FAIR VALUE MEASUREMENT

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE Q - FAIR VALUE MEASUREMENT

We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. For example, investment securities available for sale are recorded at fair value on a recurring basis. Additionally, we may be required to record at fair value other assets on a nonrecurring basis, such as loans held for sale, impaired loans and certain other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. The following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Investment Securities. Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market exchange prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities and collateralized mortgage obligations, both issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Derivatives. Derivative instruments include interest rate swaps and are valued on a recurring basis using models developed by third-party providers. This type of derivative is classified as Level 2 within the hierarchy.

Mortgage Loans Held for Sale. Mortgage loans held for sale are carried at the lower of cost or estimated fair value. The fair values of mortgage loans held for sale are based on commitments on hand from investors within the secondary market for loans with similar characteristics. As a result, any fair value adjustments for mortgage loans held for sale are classified as nonrecurring Level 2.  Related to our mortgage lending program, we into interest rate lock commitments with customers and commitments to sell mortgages to various investors. Interest rate lock commitments are recorded at estimated fair value based on current secondary market pricing and are included in mortgage loans held for sale on the consolidated balance sheet. Interest rate lock commitments are classified as recurring Level 3.

Loans. Loans are not recorded at fair value on a recurring basis. However, certain loans are determined to be impaired, and those loans are charged down to estimated fair value. The fair value of impaired loans that are collateral dependent is based on collateral value. For impaired loans that are not collateral dependent, estimated value is based on either an observable market price, if available, or the present value of expected future cash flows. Those impaired loans not requiring a charge-off represent loans for which the estimated fair value exceeds the recorded investments in such loans. When the fair value of an impaired loan is based on an observable market price or a current appraised value with no adjustments, we record the impaired loan as nonrecurring Level 2. When an appraised value is not available, or we determine the fair value of the collateral is further impaired below the appraised value, and there is no observable market price, we classify the impaired loan as nonrecurring Level 3.

Foreclosed Assets. Foreclosed assets are adjusted to fair value upon transfer of loans to foreclosed assets. Subsequently, foreclosed assets are carried at lower of cost or net realizable value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. Given the lack of observable market prices for identical properties, the Company classifies foreclosed assets as nonrecurring Level 3.

The following tables summarize information about assets and liabilities measured at fair value at December 31, 2011 and 2010:

				Successor Company
				Fair Value Measurements at
				December 31, 2011, Using
				Quoted Prices		Significant
	Assets/(Liabilities)			in Active		Other			Significant
	Measured at			Markets for		Observable			Unobservable
	Fair Value			Identical Assets		Inputs			Inputs
Description				(Level 1)		(Level 2)			(Level 3)
Securities available for sale:
U.S. Government obligations and agency	$	-		$	-	$	-		$	-
Mortgage-backed		19,364,344			-		19,364,344			-
Collateralized mortgage obligations		82,094,869			-		82,094,869			-
Municipals		13,513,891			-		13,513,891			-
Corporate bonds		27,966,102					27,966,102			-
Marketable equity		564,642			564,642		-			-
Foreclosed assets		9,422,056			-		-			9,422,056
Impaired loans		-			-		-			-
Interest rate lock commitments		211,622			-		-			211,622
Derivative liabilities		(330,114	)		-		(330,114	)		-

				Predecessor Company
				Fair Value Measurements at
				December 31, 2010, Using
				Quoted Prices		Significant
	Assets/(Liabilities)			in Active		Other			Significant
	Measured at			Markets for		Observable			Unobservable
	Fair Value			Identical Assets		Inputs			Inputs
Description				(Level 1)		(Level 2)			(Level 3)
Securities available for sale:
U.S. Government obligations and agency	$	9,838,400		$	-	$	9,838,400		$	-
Mortgage-backed		39,724,845			-		39,724,845			-
Collateralized mortgage obligations		78,449,684			-		78,449,684			-
Municipals		50,618,363			-		50,618,363			-
Corporate bonds		2,768,800					2,768,800			-
Marketable equity		516,137			516,137		-			-
Foreclosed assets		15,523,592			-		-			15,523,592
Impaired loans		43,404,439			-		-			43,404,439
Interest rate lock commitments		53,185			-		-			53,185
Derivative liabilities		(579,038	)		-		(579,038	)		-

Due to the nature of the Company’s business, a significant portion of its assets and liabilities consist of financial instruments. Accordingly, the estimated fair values of these financial instruments are disclosed. Quoted market prices, if available, are utilized as an estimate of the fair value of financial instruments. The fair value of such instruments has been derived based on assumptions with respect to future economic conditions, the amount and timing of future cash flows and estimated discount rates. Different assumptions could significantly affect these estimates. Accordingly, the net amounts ultimately collected could be materially different from the estimates presented below. In addition, these estimates are only indicative of the values of individual financial instruments and should not be considered an indication of the fair value of the Company taken as a whole.

Cash and Cash Equivalents. The carrying amounts for cash and cash equivalents are equal to fair value.

Investment Securities Available for Sale. See discussion related to fair value estimates for securities available for sale in the fair value hierarchy section above.

Mortgage Loans Held For Sale. The fair value of mortgage loans held for sale is based on commitments on hand from investors within the secondary market for loans with similar characteristics.

Loans Held For Investment. Upon analyzing estimated credit losses, we forecasted expected cash flows over the remaining life of each loan and discounted those expected cash flows to present value at current market interest rates for similar loans considering loan collateral type and credit quality.

Federal Home Loan Bank Stock. Given the option to redeem this stock at par through the FHLB, the carrying value of FHLB stock approximates fair value.

Investment in Life Insurance. Bank-owned life insurance investments are recorded at their cash surrender value, or the amount that can be realized upon surrender. Therefore, carrying value approximates fair value.

Deposits. The fair value of demand deposits, savings, money market and NOW accounts represents the amount payable on demand. The fair value of time deposits is estimated using interest rates currently offered for instruments of similar remaining maturities.

Short-term Borrowings and Long-term Debt. The fair value of short-term borrowings and long-term debt are based upon the discounted value when using current rates at which borrowings of similar maturity could be obtained.

Accrued Interest Receivable and Accrued Interest Payable. The carrying amounts of accrued interest receivable and payable approximate fair value due to the short maturities of these instruments.

Derivative Instruments. See discussion related to fair value estimates for derivative instruments in the fair value hierarchy section above.

The following table summarizes the carrying amounts and estimated fair values of our financial instruments, none of which are held for trading purposes, at December 31, 2011 and 2010:

	Successor Company				Predecessor Company
	2011				2010
	Carrying		Estimated		Carrying		Estimated
	amount		fair value		amount		fair value
Financial assets:
Cash and cash equivalents	$	25,361,937	$	25,361,937	$	49,106,179	$	49,106,179
Investment securities		143,503,848		143,503,848		184,455,418		184,455,418
Federal Home Loan Bank stock		8,669,300		8,669,300		10,521,700		10,521,700
Mortgage loans held for sale		3,841,412		3,841,412		5,689,853		5,689,853
Loans held for investment, net		552,650,060		552,650,060		656,101,069		621,983,795
Investment in life insurance		19,261,443		19,261,443		18,482,993		18,482,993
Accrued interest receivable		2,801,634		2,801,634		3,995,242		3,995,242
Financial liabilities:
Deposits		674,418,586		674,418,586		724,383,323		742,610,196
Short-term borrowings		-		-		7,000,000		7,232,221
Long-term debt		12,215,901		12,215,901		157,748,000		158,661,779
Interest rate swaps		330,114		330,114		579,038		579,038
Accrued interest payable		779,784		779,784		1,350,326		1,350,326