10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934

For the Quarterly Period Ended September 30, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             .

Commission File No. 1-13652

First West Virginia Bancorp, Inc.

(Exact name of registrant as specified in its charter)

West Virginia	55-6051901
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1701 Warwood Avenue

Wheeling, West Virginia 26003

(Address of principal executive offices)

Registrant’s telephone number, including area code: (304) 277-1100

N/A

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months ( or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days.     x   Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer , an accelerated filer or a non-accelerated filer as defined by Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-accelerated filer	¨	Smaller Reporting Company	x

Indicate by check mark whether the Registrant is a shell company as defined by Rule 12b-2 of the Exchange Act.     ¨  Yes     x  No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     ¨   Yes     ¨   No     x  N/A

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practible date. The number of shares outstanding of the issuer’s common stock as of November 9, 2012: Common Stock, $5.00 Par Value, shares outstanding: 1,652,814 shares

FORM 10-Q INDEX

		Page No.
PART I - Financial Information
Item 1.	Financial Statements		3-26
	Consolidated Balance Sheets at September 30, 2012 (unaudited) and December 31, 2011		4
	Consolidated Statements of Income for the three and nine months ended September 30, 2012 and September 30, 2011 (unaudited)		5
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and September 30, 2011 (unaudited)		6
	Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2012 and 2011 (unaudited)		7
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 (unaudited)		8
	Notes to Consolidated Financial Statements (unaudited)		9-26
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27-38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		39
Item 4.	Controls and Procedures		39
PART II - Other Information
Item 1.	Legal Proceedings		40
Item 1A.	Risk Factors		40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		40
Item 3.	Defaults upon Senior Securities		40
Item 4.	Mine Safety Disclosures		40
Item 5.	Other Information		40
Item 6.	Exhibits		40
SIGNATURES			41

2

FIRST WEST VIRGINIA BANCORP, INC.

PART I

FINANCIAL INFORMATION

3

First West Virginia Bancorp, Inc.

CONSOLIDATED BALANCE SHEETS

	September 30, 2012			December 31, 2011
	(Unaudited)
ASSETS
Cash and due from banks	$	4,759,103		$	6,671,293
Due from banks - interest bearing		16,274,000			14,245,480
Total cash and cash equivalents		21,033,103			20,916,773
Investment securities:
Available-for-sale (at fair value)		166,464,449			150,960,955
Loans		100,726,270			109,428,476
Less allowance for loan losses		(2,512,909	)		(2,503,738	)
Net loans		98,213,361			106,924,738
Premises and equipment, net		6,412,950			5,917,719
Accrued income receivable		1,185,615			1,140,273
Goodwill		1,644,119			1,644,119
Bank owned life insurance		3,597,816			3,518,450
Other assets		2,460,384			2,235,063
Total assets	$	301,011,797		$	293,258,090
LIABILITIES
Noninterest bearing deposits:
Demand	$	31,379,663		$	31,915,482
Interest bearing deposits:
Demand		46,655,399			47,890,988
Savings		91,430,917			85,579,615
Time		69,854,783			73,790,921
Total deposits		239,320,762			239,177,006
Federal funds purchased and securities sold under agreements to repurchase		18,570,150			14,013,506
Federal Home Loan Bank borrowings		3,628,451			3,693,014
Accrued interest payable		170,782			217,726
Other liabilities		3,366,128			1,630,328
Total liabilities		265,056,273			258,731,580
STOCKHOLDERS’ EQUITY
Common stock - 2,000,000 shares authorized at $5 par value:
1,662,814 shares issued at September 30, 2012 and December 31, 2011		8,314,070			8,314,070
Treasury stock - 10,000 shares at cost:		(228,100	)		(228,100	)
Surplus		6,288,403			6,288,403
Retained earnings		17,601,075			16,920,319
Accumulated other comprehensive income		3,980,076			3,231,818
Total stockholders’ equity		35,955,524			34,526,510
Total liabilities and stockholders’ equity	$	301,011,797		$	293,258,090

The accompanying notes are an integral part of the unaudited consolidated financial statements.

4

First West Virginia Bancorp, Inc.

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended, September 30,					Nine Months Ended, September 30,
	2012			2011		2012		2011
	(Unaudited)					(Unaudited)
INTEREST AND DIVIDEND INCOME
Loans, including fees:
Taxable	$	1,289,102		$	1,506,060	$	3,927,389	$	4,554,523
Tax-exempt		113,894			125,556		354,419		403,624
Debt securities:
Taxable		602,929			813,718		1,862,526		2,495,816
Tax-exempt		438,758			348,766		1,294,607		1,064,237
Other interest and dividend income		10,388			12,755		36,315		33,095
Total interest and dividend income		2,455,071			2,806,855		7,475,256		8,551,295
INTEREST EXPENSE
Deposits		355,600			473,119		1,158,740		1,497,405
Federal funds purchased and repurchase agreements		31,380			28,306		87,341		79,091
Federal Home Loan Bank borrowings		43,512			44,528		130,818		133,820
Total interest expense		430,492			545,953		1,376,899		1,710,316
Net interest income		2,024,579			2,260,902		6,098,357		6,840,979
PROVISION FOR LOAN LOSSES		—			—		—		600,000
Net interest income after provision for loan losses		2,024,579			2,260,902		6,098,357		6,240,979
NONINTEREST INCOME
Service charges and other fees		118,586			133,155		346,149		363,081
Net gains on available for sale securities		1,671			375,121		343,950		642,997
Other operating income		186,410			213,736		582,900		548,316
Total noninterest income		306,667			722,012		1,272,999		1,554,394
NONINTEREST EXPENSE
Salary and employee benefits		932,344			971,599		2,788,842		2,844,320
Net occupancy expense of premises		385,898			375,984		1,144,254		1,080,720
Other operating expenses		551,220			546,254		1,769,159		1,779,859
Total noninterest expense		1,869,462			1,893,837		5,702,255		5,704,899
Income before income taxes		461,784			1,089,077		1,669,101		2,090,474
INCOME TAX EXPENSE (BENEFIT)		(21,042	)		230,145		46,241		272,500
Net income	$	482,826		$	858,932	$	1,622,860	$	1,817,974
WEIGHTED AVERAGE SHARES OUTSTANDING		1,652,814			1,652,814		1,652,814		1,652,814
EARNINGS PER COMMON SHARE	$	0.29		$	0.52	$	0.98	$	1.10
DIVIDENDS PER COMMON SHARE	$	0.19		$	0.19	$	0.57	$	0.57

The accompanying notes are an integral part of the unaudited consolidated financial statements.

5

First West Virginia Bancorp, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended, September 30,						Nine Months Ended, September 30,
	2012			2011			2012			2011
	(Unaudited)						(Unaudited)
Net Income	$	482,826		$	858,932		$	1,622,860		$	1,817,974
Other comprehensive income:
Investment securities available for sale
Unrealized holding gains arising during the period		877,209			2,087,736			1,543,659			3,608,861
Income tax effect		(330,094	)		(785,615	)		(580,879	)		(1,358,014	)
Reclassification of gains recognized in earnings		(1,671	)		(375,120	)		(343,950	)		(642,997	)
Income tax effect		629			141,157			129,428			241,960
Total other comprehensive income	$	546,073		$	1,068,158		$	748,258		$	1,849,810
Comprehensive income	$	1,028,899		$	1,927,090		$	2,371,118		$	3,667,784

The accompanying notes are an integral part of the unaudited consolidated financial statements.

6

First West Virginia Bancorp, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

					Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income		Total
	Common Stock
	Shares		Amount
BALANCE, DECEMBER 31, 2011		1,662,814	$	8,314,070	$	6,288,403	$	16,920,319		$	(228,100	)	$	3,231,818	$	34,526,510
Comprehensive income:
Net Income		—		—		—		1,622,860			—			—		1,622,860
Other comprehensive income														748,258		748,258
Cash dividend ($.57 per share)		—		—		—		(942,104	)		—			—		(942,104	)
BALANCE, September 30, 2012		1,662,814	$	8,314,070	$	6,288,403	$	17,601,075		$	(228,100	)	$	3,980,076	$	35,955,524
					Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income		Total
	Common Stock
	Shares		Amount
BALANCE, DECEMBER 31, 2010		1,662,814	$	8,314,070	$	6,288,403	$	15,722,313		$	(228,100	)	$	1,004,500	$	31,101,186
Comprehensive income:
Net Income		—		—		—		1,817,974			—			—		1,817,974
Other comprehensive income														1,849,810		1,849,810
Cash dividend ($.57 per share)		—		—		—		(942,104	)		—			—		(942,104	)
BALANCE, September 30, 2011		1,662,814	$	8,314,070	$	6,288,403	$	16,598,183		$	(228,100	)	$	2,854,310	$	33,826,866

The accompanying notes are an integral part of the unaudited consolidated financial statements.

7

First West Virginia Bancorp, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	For the Nine Months Ended September 30,
	2012			2011
OPERATING ACTIVITIES
Net income	$	1,622,860		$	1,817,974
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		—			600,000
Depreciation		383,288			362,390
Amortization of investment securities, net		427,979			177,273
Investment security gains		(343,950	)		(642,997	)
Loss on disposal of premises and equipment		4,687			—
Increase in cash surrender value of bank-owned life insurance		(79,366	)		(76,929	)
Increase in interest receivable		(45,342	)		(119,595	)
Decrease in interest payable		(46,944	)		(63,989	)
Other, net		(1,040,971	)		927,355
Net cash provided by operating activities		882,241			2,981,482
INVESTING ACTIVITIES
Net decrease in loans, net of charge-offs		8,692,361			6,895,105
Recoveries on loans previously charged-off		19,016			52,178
Proceeds from sales of securities available-for-sale		10,005,882			18,299,847
Proceeds from maturities of securities available-for-sale		23,822,977			33,350,126
Principal collected on mortgage-backed securities		12,719,445			14,302,668
Purchases of securities available-for-sale		(58,836,119	)		(72,559,191	)
Purchases of premises and equipment		(883,206	)		(382,861	)
Net cash used in investing activities		(4,459,644	)		(42,128	)
FINANCING ACTIVITIES
Net increase in deposits		143,756			6,985,022
Dividends paid		(942,104	)		(942,104	)
Increase in short-term borrowings		4,556,644			3,434,775
Decrease in Federal Home Loan Bank borrowings		(64,563	)		(61,556	)
Net cash provided by financing activities		3,693,733			9,416,137
INCREASE IN CASH AND CASH EQUIVALENTS		116,330			12,355,491
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		20,916,773			9,932,613
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	21,033,103		$	22,288,104
Supplemental Disclosures:
Cash Paid for Interest	$	1,423,843		$	1,774,304
Cash Paid for Income Taxes	$	248,750		$	161,183

The accompanying notes are an integral part of the unaudited consolidated financial statements.

8

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting and reporting policies applied in the presentation of the accompanying financial statements follows.

Nature of Operations and Basis of Presentation: First West Virginia Bancorp, Inc. (the “Company”) is a West Virginia Company. The Company provides a variety of banking services to individuals and businesses through the branch network of its affiliate bank (the “Bank”). The Bank operates nine full service branches located in Wheeling (3), Wellsburg, Moundsville, New Martinsville, Buckhannon, and Weston, West Virginia and Bellaire, Ohio. Primary deposit products consist of checking accounts, savings accounts, and certificates of deposit. Primary lending products consist of commercial and residential real estate loans, consumer loans, and business loans.

Principles of Consolidation: The consolidated financial statements of the Company include the financial statements of the parent and its wholly-owned subsidiary, Progressive Bank, N.A. All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to material change in the near term relate to the determination of the allowance for loan losses and the valuation of deferred tax assets.

Cash and cash equivalents: Cash and cash equivalents consist of cash on hand and amounts due from banks and federal funds sold with maturities of less than 90 days.

Investment Securities: Investment securities are classified at the time of purchase, based on management’s intention and ability, as securities available for sale or held to maturity. Debt securities classified as held to maturity are stated at cost adjusted for amortization of premium and accretion of discount which are computed using the interest method and recognized as adjustments of interest income. Certain other debt and equity securities have been classified as available for sale to serve principally as a source of liquidity. Unrealized holding gains and losses for available-for-sale securities are reported as a separate component of stockholders’ equity, net of tax, until realized. Realized securities gains and losses are computed using the specific identification method. Interest and dividends on investment securities are recognized as income when earned.

Securities are periodically reviewed for other-than-temporary impairment based upon a number of factors, including, but not limited to, the length of time and extent to which the market value has been less than cost, the financial condition of the underlying issuer, the ability of the issuer to meet contractual obligations, the likelihood of the security’s ability to recover any decline in its market value, and management’s intent and ability to hold the security for a period of time sufficient to allow for a recovery in market value. Among the factors that are considered in determining management’s intent and ability is a review of the Company’s capital adequacy, interest rate risk position and liquidity. The assessment of a security’s ability to recover any decline in market value, the ability of the issuer to meet contractual obligations and management’s intent and ability requires considerable judgment. Once a decline in value is determined to be other than temporary, if the investor does not intend to sell the security, and it is more-likely-than-not that it will not be required to sell the security, before recovery of the security’s amortized cost basis, the charge to earnings is limited to the amount of credit loss. Any remaining difference between fair value and amortized cost (the difference defined as the non-credit portion) is recognized in other comprehensive income, net of applicable taxes. Otherwise, the entire difference between fair value and amortized cost is charged to earnings. At September 30, 2012 and December 31, 2011, there were no investment securities identified by management to be other-than-temporarily impaired. If investments decline in fair value due to adverse changes in the financial markets, charges to income could occur in future periods.

Common stock of the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank represents ownership interest in institutions that are wholly owned by other financial institutions. These equity securities are accounted for at cost and are classified with other assets. The Bank is a member of the FHLB and, as such, is required to maintain a minimum investment in stock of the FHLB that varies with the level of advances outstanding with the FHLB. The stock is bought from and sold to the FHLB based upon its $100 par value. The stock does not have a readily determinable fair value and, as such, is classified as restricted stock, carried at cost and evaluated by management. The stock’s value is determined by the ultimate recoverability of the par value rather than by recognizing temporary declines. The determination of whether the par value will ultimately be recovered is influenced by criteria such as the following: (a) the significance of the decline in net assets of the FHLB as compared with the capital stock amount and the length of time this situation has persisted, (b) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance, (c) the impact of legislative and regulatory changes on the customer base of the FHLB, and (d) the liquidity position of the FHLB.

