ChoiceOne Financial Services (COFS) 10-Q 12 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 31, 2016
Document And Entity Information
Entity Registrant Name	CHOICEONE FINANCIAL SERVICES INC
Entity Central Index Key	803,164
Document Type	10-Q
Trading Symbol	COFS
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		3,277,035
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,016

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 13,466	$ 11,187
Securities available for sale (Note 2)	175,172	160,136
Federal Home Loan Bank stock	1,614	1,614
Federal Reserve Bank stock	1,573	1,573
Loans held for sale	2,734	4,957
Loans (Note 3)	357,242	349,304
Allowance for loan losses (Note 3)	(4,296)	(4,194)
Loans, net	352,946	345,110
Premises and equipment, net	11,872	12,120
Cash value of life insurance policies	12,438	12,261
Intangible assets, net	155	379
Goodwill	13,728	13,728
Other assets	4,725	4,681
Total assets	590,423	567,746
Liabilities
Deposits - noninterest-bearing	124,134	122,937
Deposits - interest-bearing	339,687	351,759
Total deposits	463,821	474,696
Repurchase agreements	5,379	9,460
Advances from Federal Home Loan Bank	45,317	11,332
Other liabilities	3,509	2,416
Total liabilities	518,026	497,904
Shareholders' Equity
Common stock and paid-in capital, no par value; shares authorized: 7,000,000; shares outstanding: 3,275,852 at June 30, 2016 and 3,295,228 at December 31, 2015	46,227	46,501
Retained earnings	23,734	22,138
Accumulated other comprehensive income, net	2,436	1,203
Total shareholders' equity	72,397	69,842
Total liabilities and shareholders' equity	$ 590,423	$ 567,746

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, shares par value	$ 0	$ 0
Common stock, shares authorized	7,000,000	7,000,000
Common stock, shares outstanding	3,275,852	3,295,228

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Interest income
Loans, including fees	$ 4,087	$ 3,988	$ 8,083	$ 7,930
Securities:
Taxable	584	485	1,137	937
Tax exempt	363	357	729	706
Other	3	2	9	5
Total interest income	5,037	4,832	9,958	9,578
Interest expense
Deposits	199	215	408	440
Advances from Federal Home Loan Bank	45	28	75	47
Other	3	10	5	22
Total interest expense	247	253	488	509
Net interest income	4,790	4,579	9,470	9,069
Provision for loan losses				100
Net interest income after provision for loan losses	4,790	4,579	9,470	8,969
Noninterest income
Customer service charges	1,030	1,062	1,990	2,045
Insurance and investment commissions	226	292	449	633
Gains on sales of loans	419	309	838	812
Gains on sales of securities	156	45	226	53
Losses on sales and write-downs of other assets		(55)	(23)	(76)
Earnings on life insurance policies	89	87	177	475
Other	131	111	236	202
Total noninterest income	2,051	1,851	3,893	4,144
Noninterest expense
Salaries and benefits	2,565	2,214	4,976	4,513
Occupancy and equipment	692	593	1,333	1,188
Data processing	539	578	1,098	1,132
Professional fees	232	236	468	513
Supplies and postage	95	73	220	178
Advertising and promotional	89	58	132	125
Intangible amortization	112	112	224	224
FDIC insurance	73	72	140	149
Other	504	549	1,107	1,022
Total noninterest expense	4,901	4,485	9,698	9,044
Income before income tax	1,940	1,945	3,665	4,069
Income tax expense	495	514	947	996
Net income	$ 1,445	$ 1,431	$ 2,719	$ 3,073
Basic earnings per share (Note 4) (in dollars per share)	$ 0.43	$ 0.43	$ 0.82	$ 0.93
Diluted earnings per share (Note 4) (in dollars per share)	0.43	0.43	0.82	0.93
Dividends declared per share (in dollars per share)	$ 0.17	$ 0.17	$ 0.34	$ 0.32

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Schedule of activity in secondar market loans
Net income	$ 1,445	$ 1,431	$ 2,719	$ 3,073
Other comprehensive income:
Changes in unrealized gains (losses) on investment securities available for sale, net of tax expense (benefit)	673	(428)	1,382	126
Less: Reclassification adjustment for realized gain on sale of investment securities available for sale included in net income, net of tax expense (benefit)	(103)	(30)	(149)	(35)
Other comprehensive income (loss), net of tax	570	(458)	1,233	91
Comprehensive income	$ 2,015	$ 973	$ 3,952	$ 3,164

CONSOLIDATED STATEMENTS OF COM6

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Schedule of activity in secondar market loans
Unrealized holding gains on available for sale securities, tax expense (benefit)	$ 347	$ (220)	$ 712	$ (70)
Reclassification adjustment for gain recognized in net income, tax expense (benefit)	$ (53)	$ (15)	$ (77)	$ (18)

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Common Stock and Paid In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income, Net [Member]	Total
Balance, beginning at Dec. 31, 2014	$ 46,552	$ 18,565	$ 1,073	$ 66,190
Balance, beginning (in shares) at Dec. 31, 2014	3,295,834
Net income		3,073		3,073
Other comprehensive income			91	91
Shares issued	$ 102			102
Shares issued (shares)	7,217
Shares repurchased	$ (371)			(371)
Shares repurchased (in shares)	(16,200)
Change in ESOP repurchase obligation	$ (4)			(4)
Effect of employee stock purchases	6			6
Restricted stock units issued	$ 68			68
Restricted stock units issued (in shares)	100
Cash dividends declared		(1,051)		(1,051)
Balance, ending at Jun. 30, 2015	$ 46,353	20,587	1,164	68,104
Balance, ending (in shares) at Jun. 30, 2015	3,286,951
Balance, beginning at Dec. 31, 2015	$ 46,501	22,138	1,203	$ 69,842
Balance, beginning (in shares) at Dec. 31, 2015	3,295,228			3,295,228
Net income		2,719		$ 2,719
Other comprehensive income			1,233	1,233
Shares issued	$ 130			130
Shares issued (shares)	7,142
Shares repurchased	$ (678)			(678)
Shares repurchased (in shares)	(30,000)
Change in ESOP repurchase obligation	$ 127			127
Effect of employee stock purchases	6			6
Restricted stock units issued	$ 141			141
Restricted stock units issued (in shares)	3,482
Cash dividends declared		(1,123)		(1,123)
Balance, ending at Jun. 30, 2016	$ 46,227	$ 23,734	$ 2,436	$ 72,397
Balance, ending (in shares) at Jun. 30, 2016	3,275,852			3,275,852

CONSOLIDATED STATEMENTS OF CHA8

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Stockholders' Equity [Abstract]
Cash dividend declared, per share	$ 0.17	$ 0.17	$ 0.34	$ 0.32

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net income	$ 2,719	$ 3,073
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses		100
Depreciation	481	486
Amortization	799	752
Compensation expense on stock purchases and restricted stock units	147	74
Gains on sales of securities	(226)	(53)
Gains on sales of loans	(838)	(812)
Loans originated for sale	(22,737)	(7,544)
Proceeds from loan sales	25,633	7,663
Earnings on bank-owned life insurance	(177)	(475)
Proceeds on bank-owned life insurance		461
Gains on sales of other real estate owned	3
Write-downs of other real estate owned		76
Proceeds from sales of other real estate owned	28	124
Deferred federal income tax expense/(benefit)	(86)	(303)
Net changes in other assets	25	(289)
Net changes in other liabilities	670	(85)
Net cash from operating activities	6,441	3,248
Securities available for sale:
Sales	11,157	4,633
Maturities, prepayments and calls	22,835	5,958
Purchases	(47,375)	(18,969)
Loan originations and payments, net	(7,849)	9,926
Additions to premises and equipment	(288)	(502)
Net cash from investing activities	(21,520)	1,046
Cash flows from financing activities:
Net change in deposits	(10,875)	(12,040)
Net change in repurchase agreements	(4,081)	(5,703)
Proceeds from Federal Home Loan Bank advances	202,000	88,575
Payments on Federal Home Loan Bank advances	(168,015)	(75,065)
Issuance of common stock	130	102
Repurchase of common stock	(678)	(371)
Cash dividends	(1,123)	(1,051)
Net cash from financing activities	17,358	(5,553)
Net change in cash and cash equivalents	2,279	(1,259)
Beginning cash and cash equivalents	11,187	16,650
Ending cash and cash equivalents	13,466	15,391
Supplemental disclosures of cash flow information:
Cash paid for interest	486	514
Cash paid for taxes	100	1,970
Loans transferred to other real estate owned	$ 13	$ 327

