5.	Interim Disclosures about Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and Cash Equivalents

For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities Available for Sale

Management utilizes quoted market pricing for the fair value of the Corporation's securities that are available for sale, if available. If a quoted market rate is not available, fair value is estimated using quoted market prices for similar securities.

Regulatory Stock

Regulatory stock is valued at a stable dollar price, which is the price used to purchase or liquidate shares; therefore the carrying amount is a reasonable estimate of fair value.

Loans Held for Sale

Loans held for sale are individual loans for which the Corporation has a firm sales commitment; therefore, the carrying value is a reasonable estimate of the fair value.

Loans

The fair value of fixed and variable rate loans is estimated by discounting back the scheduled future cash flows of the particular loan product, using the market interest rates of comparable loan products in the Corporation's greater market area, with the same general structure, comparable credit ratings, and for the same remaining maturities.

Accrued Interest Receivable

The carrying amount of accrued interest receivable is a reasonable estimate of fair value.

Bank Owned Life Insurance

Fair value is equal to the cash surrender value of the life insurance policies.

Mortgage Servicing Assets

The fair value of mortgage servicing assets is based on the present value of future cash flows for pools of mortgages, stratified by rate and maturity date.

Deposits

The fair value of non-interest bearing demand deposit accounts and interest bearing demand, savings, and money market deposit accounts is based on the amount payable on demand at the reporting date. The fair value of fixed-maturity time deposits is estimated by discounting back the expected cash flows of the time deposit using market interest rates from the Corporation's greater market area currently offered for similar time deposits with similar remaining maturities.

Long-term Borrowings

The fair value of a long-term borrowing is estimated by comparing the rate currently offered for the same type of borrowing instrument with a matching remaining term.

Accrued Interest Payable

The carrying amount of accrued interest payable is a reasonable estimate of fair value.

Firm Commitments to Extend Credit, Lines of Credit, and Open Letters of Credit

These financial instruments are generally not subject to sale and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment, using fees currently charged to enter into similar agreements with similar credit risk, is not considered material for disclosure purposes. The contractual amounts of unfunded commitments are presented in Note 6.

Fair Value of Financial Instruments

The carrying amounts and estimated fair values of the Corporation's financial instruments at June 30, 2011, December 31, 2010, and June 30, 2010, are as follows:

FAIR VALUE OF FINANCIAL INSTRUMENTS

(DOLLARS IN THOUSANDS)

	June 30,				December 31,				June 30,
	2011				2010				2010
	Carrying				Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value		Amount		Fair Value
	$		$		$		$		$		$
Financial Assets:
Cash and cash equivalents		38,572		38,572		29,226		29,226		23,353		23,353
Securities available for sale		265,637		265,637		259,138		259,138		256,079		256,079
Regulatory stock		4,242		4,242		4,680		4,680		4,916		4,916
Loans held for sale		253		253		771		771		111		111
Loans, net of allowance		401,201		410,568		408,102		409,238		420,300		425,492
Accrued interest receivable		3,056		3,056		3,044		3,044		3,300		3,300
Bank owned life insurance		16,213		16,213		15,891		15,891		15,567		15,567
Mortgage servicing assets		30		30		32		32		39		39

Financial Liabilities:
Demand deposits		137,928		137,928		131,534		131,534		124,260		124,260
NOW accounts		63,397		63,397		63,877		63,877		58,153		58,153
Savings accounts		100,566		100,566		92,964		92,964		92,180		92,180
Money market deposit accounts		53,953		53,953		55,111		55,111		50,014		50,014
Time deposits		237,645		241,273		252,108		256,233		267,895		272,679
Total deposits		593,489		597,117		595,594		599,719		592,502		597,286

Long-term borrowings		79,000		83,304		74,500		79,083		80,000		85,318

Accrued interest payable		1,118		1,118		1,268		1,268		1,401		1,401