9

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investment Securities: (Continued)

The FHLB had incurred losses in 2009 and for parts of 2010 due primarily to other-than-temporary impairment credit losses on its private- label mortgage-backed securities portfolio. These securities were the most affected by the extreme economic conditions in place during the previous several years. As a result, the FHLB had suspended the payment of dividends and limited the amount of capital stock repurchases. The FHLB had reported net income for both the fourth quarter and the year ended December 31, 2011, and has declared a $.10 percent annualized dividend to its shareholders effective February 23, 2012. While the FHLB has not committed to regular dividend payments or future limited repurchases of excess capital stock, it will continue to monitor the overall financial performance of the FHLB in order to determine the status of limited repurchases of excess capital or dividends in the future. Management evaluated the stock and concluded that the stock was not impaired for the periods presented herein. More consideration was given to the long-term prospects for the FHLB as opposed to the recent stress caused by the extreme economic conditions the world is facing. Management also considered that the FHLB’s regulatory capital ratios have increased from the prior year, liquidity appears adequate, new shares of FHLB stock continue to exchange hands at $100 par value, and the resumption of dividends.

Loans and Loans Held for Sale: Loans are generally reported at the principal balance outstanding, net of unearned income. Interest income on loans is accrued based on the principal outstanding. It is the Company’s policy to discontinue the accrual of interest when either the principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection. It is the Company’s policy not to recognize interest income on specific impaired loans unless the likelihood of future loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. Nonaccrual loans may be returned to accrual status when none of its principal and interest payments are due and there has been a sustained period of repayment performance. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the contractual life of the related loans or commitments as an adjustment of the related loan’s yield. Loans held for sale are carried at the lower of cost or estimated market value in the aggregate. There were no loans held for sale as of September 30, 2012 and December 31, 2011, respectively.

The Company has entered into an agreement with the Federal Home Loan Bank of Pittsburgh (“FHLB”) under which the bank may sell conforming one-to-four family residential mortgage loans to the FHLB. The current agreement dated December 28, 2011 provides for a maximum commitment of $5,000,000. This commitment expires on December 28, 2012. Loans sold to the FHLB are sold with limited recourse or credit risk based upon utilization of the original commitment. The bank also maintains the servicing of these loans, for which it is paid a servicing fee. The total amount of loans sold and outstanding to the FHLB were $9,911,832 and $9,470,840 as of September 30, 2012 and December 31, 2011, respectively. These loans were also subject to recourse obligation or credit risk in the amount of $415,152 and $383,269 at September 30, 2012 and December 31, 2011, respectively. The amount of income recognized as of a result of this agreement was $14,562 and $20,173 for the three months ended September 30, 2012 and 2011, respectively, and $57,838 and $50,330 for the nine months ended September 30, 2012 and 2011, respectively.

Allowance for Loan Losses: The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses that is charged to operations. The provision is based on management’s evaluation of the adequacy of the allowance for loan losses which encompasses the overall risk characteristics of the various portfolio segments, past experience with losses, the impact of economic conditions on borrowers, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to significant changes in the near term.

Management tracks and assigns a historical loss percentage for each loan rating category within each loan type. A rolling three-year historical loss ratio is used, calculated on a quarterly basis.

Management currently utilizes nine qualitative factors that are adjusted based on changes in the lending environment and economic conditions. The qualitative factors include the following: levels of and trends in delinquencies, non-accruals, and charge-offs; trends within the loan portfolio; changes in lending policies and procedures; experience of lending personnel and management oversight; national and local economic trends; concentrations of credit; external factors such as legal and regulatory requirements; changes in the quality of loan review and Board oversight; and changes in the value of underlying collateral. The number of qualitative factors can change. Factors can be added for new risks or taken away if the risk no longer applies. Each loan type will have its own risk profile and management will evaluate and adjust each qualitative factor for each loan type quarterly, if necessary. For example, if one area of the loan portfolio is experiencing sharp increases in growth, it is likely the qualitative factor for trends in the loan portfolio would be increased for that loan type. As levels of delinquencies and non-accrual loans decline for commercial real estate and commercial loans it is likely that factor would be reduced.

In terms of the Company’s loan portfolio, the commercial and industrial loans and commercial real estate loans are deemed to have more risk than the consumer real estate loans and other consumer loans in the portfolio. The commercial loans not secured by real estate are highly dependent on financial condition and are more dependent on economic conditions. The commercial loans secured by real estate are also dependent on economic conditions but generally have stronger forms of collateral. More recently, commercial real estate has been negatively impacted by devaluation so these commercial loans carry a higher qualitative factor for changes in the value of collateral. The commercial loans and commercial real estate loans have historically been responsible for the majority of the Company’s delinquencies, non-accrual loans, and charge-offs so both of these categories carry higher qualitative factors than consumer real estate loans and other consumer loans. The Company has historically experienced very low levels of consumer real estate and consumer loan charge-offs so these qualitative factors are set lower than the commercial real estate and commercial and industrial loans.

10

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses: (Continued)

Mortgage loans secured by one-to-four family properties and all consumer loans are large groups of smaller-balance homogeneous loans and are measured for impairment collectively. Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances concerning the loan, the credit worthiness and payment history of the borrower, the length of the payment delay, and the amount of shortfall in relation to the principal and interest owed.

Impaired loans are loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The Company individually evaluates such loans for impairment and does not aggregate loans by major risk classifications. The definition of “impaired loans” is not the same as the definition of “nonaccrual loans,” although the two categories overlap.

The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility while not classifying the loan as impaired, provided the loan is not a commercial or commercial real estate classification. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral.

Individual loan reviews are based upon specific quantitative and qualitative criteria, including the size of the loan, loan quality ratings, value of collateral, repayment ability of borrowers, and historical experience factors. The historical experience factors utilized for individual loan reviews are based upon past loss experience, known trends in losses and delinquencies, the growth of loans in particular markets and industries, and known changes in economic conditions in the particular lending markets. Allowances for homogeneous loans (such as residential mortgage loans, personal loans, etc.) are evaluated based upon historical loss experience, trends in losses and delinquencies, growth of loans in particular markets, and known changes in economic conditions in each lending market. There can be no assurance the allowance for loan losses will be adequate to cover all losses, but management believes the allowance for loan losses in the amount of $2,512,909 at September 30, 2012, was adequate to provide for probable losses from existing loans based on information currently available. While management uses available information to provide for loan losses, the ultimate collectibility of a substantial portion of the loan portfolio, and the need for future additions to the allowance, will be based on changes in economic conditions and other relevant factors. As such, an adverse change in economic activity could reduce cash flows for both commercial and individual borrowers, which would likely cause the Company to experience increases in problem assets, delinquencies and losses on loans.

Goodwill: Goodwill resulted from the Company’s purchase of a less-than-whole financial institution (the “branch”). The goodwill value of $1.6 million is supported ultimately by revenue that is driven by the volume of business transacted. A decline in earnings as a result of a lack of growth or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods.

Goodwill is periodically reviewed for impairment. No impairment losses were recognized. Additionally, future events could cause management to conclude that impairment indicators exist and that the goodwill is impaired, which would result in the Company recording an impairment loss. Any resulting impairment loss could have a material, adverse impact on the Company’s financial condition and results of operations.

Mortgage Servicing Rights (“MSRs”): The Company has agreements for the express purpose of selling loans in the secondary market. The Company maintains all servicing rights for these loans. Originated MSRs are recorded by allocating total costs incurred between the loan and servicing rights based on their relative fair values. MSRs are amortized in proportion to the estimated servicing income over the estimated life of the servicing portfolio. Impairment is evaluated based on the fair value of the right, based on portfolio interest rates and prepayment characteristics.

Bank-owned Life Insurance: Bank owned life insurance consists of investments in life insurance policies on executive officers and other members of the bank’s management. The policies are carried at their net cash surrender value. Changes in the policy value are recorded as an adjustment to the carrying value with the corresponding amount recognized as non-interest income or expense. Earnings on these policies are based on the net earnings on the cash surrender value of the policies. The net cash surrender value of bank-owned life insurance was $3,597,816 and $3,518,450 at September 30, 2012 and December 31, 2011, respectively. The death benefit value of the bank-owned life insurance at September 30, 2012 and December 31, 2011 was $8.7 million and $8.8 million, respectively. An agreement has been executed with all officers whereby a $40,000 death benefit is payable upon the participant’s death while employed by the Company to their designated beneficiary

Advertising Costs: Advertising costs are expensed as the costs are incurred. Advertising expenses amounted to $55,299 and $40,280 for the three months ended September 30, 2012 and September 30, 2011, respectively. For the nine month periods ended September 30, 2012 and 2011 advertising expenses amounted to $162,372 and $98,650, respectively.

Premises and Equipment: Premises and equipment are stated at cost, less accumulated depreciation and amortization. Provisions for depreciation and amortization are computed generally using the straight-line method over the estimated useful lives of the assets. When units of property are disposed of, the premises and equipment accounts are relieved of the cost and the accumulated depreciation related to such units. Any resulting gains or losses are credited to or charged against income. Cost of repairs and maintenance is charged to expense as incurred. Additions and improvements are capitalized at cost.

11

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Other Real Estate Owned: Other real estate owned are carried at the lower of cost or their estimated current fair value, less estimated costs to sell and are included in other assets. Other real estate owned consist primarily of properties acquired through, or in lieu of foreclosures. Any subsequent declines in fair value, and gains or losses on the disposition of these assets are credited to or charged against income.

Income Taxes: The Company and its subsidiary file a consolidated federal income tax return. There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Statement of Income. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred income tax expenses or benefits are based on the changes in the deferred tax asset or liability from period to period.

Earnings Per Common Share: Earnings per common share are calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the year. The Company has no securities which would be considered potential common stock.

Recent Accounting Pronouncements: In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The amendments in this Update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in this Update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. For nonpublic entities, the amendments are effective for annual periods beginning after December 15, 2012. Early application by public entities is not permitted. The expanded disclosures have been provided in Notes 9 and 10.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments in this Update improve the comparability, clarity, consistency, and transparency of financial reporting and increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. GAAP and IFRS, the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. All entities that report items of comprehensive income, in any period presented, will be affected by the changes in this Update. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The amendments in this Update should be applied retrospectively, and early adoption is permitted. The Company has provided the necessary disclosure in the Statement of Comprehensive Income.

In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other Topics (Topic 350), Testing Goodwill for Impairment. The objective of this update is to simplify how entities, both public and nonpublic, test goodwill for impairment. The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendments in this Update apply to all entities, both public and nonpublic, that have goodwill reported in their financial statements and are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. This ASU is not expected to have a significant impact on the Company’s financial statements.

12

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

In September 2011, the FASB issued ASU 2011-09, Compensation-Retirement Benefits-Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan. The amendments in this Update will require additional disclosures about an employer’s participation in a multiemployer pension plan to enable users of financial statements to assess the potential cash flow implications relating to an employer’s participation in multiemployer pension plans. The disclosures also will indicate the financial health of all of the significant plans in which the employer participates and assist a financial statement user to access additional information that is available outside the financial statements. For public entities, the amendments in this Update are effective for annual periods for fiscal years ending after December 15, 2011, with early adoption permitted. For nonpublic entities, the amendments are effective for annual periods of fiscal years ending after December 15, 2012, with early adoption permitted. The amendments should be applied retrospectively for all prior periods presented. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification. The amendments in this Update affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. Under the amendments in this Update, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The amendments in this Update should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2013, and interim and annual periods thereafter. Early adoption is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. In order to defer only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments, the paragraphs in this Update supersede certain pending paragraphs in Update 2011-05. Entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before Update 2011-05. All other requirements in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011. Nonpublic entities should begin applying these requirements for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The Company has provided the necessary disclosure in the Statement of Comprehensive Income.

13

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 2 - INVESTMENT SECURITIES

The amortized cost and estimated fair values of investment securities are as follows at September 30, 2012 and December 31, 2011:

	(Expressed in thousands) September 30, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale:
Obligations of U.S. Government corporations and agencies	$	42,104	$	250	$	(7	)	$	42,347
Obligations of states and political subdivisions		45,334		3,927		—			49,261
Mortgage-backed securities		72,459		2,209		(25	)		74,643
Equity securities		186		27		—			213
Total available-for-sale	$	160,083	$	6,413	$	(32	)	$	166,464

	(Expressed in thousands) December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale:
Obligations of U.S. Government corporations and agencies	$	36,014	$	202	$	—		$	36,216
Obligations of states and political subdivisions		42,154		3,150		—			45,304
Mortgage-backed securities		67,402		1,820		(7	)		69,215
Equity securities		209		17		—			226
Total available-for-sale	$	145,779	$	5,189	$	(7	)	$	150,961

The Company’s investment securities portfolio contains unrealized losses of direct obligations of the U.S. Government agency securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government or are generally viewed as having the implied guarantee of the U.S. government, and debt obligations of a U.S. state or political subdivision.

On a quarterly basis, the Company evaluates the severity and duration of impairment for its investment securities portfolio and the Company’s ability to hold the securities till they recover. Generally, impairment is considered other than temporary when an investment security has sustained a decline in market value for a period of twelve months. The Company has concluded that any impairment of its investment securities portfolio is not other than temporary but is the result of interest rate changes that are not expected to result in the noncollection of principal and interest during the period. There are 4 positions that are temporarily impaired at September 30, 2012.