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include ChoiceOne Financial Services, Inc. (“ChoiceOne”) and its wholly-owned subsidiary, ChoiceOne Bank (the “Bank”), and the Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc. Intercompany transactions and balances have been eliminated in consolidation. The unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information not misleading. The accompanying consolidated financial statements reflect all adjustments ordinary in nature which are, in the opinion of management, necessary for a fair presentation of the Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015, the Consolidated Statements of Income for the three- and six-month periods ended June 30, 2016 and June 30, 2015, the Consolidated Statements of Comprehensive Income for the three- and six-month periods ended June 30, 2016 and June 30, 2015, the Consolidated Statements of Changes in Shareholders’ Equity for the six-month periods ended June 30, 2016 and June 30, 2015, and the Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2016 and June 30, 2015. Operating results for the six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in ChoiceOne’s Annual Report on Form 10-K for the year ended December 31, 2015. Allowance for Loan Losses The allowance for loan losses is maintained at a level believed adequate by management to absorb probable incurred losses inherent in the consolidated loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, assessments of the impact of current economic conditions on the portfolio and historical loss experience of seasoned loan portfolios. See Note 3 to the interim consolidated financial statements for additional information. Management believes the accounting estimate related to the allowance for loan losses is a “critical accounting estimate” because (1) the estimate is highly susceptible to change from period to period because of assumptions concerning the changes in the types and volumes of the portfolios and economic conditions and (2) the impact of recognizing an impairment or loan loss could have a material effect on ChoiceOne’s reported assets and net income. Stock Transactions A total of 3,304 shares of common stock were issued to ChoiceOne’s Board of Directors for a cash price of $77,000 under the terms of the Directors’ Stock Purchase Plan in the first six months of 2016. A total of 2,033 shares of common stock were issued upon the exercise of stock options in the first half of 2016. A total of 1,805 shares of common stock were issued to employees for a cash price of $42,000 under the Employee Stock Purchase Plan in the first half of 2016. A total of 3,482 shares of common stock were issued to employees for Restricted Stock Units that vested during the first six months of 2016. A total of 30,000 shares of common stock were repurchased by ChoiceOne in the first six months of 2016. Stock-Based Compensation Effective July 1, 2013, ChoiceOne began granting Restricted Stock Units to a select group of employees under the Stock Incentive Plan of 2012. All of the Restricted Stock Units are initially unvested and vest in three annual installments on each of the next three anniversaries of the grant date. Certain additional vesting provisions apply. Each unit, once vested, is settled by delivery of one share of ChoiceOne common stock. Comprehensive Income Comprehensive income consists of net income and other comprehensive income or loss. Other comprehensive income or loss includes unrealized gains and losses on securities available for sale and changes in the funded status of post-retirement plans, net of tax, which are also recognized as a separate component of shareholders’ equity. Accumulated other comprehensive income was as follows: (Dollars in thousands) As of June 30, 2016 2015 Unrealized gains on available for sale securities 3,498 1,538 Unrecognized gains on post-retirement benefits 193 225 Tax effect (1,255 ) (599 ) Accumulated other comprehensive income $ 2,436 $ 1,164 Reclassifications Certain amounts presented in prior periods have been reclassified to conform to the current presentation.

SECURITIES

SECURITIES	6 Months Ended
	Jun. 30, 2016
Investments, Debt and Equity Securities [Abstract]
SECURITIES	NOTE 2 - SECURITIES The fair value of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows: June 30, 2016 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair U.S. Government and federal agency $ 65,995 $ 372 $ (52 ) $ 66,315 U.S. Treasury 2,078 42 — 2,120 State and municipal 84,094 2,784 (22 ) 86,856 Mortgage-backed 7,756 51 (3 ) 7,804 Corporate 7,908 71 (2 ) 7,977 Foreign debt 1,000 2 — 1,002 Equity securities 2,617 261 — 2,878 Asset-backed securities 226 — (6 ) 220 Total $ 171,674 $ 3,583 $ (85 ) $ 175,172 December 31, 2015 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Government and federal agency $ 57,406 $ 30 $ (229 ) $ 57,207 U.S. Treasury 6,133 — (33 ) 6,100 State and municipal 76,005 1,858 (109 ) 77,754 Mortgage-backed 6,989 26 (45 ) 6,970 Corporate 8,418 8 (39 ) 8,387 Foreign debt 1,000 — (5 ) 995 Equity securities 2,279 174 — 2,453 Asset-backed securities 274 — (4 ) 270 Total $ 158,504 $ 2,096 $ (464 ) $ 160,136 ChoiceOne reviews its securities portfolio on a quarterly basis to determine whether unrealized losses are considered to be temporary or other-than-temporary. No other-than-temporary impairment charges were recorded in the six months ended June 30, 2016. ChoiceOne believed that unrealized losses on securities were temporary in nature and were due to changes in interest rates and reduced market liquidity and not as a result of credit quality issues.

