Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Information about the Company's assets and liabilities measured at fair value on a recurring basis

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value for the periods indicated.

			Fair Value Measurements At March 31, 2013, Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Available-for-Sale Securities:
Government Agency & Government-Sponsored Entities	$	26,692	$	21,612	$	5,080	$	-
Obligations of States and Political Subdivisions		5,643		-		-		5,643
Mortgage Backed Securities		432,285		-		432,285		-
Corporate Securities		50,128		9,373		40,755		-
Other		825		515		310		-
Total Assets Measured at Fair Value On a Recurring Basis	$	515,573	$	31,500	$	478,430	$	5,643

			Fair Value Measurements At December 31, 2012, Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Available-for-Sale Securities:
Government Agency & Government-Sponsored Entities	$	26,823	$	21,731	$	5,092	$	-
Obligations of States and Political Subdivisions		5,665		-		-		5,665
Mortgage Backed Securities		352,772		-		352,772		-
Corporate Securities		22,558		4,020		18,538		-
Other		10,173		9,863		310		-
Total Assets Measured at Fair Value On a Recurring Basis	$	417,991	$	35,614	$	376,712	$	5,665

			Fair Value Measurements At March 31, 2012, Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Available-for-Sale Securities:
Government Agency & Government-Sponsored Entities	$	67,342	$	20,970	$	46,372	$	-
Obligations of States and Political Subdivisions		5,753		-		-		5,753
Mortgage Backed Securities		448,311		-		448,311		-
Corporate Securities		344		-		344		-
Other		10,067		9,657		410		-
Total Assets Measured at Fair Value On a Recurring Basis	$	531,817	$	30,627	$	495,437	$	5,753

Changes in level 3 assets measured at fair value on a recurring basis

Fair values for Level 2 available-for-sale investment securities are based on quoted market prices for similar securities. During the quarters ended March 31, 2013 and 2012, there were no transfers in or out of level 1, 2, or 3. The following table presents changes in level 3 assets measured at fair value on a recurring basis.

	Three Months Ended March 31,
(in thousands)	2013			2012
Balance at Beginning of Period	$	5,665		$	5,782
Total Realized and Unrealized Gains/(Losses) Included in Income		-			-
Total Unrealized Gains/(Losses) Included in Other Comprehensive Income		-			-
Purchase of Securities		-			-
Sales, Maturities, and Calls of Securities		(22	)		(29	)
Net Transfers In/(Out) of Level 3		-			-
Balance at End of Period	$	5,643		$	5,753

Information about the Company's assets and liabilities measured at fair value on a non-recurring basis

The following tables present information about the Company's other real estate and impaired loans, classes of assets or liabilities that the Company carries at fair value on a non-recurring basis, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value for the periods indicated. Not all impaired loans are carried at fair value. Impaired loans are only included in the following tables when their fair value is based upon a current appraisal of the collateral, and if that appraisal results in a partial charge-off or the establishment of a specific reserve.

			Fair Value Measurements At March 31, 2013, Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Impaired Loans
Agricultural Real Estate	$	1,572	$	-	$	-	$	1,572
Residential 1st Mortgage		289		-		-		289
Home Equity Lines and Loans		15		-		-		15
Agricultural		965		-		-		965
Commercial		220		-		-		220
Total Impaired Loans		3,061		-		-		3,061
Other Real Estate
Real Estate Construction		2,553		-		-		2,553
Agricultural Real Estate		1,910		-		-		1,910
Agricultural		280		-		-		280
Total Other Real Estate		4,743		-		-		4,743
Total Assets Measured at Fair Value On a Non-Recurring Basis	$	7,804	$	-	$	-	$	7,804

The fair value of impaired loans with a specific reserve or a partial charge-off was $3.0 million, net of an allowance for credit losses of $1.7 million.

ORE was $4.7 million, net of a $4.1 million valuation allowance. ORE has been adjusted to estimated fair value, less estimated selling costs. At the time of foreclosure, foreclosed assets are recorded at the estimated fair value less estimated selling costs. Any write-downs based on the asset's fair value at the date of acquisition are charged to the allowance for credit losses. After foreclosure, management periodically obtains updated valuations of the foreclosed assets and, if additional impairments are deemed necessary, the impairment is recorded in non-interest expense on the Consolidated Statements of Income.

			Fair Value Measurements At December 31, 2012, Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Impaired Loans
Residential 1st Mortgage	$	235	$	-	$	-	$	235
Home Equity Lines and Loans		462		-		-		462
Agricultural		1,010		-		-		1,010
Total Impaired Loans		1,707		-		-		1,707
Other Real Estate
Real Estate Construction		2,553		-		-		2,553
Total Other Real Estate		2,553		-		-		2,553
Total Assets Measured at Fair Value On a Non-Recurring Basis	$	4,260	$	-	$	-	$	4,260

The fair value of impaired loans with a specific reserve or a partial charge-off or was $1.7 million, net of an allowance for credit losses of $1.4 million. The fair value of ORE was $2.6 million, net of a $4.1 million valuation allowance.

			Fair Value Measurements At March 31, 2012, Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Impaired Loans
Commercial Real Estate	$	61	$	-	$	-	$	61
Home Equity Lines and Loans		225		-		-		225
Commercial		49		-		-		49
Total Impaired Loans		335		-		-		335
Other Real Estate
Real Estate Construction		2,553		-		-		2,553
Residential 1st Mortgage		371		-		-		371
Total Other Real Estate		2,924		-		-		2,924
Total Assets Measured at Fair Value On a Non-Recurring Basis	$	3,259	$	-	$	-	$	3,259

- Definition

Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

+ References+ Details

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details