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:

	(Expressed in thousands) September 30, 2012
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Government corporations and agencies	$	2,993	$	(7	)	$	—	$	—		$	2,993	$	(7	)
Mortgage-backed securities		2,989		(24	)		89		(1	)		3,078		(25	)
Total	$	5,982	$	(31	)	$	89	$	(1	)	$	6,071	$	(32	)

14

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 2 - INVESTMENT SECURITIES (CONTINUED)

	(Expressed in thousands) December 31, 2011
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Mortgage-backed securities	$	2,008	$	(6	)	$	112	$	(1	)	$	2,120	$	(7	)
Total	$	2,008	$	(6	)	$	112	$	(1	)	$	2,120	$	(7	)

The amortized cost and fair value of investment securities available for sale at September 30, 2012, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	(Expressed in thousands) September 30, 2012
	Amortized Cost		Fair Value
Due in one year or less	$	569	$	576
Due after one year through five years		9,700		9,866
Due after five years through ten years		48,901		50,223
Due after ten years		28,268		30,943
		87,438		91,608
Mortgage-backed securities		72,459		74,643
Equity securities		186		213
Total	$	160,083	$	166,464

Assets carried at $58,203,132 and $53,581,000 at September 30, 2012 and December 31, 2011, respectively, were pledged to secure United States Government and other public funds and for other purposes as required or permitted by law. Proceeds from sales of securities available-for-sale during the nine month periods ended September 30, 2012 and 2011, were $10,005,082 and $18,299,847, respectively. Gross gains of $344,265 and gross losses of $315 were realized during the nine months ended September 30, 2012 and gross gains of $659,008 and gross losses of $16,011 were realized during the nine months ended September 30, 2011. Proceeds from sales of securities available-for-sale during the three month periods ended September 30, 2012 and 2011, were $15,118 and $5,323,801, respectively. Gross gains of $1,671 and gross losses of $0 were realized during the three months ended September 30, 2012 and gross gains of $375,212 and gross losses of $91 were realized during the three months ended September 30, 2011. The maturity distribution using book value including accretion of discounts and amortization of premiums and approximate yield of investment securities at September 30, 2012 and December 31, 2011 are presented in the following table. Tax equivalent yield basis was used on tax exempt obligations. Approximate yield was calculated using a weighted average of yield to maturities. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(dollars in thousands)	September 30, 2012							December 31, 2011
	Amortized Cost		Fair Value		Yield			Amortized Cost		Fair Value		Yield
U.S. Government corporations and agencies
Within One Year	$	9	$	9		0.01	%	$	11	$	11		0.80	%
After One But Within Five Years		7,500		7,536		1.63			11,500		11,558		1.68
After Five But Within Ten Years		34,592		34,799		1.92			24,500		24,644		2.36
After Ten Years		3		3		0.87			3		3		0.86
		42,104		42,347		1.87			36,014		36,216		2.14
States & Political Subdivisions
Within One Year		560		567		5.54			1,145		1,151		5.48
After One But Within Five Years		2,200		2,330		5.85			1,834		1,913		5.54
After Five But Within Ten Years		14,309		15,424		5.62			11,395		12,285		5.66
After Ten Years		28,265		30,940		5.86			27,780		29,955		6.07
		45,334		49,261		5.78			42,154		45,304		5.92
Mortgage-Backed Securities		72,459		74,643		2.68			67,402		69,215		3.03
Equity Securities		186		213		2.12			209		226		2.25
Total	$	160,083	$	166,464		3.39	%	$	145,779	$	150,961		3.68	%

15

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 3 - LOANS AND LEASES

Loans outstanding at September 30, 2012 and December 31, 2011, are as follows:

	(Expressed in Thousands)
	September 30, 2012		December 31, 2011
Commercial and Other Loans:
Commercial	$	4,754	$	4,354
Non-rated industrial development obligations		10,475		11,508
Other loans		20		76
Total Commercial and Other Loans		15,249		15,938
Commercial Real Estate:
Non-farm, non-residential		42,381		49,146
Multifamily (5 or more) residential properties		6,919		7,222
Total Commercial Real Estate		49,300		56,368
Consumer Real Estate:
Construction		1,765		295
Farmland		247		213
Residential 1-4 Family		23,395		24,961
Home Equity Loans		2,124		2,380
Home Equity Lines of Credit		2,949		2,303
Total Consumer Real Estate		30,480		30,152
Consumer Loans:
Installment and other loans to individuals		5,252		6,484
Credit Cards		534		606
Total Consumer Loans		5,786		7,090
Total loans	$	100,815	$	109,548
Less unearned interest and deferred fees		89		119
Net loans	$	100,726	$	109,429

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. These policies and procedures are reviewed by management and approved by the Board of Directors on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

The Company originates direct and indirect consumer loans including principally residential real estate, home equity lines and loans, credit cards, and indirect vehicle loans using a credit analysis as part of the underwriting process. Each loan type has a separate underwriting criteria, which consists of several factors including debt to income, type of collateral, credit history and customer relationship with the Company.

Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably. Underwriting standards are designed to promote relationship banking rather than transactional banking. The Company’s management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of the borrower, however, may not be as expected and the collateral securing the loan may fluctuate in value. Minimum standards and underwriting guidelines have been established for commercial loan types.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by the general economy or conditions specific to the real estate market such as geography and/or property type.

Non-accrual loans amounted to $3,748,768 and $4,045,937 at September 30, 2012 and December 31, 2011, respectively. The amount of interest income that would have been recognized had the loans performed in accordance with their original terms was $49,774 and $40,890 for the three months ended September 30,2012 and September 30, 2011, respectively. For nine months ended September 30, 2012 and 2011 and for the year ended December 31, 2011, the amount of interest income that would have been recognized had the loans performed in accordance with their original terms was $176,820, $227,335 and $353,340, respectively.

16

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)

The following tables present the aging of the recorded investment in past due loans by class of loans (in thousands):

	September 30, 2012
	Current			30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past Due		Total Past Due		Total Loans			90 Days or more Past Due and Accruing
Commercial and Other Loans	$	15,181		$	45	$	—	$	23	$	68	$	15,249		$	—
Commercial real estate		46,122			148		—		3,030		3,178		49,300			—
Consumer real estate		30,240			123		—		117		240		30,480			32
Consumer		5,757			22		5		2		29		5,786			—
Unearned interest and deferred fees		(89	)		—		—		—		—		(89	)		—
Total loans	$	97,211		$	338	$	5	$	3,172	$	3,515	$	100,726		$	32
Non-accrual loans included above are as follows:
Commercial and Other Loans	$	10		$	—	$	—	$	23	$	23	$	33		$	—
Commercial real estate		266			—		—		3,030		3,030		3,296			—
Consumer real estate		198			115		—		85		200		398			—
Consumer		13			4		3		2		9		22			—
Total non-accrual loans	$	487		$	119	$	3	$	3,140	$	3,262	$	3,749		$	—

	December 31, 2011
	Current			30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past  Due		Total Past Due		Total Loans			90 Days or more Past Due and Accruing
Commercial and Other Loans	$	15,655		$	257	$	—	$	26	$	283	$	15,938		$	—
Commercial real estate		52,727			409		36		3,196		3,641		56,368			—
Consumer real estate		29,681			221		140		110		471		30,152			—
Consumer		7,040			9		17		24		50		7,090			—
Unearned interest and deferred fees		(119	)		—		—		—		—		(119	)		—
Total loans	$	104,984		$	896	$	193	$	3,356	$	4,445	$	109,429		$	—
Non-accrual loans included above are as follows:
Commercial and Other Loans	$	13		$	—	$	—	$	26	$	26	$	39		$	—
Commercial real estate		253			84		—		3,196		3,280		3,533			—
Consumer real estate		232			105		—		110		215		447			—
Consumer		—			—		3		24		27		27			—
Total non-accrual loans	$	498		$	189	$	3	$	3,356	$	3,548	$	4,046		$	—

17

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)

The Company utilizes an internal asset classification system for commercial loans as a means of reporting problem and potential problem loans. Under the Company’s risk rating system, the Company classifies problem and potential problem loans as “Special Mention”, “Substandard”, and “Doubtful.” Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management’s close attention are deemed to be Special Mention. Risk ratings are updated any time the situation warrants. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

The following tables present the risk category of loans based on the most recent analysis performed and the contractual aging as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Other	$	15,210	$	—	$	39	$	—	$	15,249
Commercial Real Estate		39,846		2,398		7,056		—		49,300
Construction and Land Development		1,066		946		—		—		2,012
Total	$	56,122	$	3,344	$	7,095	$	—	$	66,561
Current	$	56,077	$	3,344	$	3,651	$	—	$	63,072
Past Due 30-59 days		45		—		148		—		193
Past Due 60-89 days		—		—		—		—		—
Past Due 90 days or more		—		—		—		—		—
Non-accrual		—		—		3,296		—		3,296
Total	$	56,122	$	3,344	$	7,095	$	—	$	66,561

December 31, 2011	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Other	$	15,882	$	—	$	56	$	—	$	15,938
Commercial Real Estate		43,067		5,807		6,786		708		56,368
Construction and Land Development		508		—		—		—		508
Total	$	59,457	$	5,807	$	6,842	$	708	$	72,814
Current	$	59,164	$	5,807	$	3,653	$	—	$	68,624
Past Due 30-59 days		257		—		325		—		582
Past Due 60-89 days		36		—		—		—		36
Past Due 90 days or more		—		—		—		—		—
Non-accrual		—		—		2,864		708		3,572
Total	$	59,457	$	5,807	$	6,842	$	708	$	72,814

For consumer and consumer real estate loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Performing		Non-performing		Total
Consumer	$	5,764	$	22	$	5,786
Consumer Real Estate		30,050		430		30,480
Total	$	35,814	$	452	$	36,266

December 31, 2011	Performing		Non-performing		Total
Consumer	$	7,063	$	27	$	7,090
Consumer Real Estate		29,705		447		30,152
Total	$	36,768	$	474	$	37,242

18

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)

The Company also evaluates problem loans for impairment. A loan is considered to be impaired if it is probable that the Company will not be able to collect the payments for principal and interest when due according to the contractual terms of the loan agreement. Impaired loans generally include all non-accrual loans and Troubled Debt Restructurings (TDR’s).

Impaired loans at September 30, 2012 and December 31, 2011 are set forth in the following tables (in thousands):

	September 30, 2012
	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial and Other Loans	$	34	$	10	$	24	$	34	$	24
Commercial real estate		3,296		572		2,724		3,296		795
Consumer real estate		234		234		—		234		—
Total	$	3,564	$	816	$	2,748	$	3,564	$	819

	December 31, 2011
	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial and Other Loans	$	46	$	39	$	7	$	46	$	7
Commercial real estate		3,533		1,056		2,477		3,533		829
Consumer real estate		312		312		—		312		—
Total	$	3,891	$	1,407	$	2,484	$	3,891	$	836

The average recorded investment in impaired loans are set forth below in the following table. No interest income was recognized on impaired loans subsequent to their classification as impaired (in thousands):

	Average Recorded Investment
	For the three months ended				For the nine months ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Commercial and Other Loans		33		42		32		44
Commercial real estate		3,105		3,688		3,088		3,883
Consumer real estate		528		330		525		347
Total	$	3,666	$	4,060	$	3,645	$	4,274

19

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonaccrual at the time of restructure and may only be returned to accrual status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDR’s on accrual status may remain in accrual status after they have been restructured as long as they continue to perform in accordance with their modified terms. There were no TDR’s in accrual status at September 30, 2012 and December 31, 2011.

When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at origination.

The Company did not have any new TDR’s originate during the three and nine month periods ended September 30, 2012 and 2011. One loan which was previously identified as a TDR was modified during the third quarter of 2012. There were no TDR’s that defaulted during the three and nine month periods ended September 30, 2012 and 2011.

No additional funds are committed to be advanced to customers whose loans were classified as TDR’s

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

The following table summarizes the primary segments of the ALL, segregated into the amount for loans individually evaluated for impairment by class of loans as of September 30, 2012 and September 30, 2011 (in thousands):

September 30, 2012	Commercial and other			Commercial Real Estate			Consumer Real Estate		Consumer			Total
Allowance for Loan Losses:
Beginning Balance, January 1, 2012	$	179		$	2,082		$	193	$	50		$	2,504
Charge-offs		—			(3	)		—		(7	)		(10	)
Recoveries		—			15			—		4			19
Provision		(10	)		(54	)		74		(10	)		—
Ending Balance, September 30, 2012	$	169		$	2,040		$	267	$	37		$	2,513
Loans individually evaluated for impairment	$	24		$	795		$	—	$	—		$	819
Loans collectively evaluated for impairment		145			1,245			267		37			1,694
Ending Balance	$	169		$	2,040		$	267	$	37		$	2,513

20

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 4 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)

September 30, 2011	Commercial and other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, January 1, 2011	$	212		$	1,511		$	272		$	64		$	2,059
Charge-offs		(8	)		(156	)		(7	)		(15	)		(186	)
Recoveries		2			45			—			5			52
Provision		(37	)		775			(131	)		(7	)		600
Ending Balance, September 30, 2011	$	169		$	2,175		$	134		$	47		$	2,525
Loans individually evaluated for impairment	$	—		$	851		$	—		$	—		$	851
Loans collectively evaluated for impairment		169			1,324			134			47			1,674
Ending Balance	$	169		$	2,175		$	134		$	47		$	2,525

The following table summarizes the primary segments of the ALL for the three months ended as of September 30, 2012 and September 30, 2011 (in thousands):

September 30, 2012	Commercial and other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, July 1, 2012	$	170		$	2,050		$	254		$	40		$	2,514
Charge-offs		—			—			—			(2	)		(2	)
Recoveries		—			—			—			1			1
Provision		(1	)		(10	)		13			(2	)		—
Ending Balance, September 30, 2012	$	169		$	2,040		$	267		$	37		$	2,513
September 30, 2011	Commercial and other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, July 1, 2011	$	175		$	2,055		$	249		$	50		$	2,529
Charge-offs		—			—			1			(6	)		(5	)
Recoveries		—			1			—			1			2
Provision		(6	)		119			(116	)		2			(1	)
Ending Balance, September 30, 2011	$	169		$	2,175		$	134		$	47		$	2,525

The following table presents loans individually and collectively evaluated for impairment by class of loans as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Commercial and other		Commercial Real Estate		Consumer Real Estate		Consumer		Unearned Discounts			Total
Loans individually evaluated	$	34	$	3,296	$	234	$	—	$	—		$	3,564
Loans collectively evaluated		15,215		46,004		30,246		5,786		(89	)		97,162
Ending Balance	$	15,249	$	49,300	$	30,480	$	5,786	$	(89	)	$	100,726
December 31, 2011
Loans individually evaluated	$	46	$	3,533	$	312	$	—	$	—		$	3,891
Loans collectively evaluated		15,892		52,835		29,840		7,090		(119	)		105,538
Ending Balance	$	15,938	$	56,368	$	30,152	$	7,090	$	(119	)	$	109,429

21

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, less accumulated depreciation, as follows:

	September 30, 2012		December 31, 2011		Original Useful Life Years
Land	$	1,974,527	$	1,973,014
Land improvements		382,278		338,069	15
Leasehold improvements		1,083,051		1,063,735	15
Buildings		5,388,753		5,193,157	39
Furniture, fixtures & equipment		5,076,997		5,130,953	3 -7
Total		13,905,606		13,698,928
Less accumulated depreciation		7,492,656		7,781,209
Premises and equipment, net	$	6,412,950	$	5,917,719

Charges to operations for depreciation approximated $133,501 and $123,297 for the three months ended September 30, 2012 and 2011, respectively. Depreciation expenses were $383,288 and $362,390 for the nine months ended September 30, 2012 and 2011, respectively.

