10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period ended June 30, 2011.  Commission File Number 000-27894

COMMERCIAL BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

OHIO	34-1787239
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

118 S. Sandusky Avenue, Upper Sandusky, Ohio 43351

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (419) 294-5781

N/A

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.   Yes RNo ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes RNo ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one).

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer   ¨	Smaller Reporting Company R

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨No R

As of August 12, 2011, the latest practicable date, there were 1,156,752 outstanding of the registrant’s common stock, no par value.

Explanatory Note

The purpose of this amendment on Form 10-Q/A to Commercial Bancshares, Inc.’s quarterly report on Form 10-Q for the period ended June 30, 2011, filed with the Securities and Exchange Commission on August 15, 2011 (“Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q, as required by Rule 405 of Regulation S-T.

No other changes have been made to the Form 10-Q. This Form 10-Q/A speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

COMMERCIAL BANCSHARES, INC.

FORM 10-Q

Quarter ended June 30, 2011

PART II – OTHER INFORMATION

Item 6  Exhibits:

Exhibit
Number		Description of Document
	3.1.a.	Amended Articles of Incorporation of the Corporation (incorporated by reference to Registrant’s Form 8-K dated April 27, 1995)
	3.1.b.	Amendment to the Corporation’s Amended Articles of Incorporation to increase the number of shares authorized for the issuance to 4,000,000 common shares, no par value (incorporated by reference to Appendix I to Registrant’s Definitive Proxy Statement filed March 13, 1997)
	3.2	Code of Regulations of the Corporation (incorporated by reference to Registrant’s Form 8-K dated April 27, 1995)
	4	Form of Certificate of Common Shares of the Corporation (incorporated by reference to Registrant’s Form 8-K dated April 27, 1995)
	11*	Statement re computation of per share earnings (reference is hereby made to Note 2 of the Consolidated Financial Statements on page 7 hereof)
	31.1*	Certification by CEO Pursuant to Sarbanes Oxley Section 302
	31.2*	Certification by CFO Pursuant to Sarbanes Oxley Section 302
	32.1*	Certification by CEO Pursuant to Sarbanes Oxley Section 906
	32.2*	Certification by CFO Pursuant to Sarbanes Oxley Section 906

101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

* Filed with our Form 10-Q as filed on August 15, 2011

** Furnished with this Form 10-Q/A

30.

COMMERCIAL BANCSHARES, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		COMMERCIAL BANCSHARES, INC.
		(Registrant)
Date:	August 12, 2011	/s/ Robert E. Beach
		(Signature)
		Robert E. Beach
		President and Chief Executive Officer
Date:	August 12, 2011	/s/ Scott A. Oboy
		(Signature)
		Scott A. Oboy
		Executive Vice President and Chief Financial Officer

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CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Jun. 30, 2011	Dec. 31, 2010
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized	4,000,000	4,000,000
Common stock, shares issued	1,182,888	1,182,888
Deferred compensation plan, shares issued	38,864	35,467
Treasury stock, shares	27,455	31,543

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Interest income
Interest and fees on loans	$ 3,456	$ 3,579	$ 6,855	$ 7,151
Interest on investment securities:
Taxable	141	160	285	318
Tax-exempt	157	177	316	357
Federal funds sold	6	11	18	18
Total interest income	3,760	3,927	7,474	7,844
Interest expense
Interest on deposits	557	912	1,185	1,840
Interest on borrowings	0	29	0	71
Total interest expense	557	941	1,185	1,911
Net interest income	3,203	2,986	6,289	5,933
Provision for loan losses	330	280	525	525
Net interest income after provision for loan losses	2,873	2,706	5,764	5,408
Noninterest income
Service fees and overdraft charges	391	434	753	853
Losses on other repossessed asset sales, net	0	(56)	(27)	(191)
Other income	167	173	320	317
Total noninterest income	558	551	1,046	979
Noninterest expense
Salaries and employee benefits	1,399	1,296	2,734	2,596
Premises and equipment	317	300	668	642
OREO and miscellaneous loan expense	81	136	128	180
Professional fees	105	99	275	217
Data processing	49	62	99	125
Software maintenance	95	78	183	152
Advertising and promotional	53	53	113	102
FDIC deposit insurance	109	140	223	278
Franchise tax	79	71	157	141
Other operating expense	298	294	556	559
Total noninterest expense	2,585	2,529	5,136	4,992
Income before income taxes	846	728	1,674	1,395
Income tax expense	218	171	429	320
Net income	$ 628	$ 557	$ 1,245	$ 1,075
Basic earnings per common share (in dollars per share)	$ 0.55	$ 0.49	$ 1.08	$ 0.94
Diluted earnings per common share (in dollars per share)	$ 0.54	$ 0.49	$ 1.07	$ 0.94

