31,
	2014		2013
	(Dollars in Thousands)

Estimated credit losses, beginning of year	$	3,262	$	3,247
Credit losses - no previous OTTI recognized		-		-
Credit losses - previous OTTI recognized		-		15

Estimated credit losses, end of period	$	3,262	$	3,262

- 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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- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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