NOTE 6 - DEPOSITS

The composition of the Bank’s deposits at September 30, 2012 and December 31, 2011 follows:

	(Expressed in Thousands) September 30, 2012
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	30,655	$	38,107	$	88,571	$	66,297
United States Government		1		—		—		—
States and political subdivisions		605		8,548		2,755		3,068
Commercial banks and other depository institutions		119		—		105		490
Total	$	31,380	$	46,655	$	91,431	$	69,855
	(Expressed in Thousands) December 31, 2011
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	31,319	$	41,702	$	80,857	$	70,125
United States Government		1		—		—		—
States and political subdivisions		540		6,189		4,723		3,176
Commercial banks and other depository institutions		55		—		—		490
Total	$	31,915	$	47,891	$	85,580	$	73,791

A maturity distribution of time certificates of deposit at September 30, 2012 and December 31, 2011, follows:

(dollars in thousands)	Maturities of Time Deposits
	September 30, 2012		December 31, 2011
12 month or less	$	35,048	$	43,761
12 months through 24 months		14,044		10,066
24 months through 36 months		7,970		6,703
36 months through 48 months		6,631		6,373
48 months through 60 months		5,395		6,223
Over 60 months		767		665
Total	$	69,855	$	73,791

22

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 6 - DEPOSITS - (CONTINUED)

Time deposits include certificates of deposit issued in denominations of $100,000 or more which amounted to $20,696,000 and $22,040,000 at September 30, 2012 and December 31, 2011, respectively. Interest expense on certificates of deposit of $100,000 or more was $74,251 and $122,591 for the three months ended September 30, 2012 and 2011, respectively. Interest expense on certificates of deposit of $100,000 or more was $266,426 and $347,879 for the nine months ended September 30, 2012 and 2011, respectively.

The following table presents other time deposits of $100,000 or more issued by domestic offices by time remaining until maturity of 3 months or less; over 3 through 6 months; over 6 through 12 months; and over 12 months.

	Maturities of Time Deposits in Excess of $100,000
(dollars in thousands)	September 30, 2012		December 31, 2011
Three Months or Less	$	2,831	$	4,411
Over Three and Less than Six Months		2,577		3,719
Over Six and Less than Twelve Months		3,684		5,103
Over Twelve Months		11,604		8,807
Total	$	20,696	$	22,040

NOTE 7 - FEDERAL HOME LOAN BANK BORROWINGS

The Bank is a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”). The FHLB borrowings are secured by a blanket lien by the FHLB on certain residential real estate loans or securities with a market value at least equal to the outstanding balances. The remaining maximum borrowing capacity with the FHLB at September 30, 2012 was approximately $38.7 million subject to the purchase of additional FHLB stock. The Bank had FHLB borrowings of $3,628,451 and $3,693,014 at September 30, 2012 and December 31, 2011, respectively. At September 30, 2012 the Bank had three fixed rate amortizing advances which totaled $3,628,451 with a weighted average interest rate of 4.78% of which $2,057,189 will mature in 2018 and $1,571,262 will mature in 2023.

The Bank also has a one year line of credit agreement with the Federal Home Loan Bank. The maximum credit available under this agreement is $7.0 million and expires in December 2012. There were no borrowings outstanding under this agreement at September 30, 2012 and December 31, 2011, respectively.

Contractual maturities of FHLB borrowings as of September 30, 2012 were as follows:

Due in 2012	$	22,039
Due in 2013		90,832
Due in 2014		95,267
Due in 2015		99,919
Due in 2016		104,800
Due in 2017 and thereafter		3,215,594
Total	$	3,628,451

NOTE 8 - REGULATORY MATTERS

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk, weighting, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to adjusted total assets (as defined).

23

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 8 - REGULATORY MATTERS - (CONTINUED)

As of September 30, 2012, the most recent notifications from the Office of the Comptroller of the Currency categorized the bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes has changed the capital category. The capital ratios of the Company and its subsidiary bank, along with the regulatory framework for adequately capitalized and well capitalized institutions are depicted as set forth in the following table:

(Amounts Expressed in Thousands)	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
First West Virginia Bancorp, Inc.
As of September 30, 2012
Total Capital (to Risk Weighted Assets)	$	32,122		22.47	%	$	11,439		8.0	%	$	14,298		10.0	%
Tier I Capital (to Risk Weighted Assets)		30,328		21.21	%		5,719		4.0	%		8,579		6.0	%
Tier I Capital (to Adjusted Total Assets)		30,328		10.36	%		11,707		4.0	%		14,634		5.0	%
As of December 31, 2011
Total Capital (to Risk Weighted Assets)	$	31,494		21.55	%	$	11,691		8.0	%	$	14,614		10.0	%
Tier I Capital (to Risk Weighted Assets)		29,662		20.30	%		5,845		4.0	%		8,768		6.0	%
Tier I Capital (to Adjusted Total Assets)		29,662		10.46	%		11,340		4.0	%		14,175		5.0	%
Progressive Bank, N.A.
As of September 30, 2012
Total Capital (to Risk Weighted Assets)	$	31,929		22.36	%	$	11,421		8.0	%	$	14,277		10.0	%
Tier I Capital (to Risk Weighted Assets)		30,135		21.11	%		5,711		4.0	%		8,566		6.0	%
Tier I Capital (to Adjusted Total Assets)		30,135		10.31	%		11,696		4.0	%		14,620		5.0	%
As of December 31, 2011
Total Capital (to Risk Weighted Assets)	$	31,269		21.43	%	$	11,674		8.0	%	$	14,592		10.0	%
Tier I Capital (to Risk Weighted Assets)		29,437		20.17	%		5,837		4.0	%		8,755		6.0	%
Tier I Capital (to Adjusted Total Assets)		29,437		10.39	%		11,328		4.0	%		14,160		5.0	%

NOTE 9 - FAIR VALUE MEASUREMENTS

The following disclosures show the hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets and liabilities at fair value. The three broad levels defined by U.S. generally accepted accounting principles are as follows:

Ÿ	Level I:	Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
Ÿ	Level II:	Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.
Ÿ	Level III:	Valuations derived from valuation techniques in which one or more significantinputs or significant value drivers are unobservable. This hierarchy requires the use of observable market data when available.

The following table presents the assets reported on the balance sheet at their fair value as of September 30, 2012 and December 31, 2011, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

(dollars in thousands)	September 30, 2012
	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Securities available for sale:
U.S. Government corporations and agencies	$	—	$	42,347	$	—	$	42,347
Obligations of states and political subdivisions		—		49,261		—		49,261
Mortgage-backed securities
U.S. sponsored entities		—		74,643		—		74,643
Subtotal mortgage-backed securities		—		74,643		—		74,643
Equity securities		213		—		—		213
Total securities available for sale:	$	213	$	166,251	$	—	$	166,464
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	2,745	$	2,745
Other real estate	$	—	$	—	$	7	$	7
Mortgage servicing rights	$	—	$	—	$	45	$	45

24

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 9 - FAIR VALUE MEASUREMENTS (CONTINUED)

(dollars in thousands)	December 31, 2011
	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Securities available for sale:
U.S. Government corporations and agencies	$	—	$	36,216	$	—	$	36,216
Obligations of states and political subdivisions		—		45,304		—		45,304
Mortgage-backed securities
U.S. sponsored entities		—		69,215		—		69,215
Subtotal mortgage-backed securities		—		69,215		—		69,215
Equity securities		226		—		—		226
Total securities available for sale:	$	226	$	150,735	$	—	$	150,961
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	3,055	$	3,055
Other real estate	$	—	$	—	$	138	$	138
Mortgage servicing rights	$	—	$	—	$	52	$	52

Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loans include observable inputs employed by certified appraisers for similar assets classified as Level III inputs. Other real estate owned is measured at fair value, less cost to sell at the date of foreclosure. Valuations are periodically performed by management and the assets are carried at the lower of carrying amount, or fair value less cost to sell.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Level 3 inputs were used in determining fair value.

(dollars in thousands)	Quantitative Information about Level 3 Fair Value  Measurements
September 30, 2012	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted         Average)
Impaired Loans	$	2,745	Appraisal of collateral (1)	Appraisal adjustments (2) Liquidation expenses (2)	0% to -36.3% (16.2%) 3.5% to 22.9% (10.3%)
Other real estate owned and repossessed assets	$	7	Appraisal of collateral (1)(3)
Mortgage Servicing Rights	$	45	Discounted Cash Flow	Remaining term Discount rate	2.9 years to 7 years (3.49 years) 9.5% to 10.5% (10%)

(1) The fair value is determined through independent appraisals by certified appraisers of the underlying collateral.

(2) Appraisals may be adjusted by management for qualitative factors and estimated liquidation expenses. The range and weighted average of liquidation expenses are expressed as a percent of discounted collateral value and other appraisal adjustments are presented as a percentage of the appraised amounts.

(3) Valuation includes qualitative adjustments by management and estimated liquidation expenses.

The reported fair values of financial instruments are based on a variety of factors. Where possible, fair values represent quoted market prices for identical or comparable instruments. In other cases, fair values have been estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of risk. Intangible values assigned to customer relationships are not reflected in the reported fair values. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of year end or that will be realized in the future.

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments:

Cash and Cash Equivalents: The carrying amount for cash and cash equivalents is a reasonable estimate of fair value.

25

First West Virginia Bancorp, Inc. and Subsidiary

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012 AND 2011

(Unaudited)

NOTE 9 - FAIR VALUE MEASUREMENTS (CONTINUED)

Investment Securities: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans: The fair value for net loans is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality. Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were utilized as estimates for fair value.

Bank Owned Life Insurance: The carrying amount of bank owned life insurance represents the cash surrender value of the underlying insurance policies, if such policies were terminated. Management believes that the carrying amount approximates the fair value.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates its fair value.

Deposits: Noninterest bearing and interest bearing demand deposits and savings deposits are valued at the amount payable on demand as of year end. The fair values for time deposits are based on discounted value of cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.

Federal Funds Purchased and Repurchase Agreements: The carrying amount for federal funds purchased and repurchase agreements are considered to be a reasonable estimate of fair value.

Federal Home Loan Bank borrowings: The fair value of FHLB and other long term borrowings is the carrying amount. Management believes that the carrying amount approximates the fair value.

Accrued Interest Payable: The carrying amount of accrued interest payable approximates it fair value.

Off-Balance-Sheet Instruments: The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The amount of fees currently charged on commitments is determined to be insignificant and, therefore, the carrying value and fair value of off-balance-sheet instruments are not shown.

The estimates of fair values of financial instruments are summarized as follows at September 30, 2012 and December 31, 2011:

	September 30, 2012
(Amounts Expressed in Thousands)	Level I		Level II		Level III		Total Fair Value
Financial assets:
Cash and cash equivalents	$	21,033	$	—	$	—	$	21,033
Investment securities		213		166,221		—		166,464
Loans		—		—		99,360		99,360
Bank owned life insurance		3,598		—		—		3,598
Accrued interest receivable		1,186		—		—		1,186
Financial liabilities:
Deposits		158,335		70,878		—		229,213
Federal Funds Purchased and Repurchase Agreements		18,570		—		—		18,370
Federal Home Loan Bank borrowings		—		3,628		—		3,628
Accrued interest payable		171		—		—		171
	September 30, 2012				December 31, 2011
(Amounts Expressed in Thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	21,033	$	21,033	$	20,917	$	20,917
Investment securities		166,464		166,464		150,961		150,961
Loans		98,213		99,360		106,925		105,733
Bank owned life insurance		3,598		3,598		3,518		3,518
Accrued interest receivable		1,186		1,186		1,140		1,140
Financial liabilities:
Deposits		239,321		229,213		239,177		227,662
Federal funds purchased and repurchase agreements		18,570		18,570		14,014		14,014
Federal Home Loan Bank borrowings		3,628		3,628		3,693		3,693
Accrued interest payable		171		171		218		218