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DOCUMENT AND ENTITY INFORMATION	6 Months Ended
	Jun. 30, 2011	Aug. 12, 2011
Entity Registrant Name	COMMERCIAL BANCSHARES INC \OH\
Entity Central Index Key	0001009976
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	cmoh
Entity Common Stock, Shares Outstanding		1,156,752
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2011

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ALLOWANCE FOR LOAN LOSSES

6 Months Ended

Jun. 30, 2011

Receivables [Abstract]

Allowance for Credit Losses [Text Block]

NOTE  5   ALLOWANCE FOR LOAN LOSSES

(Amounts in thousands)

	Commercial			Real Estate			Consumer			Total
June 30, 2011
Beginning balance – January 1, 2011	$	2,385		$	187		$	670		$	3,242
Charge-offs		(74	)		25			(15	)		(64	)
Recoveries		3			—			25			28
Provision		229			65			36			330
Ending Balance – June 30, 2011	$	2,543		$	277		$	716		$	3,536
Allowance:
Ending balance individually evaluated for impairment	$	401		$	—		$	—		$	401
Ending balance collectively evaluated for impairment	$	2,142		$	277		$	716		$	3,135
Loans:
Ending balance individually evaluated for impairment	$	4,840		$	—		$	—		$	4,840
Ending balance collectively evaluated for impairment	$	161,129		$	14,314		$	43,555		$	218,998
December 31, 2010
Beginning balance – January 1, 2010	$	1,927		$	158		$	659		$	2,744
Charge-offs		(610	)		(25	)		(404	)		(1,039	)
Recoveries		34			—			89			123
Provision		956			49			365			1,370
Ending Balance – December 31, 2010	$	2,307		$	182		$	709		$	3,198
Allowance:
Ending balance individually evaluated for impairment	$	116		$	—		$	40		$	156
Ending balance collectively evaluated for impairment	$	2,191		$	182		$	669		$	3,042
Loans:
Ending balance individually evaluated for impairment	$	1,774		$	—		$	90		$	1,864
Ending balance collectively evaluated for impairment	$	170,650		$	13,775		$	44,369		$	228,794

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FAIR VALUES AND MEASUREMENTS OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE  10   FAIR VALUES AND MEASUREMENTS OF FINANCIAL INSTRUMENTS

The Corporation groups its assets and liabilities measured at fair value into a three-level hierarchy for valuation techniques used to measure assets and liabilities at fair value.  This hierarchy is based on whether the valuation inputs are observable or unobservable.  These levels are:

· Level 1 – Quoted prices in active markets for identical assets or liabilities.

· Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

· Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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 Corporation’s assessment of the significance of particular inputs to these fair value measurements requires significant management judgment or estimation and considers factors specific to each asset or liability.

The following table presents information about the Corporation’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010, and the valuation techniques used by the Corporation to determine those fair values.

Assets and liabilities, (in thousands) measured at fair value on a recurring basis for the periods shown:

	Quoted Prices in		Significant		Significant
	Active Markets		Observable		Unobservable
	For Identical		Inputs		Inputs
	Assets (Level 1)		(Level 2)		(Level 3)		Balance
June 30, 2011
Assets
U.S. Government and federal agencies	$	—	$	11,173	$	—	$	11,173
State and political subdivisions		—		15,502		—		15,502
Mortgage-backed securities		—		7,474		—		7,474
Total Assets	$	—	$	34,149	$	—	$	34,149
Liabilities	$	—	$	—	$	—	$	—
December 31, 2010
Assets
U.S. Government and federal agencies	$	—	$	9,065	$	—	$	9,065
State and political subdivisions		—		16,069		—		16,069
Mortgage-backed securities		—		8,709		—		8,709
Total Assets	$	—	$	33,843	$	—	$	33,843
Liabilities	$	—	$	—	$	—	$	—

Securities characterized as having Level 2 inputs generally consist of obligations of U.S. Government and federal agencies, government-sponsored organizations and obligations of state and political subdivisions.  There were no significant transfers in or out of Levels 1 and 2 for the period ending June 30, 2011.