LOANS AND ALLOWANCE FOR LOAN LO

LOANS AND ALLOWANCE FOR LOAN LOSSES	6 Months Ended
	Jun. 30, 2016
Receivables [Abstract]
LOANS AND ALLOWANCE FOR LOAN LOSSES	NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES Activity in the allowance for loan losses and balances in the loan portfolio was as follows: Commercial (Dollars in thousands) and Commercial Construction Residential Agricultural Industrial Consumer Real Estate Real Estate Real Estate Unallocated Total Allowance for Loan Losses Beginning balance $ 382 $ 691 $ 272 $ 1,138 $ 43 $ 1,350 $ 249 $ 4,124 Charge-offs — — (29 ) — — — — (29 ) Recoveries — 8 28 23 — 142 — 201 Provision 18 (42 ) 6 (28 ) 2 (270 ) 315 — Ending balance $ 400 $ 657 $ 277 $ 1,133 $ 45 $ 1,222 $ 563 $ 4,296 Six Months Ended June 30, 2016 Beginning balance $ 420 $ 586 $ 297 $ 1,030 $ 46 $ 1,388 $ 427 $ 4,194 Charge-offs — (33 ) (68 ) — — (69 ) — (170 ) Recoveries — 23 69 31 — 149 — 272 Provision (20 ) 81 (21 ) 72 (2 ) (246 ) 136 — Ending balance $ 400 $ 657 $ 277 $ 1,133 $ 45 $ 1,222 $ 563 $ 4,296 Individually evaluated for impairment $ 11 $ 11 $ 1 $ 177 $ — $ 364 $ — $ 564 Collectively evaluated for impairment $ 389 $ 646 $ 276 $ 956 $ 45 $ 858 $ 563 $ 3,732 Three Months Ended June 30, 2015 Beginning balance $ 201 $ 613 $ 193 $ 1,498 $ 39 $ 1,482 $ 295 $ 4,321 Charge-offs — — (55 ) — — (20 ) — (75 ) Recoveries 1 20 42 14 — 30 — 107 Provision 77 (136 ) 13 (228 ) (11 ) (116 ) 401 — Ending balance $ 279 $ 497 $ 193 $ 1,284 $ 28 $ 1,376 $ 696 $ 4,353 Six Months Ended June 30, 2015 Beginning balance $ 187 $ 527 $ 183 $ 1,641 $ 9 $ 1,193 $ 433 $ 4,173 Charge-offs — — (106 ) — — (21 ) — (127 ) Recoveries 1 48 79 21 — 58 — 207 Provision 91 (78 ) 37 (378 ) 19 146 263 100 Ending balance $ 279 $ 497 $ 193 $ 1,284 $ 28 $ 1,376 $ 696 $ 4,353 Individually evaluated for impairment $ — $ — $ 1 $ 333 $ — $ 332 $ — $ 666 Collectively evaluated for impairment $ 279 $ 497 $ 192 $ 951 $ 28 $ 1,044 $ 696 $ 3,687 Loans June 30, 2016 Individually evaluated for impairment $ 173 $ 294 $ 22 $ 2,628 $ — $ 2,916 $ 6,033 Collectively evaluated for impairment 34,500 97,436 20,887 103,606 5,427 89,353 351,209 Ending balance $ 34,673 $ 97,730 $ 20,909 $ 106,234 $ 5,427 $ 92,269 $ 357,242 December 31, 2015 Individually evaluated for impairment $ 50 $ 192 $ 24 $ 2,790 $ — $ 2,529 $ 5,585 Collectively evaluated for impairment 40,182 94,155 20,066 94,946 5,390 88,980 343,719 Ending balance $ 40,232 $ 94,347 $ 20,090 $ 97,736 $ 5,390 $ 91,509 $ 349,304 The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans, (2) the level of classified business loans, and (3) delinquent and nonperforming consumer loans. Business loans are risk rated on a scale of 1 to 8. A description of the characteristics of the ratings follows: Risk ratings 1 and 2: These loans are considered pass credits. They exhibit good to exceptional credit risk and demonstrate the ability to repay the loan from normal business operations. Risk rating 3: These loans are considered pass credits. They exhibit acceptable credit risk and demonstrate the ability to repay the loan from normal business operations. Risk rating 4: These loans are considered pass credits. However, they have potential developing weaknesses that, if not corrected, may cause deterioration in the ability of the borrower to repay the loan. While a loss is possible for a loan with this rating, it is not anticipated. Risk rating 5: These loans are considered special mention credits. Loans in this risk rating are considered to be inadequately protected by the net worth and debt service coverage of the borrower or of any pledged collateral. These loans have well defined weaknesses that may jeopardize the borrower’s ability to repay the loan. If the weaknesses are not corrected, loss of principal and interest could be probable. Risk rating 6: These loans are considered substandard credits. These loans have well defined weaknesses, the severity of which makes collection of principal and interest in full questionable. Loans in this category may be placed on nonaccrual status. Risk rating 7: These loans are considered doubtful credits. Some loss of principal and interest has been determined to be probable. The estimate of the amount of loss could be affected by factors such as the borrower’s ability to provide additional capital or collateral. Loans in this category are on nonaccrual status. Risk rating 8: These loans are considered loss credits. They are considered uncollectible and will be charged off against the allowance for loan losses. Information regarding the Bank’s credit exposure is as follows: Corporate Credit Exposure - Credit Risk Profile By Creditworthiness Category Agricultural Commercial and Industrial Commercial Real Estate (Dollars in thousands) June 30, December 31, June 30, December 31, June 30, December 31, 2016 2015 2016 2015 2016 2015 Risk ratings 1 and 2 $ 7,979 $ 10,416 $ 11,315 $ 10,480 $ 6,505 $ 3,875 Risk rating 3 18,758 25,189 67,159 66,921 56,179 57,540 Risk rating 4 6,053 3,086 18,310 16,169 38,213 29,826 Risk rating 5 1,837 1,491 825 574 3,433 3,776 Risk rating 6 46 50 121 129 1,904 2,719 Risk rating 7 — — — 74 — — $ 34,673 $ 40,232 $ 97,730 $ 94,347 $ 106,234 $ 97,736 Corporate Credit Exposure - Credit Risk Profile Based On Payment Activity Consumer Construction Real Estate Residential Real Estate (Dollars in thousands) June 30, December 31, June 30, December 31, June 30, December 31, 2016 2015 2016 2015 2016 2015 Performing $ 20,909 $ 20,090 $ 5,427 $ 5,390 $ 91,687 $ 90,796 Nonperforming — — — — — 282 Nonaccrual — — — — 582 431 $ 20,909 $ 20,090 $ 5,427 $ 5,390 $ 92,269 $ 91,509 The following schedule provides information on loans that were considered TDRs that were modified during the three- and six-months periods ended June 30, 2016: Three Months Ended June 30, 2016 Six Months Ended June 30, 2016 Pre- Post- Pre- Post- Modification Modification Modification Modification Outstanding Outstanding Outstanding Outstanding (Dollars in thousands) Number of Recorded Recorded Number of Recorded Recorded Loans Investment Investment Loans Investment Investment Commercial real estate — $ — $ — 1 $ 128 $ 128 Residential real estate 2 150 150 3 179 179 Total 2 $ 150 $ 150 4 $ 307 $ 307 The pre-modification and post-modification outstanding recorded investment represents amounts as of the date of loan modification. If a difference exists between the pre-modification and post-modification outstanding recorded investment, it represents impairment recognized through the provision for loan losses computed based on a loan’s post-modification present value of expected future cash flows discounted at the loan’s original effective interest rate. If no difference exists, a loss is not expected to be incurred based on an assessment of the borrower’s expected cash flows. Loans are classified as performing when they are current as to principal and interest payments or are past due on payments less than 90 days. Loans are classified as nonperforming when they are past due 90 days or more as to principal and interest payments or are considered a troubled debt restructuring. Impaired loans by loan category as of June 30, 2016 and 2015 were as follows: Unpaid Average Interest (Dollars in thousands) Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized June 30, 2016 With no related allowance recorded Agricultural $ — $ — $ — $ 43 $ — Commercial and industrial — — — 25 — Consumer — — — — — Commercial real estate 1,253 1,450 — 1,351 5 Residential real estate 170 170 — 89 — Subtotal 1,423 1,620 — 1,508 5 With an allowance recorded Agricultural 173 175 11 90 14 Commercial and industrial 295 295 11 241 1 Consumer 22 22 1 23 1 Commercial real estate 1,375 1,917 177 1,482 54 Residential real estate 2,745 2,633 364 2,612 58 Subtotal 4,610 5,042 564 4,448 128 Total Agricultural 173 175 11 133 14 Commercial and industrial 294 295 11 266 1 Consumer 22 22 1 23 1 Commercial real estate 2,628 3,367 177 2,833 59 Residential real estate 2,916 2,803 364 2,701 58 Total $ 6,033 $ 6,662 $ 564 $ 5,956 $ 133 June 30, 2015 With no related allowance recorded Agricultural $ — $ — $ — $ — $ — Commercial and industrial 74 103 — 16 — Consumer — — — 3 — Commercial real estate 1,540 1,540 — 658 5 Residential real estate 13 13 — 300 — Subtotal 1,627 1,656 — 977 5 With an allowance recorded Agricultural 50 50 3 70 (6 ) Commercial and industrial 118 118 15 — — Consumer 24 24 1 26 1 Commercial real estate 1,250 1,755 191 2,408 39 Residential real estate 2,516 2,516 296 2,393 41 Subtotal 3,958 4,463 506 4,897 75 Total Agricultural 50 50 3 70 (6 ) Commercial and industrial 192 221 15 16 — Consumer 24 24 1 29 1 Commercial real estate 2,790 3,295 191 3,066 44 Residential real estate 2,529 2,529 296 2,693 41 Total $ 5,585 $ 6,119 $ 506 $ 5,874 $ 80 An aging analysis of loans by loan category follows: Greater 90 Days Past (Dollars in thousands) 30 to 59 60 to 89 Than 90 Loans Not Due and Days Days Days (1) Total Past Due Total Loans Accruing June 30, 2016 Agricultural $ — $ — $ — $ — $ 34,673 $ 34,673 $ — Commercial and industrial — 73 290 363 97,367 97,730 — Consumer 22 12 — 34 20,875 20,909 — Commercial real estate 265 261 280 806 105,428 106,234 — Construction real estate — — — — 5,427 5,427 — Residential real estate 83 810 238 1,131 91,138 92,269 102 $ 370 $ 1,156 $ 808 $ 2,334 $ 354,908 $ 357,242 $ 102 December 31, 2015 Agricultural $ 3 $ — $ — $ 3 $ 40,229 $ 40,232 $ — Commercial and industrial 90 322 77 489 93,858 94,347 — Consumer 115 — — 115 19,975 20,090 — Commercial real estate 505 297 1,233 2,035 95,701 97,736 — Construction real estate 299 — — 299 5,091 5,390 — Residential real estate 1,012 364 200 1,576 89,933 91,509 29 $ 2,024 $ 983 $ 1,510 $ 4,517 $ 344,787 $ 349,304 $ 29 (1) Includes nonaccrual loans. Nonaccrual loans by loan category follow: (Dollars in thousands) June 30, December 31, 2016 2015 Agricultural $ 46 $ 50 Commercial and industrial 289 77 Consumer — — Commercial real estate 1,719 1,640 Construction real estate — — Residential real estate 582 431 $ 2,636 $ 2,198

EARNINGS PER SHARE

EARNINGS PER SHARE	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
EARNINGS PER SHARE	NOTE 4 - EARNINGS PER SHARE Earnings per share are based on the weighted average number of shares outstanding during the period. A computation of basic earnings per share and diluted earnings per share follows: Three Months Ended Six Months Ended (Dollars in thousands, except per share data) June 30, June 30, 2016 2015 2016 2015 Basic Earnings Per Share Net income available to common shareholders $ 1,445 $ 1,431 $ 2,719 $ 3,073 Weighted average common shares outstanding 3,299,836 3,285,290 3,298,037 3,287,063 Basic earnings per share $ 0.43 $ 0.43 $ 0.82 $ 0.93 Diluted Earnings Per Share Net income available to common shareholders $ 1,445 $ 1,431 $ 2,719 $ 3,073 Weighted average common shares outstanding 3,299,836 3,285,290 3,298,037 3,287,063 Plus dilutive stock options and restricted stock units 5,178 9,256 5,286 9,300 Weighted average common shares outstanding and potentially dilutive shares 3,305,014 3,294,546 3,303,323 3,296,363 Diluted earnings per share $ 0.43 $ 0.43 $ 0.82 $ 0.93 There were 30,000 stock options as of June 30, 2016 and zero as of June 30, 2015 with an exercise price more than the current market price. These stock options have been excluded from the calculation of diluted earnings above.