26

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table One

SELECTED FINANCIAL DATA (Dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,						Years ended December 31,
	2012			2011			2012			2011			2011			2010			2009
SUMMARY OF OPERATIONS
Total interest income	$	2,455		$	2,807		$	7,475		$	8,551			11,207			11,858		$	12,914
Total interest expense		430			546			1,377			1,710			2,229			3,056			4,328
Net interest income		2,025			2,261			6,098			6,841			8,978			8,802			8,586
Provision for loan losses		—			—			—			600			600			220			184
Total other income		307			722			1,273			1,554			2,034			1,977			1,791
Total other expenses		1,870			1,894			5,702			5,705			7,626			7,723			7,592
Income before income taxes		462			1,089			1,669			2,090			2,786			2,836			2,601
Net income		483			859			1,623			1,818			2,454			2,339			2,305
PER SHARE DATA (1)
Net income	$	0.29		$	0.52		$	0.98		$	1.10			1.48			1.42		$	1.39
Cash dividends declared		0.19			0.19			0.57			0.57			0.76			0.73			0.73
Book value per share		21.75			20.47			21.75			20.47			20.89			18.82			18.64
AVERAGE BALANCE SHEET SUMMARY
Total loans, net	$	103,539		$	115,559		$	105,846		$	117,036			115,415			124,074		$	128,206
Investment securities		158,684			135,203			153,017			133,999			136,409			116,990			112,142
Deposits - interest bearing		208,335			206,508			208,034			205,152			204,616			198,042			190,981
Stockholders’ equity		31,747			30,514			31,481			30,351			30,498			29,415			28,192
Total assets		294,328			286,100			292,505			283,260			283,734			273,778			266,414
SELECTED RATIOS
Return on average assets		0.65	%		1.19	%		0.74	%		0.86	%		0.86	%		0.85	%		0.87	%
Return on average equity		6.05	%		11.17	%		6.89	%		8.01	%		8.05	%		7.95	%		8.18	%
Average equity to average assets		10.79	%		10.67	%		10.76	%		10.71	%		10.75	%		10.74	%		10.58	%
Dividend payout ratio (1)		65.52	%		36.54	%		58.16	%		51.82	%		51.35	%		51.41	%		52.52	%
Loan to Deposit ratio		42.09	%		48.54	%		42.09	%		48.54	%		45.75	%		53.12	%		58.12	%
	September 30,						December 31,
	2012			2011			2011			2010			2009
BALANCE SHEET
Investments	$	166,464		$	143,207		$	150,961		$	133,169		$	115,997
Loans		100,726			114,286			109,428			121,367			128,581
Allowance for loan losses		(2,513	)		(2,525	)		(2,504	)		(2,059	)		(1,894	)
Other assets		36,335			36,900			35,373			25,482			28,447
Total Assets	$	301,012		$	291,868		$	293,258		$	277,959		$	271,131
Deposits	$	239,321		$	235,460		$	239,177		$	228,475		$	221,246
Federal funds purchased and repurchase agreements		18,570			16,912			14,013			13,477			11,025
FHLB borrowings		3,628			3,714			3,693			3,776			7,354
Other liabilities		3,537			1,955			1,848			1,130			700
Stockholders’ equity		35,956			33,827			34,527			31,101			30,806
Total Liabilities and Stockholders’ equity	$	301,012		$	291,868		$	293,258		$	277,959		$	271,131

(1) Adjusted for the 4 percent common stock dividend to stockholders of record as of December 20, 2010 and the 4 percent common stock dividend to shareholders of record on October 1, 2008.

27

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

The following discussion and analysis provides further detail to the financial condition and results of operations of the Company. The section should be read in conjunction with the notes and financial statements presented elsewhere in this report.

The Company’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of September 30, 2012 have remained unchanged from the disclosures presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 under the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-Looking Information: Certain information contained in this report, which are not historical facts, may be forward-looking statements that involve risks and uncertainties. These statements are subject to important factors that could cause action results to differ materially from those contemplated by such statements, including without limitation, the effect of changing economic conditions, changes in interest rates, changes in lending activities, changes in state and federal regulations, and other external factors which may materially impact the Company’s operational and financial performance. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements, including without limitation, the effect of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to the parent company and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform; competitive conditions in the financial services industry; rapidly changing technology affecting financial services, and/or other external developments materially impacting the Company’s operational and financial performance. The Company does not assume any duty to update forward-looking statements.

Critical Accounting Policies: The Company’s accounting policies are integral to understanding the results reported. The accounting policies are described in detail in Note 1 of the Consolidated Financial Statements. Our most complex accounting policies require management’s judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. Detailed policies and control procedures have been established and are intended to ensure valuation methods are well controlled and applied consistently from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The following is a brief description of our current accounting policies involving significant management valuation judgments.

Other Than Temporary Impairment of Equity Securities: Equity securities are evaluated periodically to determine whether a decline in their value is other than temporary. Management utilizes criteria such as the magnitude and duration of the decline, in addition to the reasons underlying the decline, to determine whether the loss in value is other than temporary. The term “other than temporary” is not intended to indicate that the decline is permanent. It indicates that the prospects for a near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the investment. Once a decline in value is determined to be other than temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.

Allowance for Loan Losses: Arriving at an appropriate level of allowance for loan losses involves a high degree of judgment. The Company’s allowance for loan losses provides for probable losses based upon evaluations of known, and inherent risks in the loan portfolio. Management uses historical information to assess the adequacy of the allowance for loan losses as well as the prevailing business environment; as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. The allowance is increased by provisions for loan losses and by recoveries of loans previously charged-off and reduced by loans charged-off. For a full discussion of the Company’s methodology of assessing the adequacy of the reserve for loan losses, refer to Note 1 of the Consolidated Financial Statements.

Goodwill and Other Intangible Assets: As discussed in Note 1 of the notes to the Consolidated Financial Statements, the Company must assess goodwill and other intangible assets each year for impairment. This assessment involves estimating cash flows for future periods. If the future cash flows were less than the recorded goodwill and other intangible assets balances, we would be required to take a charge against earnings to write down the assets to the lower value.

Deferred Tax Assets: The Company uses an estimate of future earnings to support its position that the benefit of the deferred tax assets will be realized. If future income should prove non-existent or less than the amount of the deferred tax assets within the tax years to which they may be applied, the asset may not be realized and our net income will be reduced. The deferred tax assets are described further in Note 1 of the Consolidated Financial Statements.

OVERVIEW

The Company reported net income of $1,622,860 or $.98 per share for the nine months ended September 30, 2012 compared to $1,817,974 or $1.10 per share for the same period during 2011. The decrease in net income for the nine months ended September 30, 2012 as compared to the same period in 2011 of $195,114 or 10.7% was primarily the result of the decrease in net interest income combined with the decrease in noninterest income, offset in part by the decrease in the provision for loan losses and in noninterest expenses and income tax expense. Net interest income decreased $742,622 or 10.9%, primarily due to decreases in the interest and fees earned on loans and in the interest earned on investment securities, offset in part by the decrease in the interest expense paid on interest bearing liabilities. Noninterest income decreased $281,395 or 18.1% primarily due to the decrease in the net gains on sales of investment securities combined with the decline in service charges and fees earned on deposit accounts, which were offset in part by the increase in other operating income. The provision for loan losses decreased $600,000 during the nine month period ended September 30, 2012 as compared to the same period in 2011 primarily due to a specific reserve allocation for one impaired commercial real estate loan in 2011. Noninterest expenses decreased $2,644 or .1% during the nine month period ended September 30, 2012 as compared to the same period in 2011 primarily due to decreases in salary and employee benefits expenses and other operating expenses, offset in part by the increase in occupancy expenses. The ROA was .74% for the nine months ended September 30, 2012 as compared to .86% for the same period of the prior year. For the nine months ended September 30, 2012 compared to September 30, 2011, the ROE was 6.89% and 8.01%, respectively.

28

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

For the third quarter of 2012, net income was $482,826 or $.29 per share as compared to $858,932 or $.52 per share for the same period in 2011. The decrease in net income for the three months ended September 30, 2012 as compared to the same period in 2011 of $376,106 or 43.8% was primarily the result of the decrease in noninterest income combined with the decrease in net interest income, offset in part by the decrease in the provision for loan losses and the decrease in noninterest expenses and in income tax expense. Noninterest income fell $415,345 or 57.5% for the three months ended September 30, 2012 as compared to same period of the prior year and was primarily due to the decrease in the net gains on sales of investment securities combined with declines in other operating income and in service charges and fees earned on deposit accounts. Net interest income decreased $236,323 or 10.5%, primarily due to the decrease in the interest and fees earned on loans and in the interest earned on investment securities, offset in part by the decrease in the interest expense paid on interest bearing liabilities. There was no change in the provision for loan losses during the three month period ended September 30, 2012 as compared to the same period in 2011. Noninterest expenses decreased $24,375 or 1.3% during the three month period ended September 30, 2012 as compared to the same period in 2011 primarily due to the decline in salary and employee benefits expenses, offset by the increases in occupancy expenses and in other operating expenses.

The sections that follow discuss in more detail the information contained in the summary of Selected Financial Data of the Company.

EARNINGS ANALYSIS - For the nine months ended September 30, 2012

Net Interest Income

Net interest income, which is the primary source of earnings for the Company, is the difference between interest earned on loans and investments and interest paid on deposits and other liabilities. Changes in the volume and mix of earning assets and interest bearing liabilities combined with changes in market rates of interest greatly effect net interest income. Table Two presents the average balance sheets and an interest rate analysis for the nine months ended September 30, 2012 and 2011.

For the nine months ended September 30, 2012, net interest income was $6,098,357, a decrease of $742,622 or 10.9%, from the same period in 2011. Net interest income declined primarily due to the decrease in the yield on earning assets offset in part by the increase in average volume of earning assets. The taxable equivalent net yield on earning assets decreased 44 basis points from 3.95% at September 30, 2011 to 3.51% at September 30, 2012. The average earning assets increased approximately $9.1 million or 3.4% from September 30, 2011 to 2012.

Interest income on investment securities during the first nine months of 2012 fell $402,920 or 11.3% as compared to the same period of the prior year. The decrease in interest income on investment securities during the first nine months of 2012 was primarily due to the decline in the yields earned which was partially offset by a rise in the average volume. The taxable equivalent yield on investment securities fell 62 basis points in 2012, from 4.13% at December 31, 2011 to 3.51% at September 30, 2012 and decreased 75 basis points from September 30, 2011. The average volume of investment securities have increased approximately $16.6 million or 12.2% since December 31, 2011.

Interest and fees on loans decreased $676,339 or 13.6%, from the same period in 2011 primarily due to the decrease in the average loan volume combined with the decline in the average yield on loans. The taxable equivalent yield on loans fell 23 basis points in 2012 from 5.93% at December 31, 2011 to 5.70% at September 30, 2012 and fell 27 basis points from September 30, 2011. The average loan volume decreased approximately $9.6 million or 8.3% since December 31, 2011.

During the nine months ended September 30, 2012, interest expense declined $333,417 or 19.5% as compared to the same period in 2011. The decrease in the average yield paid on interest bearing liabilities, partially offset by an increase in the average volume of interest bearing liabilities primarily contributed to the decrease in interest expense during the nine month period ended September 30, 2012. The average yield paid on interest bearing liabilities fell 20 basis points from 1.00% at December 31, 2011 to .80% at September 30, 2012. The average volume of interest bearing liabilities increased approximately $5.6 million or 2.5% since December 31, 2011.

Noninterest Income

Noninterest income decreased $281,395 or 18.1% for the nine months ended September 30, 2012 as compared to same period of the prior year. The decrease in noninterest income was primarily due to the decrease in the net gains on sales of investment securities combined with the decline in service charges and other fee income, offset in part by the increase in other operating income.

The net gains on investment securities decreased $299,047 or 46.5% for the nine month period ended September 30, 2012 as compared to the same period in 2011. The change in net gains on sales of investment securities was primarily attributable to sales recorded by the Company and its subsidiary bank. The Company’s subsidiary bank sold approximately $9.6 million of mortgage-backed investment securities during the second quarter of 2012 in order to reinvest into mortgage backed investment securities with a slower more stable cash flow for the current market interest rate environment. The Company’s subsidiary bank sold approximately $17.7 million of investment securities during the first nine months of 2011 to take advantage of the current market interest rate environment. The Company accounted for securities gains of $344,265 and securities losses of $315 during the nine month period ended September 30, 2012 and securities gains of $659,008 and securities losses of $16,011 during the nine month period ended September 30, 2011.

Other operating income represents fees from safe deposit box rentals, sales of checkbooks, sales of cashiers’ checks and money orders, utility collections, ATM charges and card fees, home equity credit line fees, credit life commissions, credit card fees and commissions and various other charges and fees related to normal customer banking relationships. For the nine month period ended September 30, 2012, other operating income increased $34,584 or 6.3% compared to the same period in 2011. The increase in other operating income was primarily due to increases in ATM fees and FHLB fee income, a gain on sale of other real estate owned and in the earnings related to the cash surrender value of the bank owned life insurance on its key officers, offset in part by decreases in the gains on sales of mortgage servicing rights, checkbook sales, safe deposit box rent and filing fee income.

Service charges and other fees represent charges that are earned from assessments made on checking and savings accounts. Service charges and other fee income fell $16,932 in the first nine months of 2012 as compared to the same period in 2011, down 4.7%, from 2011.

29

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Two Average Balance Sheets and Interest Rate Analysis (dollars in thousands)

The following table presents an average balance sheet, interest earned on interest bearing assets, interest paid on interest bearing liabilities, average interest rates and interest differentials for the nine months ended September 30, 2012 and 2011. Average balance sheet information for the periods ended September 30, 2012 and 2011 was compiled using the daily averages. Loan fees and unearned discounts were included in income for average rate calculation purposes. Average yields on investment securities available for sale have been calculated based on amortized cost. Non-accrual loans were included in the average balance computations; however, no interest was included in income subsequent to the non-accrual status classification.

