Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Disclosures [Abstract]

Estimated Fair Value of Financial Instruments

The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):

	June 30, 2012
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	18,643	$	18,643	$	—	$	—	$	18,643
Interest-earning deposits in other banks	28,231		28,231		—		—		28,231
Federal funds sold	610		610		—		—		610
Available-for-sale investment securities	322,931		7,976		314,955		—		322,931
Loans, net	404,203		—		—		404,978		404,978
Federal Home Loan Bank stock	3,850		N/A		N/A		N/A		N/A
Accrued interest receivable	3,865		19		2,005		1,841		3,865
Financial liabilities:
Deposits	702,751		—		703,256		—		703,256
Short-term borrowings	4,000		—		4,082		—		4,082
Junior subordinated deferrable interest debentures	5,155		—		—		3,190		3,190
Accrued interest payable	205		—		178		27		205

	December 31, 2011
(In thousands)	Carrying Amount		Fair Value
Financial assets:
Cash and due from banks	$	19,409	$	19,409
Interest-earning deposits in other banks	24,467		24,467
Federal funds sold	928		928
Available-for-sale investment securities	328,413		328,413
Loans, net	415,999		418,084
Federal Home Loan Bank stock	2,893		N/A
Accrued interest receivable	3,953		3,953
Financial liabilities:
Deposits	712,986		719,673
Long-term debt	4,000		4,146
Junior subordinated deferrable interest debentures	5,155		2,706
Accrued interest payable	230		230

Fair Value of Assets on a Recurring Basis

The Company is required or permitted to record the following assets at fair value on a recurring basis under other accounting pronouncements as of June 30, 2012 (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale securities
Debt Securities:
Obligations of states and political subdivisions	$	115,814	$	—	$	115,814	$	—
U.S. Government agencies collateralized by residential mortgage obligations	192,472		—		192,472		—
Private label residential mortgage backed securities	6,669		—		6,669		—
Other equity securities	7,976		7,976		—		—
Total assets measured at fair value on a recurring basis	$	322,931	$	7,976	$	314,955	$	—

The Company is required or permitted to record the following assets at fair value on a recurring basis under other accounting pronouncements (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale securities
Debt Securities:
U.S. Government agencies	$	149	$	—	$	149	$	—
Obligations of states and political subdivisions	108,431		—		108,431		—
U.S. Government agencies collateralized by residential mortgage obligations	204,544		—		204,544		—
Private label residential mortgage backed securities	7,398		—		7,398		—
Other equity securities	7,891		7,891		—		—
Total assets measured at fair value on a recurring basis	$	328,413	$	7,891	$	320,522	$	—

Fair Value of Assets on a Non-recurring Basis

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis.  These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at June 30, 2012 (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3
Impaired loans:
Commercial:
Commercial and industrial	$	923	$	—	$	—	$	923
Total commercial	923		—		—		923
Real estate:
Real estate-construction and other land loans	8,671		—		—		8,671
Total real estate	8,671		—		—		8,671
Consumer:
Equity loans and lines of credit	206		—		—		206
Total consumer	206		—		—		206
Total impaired loans	9,800		—		—		9,800
Other real estate owned-commercial real estate	2,098		—		—		2,098
Total assets measured at fair value on a non-recurring basis	$	11,898	$	—	$	—	$	11,898

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis.  These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2011 (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3		Total Gains (Losses) in the Period
Impaired loans:
Commercial:
Commercial and industrial	$	2,312	$	—	$	—	$	2,312	$	(271	)
Agricultural production	—		—		—		—		—
Total commercial	2,312		—		—		2,312		(271		)
Real estate:
Owner occupied	873		—		—		873		(65		)
Real estate-construction and other land loans	8,782		—		—		8,782		(996		)
Commercial real estate	1,487		—		—		1,487		(1,366		)
Total real estate	11,142		—		—		11,142		(2,427		)
Consumer:
Equity loans and lines of credit	2,003		—		—		2,003		4
Consumer and installment	51		—		—		51		(23		)
Total consumer	2,054		—		—		2,054		(19		)
Total impaired loans	15,508		—		—		15,508		(2,717		)
Other real estate owned	—		—		—		—		—
Total assets measured at fair value on a non-recurring basis	$	15,508	$	—	$	—	$	15,508	$	(2,717	)

Quantitative Information for Level 3 Fair Value Measurements

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2012 (dollars in thousands):

Description	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Impaired Loans:
Commercial and industrial	$	923	Appraisal - price digest bluebook	Adjustments for lack of sales activity and selling costs	- 40% (-40%)
Real estate-construction and other land loans	$	8,671	Appraisal - land development method	Adjustments for absorption rate, discount rate, selling costs, and lot value appreciation/depreciation	0% - 30% (25%)
Equity loans and lines of credit	$	206	Internal evaluation	Adjustments in home values and selling costs	- 15% (-15%)