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
FINANCIAL INSTRUMENTS	NOTE 5 – FINANCIAL INSTRUMENTS Financial instruments as of the dates indicated were as follows: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable (Dollars in thousands) Carrying Estimated Assets Inputs Inputs Amount Fair Value (Level 1) (Level 2) (Level 3) June 30, 2016 Assets: Cash and due from banks $ 13,466 $ 13,466 $ 13,466 $ — $ — Securities available for sale 175,172 175,172 1,378 161,795 11,999 Federal Home Loan Bank and Federal Reserve Bank stock 3,187 3,187 — 3,187 — Loans held for sale 2,734 2,816 — — 2,816 Loans, net 352,946 355,062 — — 355,062 Liabilities: Noninterest-bearing deposits 124,134 124,134 — 124,134 — Interest-bearing deposits 339,687 319,200 — 319,200 — Repurchase agreements 5,379 5,379 — 5,379 — Federal Home Loan Bank advances 45,317 45,360 — 45,360 — December 31, 2015 Assets: Cash and due from banks $ 11,187 $ 11,187 $ 11,187 $ — $ — Securities available for sale 160,136 160,136 953 147,384 11,799 Federal Home Loan Bank and Federal Reserve Bank stock 3,187 3,187 — 3,187 — Loans held for sale 4,957 5,109 — 5,109 — Loans, net 345,110 319,200 — — 319,200 Liabilities: Noninterest-bearing deposits 122,937 122,937 — 122,937 — Interest-bearing deposits 351,759 353,113 — 353,113 — Repurchase agreements 9,460 9,460 — 9,460 — Federal Home Loan Bank advances 11,332 12,028 — 12,028 — The estimated fair values approximate the carrying amounts for all financial instruments except those described later in this paragraph. The methodology for determining the estimated fair value for securities available for sale is described in Note 6. The estimated fair value for loans is based on the rates charged at June 30, 2016 and December 31, 2015 for new loans with similar maturities, applied until the loan is assumed to reprice or be paid. The allowance for loan losses is considered to be a reasonable estimate of discount for credit quality concerns. The estimated fair values for time deposits and Federal Home Loan Bank (“FHLB”) advances are based on the rates paid at June 30, 2016 and December 31, 2015 for new deposits or FHLB advances, applied until maturity. The estimated fair values for other financial instruments and off-balance sheet loan commitments are considered nominal.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS	NOTE 6 – FAIR VALUE MEASUREMENTS The following tables present information about the Bank’s assets and liabilities measured at fair value on a recurring basis and the valuation techniques used by the Bank to determine those fair values. In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Bank has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Bank’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. There were no liabilities measured at fair value as of June 30, 2016 or December 31, 2015. Disclosures concerning assets measured at fair value are as follows: Assets Measured at Fair Value on a Recurring Basis Quoted Prices Significant in Active Other Significant Markets for Identical Observable Unobservable (Dollars in thousands) Assets Inputs Inputs Balance at (Level 1) (Level 2) (Level 3) Date Indicated Investment Securities, Available for Sale – June 30, 2016 U.S. Treasury notes and bonds $ — $ 2,120 $ — $ 2,120 U.S. Government and federal agency — 66,315 — 66,315 State and municipal — 76,756 10,100 86,856 Mortgage-backed — 7,804 — 7,804 Corporate — 7,578 399 7,977 Foreign debt — 1,002 — 1,002 Equity securities 1,378 — 1,500 2,878 Asset backed securities — 220 — 220 Total $ 1,378 $ 161,795 $ 11,999 $ 175,172 Investment Securities, Available for Sale - December 31, 2015 U.S. Treasury notes and bonds $ — $ 6,100 $ — $ 6,100 U.S. Government and federal agency — 57,207 — 57,207 State and municipal — 67,852 9,902 77,754 Mortgage-backed — 6,970 — 6,970 Corporate — 7,990 397 8,387 Foreign debt — 995 — 995 Equity securities 953 — 1,500 2,453 Asset backed securities — 270 — 270 Total $ 953 $ 147,384 $ 11,799 $ 160,136 Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis (Dollars in thousands) 2016 2015 Investment Securities, Available for Sale Balance, January 1 $ 11,799 $ 11,642 Total realized and unrealized gains included in income — — Total unrealized (gains) losses included in other comprehensive income (187 ) 772 Net purchases, sales, calls, and maturities 387 (368 ) Net transfers into Level 3 — — Balance, June 30 $ 11,999 $ 12,046 Of the Level 3 assets that were held by the Bank at June 30, 2016, the net unrealized gain for the six months ended June 30, 2016 was $187,000, which is recognized in other comprehensive income in the consolidated balance sheet . Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 investment securities and liabilities. As a result, the unrealized gains and losses for these assets and liabilities presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs. Available for sale investment securities categorized as Level 3 assets primarily consist of bonds issued by local municipalities. The Bank estimates the fair value of these bonds based on the present value of expected future cash flows using management’s best estimate of key assumptions, including forecasted interest yield and payment rates, credit quality and a discount rate commensurate with the current market and other risks involved. The Bank also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets are not normally measured at fair value, but can be subject to fair value adjustments in certain circumstances, such as impairment. Disclosures concerning assets measured at fair value on a non-recurring basis are as follows: Assets Measured at Fair Value on a Non-recurring Basis Quoted Prices Significant in Active Other Significant Markets for Identical Observable Unobservable (Dollars in thousands) Balance at Assets Inputs Inputs Dates Indicated (Level 1) (Level 2) (Level 3) Impaired Loans June 30, 2016 $ 6,033 $ — $ — $ 6,033 December 31, 2015 $ 5,585 $ — $ — $ 5,585 Other Real Estate June 30, 2016 $ 13 $ — $ — $ 13 December 31, 2015 $ 31 $ — $ — $ 31 Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired. The Bank estimates the fair value of the loans based on the present value of expected future cash flows using management’s estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). The changes in fair value consisted of charge-downs of impaired loans that were posted to the allowance for loan losses and write-downs of other real estate that were posted to a valuation account.

SUMMARY OF SIGNIFICANT ACCOUN16

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include ChoiceOne Financial Services, Inc. (“ChoiceOne”) and its wholly-owned subsidiary, ChoiceOne Bank (the “Bank”), and the Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc. Intercompany transactions and balances have been eliminated in consolidation. The unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information not misleading. The accompanying consolidated financial statements reflect all adjustments ordinary in nature which are, in the opinion of management, necessary for a fair presentation of the Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015, the Consolidated Statements of Income for the three- and six-month periods ended June 30, 2016 and June 30, 2015, the Consolidated Statements of Comprehensive Income for the three- and six-month periods ended June 30, 2016 and June 30, 2015, the Consolidated Statements of Changes in Shareholders’ Equity for the six-month periods ended June 30, 2016 and June 30, 2015, and the Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2016 and June 30, 2015. Operating results for the six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in ChoiceOne’s Annual Report on Form 10-K for the year ended December 31, 2015.
Allowance for Loan Losses	Allowance for Loan Losses The allowance for loan losses is maintained at a level believed adequate by management to absorb probable incurred losses inherent in the consolidated loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, assessments of the impact of current economic conditions on the portfolio and historical loss experience of seasoned loan portfolios. See Note 3 to the interim consolidated financial statements for additional information. Management believes the accounting estimate related to the allowance for loan losses is a “critical accounting estimate” because (1) the estimate is highly susceptible to change from period to period because of assumptions concerning the changes in the types and volumes of the portfolios and economic conditions and (2) the impact of recognizing an impairment or loan loss could have a material effect on ChoiceOne’s reported assets and net income.
Stock Transactions	Stock Transactions A total of 3,304 shares of common stock were issued to ChoiceOne’s Board of Directors for a cash price of $77,000 under the terms of the Directors’ Stock Purchase Plan in the first six months of 2016. A total of 2,033 shares of common stock were issued upon the exercise of stock options in the first half of 2016. A total of 1,805 shares of common stock were issued to employees for a cash price of $42,000 under the Employee Stock Purchase Plan in the first half of 2016. A total of 3,482 shares of common stock were issued to employees for Restricted Stock Units that vested during the first six months of 2016. A total of 30,000 shares of common stock were repurchased by ChoiceOne in the first six months of 2016.
Stock-Based Compensation	Stock-Based Compensation Effective July 1, 2013, ChoiceOne began granting Restricted Stock Units to a select group of employees under the Stock Incentive Plan of 2012. All of the Restricted Stock Units are initially unvested and vest in three annual installments on each of the next three anniversaries of the grant date. Certain additional vesting provisions apply. Each unit, once vested, is settled by delivery of one share of ChoiceOne common stock.
Comprehensive Income	Comprehensive Income Comprehensive income consists of net income and other comprehensive income or loss. Other comprehensive income or loss includes unrealized gains and losses on securities available for sale and changes in the funded status of post-retirement plans, net of tax, which are also recognized as a separate component of shareholders’ equity. Accumulated other comprehensive income was as follows: (Dollars in thousands) As of June 30, 2016 2015 Unrealized gains on available for sale securities 3,498 1,538 Unrecognized gains on post-retirement benefits 193 225 Tax effect (1,255 ) (599 ) Accumulated other comprehensive income $ 2,436 $ 1,164
Reclassifications	Reclassifications Certain amounts presented in prior periods have been reclassified to conform to the current presentation.