	(Unaudited)								(Unaudited)
	For the nine months ended September 30, 2012								For the nine months ended September 30, 2011
	Average Volume			Interest		Average Rate			Average Volume			Interest		Average Rate
ASSETS:
Investment securities:
U.S. Treasury and U. S. Government agencies	$	37,586		$	539		1.92	%	$	38,025		$	834		2.93	%
Mortgage backed securities		71,587			1,321		2.46	%		60,667			1,622		3.57	%
States and political subdivisions		43,732			1,295		3.96	%		35,099			1,101		4.19	%
Other securities		112			2		2.39	%		208			3		1.93	%
Total Investment securities:		153,017			3,157		2.76	%		133,999			3,560		3.55	%
Interest bearing deposits		13,633			24		0.24	%		12,310			22		0.24	%
Loans, net of unearned income		105,846			4,282		5.40	%		117,036			4,958		5.66	%
Other earning assets		1,246			12		1.29	%		1,338			11		1.10	%
Total earning assets		273,742			7,475		3.65	%		264,683			8,551		4.32	%
Other assets		21,270								20,770
Allowance for loan losses		(2,507	)							(2,193	)
Total Assets	$	292,505							$	283,260
LIABILITIES
Time deposits	$	72,391		$	876		1.62	%	$	77,154		$	1,152		2.00	%
Savings deposits		90,226			241		0.36	%		83,126			295		0.47	%
Interest bearing demand deposits		45,417			42		0.12	%		44,872			50		0.15	%
Federal funds purchased and repurchase agreements		16,906			87		0.69	%		14,249			79		0.74	%
FHLB and other long-term borrowings		3,660			131		4.78	%		3,744			134		4.79	%
Total interest bearing liabilities		228,600			1,377		0.80	%		223,145			1,710		1.02	%
Demand deposits		31,464								28,864
Other liabilities		960								900
Total Liabilities		261,024								252,909
STOCKHOLDERS’ EQUITY		31,481								30,351
Total Liabilities and Stockholders’ Equity	$	292,505							$	283,260
Net yield on earning assets				$	6,098		2.98	%				$	6,841		3.46	%

The fully taxable equivalent basis of interest income from obligations of states and political subdivisions has been determined using a combined Federal and State corporate income tax rate of 40% for the nine months ended September 30, 2012 and 2011, respectively. The effect of this adjustment is presented below.

Investment securities	$	153,017	$	4,020	3.51	%	$	133,999	$	4,270	4.26	%
Loans		105,846		4,518	5.70	%		117,036		5,227	5.97	%
Total earning assets	$	273,742	$	8,574	4.18	%	$	264,683	$	9,530	4.81	%
Taxable equivalent net yield on earning assets			$	7,197	3.51	%			$	7,820	3.95	%

30

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

EARNINGS ANALYSIS - For the nine months ended September 30, 2012 (continued)

Noninterest Expense

Noninterest expense decreased $2,644 or .1% for the nine months ended September 30, 2012 as compared to same period of the prior year. The decrease in noninterest expense was primarily due to the decreases in salary and employee benefits expenses and in other operating expenses, offset in part by an increase in occupancy expenses.

Salary and employee benefits expenses fell $55,478 or 2.0% during the nine months ended September 30, 2012 over the same period in 2011. Salary and employee benefit expense in 2012 compared to 2011 decreased primarily as a result of a reduction in salary expenses, offset in part by increases in employee benefits expenses and payroll taxes.

Other operating expenses for the nine months ended September 30 included the following:

(Unaudited)	2012		2011		Net Increase (Decrease)			Percent Increase (Decrease)
Directors’ fees	$	77,700	$	84,150	$	(6,450	)		(7.7	)%
Stationery and supplies		127,958		113,030		14,928			13.2	%
Regulatory assessment and deposit insurance		203,671		279,175		(75,504	)		(27.0	)%
Advertising		162,372		98,649		63,723			64.6	%
Postage and transportation		122,016		122,921		(905	)		(0.7	)%
Other taxes		126,322		129,430		(3,108	)		(2.4	)%
Service expense		356,172		289,953		66,219			22.8	%
Other		592,948		662,551		(69,603	)		(10.5	)%
Total	$	1,769,159	$	1,779,859	$	(10,700	)		(0.6	)%

Other operating expense decreased $10,700, or .6%, compared to the same period of the prior year. The decrease in other operating expenses during the nine month period ended September 30, 2012 as compared to 2011 was attributable primarily due to the decreases in director fees, regulatory assessments and deposit insurance, postage and transportation expenses, other taxes, and other expenses, which were offset in part by increases in service expense, stationery and supplies expenses and advertising expenses.

As a result of the change in the Federal Deposit Insurance Corporation assessment base calculation in June 2011, the Company saw a reduction in regulatory assessment and deposit insurance during the nine months ended September 30, 2012 compared to the same period in 2011. In 2012 the Bank changed it’s ATM and Debit card processor. The increase in service expenses during the nine months ended September 30, 2012 compared to the same period in 2011 was primarily due to the increased costs as a result of the change in the Bank’s ATM and Debit card processor.

Net occupancy expenses of premises increased $63,534 or 5.9% during the nine months ended September 30, 2012 compared to the same period in 2011. Increases in real estate taxes, building and land lease expense, furniture and fixture depreciation expenses, and utilities, offset in part by the decline in expenses associated with other real estate owned property contributed to the increase in occupancy expenses in 2012 as compared to 2011.

Income Taxes

Income tax expense for the nine month period ended September 30, 2012 was $46,241, decreasing $226,259 or 83.0% compared to the same period in 2011. The decrease in income tax expense was primarily due to the decrease in pre-taxable income of $421,373 combined with the increase in tax-exempt income during the first nine months of 2012 over the same period in 2011. Components of the income tax expense for September 30, 2012 were a benefit of $13,779 for federal taxes and $60,020 for West Virginia corporate net income taxes. Federal income tax rates remain consistent at 34% for the nine months ended September 30, 2012 and 2011 and for the year ended December 31, 2011. West Virginia corporate net income tax rates decreased to 7.75% in 2012 as compared to 8.5% in 2011.

31

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Three Average Balance Sheets and Interest Rate Analysis (dollars in thousands)

The following table presents an average balance sheet, interest earned on interest bearing assets, interest paid on interest bearing liabilities, average interest rates and interest differentials for the three months ended September 30, 2012 and 2011. Average balance sheet information for the periods ended September 30, 2012 and 2011 was compiled using the daily averages. Loan fees and unearned discounts were included in income for average rate calculation purposes. Average yields on investment securities available for sale have been calculated based on amortized cost. Non-accrual loans were included in the average balance computations; however, no interest was included in income subsequent to the non-accrual status classification. Average rates were annualized for the three month periods ended September 30, 2012 and 2011.

	(Unaudited) For the three months ended September 30, 2012								(Unaudited) For the three months ended September 30, 2011
	Average Volume			Interest		Average Rate			Average Volume			Interest		Average Rate
ASSETS:
Investment securities:
U.S. Treasury and other U. S. Government agencies	$	40,892		$	185		1.80	%	$	39,068		$	279		2.83	%
Mortgage backed securities		72,919			417		2.28	%		59,650			497		3.31	%
Obligations of states and political subdivisions		44,764			439		3.90	%		36,268			385		4.21	%
Other securities		109			1		3.65	%		217			1		1.83	%
Total Investment securities:		158,684			1,042		2.61	%		135,203			1,162		3.41	%
Interest bearing deposits		11,799			6		0.20	%		15,107			9		0.24	%
Loans, net of unearned income		103,539			1,403		5.39	%		115,559			1,632		5.60	%
Other earning assets		1,261			4		1.26	%		1,277			4		1.24	%
Total earning assets		275,283			2,455		3.55	%		267,146			2,807		4.17	%
Other assets		21,559								21,488
Allowance for loan losses		(2,514	)							(2,534	)
Total Assets	$	294,328							$	286,100
LIABILITIES
Time deposits	$	70,641		$	265		1.49	%	$	76,080		$	365		1.90	%
Savings deposits		91,213			76		0.33	%		84,755			92		0.43	%
Interest bearing demand deposits		46,481			15		0.13	%		45,673			16		0.14	%
Federal funds purchased and repurchase agreements		18,335			31		0.67	%		15,083			28		0.74	%
FHLB and other long-term borrowings		3,639			43		4.70	%		3,724			45		4.79	%
Total interest bearing liabilities		230,309			430		0.74	%		225,315			546		0.96	%
Demand deposits		31,389								29,282
Other liabilities		883								989
Total Liabilities		262,581								255,586
STOCKHOLDERS’ EQUITY		31,747								30,514
Total Liabilities and Stockholders’ Equity	$	294,328							$	286,100
Net yield on earning assets				$	2,025		2.93	%				$	2,261		3.36	%
The fully taxable equivalent basis of interest income from obligations of states and political subdivisions has been determined using a combined Federal and State corporate income tax rate of 40% for the three months ended September 30, 2012 and 2011, respectively. The effect of this adjustment is presented below.
Investment securities	$	158,684		$	1,334		3.34	%	$	135,203		$	1,395		4.09	%
Loans		103,539			1,479		5.68	%		115,559			1,715		5.89	%
Total earning assets	$	275,283		$	2,823		4.08	%	$	267,146		$	3,123		4.64	%
Taxable equivalent net yield on earning assets				$	2,393		3.46	%				$	2,577		3.83	%

32

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

EARNINGS ANALYSIS - For the three months ended September 30, 2012

Net Interest Income

For the three months ended September 30, 2012, net interest income was $2,024,579, decreasing $236,323 or 10.5%, from the same period in 2011. The decrease in net interest income was primarily due to the decrease in the interest earned on loans combined with the decrease in the interest earned on investment securities, offset in part by the decrease in the interest paid on interest bearing liabilities. The taxable equivalent net yield on earnings assets decreased from 3.83% at September 30, 2011 to 3.46% at September 30, 2012. Table Three presents the average balance sheets and an interest rate analysis for the three months ended September 30, 2012 and 2011.

Interest and fees on loans decreased $228,620 or 14.0% for the three month period ended September 30, 2012 as compared to the same period in 2011 due to the decline in the average volume of loans combined with the decrease in the average yield on loans. The average volume of loans fell approximately $12.0 million or 10.4% since September 30, 2011. The taxable equivalent yield on loans fell 25 basis points, to 5.68% at September 30, 2012 from 5.93% at December 31, 2011 and decreased 21 basis points from September 30, 2011.

Interest income on investment securities decreased $120,797 or 10.4% during the third quarter of 2012 as compared to the same period of the prior year. The decrease in interest income on investment securities was primarily due to the decline in the yield earned, offset in part by the rise in the average volume. The investment portfolio increased with the average volume increasing approximately $23.5 million or 17.4% since September 30, 2011. The taxable equivalent yield earned on investment securities declined 75 basis points, to 3.34% for the three months ended September 30, 2012 as compared to 4.09% for the same period in 2011.

Interest expense paid on interest bearing liabilities fell $115,461 or 21.2% during the three months ended September 30, 2012 as compared to the same period in 2011. The decrease in interest expense was primarily due to the decline in the average yield paid on interest bearing liabilities, which was offset in part by an increase in average balances. The average yield paid on interest bearing liabilities was down 22 basis points, from .96% at September 30, 2011 to .74% at September 30, 2012. The average volume of interest bearing liabilities rose approximately $5.0 million or 2.2%, from September 30, 2011 to September 30, 2012 primarily due to an increase in the balances maintained in savings deposits, interest bearing demand deposits and repurchase agreements, offset in part by the decline in time deposits and Federal Home Loan Bank borrowings.

Noninterest Income

Noninterest income decreased $415,345 or 57.5% for the three months ended September 30, 2012 as compared to same period of the prior year. The decrease in noninterest income was primarily due to the decrease in the net gains on sales of investment securities combined with the decreases in other operating income and service charges and other fee income.

The net gains on investment securities decreased $373,450 or 99.6% for the three month period ended September 30, 2012 as compared to the same period in 2011. The decrease in investment securities gains was primarily attributable to additional sales recorded by the Company and its subsidiary bank in 2011. The Company’s subsidiary bank sold approximately $4.9 million of investment securities during the third quarter of 2011 in order to take advantage of the current market interest rate environment. The Company accounted for securities gains of $1,671 and no securities losses during the three month period ended September 30, 2012 and securities gains of $375,212 and securities losses of $91 during the three month period ended September 30, 2011.

During the third quarter of 2012, other operating income decreased $27,326 or 12.8% as compared to same period of the prior year. The decrease in other operating income during the three month period ended September 30, 2012 as compared to the same period in the prior year was primarily due to decreases in the gain on mortgage servicing rights, FHLB fee income, sales of checkbooks offset in part by increases in ATM fees, the gain on the sale of other real estate owned property, filing fee income, credit card fees and other miscellaneous income.

Noninterest Expense

Noninterest expense decreased $24,375 or 1.3% for the three months ended September 30, 2012 as compared to same period of the prior year. The decrease in noninterest expense was primarily due to the decline in salary and employee benefits expenses, offset in part by the increases in occupancy expense of premises and other operating expenses.

Salary and employee benefits expenses fell $39,255 or 4.0% during the three months ended September 30, 2012 over the same period in 2011. Salary and employee benefits expense in 2012 compared to 2011 decreased primarily as a result of a reduction in salary expenses, offset in part by increases in employee benefits expenses and payroll taxes.

Net occupancy expenses of premises increased $9,914 or 2.6% during the three months ended September 30, 2012 compared to the same period in 2011. The increase in net occupancy expenses in 2012 as compared to 2011 was primarily due to increases in building maintenance costs, real estate taxes and furniture and fixture depreciation expenses and maintenance costs, offset in part by a decrease in expenses for other real estate owned property.

Other operating expense increased $4,966, or .9%, compared to the same period of the prior year. The increase in other operating expenses during the three month period ended September 30, 2012 as compared to 2011 was attributable primarily due to the increases in service expense, stationery and supplies expenses and advertising expenses, which were offset in part by decreases in other taxes, director fees, regulatory assessments and deposit insurance, postage and transportation expenses and other expenses.

33

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

EARNINGS ANALYSIS - For the three months ended September 30, 2012 (continued)

Noninterest Expense - (continued)

Other operating expenses for the three months ended September 30 included the following:

(Unaudited)	2012		2011		Net Increase (Decrease)			Percent Increase (Decrease)
Directors’ fees	$	23,350	$	26,100	$	(2,750	)		(10.5	)%
Stationery and supplies		51,793		36,129		15,664			43.4	%
Regulatory assessment and deposit insurance		68,094		70,872		(2,778	)		(3.9	)%
Advertising		55,299		40,280		15,019			37.3	%
Postage and transportation		36,398		35,657		741			2.1	%
Other taxes		25,270		35,152		(9,882	)		(28.1	)%
Service expense		134,722		99,131		35,591			35.9	%
Other		156,294		202,933		(46,639	)		(23.0	)%
Total	$	551,220	$	546,254	$	4,966			0.9	%

Income Taxes

The income tax benefit for the three month period ended September 30, 2012 was $21,042, as compared to the income tax expense of $230,145 for the same period in 2011. The decrease in income tax expense was primarily due to the decrease in pre-taxable income of $627,293 combined with the increase in tax-exempt income during the three month period ended September 30, 2012 over the same period in 2011.