The Corporation also has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis.  At June 30, 2011, such assets consist primarily of impaired loans and other real estate owned.  The Corporation has established the fair values of these assets using Level 3 inputs, specifically, discounted present value of cash flow projections.

The following table presents financial assets and liabilities measured on a nonrecurring basis:

Fair Value Measurements at Reporting Date Using

	Balance at
(In thousands)	June 30,		Level 1		Level 2		Level 3
2011
Impaired loans	$	4,840	$	—	$	—	$	4,480
Real estate acquired through foreclosure		214		—		—		214

	Balance at
(In thousands)	December 31,		Level 1		Level 2		Level 3
2010
Impaired loans	$	1,864	$	—	$	—	$	1,864
Real estate acquired through foreclosure		20		—		—		20

A loan is considered impaired when, based on current information and events it is probable the Corporation will be unable to collect all amounts due (both interest and principal) according to the contractual terms of the loan agreement.  Impaired loans are subject to nonrecurring fair value adjustments to reflect (1) partial write downs that are based on the observable market price or current appraised value of the collateral, or (2) the full charge-off of the loan carrying value.  The Corporation establishes the fair value of the loans based on the present value of expected future cash flows using management’s best 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).

Other real estate owned (“OREO”) acquired through or instead of loan foreclosure is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  Management considers third party appraisals as well as independent fair market value assessments from realtors or persons involved in selling OREO when determining the fair value of particular properties.  Accordingly, the valuations of OREO and other repossessed assets are subject to significant judgment.  If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense.  Additionally, any operating costs incurred after acquisition are also expensed.

The estimated fair values of financial instruments (in thousands ) were as follows:

	June 30, 2011						December 31, 2010
	Carrying			Estimated			Carrying			Estimated
	Amount			Fair Value			Amount			Fair Value
Financial assets
Cash equivalents and federal funds sold	$	15,416		$	15,416		$	22,080		$	22,080
Securities available for sale		34,149			34,149			33,843			33,843
Other investment securities		2,259			2,259			2,260			2,260
Loans, net of allowance for loan loss		220,302			227,331			227,460			225,298
Accrued interest receivable		1,160			1,160			1,288			1,288
Financial liabilities
Demand and savings deposits	$	(153,166	)	$	(153,166	)	$	(151,336	)	$	(151,336	)
Time deposits		(110,633	)		(109,577	)		(125,908	)		(125,532	)
Accrued interest payable		(162	)		(162	)		(192	)		(192	)

The following describes the valuation methodologies used by management to measure financial assets and liabilities at fair value.  Where appropriate, the description includes information about the valuation models and key inputs to those models.

· Cash equivalents and federal funds sold – The carrying value of cash, amounts due from banks and federal funds sold assumed to approximate fair value.

· Investment securities – Fair value is based on quoted market prices in active markets for identical assets or similar assets in active markets.  If quoted market prices are not available, with the assistance of an independent pricing service, management’s fair value measurements consider observable data which may include market maker bids, quotes and pricing models.  Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows.

· Loans – The loan portfolio includes adjustable and fixed-rate loans, the fair value of which is estimated using discounted cash flow analyses.  To calculate discounted cash flows, the loans are aggregated into pools of similar types and expected repayment terms.  The expected cash flows of loans considered historical prepayment experiences and estimated credit losses for nonperforming loans and were discounted using current rates offered to borrowers of similar credit characteristics.  Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

· Accrued interest receivable – The fair value approximates the carrying value.

· Demand and savings deposits – The fair value is equal to the amount payable on demand at the reporting date.

· Time deposits – The fair value for fixed-rate time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for time deposits with similar terms and remaining maturities.