SUMMARY OF SIGNIFICANT ACCOUN17

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Schedule of accumulated other comprehensive income	Accumulated other comprehensive income was as follows: (Dollars in thousands) As of June 30, 2016 2015 Unrealized gains on available for sale securities 3,498 1,538 Unrecognized gains on post-retirement benefits 193 225 Tax effect (1,255 ) (599 ) Accumulated other comprehensive income $ 2,436 $ 1,164

SECURITIES (Tables)

SECURITIES (Tables)	6 Months Ended
	Jun. 30, 2016
Investments, Debt and Equity Securities [Abstract]
Schedule of fair value of securities available for sale	The fair value of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows: June 30, 2016 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair U.S. Government and federal agency $ 65,995 $ 372 $ (52 ) $ 66,315 U.S. Treasury 2,078 42 — 2,120 State and municipal 84,094 2,784 (22 ) 86,856 Mortgage-backed 7,756 51 (3 ) 7,804 Corporate 7,908 71 (2 ) 7,977 Foreign debt 1,000 2 — 1,002 Equity securities 2,617 261 — 2,878 Asset-backed securities 226 — (6 ) 220 Total $ 171,674 $ 3,583 $ (85 ) $ 175,172 December 31, 2015 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Government and federal agency $ 57,406 $ 30 $ (229 ) $ 57,207 U.S. Treasury 6,133 — (33 ) 6,100 State and municipal 76,005 1,858 (109 ) 77,754 Mortgage-backed 6,989 26 (45 ) 6,970 Corporate 8,418 8 (39 ) 8,387 Foreign debt 1,000 — (5 ) 995 Equity securities 2,279 174 — 2,453 Asset-backed securities 274 — (4 ) 270 Total $ 158,504 $ 2,096 $ (464 ) $ 160,136

LOANS AND ALLOWANCE FOR LOAN 19

LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)	6 Months Ended
	Jun. 30, 2016
Receivables [Abstract]
Schedule of activity in the allowance for loan losses and balances in the loan portfolio	Activity in the allowance for loan losses and balances in the loan portfolio was as follows: Commercial (Dollars in thousands) and Commercial Construction Residential Agricultural Industrial Consumer Real Estate Real Estate Real Estate Unallocated Total Allowance for Loan Losses Beginning balance $ 382 $ 691 $ 272 $ 1,138 $ 43 $ 1,350 $ 249 $ 4,124 Charge-offs — — (29 ) — — — — (29 ) Recoveries — 8 28 23 — 142 — 201 Provision 18 (42 ) 6 (28 ) 2 (270 ) 315 — Ending balance $ 400 $ 657 $ 277 $ 1,133 $ 45 $ 1,222 $ 563 $ 4,296 Six Months Ended June 30, 2016 Beginning balance $ 420 $ 586 $ 297 $ 1,030 $ 46 $ 1,388 $ 427 $ 4,194 Charge-offs — (33 ) (68 ) — — (69 ) — (170 ) Recoveries — 23 69 31 — 149 — 272 Provision (20 ) 81 (21 ) 72 (2 ) (246 ) 136 — Ending balance $ 400 $ 657 $ 277 $ 1,133 $ 45 $ 1,222 $ 563 $ 4,296 Individually evaluated for impairment $ 11 $ 11 $ 1 $ 177 $ — $ 364 $ — $ 564 Collectively evaluated for impairment $ 389 $ 646 $ 276 $ 956 $ 45 $ 858 $ 563 $ 3,732 Three Months Ended June 30, 2015 Beginning balance $ 201 $ 613 $ 193 $ 1,498 $ 39 $ 1,482 $ 295 $ 4,321 Charge-offs — — (55 ) — — (20 ) — (75 ) Recoveries 1 20 42 14 — 30 — 107 Provision 77 (136 ) 13 (228 ) (11 ) (116 ) 401 — Ending balance $ 279 $ 497 $ 193 $ 1,284 $ 28 $ 1,376 $ 696 $ 4,353 Six Months Ended June 30, 2015 Beginning balance $ 187 $ 527 $ 183 $ 1,641 $ 9 $ 1,193 $ 433 $ 4,173 Charge-offs — — (106 ) — — (21 ) — (127 ) Recoveries 1 48 79 21 — 58 — 207 Provision 91 (78 ) 37 (378 ) 19 146 263 100 Ending balance $ 279 $ 497 $ 193 $ 1,284 $ 28 $ 1,376 $ 696 $ 4,353 Individually evaluated for impairment $ — $ — $ 1 $ 333 $ — $ 332 $ — $ 666 Collectively evaluated for impairment $ 279 $ 497 $ 192 $ 951 $ 28 $ 1,044 $ 696 $ 3,687 Loans June 30, 2016 Individually evaluated for impairment $ 173 $ 294 $ 22 $ 2,628 $ — $ 2,916 $ 6,033 Collectively evaluated for impairment 34,500 97,436 20,887 103,606 5,427 89,353 351,209 Ending balance $ 34,673 $ 97,730 $ 20,909 $ 106,234 $ 5,427 $ 92,269 $ 357,242 December 31, 2015 Individually evaluated for impairment $ 50 $ 192 $ 24 $ 2,790 $ — $ 2,529 $ 5,585 Collectively evaluated for impairment 40,182 94,155 20,066 94,946 5,390 88,980 343,719 Ending balance $ 40,232 $ 94,347 $ 20,090 $ 97,736 $ 5,390 $ 91,509 $ 349,304
Schedule of the bank's credit exposure	Information regarding the Bank’s credit exposure is as follows: Corporate Credit Exposure - Credit Risk Profile By Creditworthiness Category Agricultural Commercial and Industrial Commercial Real Estate (Dollars in thousands) June 30, December 31, June 30, December 31, June 30, December 31, 2016 2015 2016 2015 2016 2015 Risk ratings 1 and 2 $ 7,979 $ 10,416 $ 11,315 $ 10,480 $ 6,505 $ 3,875 Risk rating 3 18,758 25,189 67,159 66,921 56,179 57,540 Risk rating 4 6,053 3,086 18,310 16,169 38,213 29,826 Risk rating 5 1,837 1,491 825 574 3,433 3,776 Risk rating 6 46 50 121 129 1,904 2,719 Risk rating 7 — — — 74 — — $ 34,673 $ 40,232 $ 97,730 $ 94,347 $ 106,234 $ 97,736 Corporate Credit Exposure - Credit Risk Profile Based On Payment Activity Consumer Construction Real Estate Residential Real Estate (Dollars in thousands) June 30, December 31, June 30, December 31, June 30, December 31, 2016 2015 2016 2015 2016 2015 Performing $ 20,909 $ 20,090 $ 5,427 $ 5,390 $ 91,687 $ 90,796 Nonperforming — — — — — 282 Nonaccrual — — — — 582 431 $ 20,909 $ 20,090 $ 5,427 $ 5,390 $ 92,269 $ 91,509
Schedule of troubled debt restructurings	The following schedule provides information on loans that were considered TDRs that were modified during the three- and six-months periods ended June 30, 2016: Three Months Ended June 30, 2016 Six Months Ended June 30, 2016 Pre- Post- Pre- Post- Modification Modification Modification Modification Outstanding Outstanding Outstanding Outstanding (Dollars in thousands) Number of Recorded Recorded Number of Recorded Recorded Loans Investment Investment Loans Investment Investment Commercial real estate — $ — $ — 1 $ 128 $ 128 Residential real estate 2 150 150 3 179 179 Total 2 $ 150 $ 150 4 $ 307 $ 307
Schedule of impaired loans	Impaired loans by loan category as of June 30, 2016 and 2015 were as follows: Unpaid Average Interest (Dollars in thousands) Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized June 30, 2016 With no related allowance recorded Agricultural $ — $ — $ — $ 43 $ — Commercial and industrial — — — 25 — Consumer — — — — — Commercial real estate 1,253 1,450 — 1,351 5 Residential real estate 170 170 — 89 — Subtotal 1,423 1,620 — 1,508 5 With an allowance recorded Agricultural 173 175 11 90 14 Commercial and industrial 295 295 11 241 1 Consumer 22 22 1 23 1 Commercial real estate 1,375 1,917 177 1,482 54 Residential real estate 2,745 2,633 364 2,612 58 Subtotal 4,610 5,042 564 4,448 128 Total Agricultural 173 175 11 133 14 Commercial and industrial 294 295 11 266 1 Consumer 22 22 1 23 1 Commercial real estate 2,628 3,367 177 2,833 59 Residential real estate 2,916 2,803 364 2,701 58 Total $ 6,033 $ 6,662 $ 564 $ 5,956 $ 133 June 30, 2015 With no related allowance recorded Agricultural $ — $ — $ — $ — $ — Commercial and industrial 74 103 — 16 — Consumer — — — 3 — Commercial real estate 1,540 1,540 — 658 5 Residential real estate 13 13 — 300 — Subtotal 1,627 1,656 — 977 5 With an allowance recorded Agricultural 50 50 3 70 (6 ) Commercial and industrial 118 118 15 — — Consumer 24 24 1 26 1 Commercial real estate 1,250 1,755 191 2,408 39 Residential real estate 2,516 2,516 296 2,393 41 Subtotal 3,958 4,463 506 4,897 75 Total Agricultural 50 50 3 70 (6 ) Commercial and industrial 192 221 15 16 — Consumer 24 24 1 29 1 Commercial real estate 2,790 3,295 191 3,066 44 Residential real estate 2,529 2,529 296 2,693 41 Total $ 5,585 $ 6,119 $ 506 $ 5,874 $ 80
Schedule of aging analysis of loans by loan category	An aging analysis of loans by loan category follows: Greater 90 Days Past (Dollars in thousands) 30 to 59 60 to 89 Than 90 Loans Not Due and Days Days Days (1) Total Past Due Total Loans Accruing June 30, 2016 Agricultural $ — $ — $ — $ — $ 34,673 $ 34,673 $ — Commercial and industrial — 73 290 363 97,367 97,730 — Consumer 22 12 — 34 20,875 20,909 — Commercial real estate 265 261 280 806 105,428 106,234 — Construction real estate — — — — 5,427 5,427 — Residential real estate 83 810 238 1,131 91,138 92,269 102 $ 370 $ 1,156 $ 808 $ 2,334 $ 354,908 $ 357,242 $ 102 December 31, 2015 Agricultural $ 3 $ — $ — $ 3 $ 40,229 $ 40,232 $ — Commercial and industrial 90 322 77 489 93,858 94,347 — Consumer 115 — — 115 19,975 20,090 — Commercial real estate 505 297 1,233 2,035 95,701 97,736 — Construction real estate 299 — — 299 5,091 5,390 — Residential real estate 1,012 364 200 1,576 89,933 91,509 29 $ 2,024 $ 983 $ 1,510 $ 4,517 $ 344,787 $ 349,304 $ 29 (1) Includes nonaccrual loans.
Schedule of nonaccrual loans by loan category	Nonaccrual loans by loan category follow: (Dollars in thousands) June 30, December 31, 2016 2015 Agricultural $ 46 $ 50 Commercial and industrial 289 77 Consumer — — Commercial real estate 1,719 1,640 Construction real estate — — Residential real estate 582 431 $ 2,636 $ 2,198