Balance Sheet Analysis

Investments

Investment securities increased approximately $15.5 million or 10.3% from December 31, 2011 to September 30, 2012. The investment portfolio is managed to attempt to achieve an optimum mix of asset quality, liquidity and maximum yield on investment. The investment portfolio consists of U.S. Government agency and corporation securities, obligations of states and political subdivisions, corporate debt securities, mortgage-backed securities and equity securities. Taxable securities comprised 70.4% of total securities at September 30, 2012, as compared to 70.0% at December 31, 2011. Other than the normal risks inherent in purchasing U.S. Government agency and corporation securities, corporate debt securities, mortgage-backed securities and obligations of states and political subdivisions, i.e., interest rate risk, management has no knowledge of other market risk involved in these investments. The Company does not have any high risk hybrid/derivative instruments.

Investment securities that are classified available for sale are available for sale at any time based upon management’s assessment of changes in economic or financial market conditions. These securities are carried at fair value and the unrealized holding gains and losses, net of taxes, are reflected as a separate component of stockholders’ equity until realized. Available for sale securities, at fair value, represented 100% of the investment portfolio at September 30, 2012 and December 31, 2011. The increase in the available for sale securities was primarily due to the purchase of obligations of U.S Government agency and corporation securities, obligations of states and political subdivisions and mortgage backed securities. The Company did not have any investment securities classified as held to maturity securities at September 30, 2012 and December 31, 2011. As the investment portfolio consists primarily of fixed rate debt securities, changes in the market rates of interest will affect the carrying value of securities available for sale, adjusted upward or downward and represent temporary adjustments in value. The carrying values of securities available for sale was above amortized cost by $6,381,394 and $5,181,686 at September 30, 2012 and December 31, 2011, respectively.

Loans

Total loans, net of unearned income, declined $8,702,206 or 8.0% from December 31, 2011 to September 30, 2012. The decrease in total loans in 2012 was primarily due to the decreases in commercial real estate loans, consumer loans, and commercial and other loans which decreased $7,068,000, $1,304,000 and $689,000, respectively, offset in part by the increase in consumer real estate loans which increased $328,000. The decline in commercial real estate loans was primarily due to the decrease in loans secured by non-farm, non-residential commercial real estate. The consumer loans decreased during the first nine months of 2012 primarily due to the decline in installment loans to individuals. Commercial loans declined during 2012 primarily in non-rated industrial development obligations and in commercial and industrial loans. The increase in consumer real estate loans in 2012 was primarily in construction and home equity lines of credit, partially offset by the decline in residential real estate loans and home equity loans.

Commercial real estate loans which include real estate loans secured by non-farm, non-residential properties and multi-family residential property loans comprised forty-nine percent (49%) of the loan portfolio. Consumer real estate loans which include construction, farmland, real estate residential loans, and home equity loans comprised thirty percent (30%) of the loan portfolio. Commercial and other loans which include commercial and industrial loans and non-rated industrial development obligations comprised fifteen percent (15%) of the loan portfolio. Consumer loans which include installment and other loans to individuals and credit cards comprised six percent (6%) of the loan portfolio. The changes in the composition of the loan portfolio from December 31, 2011 to September 30, 2012 were a 2% increase in consumer real estate loans and a 2% decrease in commercial real estate loans.

34

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Maturities and sensitivities of Loans to Changes in Interest Rates

The following table presents the contractual maturities of loans other than installment loans and residential mortgages as of September 30, 2012 and December 31, 2011:

(dollars in thousands)	(Unaudited) September 30, 2012						December 31, 2011
	In one Year or Less		After one Year Through Five Years		After Five Years		In one Year or Less		After one Year Through Five Years		After Five Years
Construction	$	7	$	627	$	1,131	$	—	$	13	$	282
Commercial real estate - nonfarm, nonresidential property		2,690		3,573		36,118		3,571		3,027		42,548
Commercial		667		2,679		1,408		657		2,572		1,125
Nonrated industrial development obligations		649		3,206		6,620		289		4,270		6,949
Total	$	4,013	$	10,085	$	45,277	$	4,517	$	9,882	$	50,904

The following table presents an analysis of fixed and variable rate loans as of September 30, 2012 and December 31, 2011 along with the contractual maturities of loans other than installment loans and residential mortgages:

(dollars in thousands)	(Unaudited) September 30, 2012						December 31, 2011
	In one Year or Less		After one Year Through Five Years		After Five Years		In one Year or Less		After one Year Through Five Years		After Five Years
Fixed Rates	$	3,315	$	6,214	$	9,436	$	3,905	$	5,751	$	10,208
Variable Rates		698		3,871		35,841		612		4,131		40,696
Total	$	4,013	$	10,085	$	45,277	$	4,517	$	9,882	$	50,904

Loans Held for Sale

The Company has entered into an agreement with the Federal Home Loan Bank of Pittsburgh (“FHLB”) under which the bank may sell conforming one-to-four family residential mortgage loans to the FHLB. The agreement provides for a maximum commitment of $5,000,000. Loans sold to the FHLB are sold with limited recourse or credit risk based upon utilization of the original commitment. The bank also maintains the servicing of these loans, for which it is paid a servicing fee. The total amount of loans sold under this agreement is $9,911,832 and $9,470,840 as of September 30, 2012 and December 31, 2011, respectively. The loans which were sold were also subject to a recourse obligation or credit risk in the amount of $415,152 and $383,269 at September 30, 2012 and December 31, 2011, respectively.

Non-performing Loans

Non-performing assets include non-accrual loans on which the collectibility of the full amount of interest is uncertain; loans which have been renegotiated to provide for a reduction or deferral of interest on principal because of a deterioration in the financial position of the borrower; loans past due ninety days or more as to principal or interest; and other real estate owned. A summary of nonperforming assets is presented in the following table. Total non-performing loans were $3,788,000 at September 30, 2012 as compared to $4,184,000 at December 31, 2011. The decline in non-performing loans in 2012 was primarily due to decreases in non-accrual loans and in other real estate owned.

35

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Non-performing Loans (Continued)

Risk Elements

Loans which are in the process of collection, but are contractually past due 90 days or more as to interest or principal, renegotiated, non-accrual loans and other real estate are as follows:

(dollars in thousands)	September 30,			December 31,
	2012			2011			2010			2009			2008
Past Due 90 Days or More:
Commercial and Other Loans	$	—		$	—		$	—		$	—		$	—
Commercial real estate		—			—			—			—			—
Consumer real estate		32			—			28			—			—
Consumer		—			—			—			—			—
		32			—			28			—			—
Non-accrual:
Commercial and Other Loans	$	33		$	39		$	54		$	2,254		$	111
Commercial real estate		3,296			3,533			4,147			1,195			2,866
Consumer real estate		398			447			688			624			282
Consumer		22			27			14			19			16
	$	3,749		$	4,046		$	4,903		$	4,092		$	3,275
Other Real Estate	$	7		$	138		$	8		$	173		$	8
Total non-performing assets	$	3,788		$	4,184		$	4,939		$	4,265		$	3,283
Total non-performing assets to total loans and other real estate		3.76	%		3.82	%		4.07	%		3.31	%		2.63	%

Loans are placed in non-accrual when the principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection. Non-accrual loans were $3,748,768 or 3.7% of total loans outstanding as of September 30, 2012, as compared to $4,045,937 or 3.7% of total loans outstanding as of December 31, 2011. Non-accrual loans decreased in 2012 primarily from loan payments. There was one loan past due 90 days or more and still accruing interest at September 30, 2012. There were no loans past due 90 days or more and still accruing interest at December 31, 2011. Other real estate owned totaled $7,000 and $138,000 at September 30, 2012 and December 31, 2011, respectively. Management continues to monitor the nonperforming assets to ensure against deterioration in collateral values.

Allowance for Loan Losses

In all lending activities there is an inherent risk that borrowers will be unable to repay their obligations. The Company maintains an allowance for loan losses to absorb probable loan losses. The Company has historically maintained the allowance for loan losses at a level greater than actual charge-offs. Although a subjective evaluation is determined by management, the Company believes it has appropriately assessed the risk of loans in the loan portfolio and has provided for an allowance which is adequate based on that assessment. Because the allowance is an estimate, any change in the economic conditions of the Company’s market area could result in new estimates which could affect the Company’s earnings. Management monitors the quality of the loan portfolio through reviews of past due loans and all significant loans which are considered to be potential problem loans on a monthly basis. The internal loan review function provides for an independent review of commercial, real estate, and installment loans in order to measure the asset quality of the portfolio. Management’s review of the loan portfolio has not indicated any material loans, not disclosed in the accompanying tables and discussions which are known to have possible credit problems that cause management to have serious doubts as to the ability of each borrower to comply with their present loan repayment terms. The allowance for loan losses increased $9,170 or .4%, since December 31, 2011. The allowance for loan losses represented 2.4% and 2.3% of outstanding loans as of September 30, 2012 and at December 31, 2011, respectively. Charge-offs amounted to $9,846 and recoveries were $19,016 for the nine month period ended September 30, 2012. There was no provision made to the allowance for loan losses during the nine months ended September 30, 2012. There was a provision in the amount of $600,000 made to the allowance for loan losses during the nine months ended September 30, 2011. The credit quality of the loan portfolio combined with the recent level of net charge-offs and nonperforming assets continue to be considered in the calculation of the provision for loan losses. The Company has allocated the allowance for possible loan losses to specific portfolio segments based upon historical net charge-off experience, changes in the level of nonperforming assets, local economic conditions and management’s experience.

The additions to the allowance for loan losses are based on management’s evaluation of characteristics of the loan portfolio, current and anticipated economic conditions, past loan experiences, net loans charged-off, specific problem loans and delinquencies, and other factors. The Company has allocated the allowance for possible loan losses to specific portfolio segments based upon historical net charge-off experience, changes in the level of nonperforming assets, local economic conditions and management’s experience as presented in the following table.

36

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Allowance for Loan Losses (Continued)

The following table presents an allocation of the allowance for possible loan losses at each of the four year periods ended December 31, 2011, and the nine month period ended September 30, 2012. The allocation presented below is based on the historical average of net charge offs per category combined with the change in loan growth and management’s review of the loan portfolio.

	(Unaudited) September 30,					December 31,
	2012					2011					2010					2009					2008
(dollars in thousands)	Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans
Commercial and Other Loans	$	169		15.1	%	$	179		14.6	%	$	212		16.9	%	$	203		16.1	%	$	202		17.7	%
Commercial real estate		2,040		48.9	%		2,082		51.5	%		1,511		46.5	%		1,345		45.5	%		1,350		41.8	%
Consumer real estate		267		30.3	%		193		27.4	%		272		28.1	%		267		28.2	%		267		29.2	%
Consumer		37		5.7	%		50		6.5	%		64		8.5	%		79		10.2	%		104		11.3	%
Total	$	2,513		100.0	%	$	2,504		100.0	%	$	2,059		100.0	%	$	1,894		100.0	%	$	1,923		100.0	%

Deposits

A stable core deposit base is the major source of funds for the Company’s subsidiary bank. The deposit mix depends upon many factors including competition from other financial institutions, depositor interest in certain types of deposits, changes in the interest rate and the Company’s need for certain types of deposit growth. Total deposits increased approximately $143,756 during the first nine months of 2012. Since year end the increase in total deposits was primarily due to increases in savings deposits which increased approximately $5.9 million, offset in part by the decreases in certificates of deposit, interest bearing demand deposits and noninterest bearing demand deposits which fell $3.9 million and $1.2 million and $.5 million, respectively. At September 30, 2012, noninterest bearing deposits comprised 13% of total deposits and interest bearing deposits which include NOW, money market, savings and time deposits comprised 87% of total deposits. There were no changes in the composition of the deposit mix since December 31, 2011.

Federal Funds Purchased and Repurchase Agreements

Federal funds purchased and repurchase agreements represent borrowings of a short duration, usually less than 30 days. For repurchase agreements, the securities underlying the agreements remained under the Bank’s control. There were no Federal funds purchased at September 30, 2012 and December 31, 2011. Repurchase agreements increased $4,556,644 or 32.5%, from December 31, 2011 to September 30, 2012. The increase in repurchase agreements since year end was primarily due to the increase in the balances maintained by existing commercial customers.

Capital Resources

Stockholders’ equity increased 1.9% during the nine month period ended September 30, 2012 entirely from current earnings after quarterly dividends, and a 2.2% increase in accumulated other comprehensive income. The increase in accumulated other comprehensive income is primarily attributable to the effect of the change in the net unrealized gain on securities available for sale. Stockholders’ equity amounted to 11.9% and 11.8% of total assets at September 30, 2012 and December 31, 2011, respectively. The Company paid dividends of $.57 per share during the nine month periods ended September 30, 2012 and September 30, 2011. The Company paid dividends of $.19 per share during the three month periods ended September 30, 2012 and September 30, 2011.

The Company’s primary source of funds for payment of dividends to shareholders is from the dividends from its subsidiary bank. The approval of the Comptroller of the Currency is required to pay dividends if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits (as defined) for the year, combined with its retained net profits of the preceding two years. Under this formula, the Company’s subsidiary bank can declare dividends in 2012, without approval of the Comptroller of the Currency, of approximately $2,396,000, plus an additional amount equal to the bank’s net profit for 2012 up to the date of any such dividend declaration.