· Accrued interest payable – The fair value approximates the carrying value.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2011

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE  1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation :  The accompanying consolidated financial statements include the accounts of Commercial Bancshares, Inc. (the “Corporation”) and its wholly owned subsidiaries, Commercial Financial and Insurance Agency, LTD (“Commercial Financial”) and The Commercial Savings Bank (the “Bank”).  The Bank also owns a 49.9% interest in Beck Title Agency, Ltd., which is accounted for by using the equity method of accounting. All significant inter-company balances and transactions have been eliminated in consolidation.

The condensed consolidated financial statements have been prepared without audit.  In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the Corporation’s financial position at June 30, 2011, and the results of operations and changes in cash flows for the periods presented have been made.

Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. generally accepted principles have been omitted.  The Annual Report for the year ended December 31, 2010, contains consolidated financial statements and related footnote disclosures, which should be read in conjunction with the accompanying consolidated financial statements.  The results of operations for the period ended June 30, 2011 are not necessarily indicative of the operating results for the full year or any future interim period.

Recent Accounting Pronouncements :

 In June 2011, the FASB issued ASU 2011-05 Comprehensive Income (Topic 220) Presentation of Comprehensive Income which gives an entity the option to present the total comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  Regardless of which option an entity chooses, the entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented.  Current U.S. GAAP allows reporting entities three alternatives for presenting other comprehensive income and its components in financial statements.  One of those presentation options is to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity.  This update eliminates that option.  In addition, current U.S. GAAP does not require consecutive presentation of the statement of net income and other comprehensive income.  Finally, current U.S. GAAP does not require an entity to present reclassification adjustments on the face of the financial statements from other comprehensive income to net income, which is required by the guidance in this update.  These changes apply to both annual and interim financial statements.  These improvements will help financial statement users better understand the causes of an entity’s change in financial position and results of operations.  The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively.  This guidance is not expected to have an impact on the Corporation’s financial condition or results of operations.  We anticipate this statement will be adopted with our 2012 annual financial statements.

In May 2011, the FASB issued ASU 2011-04 Fair Value Measurement (Topic 820) Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs which presents common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRS.  The amendments in this update explain how to measure fair value.  They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting.  The amendments in this update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs.  Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements.  Some of the amendments clarify the Board’s intent about the application of existing fair value measurement requirements.  Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.  This guidance is not expected to have an impact on the Corporation’s financial condition or results of operations.

In April 2011, the FASB issued ASU 2011-02 A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.   The amendments in this ASU clarify the guidance on a creditor’s evaluation of whether it has granted a concession to a debtor.  They also clarify the guidance on a creditor’s evaluation of whether a debtor is experiencing financial difficulty.  The amendments in this update are effective for the first interim or annual period beginning on or after June 15, 2011.  Early adoption is permitted.  Retrospective application to the beginning of the annual period of adoption for modifications occurring on or after the beginning of the annual adoption period is required.  As a result of applying these amendments, an entity may identify receivables that are newly considered to be impaired.  For purposes of measuring impairment of those receivables, an entity should apply the amendments prospectively for the first interim or annual period beginning on or after June 15, 2011.  Management is currently assessing the impact that ASU 2011-02 will have on its consolidated financial statements.

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AGE ANALYSIS OF PAST DUE FINANCING RECEIVABLES

6 Months Ended

Jun. 30, 2011

Past Due Financing Receivables [Abstract]

Past Due Financing Receivables [Text Block]

NOTE  7   AGE ANALYSIS OF PAST DUE FINANCING RECEIVABLES

(Amounts in thousands)

													Recorded
	30-59		60-89		> 90						Total		Investment
	Days		Days		Days		Total				Financing		> 90 Days
June 30, 2011	Past Due		Past Due		Past Due		Past Due		Current		Receivables		and Accruing
Commercial
Operating	$	47	$	—	$	10	$	57	$	22,852	$	22,909	$	—
Agricultural		—		—		—		—		29,039		29,039		—
Real estate, 1-4 family		168		29		39		236		33,829		34,065		—
Real estate, other		459		1		105		565		79,391		79,956		—
Residential real estate
Construction		—		—		—		—		2,895		2,895		—
Other		—		—		—		—		11,419		11,419		—
Consumer
Equity		45		1		18		64		20,557		20,621		—
Auto		9		—		14		23		8,931		8,954		—
Other		14		10		9		33		13,947		13,980		—
Total	$	742	$	41	$	195	$	978	$	222,860	$	223,838	$	—