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
Schedule of basic earnings per share and diluted earnings per share	Earnings per share are based on the weighted average number of shares outstanding during the period. A computation of basic earnings per share and diluted earnings per share follows: Three Months Ended Six Months Ended (Dollars in thousands, except per share data) June 30, June 30, 2016 2015 2016 2015 Basic Earnings Per Share Net income available to common shareholders $ 1,445 $ 1,431 $ 2,719 $ 3,073 Weighted average common shares outstanding 3,299,836 3,285,290 3,298,037 3,287,063 Basic earnings per share $ 0.43 $ 0.43 $ 0.82 $ 0.93 Diluted Earnings Per Share Net income available to common shareholders $ 1,445 $ 1,431 $ 2,719 $ 3,073 Weighted average common shares outstanding 3,299,836 3,285,290 3,298,037 3,287,063 Plus dilutive stock options and restricted stock units 5,178 9,256 5,286 9,300 Weighted average common shares outstanding and potentially dilutive shares 3,305,014 3,294,546 3,303,323 3,296,363 Diluted earnings per share $ 0.43 $ 0.43 $ 0.82 $ 0.93

FINANCIAL INSTRUMENTS (Tables)

FINANCIAL INSTRUMENTS (Tables)	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Schedule of carrying value and fair value of financial assets and liabilities	Financial instruments as of the dates indicated were as follows: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable (Dollars in thousands) Carrying Estimated Assets Inputs Inputs Amount Fair Value (Level 1) (Level 2) (Level 3) June 30, 2016 Assets: Cash and due from banks $ 13,466 $ 13,466 $ 13,466 $ — $ — Securities available for sale 175,172 175,172 1,378 161,795 11,999 Federal Home Loan Bank and Federal Reserve Bank stock 3,187 3,187 — 3,187 — Loans held for sale 2,734 2,816 — — 2,816 Loans, net 352,946 355,062 — — 355,062 Liabilities: Noninterest-bearing deposits 124,134 124,134 — 124,134 — Interest-bearing deposits 339,687 319,200 — 319,200 — Repurchase agreements 5,379 5,379 — 5,379 — Federal Home Loan Bank advances 45,317 45,360 — 45,360 — December 31, 2015 Assets: Cash and due from banks $ 11,187 $ 11,187 $ 11,187 $ — $ — Securities available for sale 160,136 160,136 953 147,384 11,799 Federal Home Loan Bank and Federal Reserve Bank stock 3,187 3,187 — 3,187 — Loans held for sale 4,957 5,109 — 5,109 — Loans, net 345,110 319,200 — — 319,200 Liabilities: Noninterest-bearing deposits 122,937 122,937 — 122,937 — Interest-bearing deposits 351,759 353,113 — 353,113 — Repurchase agreements 9,460 9,460 — 9,460 — Federal Home Loan Bank advances 11,332 12,028 — 12,028 —

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Schedule of assets measured at fair value on a recurring basis	Disclosures concerning assets measured at fair value are as follows: Assets Measured at Fair Value on a Recurring Basis Quoted Prices Significant in Active Other Significant Markets for Identical Observable Unobservable (Dollars in thousands) Assets Inputs Inputs Balance at (Level 1) (Level 2) (Level 3) Date Indicated Investment Securities, Available for Sale – June 30, 2016 U.S. Treasury notes and bonds $ — $ 2,120 $ — $ 2,120 U.S. Government and federal agency — 66,315 — 66,315 State and municipal — 76,756 10,100 86,856 Mortgage-backed — 7,804 — 7,804 Corporate — 7,578 399 7,977 Foreign debt — 1,002 — 1,002 Equity securities 1,378 — 1,500 2,878 Asset backed securities — 220 — 220 Total $ 1,378 $ 161,795 $ 11,999 $ 175,172 Investment Securities, Available for Sale - December 31, 2015 U.S. Treasury notes and bonds $ — $ 6,100 $ — $ 6,100 U.S. Government and federal agency — 57,207 — 57,207 State and municipal — 67,852 9,902 77,754 Mortgage-backed — 6,970 — 6,970 Corporate — 7,990 397 8,387 Foreign debt — 995 — 995 Equity securities 953 — 1,500 2,453 Asset backed securities — 270 — 270 Total $ 953 $ 147,384 $ 11,799 $ 160,136
Schedule of changes in Level 3 assets measured at fair value on a recurring basis	Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis (Dollars in thousands) 2016 2015 Investment Securities, Available for Sale Balance, January 1 $ 11,799 $ 11,642 Total realized and unrealized gains included in income — — Total unrealized (gains) losses included in other comprehensive income (187 ) 772 Net purchases, sales, calls, and maturities 387 (368 ) Net transfers into Level 3 — — Balance, June 30 $ 11,999 $ 12,046
Schedule of assets measured at fair value on a nonrecurring basis	Disclosures concerning assets measured at fair value on a non-recurring basis are as follows: Assets Measured at Fair Value on a Non-recurring Basis Quoted Prices Significant in Active Other Significant Markets for Identical Observable Unobservable (Dollars in thousands) Balance at Assets Inputs Inputs Dates Indicated (Level 1) (Level 2) (Level 3) Impaired Loans June 30, 2016 $ 6,033 $ — $ — $ 6,033 December 31, 2015 $ 5,585 $ — $ — $ 5,585 Other Real Estate June 30, 2016 $ 13 $ — $ — $ 13 December 31, 2015 $ 31 $ — $ — $ 31

SUMMARY OF SIGNIFICANT ACCOUN23

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Shares issued during period under Employee Stock Purchase Plan, shares	1,805
Shares issued during period under Employee Stock Purchase Plan, value	$ 42
Common Stock and Paid In Capital [Member]
Shares repurchased (in shares)	30,000	16,200
Stock Options [Member]
Shares issued upon exercise of options	2,033
Restricted stock [Member]
Shares issued during the period upon vesting	3,482
Vesting period	3 years
Directors' Stock Purchase Plan [Member]
Shares issued during the period, shares	3,304
Shares issued during the period, value	$ 77

SUMMARY OF SIGNIFICANT ACCOUN24

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Accounting Policies [Abstract]
Unrealized gains on available for sale securities	$ 3,498		$ 1,538
Unrealized gains on post-retirement benefits	193		225
Tax effect	(1,255)		(599)
Accumulated other comprehensive income	$ 2,436	$ 1,203	$ 1,164

SECURITIES (Details)

SECURITIES (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 171,674	$ 158,504
Gross Unrealized Gains	3,583	2,096
Gross Unrealized Losses	(85)	(464)
Fair Value	175,172	160,136
U.S. Government and federal agency [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	65,995	57,406
Gross Unrealized Gains	372	30
Gross Unrealized Losses	(52)	(229)
Fair Value	66,315	57,207
U.S. Treasury notes and bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,078	6,133
Gross Unrealized Gains	42
Gross Unrealized Losses		(33)
Fair Value	2,120	6,100
State and municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	84,094	76,005
Gross Unrealized Gains	2,784	1,858
Gross Unrealized Losses	(22)	(109)
Fair Value	86,856	77,754
Mortgage-backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	7,756	6,989
Gross Unrealized Gains	51	26
Gross Unrealized Losses	(3)	(45)
Fair Value	7,804	6,970
Corporate [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	7,908	8,418
Gross Unrealized Gains	71	8
Gross Unrealized Losses	(2)	(39)
Fair Value	7,977	8,387
Foreign debt [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,000	1,000
Gross Unrealized Gains	2
Gross Unrealized Losses		(5)
Fair Value	1,002	995
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,617	2,279
Gross Unrealized Gains	261	174
Fair Value	2,878	2,453
Asset-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	226	274
Gross Unrealized Losses	(6)	(4)
Fair Value	$ 220	$ 270

