FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2012

FAIR VALUE MEASUREMENTS

Schedule of financial asset amounts that are carried at fair value and measured at fair value on a recurring basis and the fair value hierarchy of the valuation techniques utilized by the entity to determine the fair value

	Fair value measurements at December 31, 2012
					Significant
			Quoted prices		other		Significant
			in active markets		observable		unobservable
			for identical		inputs		inputs
(in thousands)	Fair value		assets (Level 1)		(Level 2)		(Level 3)
Available-for-sale securities:
Obligations of U.S. government agencies	$	1,891	$	—	$	1,891	$	—
Obligations of state and political subdivisions	103,501		—		101,762		1,739
Government sponsored agency CMOs	9,103		—		9,103		—
Residential mortgage-backed securities	69,456		—		69,456		—
Corporate debt securities	410		—		410		—
Equity securities	1,000		1,000		—		—
Total securities available-for-sale	$	185,361	$	1,000	$	182,622	$	1,739

	Fair value measurements at December 31, 2011
					Significant
			Quoted prices		other		Significant
			in active markets		observable		unobservable
			for identical		inputs		inputs
(in thousands)	Fair value		assets (Level 1)		(Level 2)		(Level 3)
Available-for-sale securities:
Obligations of U.S. government agencies	$	8,048	$	—	$	8,048	$	—
Obligations of state and political subdivisions	96,161		—		93,350		2,811
Government sponsored agency CMOs	8,468		—		8,468		—
Private label CMOs	36,256		—		—		36,256
Residential mortgage-backed securities	31,393		—		31,393		—
Pooled trust preferred Senior Class	1,604		—		—		1,604
Pooled trust preferred Mezzanine Class	2,197		—		—		2,197
Corporate debt securities	342		—		342		—
Equity securities	1,006		1,006		—		—
Total securities available-for-sale	$	185,475	$	1,006	$	141,601	$	42,868

Schedule of reconciliation and statement of operations classifications of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

(in thousands)	PreTSLs			State and Political Subdivisions			Private Label CMOs			Total
Balance at December 31, 2010	$	3,069		$	2,245		$	—		$	5,314
Amortization	—			—			—			—
Accretion	—			—			—			—
Purchases	—			—			36,256			36,256
Paydowns	(106		)	(530		)	—			(636		)
Sales and calls	(19		)	—			—			(19		)
Transfers in and out of Level 3	—			1,182			—			1,182
Total gains or losses (realized/unrealized):
Included in earnings	(798		)	—			—			(798		)
Included in other comprehensive income	1,655			(86		)	—			1,569
Balance at December 31, 2011	$	3,801		$	2,811		$	36,256		$	42,868
Amortization	—			—			(395		)	(395		)
Accretion	—			—			101			101
Purchases	—			—			14,691			14,691
Paydowns	(172		)	(550		)	(13,478		)	(14,200		)
Sales and calls	(3,629		)	(585		)	(37,175		)	(41,389		)
Total gains or losses (realized/unrealized):
Included in earnings	—			—			—			—
Included in other comprehensive income	—			63			—			63
Balance at December 30, 2012	$	—		$	1,739		$	—		$	1,739

Schedule of assets measured at fair value on a non-recurring basis

	Fair value measurements at December 31, 2012
				Significant	Significant
			Quoted prices	other	other
			in active markets	observable	unobservable
			for identical	inputs	inputs
(in thousands)	Fair value (1)		assets (Level 1)	(Level 2)	(Level 3)
Collateral-dependent impaired loans	$	7,816			$	7,816
Other real estate owned	$	2,455			$	2,455

	Fair value measurements at December 31, 2011
				Significant	Significant
			Quoted prices	other	other
			in active markets	observable	unobservable
			for identical	inputs	inputs
(in thousands)	Fair value (1)		assets (Level 1)	(Level 2)	(Level 3)
Collateral-dependent impaired loans	$	12,555			$	12,555
Other real estate owned	$	5,212			$	5,212

(1) Represents carrying value and related write-downs for which adjustments are based on appraised value.  Management makes adjustments to the appraised values as necessary to consider declines in real estate values since the time of the appraisal.  Such adjustments are based on management’s knowledge of the local real estate markets.

Schedule of estimated fair values of the company's financial instruments

	Fair Value	December 31, 2012				December 31, 2011
(in thousands)	Measurement	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets
Cash and short term investments	Level 1	$	115,271	$	115,271	$	168,646	$	168,646
Securities	See previous table	187,559		187,844		187,569		187,720
FHLB and FRB Stock	Level 2	7,308		7,308		9,659		9,659
Loans held for sale	Level 2	1,615		1,615		94		94
Loans, net	Level 3	579,396		592,504		659,044		661,833
Accrued interest receivable	Level 2	2,199		2,199		2,552		2,552
Mortgage servicing rights	Level 3	675		884		777		1,185
Financial liabilities
Deposits	Level 2	854,613		858,970		957,136		964,238
Borrowed funds	Level 2	53,903		59,021		83,571		89,628
Accrued interest payable	Level 2	6,427		6,427		4,301		4,301