													Recorded
	30-59		60-89		> 90						Total		Investment
	Days		Days		Days		Total				Financing		> 90 Days
December 31, 2010	Past Due		Past Due		Past Due		Past Due		Current		Receivables		and Accruing
Commercial
Operating	$	47	$	—	$	10	$	57	$	27,861	$	27,918	$	—
Agricultural		—		—		—		—		28,631		28,631		—
Real estate, 1-4 family		39		—		130		169		31,725		31,894		—
Real estate, other		1,156		849		440		2,445		81,536		83,981		—
Residential real estate
Construction		—		—		—		—		2,514		2,514		—
Other		—		—		—		—		11,261		11,261		—
Consumer
Equity		18		15		11		44		21,187		21,231		—
Auto		—		—		—		—		11,557		11,557		—
Other		128		—		20		148		11,523		11,671		—
Total	$	1,388	$	864	$	611	$	2,863	$	227,795	$	230,658	$	—

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FINANCING RECEIVABLES ON NONACCRUAL STATUS

6 Months Ended

Jun. 30, 2011

Receivables [Abstract]

Financing Receivables [Text Block]

NOTE  8   FINANCING RECEIVABLES ON NONACCRUAL STATUS

(Amounts in thousands)

	June 30, 2011		December 31, 2010
Commercial
Operating	$	322	$	44
Real estate, 1-4 family		484		130
Real estate, other		1,374		1,453
Residential real estate
Other		194		216
Consumer
Equity		166		55
Auto		32		—
Other		23		36
Total	$	2,595	$	1,934

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SUMMARY OF IMPAIRED LOANS

6 Months Ended

Jun. 30, 2011

Summary Of Impaired Loans [Abstract]

Summary Of Impaired Loans [Text Block]

NOTE  6   SUMMARY OF IMPAIRED LOANS

(Amounts in thousands)

							YTD
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
June 30, 2011	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial
Operating	$	324	$	356	$	—	$	328	$	11
Real estate, 1-4 family		—		—		—		—		—
Real estate, other		1,351		1,351		—		1,357		12
With an allowance recorded:
Commercial
Real estate, 1-4 family		311		311		279		320		11
Real estate, other		2,854		3,116		122		1,592		70
Total	$	4,840	$	5,134	$	401	$	3,597	$	104

							YTD
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
December 31, 2010	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial
Operating	$	331	$	363	$	—	$	170	$	26
Real estate, 1-4 family		53		106		—		53		—
Real estate, other		500		562		—		238		19
With an allowance recorded:
Commercial
Real estate, 1-4 family		405		452		71		112		29
Real estate, other		485		713		45		638		14
Consumer, other		90		90		40		8		—
Total	$	1,864	$	2,286	$	156	$	1,219	$	88

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY [Parenthetical] (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Dividend paid per share	$ 0.12	$ 0.10	$ 0.24	$ 0.20

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE  2   EARNINGS PER SHARE

Weighted average shares used in determining basic and diluted earnings per share for the three months ended June 30:

	2011		2010
Weighted average shares outstanding during the period		1,155,216		1,138,497
Dilutive effect of stock options		8,613		0
Weighted average shares considering dilutive effect		1,163,829		1,138,497
Anti-dilutive stock options not considered in computing diluted earnings per share		2,130		20,230

Weighted average shares used in determining basic and diluted earnings per share for the six months ended June 30:

	2011		2010
Weighted average shares outstanding during the period		1,154,276		1,138,497
Dilutive effect of stock options		7,877		0
Weighted average shares considering dilutive effect		1,162,153		1,138,497
Anti-dilutive stock options not considered in computing diluted earnings per share		2,130		20,230

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LOANS

6 Months Ended

Jun. 30, 2011

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE  3   LOANS

(Amounts in thousands)

	June 30, 2011		December 31, 2010
Commercial loans	$	165,969	$	172,424
Residential real estate loans		11,419		11,261
Construction loans		2,895		2,514
Consumer loans		22,878		23,065
Home equity loans		20,621		21,231
Indirect finance loans		56		163
Total loans	$	223,838	$	230,658

At June 30, 2011 and December 31, 2010, total loans included loans to farmers for agricultural purposes of approximately $29,038,000 and $28,631,000, respectively.