LOANS AND ALLOWANCE FOR LOAN 26

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Allowance for Loan Losses
Beginning balance	$ 4,124	$ 4,321	$ 4,194	$ 4,173
Charge-offs	(29)	(75)	(170)	(127)
Recoveries	201	107	272	207
Provision				100
Ending balance	4,296	4,353	4,296	4,353
Individually evaluated for impairment	564	666	564	666
Collectively evaluated for impairment	3,732	3,687	3,732	3,687
Loans
Individually evaluated for impairment	6,033		6,033		$ 5,585
Collectively evaluated for impairment	351,209		351,209		343,719
Loans	357,242		357,242		349,304
Agricultural [Member]
Allowance for Loan Losses
Beginning balance	382	201	420	187
Recoveries		1		1
Provision	18	77	(20)	91
Ending balance	400	279	400	279
Individually evaluated for impairment	11		11
Collectively evaluated for impairment	389	279	389	279
Loans
Individually evaluated for impairment	173		173		50
Collectively evaluated for impairment	34,500		34,500		40,182
Loans	34,673		34,673		40,232
Commercial and Industrial [Member]
Allowance for Loan Losses
Beginning balance	691	613	586	527
Charge-offs			(33)
Recoveries	8	20	23	48
Provision	(42)	(136)	81	(78)
Ending balance	657	497	657	497
Individually evaluated for impairment	11		11
Collectively evaluated for impairment	646	497	646	497
Loans
Individually evaluated for impairment	294		294		192
Collectively evaluated for impairment	97,436		97,436		94,155
Loans	97,730		97,730		94,347
Consumer [Member]
Allowance for Loan Losses
Beginning balance	272	193	297	183
Charge-offs	(29)	(55)	(68)	(106)
Recoveries	28	42	69	79
Provision	6	13	(21)	37
Ending balance	277	193	277	193
Individually evaluated for impairment	1	1	1	1
Collectively evaluated for impairment	276	192	276	192
Loans
Individually evaluated for impairment	22		22		24
Collectively evaluated for impairment	20,887		20,887		20,066
Loans	20,909		20,909		20,090
Commercial Real Estate [Member]
Allowance for Loan Losses
Beginning balance	1,138	1,498	1,030	1,641
Recoveries	23	14	31	21
Provision	(28)	(228)	72	(378)
Ending balance	1,133	1,284	1,133	1,284
Individually evaluated for impairment	177	333	177	333
Collectively evaluated for impairment	956	951	956	951
Loans
Individually evaluated for impairment	2,628		2,628		2,790
Collectively evaluated for impairment	103,606		103,606		94,946
Loans	106,234		106,234		97,736
Construction Real Estate [Member]
Allowance for Loan Losses
Beginning balance	43	39	46	9
Provision	2	(11)	(2)	19
Ending balance	45	28	45	28
Collectively evaluated for impairment	45	28	45	28
Loans
Collectively evaluated for impairment	5,427		5,427		5,390
Loans	5,427		5,427		5,390
Residential Real Estate [Member]
Allowance for Loan Losses
Beginning balance	1,350	1,482	1,388	1,193
Charge-offs		(20)	(69)	(21)
Recoveries	142	30	149	58
Provision	(270)	(116)	(246)	146
Ending balance	1,222	1,376	1,222	1,376
Individually evaluated for impairment	364	332	364	332
Collectively evaluated for impairment	858	1,044	858	1,044
Loans
Individually evaluated for impairment	2,916		2,916		2,529
Collectively evaluated for impairment	89,353		89,353		88,980
Loans	92,269		92,269		$ 91,509
Unallocated [Member]
Allowance for Loan Losses
Beginning balance	249	295	427	433
Provision	315	401	136	263
Ending balance	563	696	563	696
Collectively evaluated for impairment	$ 563	$ 696	$ 563	$ 696

LOANS AND ALLOWANCE FOR LOAN 27

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	$ 357,242	$ 349,304
Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	34,673	40,232
Agricultural [Member] | Risk ratings 1 and 2 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	7,979	10,416
Agricultural [Member] | Risk ratings 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	18,758	25,189
Agricultural [Member] | Risk ratings 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	6,053	3,086
Agricultural [Member] | Risk ratings 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	1,837	1,491
Agricultural [Member] | Risk ratings 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	46	50
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	97,730	94,347
Commercial and Industrial [Member] | Risk ratings 1 and 2 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	11,315	10,480
Commercial and Industrial [Member] | Risk ratings 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	67,159	66,921
Commercial and Industrial [Member] | Risk ratings 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	18,310	16,169
Commercial and Industrial [Member] | Risk ratings 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	825	574
Commercial and Industrial [Member] | Risk ratings 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	121	129
Commercial and Industrial [Member] | Risk ratings 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans		74
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	106,234	97,736
Commercial Real Estate [Member] | Risk ratings 1 and 2 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	6,505	3,875
Commercial Real Estate [Member] | Risk ratings 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	56,179	57,540
Commercial Real Estate [Member] | Risk ratings 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	38,213	29,826
Commercial Real Estate [Member] | Risk ratings 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	3,433	3,776
Commercial Real Estate [Member] | Risk ratings 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	$ 1,904	$ 2,719

LOANS AND ALLOWANCE FOR LOAN 28

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 2) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	$ 357,242	$ 349,304
Nonaccrual past due loans	2,636	2,198
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	20,909	20,090
Consumer [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	20,909	20,090
Construction Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	5,427	5,390
Construction Real Estate [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	5,427	5,390
Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	92,269	91,509
Nonaccrual past due loans	582	431
Residential Real Estate [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans	$ 91,687	90,796
Residential Real Estate [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk rated loans		$ 282

LOANS AND ALLOWANCE FOR LOAN 29

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 3) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016USD ($)N	Jun. 30, 2016USD ($)N
Financing Receivable, Modifications [Line Items]
Number of contracts | N	2	4
Pre-Modification Outstanding Recorded Investment	$ 150	$ 307
Post Modification Oustanding Recorded Investment	$ 150	$ 307
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts | N		1
Pre-Modification Outstanding Recorded Investment		$ 128
Post Modification Oustanding Recorded Investment		$ 128
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts | N	2	3
Pre-Modification Outstanding Recorded Investment	$ 150	$ 179
Post Modification Oustanding Recorded Investment	$ 150	$ 179

LOANS AND ALLOWANCE FOR LOAN 30

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 4) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Impaired and Restructured Loans with or without related allowance recorded
Recorded Investment With no related allowance recorded	$ 1,423	$ 1,627
Unpaid Principal Balance With no related allowance recorded	1,620	1,656
Average Recorded Investment With no related allowance recorded	1,508	977
Interest Income Recognized With no related allowance recorded	5	5
Recorded Investment With an allowance recorded	4,610	3,958
Unpaid Principal Balance With an allowance recorded	5,042	4,463
Related Allowance	564	506
Average Recorded Investment With an allowance recorded	4,448	4,897
Interest Income Recognized With an allowance recorded	128	75
Recorded Investment	6,033	5,585
Unpaid Principal Balance	6,662	6,119
Average Recorded Investment	5,956	5,874
Interest Income Recognized	133	80
Agricultural [Member]
Impaired and Restructured Loans with or without related allowance recorded
Average Recorded Investment With no related allowance recorded	43
Recorded Investment With an allowance recorded	173	50
Unpaid Principal Balance With an allowance recorded	175	50
Related Allowance	11	3
Average Recorded Investment With an allowance recorded	90	70
Interest Income Recognized With an allowance recorded	14	(6)
Recorded Investment	173	50
Unpaid Principal Balance	175	50
Average Recorded Investment	133	70
Interest Income Recognized	14	(6)
Commercial and Industrial [Member]
Impaired and Restructured Loans with or without related allowance recorded
Recorded Investment With no related allowance recorded		74
Unpaid Principal Balance With no related allowance recorded		103
Average Recorded Investment With no related allowance recorded	25	16
Recorded Investment With an allowance recorded	295	118
Unpaid Principal Balance With an allowance recorded	295	118
Related Allowance	11	15
Average Recorded Investment With an allowance recorded	241
Interest Income Recognized With an allowance recorded	1
Recorded Investment	294	192
Unpaid Principal Balance	295	221
Average Recorded Investment	266	16
Interest Income Recognized	1
Consumer [Member]
Impaired and Restructured Loans with or without related allowance recorded
Average Recorded Investment With no related allowance recorded		3
Recorded Investment With an allowance recorded	22	24
Unpaid Principal Balance With an allowance recorded	22	24
Related Allowance	1	1
Average Recorded Investment With an allowance recorded	23	26
Interest Income Recognized With an allowance recorded	1	1
Recorded Investment	22	24
Unpaid Principal Balance	22	24
Average Recorded Investment	23	29
Interest Income Recognized	1	1
Commercial Real Estate [Member]
Impaired and Restructured Loans with or without related allowance recorded
Recorded Investment With no related allowance recorded	1,253	1,540
Unpaid Principal Balance With no related allowance recorded	1,450	1,540
Average Recorded Investment With no related allowance recorded	1,351	658
Interest Income Recognized With no related allowance recorded	5	5
Recorded Investment With an allowance recorded	1,375	1,250
Unpaid Principal Balance With an allowance recorded	1,917	1,755
Related Allowance	177	191
Average Recorded Investment With an allowance recorded	1,482	2,408
Interest Income Recognized With an allowance recorded	54	39
Recorded Investment	2,628	2,790
Unpaid Principal Balance	3,367	3,295
Average Recorded Investment	2,833	3,066
Interest Income Recognized	59	44
Residential Real Estate [Member]
Impaired and Restructured Loans with or without related allowance recorded
Recorded Investment With no related allowance recorded	170	13
Unpaid Principal Balance With no related allowance recorded	170	13
Average Recorded Investment With no related allowance recorded	89	300
Recorded Investment With an allowance recorded	2,745	2,516
Unpaid Principal Balance With an allowance recorded	2,633	2,516
Related Allowance	364	296
Average Recorded Investment With an allowance recorded	2,612	2,393
Interest Income Recognized With an allowance recorded	58	41
Recorded Investment	2,916	2,529
Unpaid Principal Balance	2,803	2,529
Average Recorded Investment	2,701	2,693
Interest Income Recognized	$ 58	$ 41

