FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2012

Investments, All Other Investments [Abstract]

Financial Instruments Disclosure [Text Block]

NOTE E – FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying values and estimated fair values of the Company's financial instruments at September 30, 2012 and December 31, 2011:

	September 30, 2012
	Carrying		Estimated
	Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash and due from banks	$	18,832	$	18,832	$	18,832	$	-	$	-
Interest-earning deposits in other banks		75,971		75,971		75,971		-		-
Federal funds sold		3,028		3,028		3,028		-		-
Investment securities available for sale		67,339		67,339		-		67,339		-
Loans, net		377,508		393,220		-		-		393,220
Accrued interest receivable		1,909		1,909		-		-		1,909
Stock in the FHLB		973		973		-		-		973
Other non-marketable securities		1,143		1,143		-		-		1,143
Financial liabilities:
Deposits	$	481,320	$	490,120	$	-	$	490,120	$	-
Short-term debt		26,195		26,195		-		26,195		-
Long-term debt		12,372		7,661		-		7,661		-
Accrued interest payable		293		293		-		-		293

	December 31, 2011
	Carrying		Estimated
	Amount		Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash and due from banks	$	18,478	$	18,478	$	18,478	$	-	$	-
Interest-earning deposits in other banks		55,590		55,590		55,590		-		-
Federal funds sold		3,028		3,028		3,028		-		-
Investment securities available for sale		67,854		67,854		-		67,854		-
Loans, net		407,590		424,851		-		-		424,851
Premises and equipment held for sale		1,113		1,113		-		-		1,113
Accrued interest receivable		2,003		2,003		-		-		2,003
Stock in the FHLB		1,248		1,248		-		-		1,248
Other non-marketable securities		1,080		1,080		-		-		1,080
Financial liabilities:
Deposits	$	501,377	$	509,454	$	-	$	509,454	$	-
Short-term debt		21,877		21,877		-		21,877		-
Long-term debt		14,372		9,661		-		9,661		-
Accrued interest payable		330		330		-		-		330

Cash and Due from Banks, Interest-Earning Deposits in Other Banks and Federal Funds Sold

The carrying amounts for cash and due from banks, interest-earning deposits in other banks and federal funds sold approximate fair value because of the short maturities of those instruments.

Investment Securities Available for Sale

Fair value for investment securities available for sale equals quoted market price if such information is available. If a quoted market price is not available, fair value is estimated using prices quoted for similar investments or quoted market prices obtained from independent pricing services.

Loans

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. However, the values likely do not represent exit prices due to distressed market conditions.

Stock in Federal Home Loan Bank of Atlanta and Other Non-marketable Securities

The fair value for FHLB stock approximates carrying value, based on the redemption provisions of the Federal Home Loan Bank. The fair value of stock in other non-marketable securities is assumed to approximate carrying value.

Premises and Equipment Held for Sale

Premises and equipment held for sale are stated at book value which approximates fair market value.

Deposits

The fair value of demand deposits is the amount payable on demand at the reporting date. The fair values of time deposits are estimated using the rates currently offered for instruments of similar remaining maturities.

Short-term Debt

The fair values of short-term debt (sweep accounts that re-price daily and short-term FHLB advances) are based on discounting expected cash flows at the interest rate for debt with the same or similar remaining maturities and collateral requirements.

Long-term Debt

The fair values of long-term debt are based on discounting expected cash flows at the interest rate for debt with the same or similar remaining maturities and collateral requirements.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amounts of accrued interest receivable and payable approximate fair value because of the short maturities of these instruments.

Financial Instruments with Off-Balance Sheet Risk

With regard to financial instruments with off-balance sheet risk, it is not practicable to estimate the fair value of future financing commitments.