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE  11   STOCK-BASED COMPENSATION

The Corporation has two stock option plans, the 1997 Stock Option Plan and the 2009 Incentive Stock Option Plan.  No additional grants may be made under the 1997 Plan.  The 2009 Plan, which is shareholder approved, permits the grant of stock options, restricted stock and certain other stock-based awards for up to 150,000 shares.  At June 30, 2011, a total of 116,850 shares remained available for issuance.  Stock-based compensation expense is based on the estimated fair value of the award at the date of grant.  The fair value of each option award is estimated on the date of grant using an option-pricing model, requiring the use of subjective assumptions.  The fair value is amortized as compensation expense on a straight-line basis over the vesting period of the grants.  Compensation expense recognized is included in personnel expense in the consolidated statements of income.

Assumptions are used in estimating the fair value of stock options granted.  Expected stock volatility is based on several factors including the historical volatility of the Corporation’s stock, implied volatility determined from traded options and other factors.  The Corporation uses historical data to estimate option exercises and employee terminations to estimate the expected life of options.  The risk-free interest rate for the expected life of the options is based on the U.S. Treasury yield curve in effect on the date of grant.  The expected dividend yield is based on the Corporation’s expected dividend yield over the life of the options.

Activity in the stock option plans for the six months ended June 30, 2011 was as follows:

			Weighted
	Number		Average		Number
	Of		Exercise		of Options
Stock Options	Options		Price		Exercisable
Outstanding options at December 31, 2010		31,330	$	13.47		7,167
Granted		—		—
Exercised		—		—
Forfeited		—		—
Expired		—		—
Outstanding options at June 30, 2011		31,330	$	13.47		8,167

The following is a summary of outstanding and exercisable stock options as of June 30, 2011:

	Number		Weighted Average			Number
	of Shares		Remaining			of Shares
Exercise Price	Outstanding		Contractual Life			Exercisable
$    22.75		1,130		1.51	years	1,130
$    26.75		1,000		4.51	years	1,000
$    12.30		18,100		8.13	years	6,037
$    13.25		11,100		9.13	years	—
Total		31,330	8.13		years	8,167

Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock option.  At June 30, 2011, the aggregate intrinsic value of stock options outstanding and exercisable was $150,000 and $33,000, respectively, compared to an aggregate intrinsic value of $54,000 and $13,000 at December 31, 2010.

For the six-month period ended June 30, 2011 and 2010, the Corporation recognized compensation expense of $10,000 and $7,000, respectively, for the vesting of stock options.  For the full year 2010, the Corporation recognized compensation expense of $18,000 for the vesting of stock options.  At June 30, 2011, the Corporation had $30,000 of unrecognized compensation expense related to stock options that is expected to be recognized over the remaining requisite service periods that extend predominantly through the third quarter 2013.

The following table summarizes information about the Corporation’s nonvested stock option activity for the six months ended June 30, 2011.

	Number			Weighted
	Of			Average
Nonvested Options	Options			Price
Nonvested options at December 31, 2010		24,163		$	13.33
Granted		—			0.00
Vested		(1,000	)		26.75
Forfeited		—			0.00
Nonvested options at June 30, 2011		23,163		$	12.76

The fair value of restricted stock is equal to the fair market value of the Corporation’s common stock on the date of grant.  Restricted stock awards are recorded as deferred compensation, a component of shareholders’ equity, and amortized to compensation expense over a three year vesting period.  Compensation expense for restricted stock awards of approximately $8,000 and $4,000 was recorded during the six-month period ended June 30, 2011 and 2010, respectively.  For the full year 2010, the Corporation recognized $11,000 in compensation expense for restricted stock awards.  At June 30, 2011, the Corporation had $28,000 of unrecognized compensation expense related to restricted stock options that is expected to be recognized over the remaining requisite service periods that extend predominantly through the third quarter 2013.