LOANS AND ALLOWANCE FOR LOAN 31

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 5) - USD ($) $ in Thousands		Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		$ 2,334	$ 4,517
Loans Not Past Due		354,908	344,787
Loans		357,242	349,304
90 Days Past Due and Accruing			29
30 to 59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		370	2,024
60 to 89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		1,156	983
Greater Than 90 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total	[1]	808	1,510
Agricultural [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total			3
Loans Not Past Due		34,673	40,229
Loans		34,673	40,232
Agricultural [Member] | 30 to 59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total			3
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		363	489
Loans Not Past Due		97,367	93,858
Loans		97,730	94,347
Commercial and Industrial [Member] | 30 to 59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total			90
Commercial and Industrial [Member] | 60 to 89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		73	322
Commercial and Industrial [Member] | Greater Than 90 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total	[1]	290	77
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		34	115
Loans Not Past Due		20,875	19,975
Loans		20,909	20,090
Consumer [Member] | 30 to 59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		22	115
Consumer [Member] | 60 to 89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		12
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		806	2,035
Loans Not Past Due		105,428	95,701
Loans		106,234	97,736
Commercial Real Estate [Member] | 30 to 59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		265	505
Commercial Real Estate [Member] | 60 to 89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		261	297
Commercial Real Estate [Member] | Greater Than 90 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total	[1]	280	1,233
Construction Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total			299
Loans Not Past Due		5,427	5,091
Loans		5,427	5,390
Construction Real Estate [Member] | 30 to 59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total			299
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		1,131	1,576
Loans Not Past Due		91,138	89,933
Loans		92,269	91,509
90 Days Past Due and Accruing			29
Residential Real Estate [Member] | 30 to 59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		83	1,012
Residential Real Estate [Member] | 60 to 89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total		810	364
Residential Real Estate [Member] | Greater Than 90 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Total	[1]	$ 238	$ 200
[1]	Includes nonaccrual loans

LOANS AND ALLOWANCE FOR LOAN 32

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 6) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	$ 2,636	$ 2,198
Agricultural [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	46	50
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	289	77
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	1,719	1,640
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual loans	$ 582	$ 431

EARNINGS PER SHARE (Details Nar

EARNINGS PER SHARE (Details Narrative) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Stock options considered to be anti-dilutive to earnings per share	30,000	0

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Basic Earnings Per Share
Net income available to common shareholders	$ 1,445	$ 1,431	$ 2,719	$ 3,073
Weighted average common shares outstanding	3,299,836	3,285,290	3,298,037	3,287,063
Basic earnings per share	$ 0.43	$ 0.43	$ 0.82	$ 0.93
Diluted Earnings Per Share
Plus dilutive stock options and restricted stock units	5,178	9,256	5,286	9,300
Weighted average common shares outstanding and potentially dilutive shares	3,305,014	3,294,546	3,303,323	3,296,363
Diluted earnings per share	$ 0.43	$ 0.43	$ 0.82	$ 0.93

FINANCIAL INSTRUMENTS (Details)

FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Assets:
Securities available for sale	$ 175,172	$ 160,136
Liabilities:
Noninterest-bearing deposits	124,134	122,937
Interest-bearing deposits	339,687	351,759
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets:
Cash and due from banks	13,466	11,187
Securities available for sale	1,378	953
Significant Other Observable Inputs (Level 2) [Member]
Assets:
Securities available for sale	161,795	147,384
Federal Home Loan Bank and Federal Reserve Bank stock	3,187	3,187
Loans held for sale		5,109
Liabilities:
Noninterest-bearing deposits	124,134	122,937
Interest-bearing deposits	319,200	353,113
Repurchase agreements	5,379	9,460
Federal Home Loan Bank advances	45,360	12,028
Significant Unobservable Inputs (Level 3) [Member]
Assets:
Securities available for sale	11,999	11,799
Loans held for sale	2,816
Loans, net	355,062	349,875
Carrying Amount [Member]
Assets:
Cash and due from banks	13,466	11,187
Securities available for sale	175,172	160,136
Federal Home Loan Bank and Federal Reserve Bank stock	3,187	3,187
Loans held for sale	2,734	4,957
Loans, net	352,946	345,110
Liabilities:
Noninterest-bearing deposits	124,134	122,937
Interest-bearing deposits	339,687	351,759
Repurchase agreements	5,379	9,460
Federal Home Loan Bank advances	45,317	11,332
Estimated Fair Value [Member]
Assets:
Cash and due from banks	13,466	11,187
Securities available for sale	175,172	160,136
Federal Home Loan Bank and Federal Reserve Bank stock	3,187	3,187
Loans held for sale	2,816	5,109
Loans, net	355,062	349,875
Liabilities:
Noninterest-bearing deposits	124,134	122,937
Interest-bearing deposits	319,200	353,113
Repurchase agreements	5,379	9,460
Federal Home Loan Bank advances	$ 45,360	$ 12,028

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details Narrative) $ in Thousands	6 Months Ended
	Jun. 30, 2016USD ($)
Fair Value Disclosures [Abstract]
Total unrealized gains (losses) included in other comprehensive income	$ (187)
Level 3 securities purchased	750
Level 3 securities matured or called	$ 182

FAIR VALUE MEASUREMENTS (Deta37

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	$ 175,172	$ 160,136
Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	2,878	2,453
U.S. Treasury notes and bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	2,120	6,100
U.S. Government and federal agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	66,315	57,207
State and municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	86,856	77,754
Mortgage-backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	7,804	6,970
Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	7,977	8,387
Foreign debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	1,002	995
Asset-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	220	270
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	1,378	953
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	161,795	147,384
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	11,999	11,799
Fair Value Measured on a Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	175,172	160,136
Fair Value Measured on a Recurring Basis [Member] | Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	2,878	2,453
Fair Value Measured on a Recurring Basis [Member] | U.S. Treasury notes and bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	2,120	6,100
Fair Value Measured on a Recurring Basis [Member] | U.S. Government and federal agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	66,315	57,207
Fair Value Measured on a Recurring Basis [Member] | State and municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	86,856	77,754
Fair Value Measured on a Recurring Basis [Member] | Mortgage-backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	7,804	6,970
Fair Value Measured on a Recurring Basis [Member] | Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	7,977	8,387
Fair Value Measured on a Recurring Basis [Member] | Foreign debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	1,002	995
Fair Value Measured on a Recurring Basis [Member] | Asset-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	220	270
Fair Value Measured on a Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	1,378	953
Fair Value Measured on a Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	1,378	953
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	161,795	147,384
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury notes and bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	2,120	6,100
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Government and federal agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	66,315	57,207
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | State and municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	76,756	67,852
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mortgage-backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	7,804	6,970
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	7,578	7,990
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Foreign debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	1,002	995
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Asset-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	220	270
Fair Value Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	11,999	11,799
Fair Value Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	1,500	1,500
Fair Value Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | State and municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	10,100	9,902
Fair Value Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	$ 399	$ 397

FAIR VALUE MEASUREMENTS (Deta38

FAIR VALUE MEASUREMENTS (Details 1) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Changes in Level 3 Investment Securities, Available for Sale Measured at Fair Value on a Recurring Basis
Total unrealized gains (losses) included in other comprehensive income	$ (187)
Fair Value Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Changes in Level 3 Investment Securities, Available for Sale Measured at Fair Value on a Recurring Basis
Balance at the beginning of period	11,799	$ 11,642
Total unrealized gains (losses) included in other comprehensive income	(187)	772
Net purchases, sales, calls, and maturities	387	(368)
Balance at the end of period	$ 11,999	$ 12,046

FAIR VALUE MEASUREMENTS (Deta39

FAIR VALUE MEASUREMENTS (Details 2) - Fair Value measured on a Non-Recurring Basis [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	$ 6,033	$ 5,585
Other real estate owned, net	13	31
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	6,033	5,585
Other real estate owned, net	$ 13	$ 31