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CREDIT QUALITY INDICATORS

6 Months Ended

Jun. 30, 2011

Credit Quality Indicators [Abstract]

Credit Quality Indicators [Text Block]

NOTE  4   CREDIT QUALITY INDICATORS

Amounts in thousands

Commercial Credit Exposure

Credit risk profile by credit worthiness category

									Commercial				Commercial
	Commercial				Commercial				Real Estate				Real Estate
	Operating				Agricultural				1-4 Family				Other
Category	06/30/11		12/31/10		06/30/11		12/31/10		06/30/11		12/31/10		06/30/11		12/31/10
1 – 2	$	14	$	275	$	130	$	130	$	—	$	—	$	—	$	—
3		44		97		2,143		2,207		1,167		2,079		3,326		2,641
4		16,614		24,916		23,496		23,885		27,865		26,660		50,269		54,926
5		2,615		1,926		2,919		2,073		3,400		1,753		11,203		13,432
6		2,837		232		351		335		933		899		4,664		11,942
7		785		472		—		—		700		458		10,426		1,000
8		—		—		—		—		—		—		68		86
Total	$	22,909	$	27,918	$	29,039	$	28,630	$	34,065	$	31,849	$	79,956	$	84,027

Consumer Credit Exposure

Credit risk by credit worthiness category

	Residential				Residential
	Real Estate, Construction				Real Estate, Other
Category	06/30/11		12/31/10		06/30/11		12/31/10
1 – 2	$	—	$	—	$	—	$	—
3		—		—		95		346
4		2,821		2,514		9,641		9,257
5		—		—		160		1,287
6		—		—		237		154
7		74		—		1,286		217
8		—		—		—		—
Total	$	2,895	$	2,514	$	11,419	$	11,261

Consumer Credit Exposure

Credit risk by credit worthiness category

	Consumer - Equity				Consumer - Auto				Consumer - Other
Category	06/30/11		12/31/10		06/30/11		12/31/10		06/30/11		12/31/10
1 – 2	$	—	$	—	$	61	$	119	$	1,366	$	1,276
3		191		178		—		—		12		14
4		19,512		20,259		8,835		10,218		12,394		11,341
5		593		507		6		123		116		47
6		69		246		6		43		7		8
7		256		41		46		37		85		2
8		—		—		—		—		—		—
Total	$	20,621	$	21,231	$	8,954	$	10,540	$	13,980	$	12,688

The Corporation’s strategy for credit risk management includes ongoing credit examinations and management reviews of loans exhibiting deterioration of credit quality.  A deteriorating credit indicates an elevated likelihood of delinquency.  When a loan becomes delinquent, its credit grade is reviewed and changed accordingly.  Each downgrade to a classified credit results in a higher percentage of reserve to reflect the increased likelihood of loss for similarly graded credits.  Further deterioration could result in a certain credit being deemed impaired resulting in a collateral valuation for purposes of establishing a specific reserve which reflects the possible extent of such loss for that credit.

The Corporation uses a risk rating system, on a scale of 1 through 9, to grade each loan.  A general description of the characteristics of the risk grades is as follows:

1 – Prime	All of the risks associated with this credit (based on each of the Bank’s creditworthiness criteria) are minimal or the loan is supported by pledged deposits, U.S. government securities, etc.
2 – Good	Most of the risks associated with this credit (based on each of the Bank’s creditworthiness criteria) are minimal.
3 – Satisfactory	Some of the risks associated with this credit (based on each of the Bank’s creditworthiness criteria) are minimal.
4 – Fair	The weighted overall risk associated with this credit (based on each of the Bank’s creditworthiness criteria) is acceptable.
5 – Watch	The credits possess some of the credit deficiency or potential weakness which deserves close attention of management, but does not yet warrant substandard classification.
6 – Special Mention	The weighted overall risk associated with this credit is considered higher than normal (but still acceptable) or the loan possesses deficiencies which corrective action by the Bank would remedy, thereby reducing risk.
7 – Substandard	The weighted overall risk associated with this credit (based on each of the Bank’s creditworthiness criteria) is considered undesirable, or the Bank is inadequately protected and there exists the distinct possibility of sustaining some loss if not corrected.
8 – Doubtful	Weakness makes collection or liquidation in full (based on currently existing facts) improbable.
9 – Loss	This credit is of little value and not warranted as a bankable asset.

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Balance at beginning of period	$ 24,962	$ 22,936	$ 24,389	$ 22,695
Comprehensive income
Net income	628	557	1,245	1,075
Change in net unrealized gain (loss) on securities available for sale, net of reclassification and tax effects	66	73	119	(92)
Total comprehensive income	694	630	1,364	983
Stock-based compensation	10	4	18	6
Issuance of treasury stock for deferred compensation plan	23	0	55	0
Dividends paid	(140)	(114)	(277)	(228)
Balance at end of period	$ 25,549	$ 23,456	$ 25,549	$ 23,456

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities
Net income	$ 1,245	$ 1,075
Adjustments	(478)	1,186
Net cash from operating activities	767	2,261
Cash flows from investing activities
Purchases	(4,149)	(4,000)
Maturities and repayments	3,913	2,772
Net change in loans	6,555	5,320
Proceeds from sale of OREO and other repossessed assets	187	571
Bank premises and equipment expenditures	(270)	(125)
Net cash from investing activities	6,236	4,538
Cash flows from financing activities
Net change in deposits	(13,445)	6,214
Repayments of FHLB advances	0	(5,000)
Cash dividends paid	(277)	(228)
Issuance of treasury stock for deferred compensation plan	55	0
Net cash from financing activities	(13,667)	986
Net change in cash equivalents and federal funds sold	(6,664)	7,785
Cash equivalents and federal funds sold at beginning of period	22,080	12,246
Cash equivalents and federal funds sold at end of period	15,416	20,031
Supplemental disclosures
Cash paid for interest	1,215	1,921
Cash paid for income taxes	950	90
Non-cash transfer of loans to foreclosed and other repossessed assets	$ 360	$ 255

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OTHER COMPREHENSIVE INCOME

6 Months Ended

Jun. 30, 2011

Stockholders' Equity Note [Abstract]

Comprehensive Income Note [Text Block]

NOTE  9   OTHER COMPREHENSIVE INCOME

Other comprehensive income (in thousands) for the three months ended June 30:

	2011		2010
Unrealized holding gains and losses on securities available for sale	$	100	$	110
Less reclassification adjustments for gains and losses later recognized in income		—		—
Net unrealized gains and losses		100		110
Tax effect		34		37
Other comprehensive income	$	66	$	73

Other comprehensive income (in thousands) for the six months ended June 30:

	2011		2010
Unrealized holding gains and losses on securities available for sale	$	180	$	(139	)
Less reclassification adjustments for gains and losses later recognized in income		—		—
Net unrealized gains and losses		180		(139	)
Tax effect		61		(47	)
Other comprehensive income (loss)	$	119	$	(92

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 6,035	$ 5,270
Federal funds sold	9,381	16,810
Cash equivalents and federal funds sold	15,416	22,080
Securities available for sale	34,149	33,843
Other investment securities	2,259	2,260
Total loans	223,838	230,658
Allowance for loan losses	(3,536)	(3,198)
Loans, net	220,302	227,460
Premises and equipment, net	7,584	7,637
Accrued interest receivable	1,160	1,288
Other assets	10,124	9,835
Total assets	290,994	304,403
LIABILITIES
Noninterest-bearing demand	32,649	33,399
Interest-bearing demand	102,513	101,620
Savings and time deposits	92,430	97,460
Time deposits $100,000 and greater	36,207	44,765
Total deposits	263,799	277,244
Accrued interest payable	162	192
Other liabilities	1,484	2,578
Total liabilities	265,445	280,014
SHAREHOLDERS' EQUITY
Common stock, no par value; 4,000,000 shares authorized, 1,182,888 shares issued in 2011 and 2010	11,494	11,440
Retained earnings	14,848	13,936
Unearned compensation	(28)	(36)
Deferred compensation plan shares; at cost, 38,864 shares in 2011, and 35,467 shares in 2010	(670)	(626)
Treasury stock; 27,455 shares in 2011 and 31,543 shares in 2010	(751)	(862)
Accumulated other comprehensive income	656	537
Total shareholders' equity	25,549	24,389
Total liabilities and shareholders' equity	$ 290,994	$ 304,403