37

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Liquidity

Liquidity management ensures that funds are available to meet loan commitments, deposit withdrawals, and operating expenses. Funds are provided by loan repayments, investment securities maturities, or deposits, and can be raised by liquidating assets or through additional borrowings. The Company had investment securities with an estimated fair value of $166,464,449 classified as available for sale at September 30, 2012. These securities are available for sale at any time based upon management’s assessment in order to provide necessary liquidity should the need arise. The fair value of temporarily impaired investment securities that the company has the intent and ability to hold until the anticipated recovery in market value is $6,071,000. In addition, the Company’s subsidiary bank, Progressive Bank, N.A., is a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”). Membership in the FHLB provides an additional source of funding in the form of collateralized advances. The remaining maximum borrowing capacity with the FHLB at September 30, 2012 was approximately $38.7 million subject to the purchase of additional FHLB stock. At September 30, 2012, the subsidiary bank had a short term line of credit in the aggregate amount of approximately $7 million available with the FHLB. There were no short term borrowings outstanding pursuant to this agreement as of September 30, 2012 and December 31, 2011. The subsidiary Bank also has an agreement with a financial institution for an available line of credit in the amount of $4,000,000 to be used for federal funds borrowings. There were no borrowings outstanding related to this agreement as of September 30, 2012 and December 31, 2011. The subsidiary bank also has pledged investment securities in the approximate amount of $14 million to secure the ability to borrow from the Federal Reserve discount window should the need arise. There were no borrowings outstanding from the Federal Reserve as of September 30, 2012 and December 31, 2011. At September 30, 2012 and December 31, 2011, the Company had outstanding loan commitments and unused lines of credit totaling $16,564,000 and $15,371,000, respectively. As of September 30, 2012, management placed a high probability for required funding within one year of approximately $7.5 million. Approximately $4.4 million is principally unused home equity and credit card lines on which management places a low probability for required funding.

38

FIRST WEST VIRGINIA BANCORP, INC.

PART I

Item 3 Quantitative and Qualitative Disclosures About Market Risk

The Company’s subsidiary bank uses an asset/liability model to measure the impact of changes in interest rates on net interest income on a periodic basis. Assumptions are made to simulate the impact of future changes in interest rates and/or changes in balance sheet composition. The effect of changes in future interest rates on the mix of assets and liabilities may cause actual results to differ from simulated results. Guidelines established by the Company’s subsidiary bank provides that the estimated net interest income may not change by more than 10% in a one year period given a +/- 200 basis point parallel shift in interest rates. Excluding the potential effect of interest rate changes on assets and liabilities of the Holding Company which are not deemed material, the anticipated impact on net interest income of the subsidiary bank at September 30, 2012 was as follows: given a 200 basis point increase scenario net interest income would be reduced by approximately 1.7%, and given a 200 basis point decrease scenario net interest income would be decreased by approximately 4.6%. The results using a +/-100 basis point interest rate scenario are also presented. Under the 100 basis point increase scenario net interest income would be increased by approximately 1.0%, and given a 100 basis point decrease scenario net interest income would be decreased by 3.6%. The projections provided by the model are not intended as an actual forecast of the bank’s performance in a particular rate environment, and should not be relied upon. Actual changes in the interest rate environment normally do not take place instantaneously, but over a period of time, and do not occur in a parallel fashion. Additionally, the balance sheet composition, spread relationships for new dollars invested, non interest income and expenses, investment practices, and deposit practices all change as a result of changes in interest rates and would need to be considered by the Asset Liability committee.

Item 4 Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chairman, President and Chief Executive Officer, Sylvan J. Dlesk, and Executive Vice President, Chief Administrative Officer and Chief Financial Officer, Francie P. Reppy, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days prior to the filing of this report (the “Evaluation Date”), have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Controls

During the quarter, there were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s disclosure controls and procedures subsequent to the date of their evaluation, nor were there any significant deficiencies or material weaknesses in the Company’s internal controls. As a result, no corrective actions were required or undertaken.

39

FIRST WEST VIRGINIA BANCORP, INC.

PART II

OTHER INFORMATION

Item 1 Legal Proceedings

The nature of the business of the Holding Company’s subsidiary generates a certain amount of litigation involving matters arising in the ordinary course of business. The Company is unaware of any litigation other than ordinary routine litigation incidental to the business of the Company, to which it or its subsidiary is a party or of which any of their property is subject.

Item 1A Risk Factors

Not applicable to Smaller Reporting Companies

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

Inapplicable

Item 3 Defaults Upon Senior Securities

Inapplicable

Item 4 Mine Safety Disclosures

None

Item 5 Other Information

Inapplicable

Item 6 Exhibits and Reports on Form 8-K

(a) Reports on Form 8-K

On August 8, 2012 a report on Form 8-K was filed which contained a press release dated August 7, 2012 that reported the announcement of First West Virginia Bancorp Inc.’s second quarter earnings.

(b) Exhibits

The exhibits listed in the Exhibit Index on page 42 of this FORM 10-Q are incorporated by reference and/or filed herewith.

40

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

First West Virginia Bancorp, Inc.                      (Registrant)
By:	/s/ Sylvan J. Dlesk
	Sylvan J. Dlesk
	Chairman, President and Chief Executive Officer
By:	/s/ Francie P. Reppy
	Francie P. Reppy
	Executive Vice President, Chief Administrative Officer and Chief Financial Officer

Dated: November 9, 2012

41

EXHIBIT INDEX

The following exhibits are filed herewith and/or are incorporated herein by reference.

			Incorprated by Reference
Exhibit Number	Description	Filed Herewith	Form		File No.		Exhibit	Filing Date
3.1	Certificate and Articles of Incorporation of First West Virginia Bancorp, Inc.			10-K		001-13652	3.1		3/31/10
3.2	Amended and Restated Bylaws of First West Virginia Bancorp, Inc.			10-K		001-13652	3.1		3/31/12
10.3	Lease dated July 20, 1993 between Progressive Bank, N.A., formerly known as “First West Virginia Bank, N.A.”, and Angela I. Stauver.			10-K		001-13652	10.3		3/31/10
10.4	Lease dated March 7, 2006 between Progressive Bank, N.A. and O. V. Smith & Sons of Big Chimney, Inc.			10-K		001-13652	10.4		3/31/10
10.5	Lease dated May 12, 2001 between Progressive Bank, N.A. and Sylvan J. Dlesk and Rosalie J. Dlesk doing business as Dlesk Realty & Investment Company.			10-K		001-13652	10.5		3/31/10
10.7	Lease dated December 1, 2009 between Progressive Bank, N.A. and Richard J. Dlesk, Sr. And Sharon G Neis-Dlesk.			10-K		001-13652	10.7		3/31/10
11.1	Statement regarding computation of per share earnings.	X
13.3	Summarized Quarterly Financial Information	X
15	Letter re unaudited interim financial information. See Part 1, Notes to Consolidated Financial Statements.	X
31.1	Rule 13a-14(a) / 15d/14(a) Certifications - Certification of Chief Executive Officer	X
31.2	Rule 13a-14(a) / 15d/14(a) Certifications - Certification of Chief Financial Officer	X
32	Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer	X
99.1	Independent Accountant’s Report.	X
101	Interactive Data File	X

42

EX-11.1

EXHIBIT 11.1 - Statement Regarding Computation of Per Share Earnings Computation of Earnings Per Share

The following formula was used to calculate the earnings per share, Consolidated Statements of Income for the three and nine months ended September 30, 2012 and 2011, included in this report as Exhibit 13.3.

Earnings Per Share

Net Income / Weighted average shares of common stock outstanding for the period

	Three months ended September 30,
	2012		2011
Weighted Average Shares Outstanding		1,652,814		1,652,814
Net Income	$	482,826	$	856,932
Per Share Amount	$	0.29	$	0.52

	Nine months ended September 30,
	2012		2011
Weighted Average Shares Outstanding		1,652,814		1,652,814
Net Income	$	1,622,860	$	1,817,974
Per Share Amount	$	0.98	$	1.10

No common stock equivalents exist.

43

EX-13.3

EXHIBIT 13.3 - Summarized Quarterly Financial Information

First West Virginia Bancorp, Inc.

Summarized Quarterly Financial Information

A summary of selected quarterly financial information follows:

2012	First Quarter		Second Quarter		Third Quarter
Total interest income	$	2,531,454	$	2,488,731	$	2,455,071
Total interest expense		488,630		457,777		430,492
Net interest income		2,042,824		2,030,954		2,024,579
Provision for loan losses		—		—		—
Investment securities gain		—		342,279		1,671
Total other income		307,995		316,058		304,996
Total other expenses		1,903,102		1,929,691		1,869,462
Income before income taxes		447,717		759,600		461,784
Net income		470,000		670,034		482,826
Net income per share		0.28		0.41		0.29

2011	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total interest income	$	2,861,756	$	2,882,684	$	2,806,855	$	2,655,920
Total interest expense		602,421		561,942		545,953		518,991
Net interest income		2,359,335		2,320,742		2,260,902		2,136,929
Provision for loan losses		30,000		570,000		—		—
Investment securities gain		172		267,704		375,121		87,900
Total other income		286,336		278,170		346,891		391,637
Total other expenses		1,903,540		1,907,522		1,893,837		1,921,179
Income before income taxes		612,303		389,094		1,089,077		695,287
Net income		549,907		409,135		858,932		636,171
Net income per share		0.33		0.25		0.52		0.38

2010	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total interest income	$	2,997,289	$	3,025,943	$	2,943,635	$	2,891,028
Total interest expense		871,185		783,922		738,435		661,960
Net interest income		2,126,104		2,242,021		2,205,200		2,229,068
Provision for loan losses		30,000		30,000		30,000		130,000
Investment securities gain		—		253,267		308,095		3,912
Total other income		294,915		323,699		487,379		305,315
Total other expenses		1,897,110		1,932,889		1,922,485		1,970,414
Income before income taxes		493,909		856,098		1,048,189		437,881
Net income		460,651		668,034		786,938		423,658
Net income per share		0.28		0.40		0.48		0.26

44

EX-31.1

EXHIBIT 31.1 - Certification of Chief Executive Officer pursuant to section 302 of the Securities and Exchange Act of 1934.

Certification

I, Sylvan J.Dlesk, certify that:

I have reviewed this quarterly report on Form 10-Q of First West Virginia Bancorp, Inc.;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the period covered by this quarterly report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 9, 2012

/s/ Sylvan J. Dlesk

Sylvan J. Dlesk

Chairman, President and Chief Executive Officer/Director

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2 - Certification of Chief Financial Officer pursuant to section 302 of the Securities and Exchange Act of 1934.

Certification

I, Francie P. Reppy, certify that:

I have reviewed this quarterly report on Form 10-Q of First West Virginia Bancorp, Inc.;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the period covered by this quarterly report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 9, 2012

/s/ Francie P. Reppy

Francie P. Reppy

Executive Vice President, Chief Administrative Officer and Chief Financial Officer

(Principal Financial Officer)

EX-32

EXHIBIT 32 - CERTIFICATION PURSUANT TO 18 U.S.C. §1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the three months ended September 30, 2012, (the “Report”) of First West Virginia Bancorp, Inc., the (“Company”) as filed with the Securities and Exchange Commission on the date hereof, each of the undersigned, in the capacities and on the dates indicated below certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2012	/s/ Sylvan J. Dlesk
	Sylvan J. Dlesk
	Chairman, President and Chief Executive Officer/Director
	(Principal Executive Officer)

Date: November 9, 2012	/s/ Francie P. Reppy
	Francie P. Reppy
	Executive Vice President, Chief Administrative Officer and Chief Financial Officer (Chief Financial Officer)

EX-99.1

EXHIBIT 99.1

SNODGRASS

Certified Public Accountants and Consultants

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

First West Virginia Bancorp, Inc.

We have reviewed the accompanying consolidated balance sheet of First West Virginia Bancorp, Inc. and its subsidiary as of September 30, 2012, and the related consolidated statements of income and comprehensive income for the three-month and nine-month periods ended September 30, 2012 and 2011, and the consolidated statement of changes in stockholders’ equity and the consolidated statement of cash flows for the nine-month periods ended September 30, 2012 and 2011. These consolidated financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2011, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 23, 2012 we expressed an unqualified opinion on those consolidated financial statements.

/s/ S. R. Snodgrass, A.C.

Wheeling, West Virginia

November 9, 2012

S.R. Snodgrass, A.C.

980 National Road Wheeling, WV 26003-6400 Phone: 304-233-5030 Facsimile: 304-233-3062

48

XML

Allowance for Loan Losses (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Schedule of Impairment on the Allowance for Loan Losses, by Class of Loans
Allowance for loan losses, Beginning balance	$ (2,514,000)	$ (2,529,000)	$ (2,503,738)	$ 2,059,000
Charge-offs	(2,000)	(5,000)	(10,000)	(186,000)
Recoveries on loans previously charged-off	1,000	2,000	19,016	52,178
Provision for loan losses		(1,000)		600,000
Loans individually evaluated for impairment	819,000	851,000	819,000	851,000
Loans collectively evaluated for impairment	1,694,000	1,674,000	1,694,000	1,674,000
Allowance for loan losses, Ending balance	(2,512,909)	2,525,000	(2,512,909)	2,525,000
Commercial and other Loans [Member]
Schedule of Impairment on the Allowance for Loan Losses, by Class of Loans
Allowance for loan losses, Beginning balance	(170,000)	(175,000)	179,000	212,000
Charge-offs				(8,000)
Recoveries on loans previously charged-off				2,000
Provision for loan losses	(1,000)	(6,000)	(10,000)	(37,000)
Loans individually evaluated for impairment	24,000		24,000
Loans collectively evaluated for impairment	145,000	169,000	145,000	169,000
Allowance for loan losses, Ending balance	169,000	169,000	169,000	169,000
Commercial real estate [Member]
Schedule of Impairment on the Allowance for Loan Losses, by Class of Loans
Allowance for loan losses, Beginning balance	(2,050,000)	(2,055,000)	2,082,000	1,511,000
Charge-offs			(3,000)	(156,000)
Recoveries on loans previously charged-off		1,000	15,000	45,000
Provision for loan losses	(10,000)	119,000	(54,000)	775,000
Loans individually evaluated for impairment	795,000	851,000	795,000	851,000
Loans collectively evaluated for impairment	1,245,000	1,324,000	1,245,000	1,324,000
Allowance for loan losses, Ending balance	2,040,000	2,175,000	2,040,000	2,175,000
Consumer real estate [Member]
Schedule of Impairment on the Allowance for Loan Losses, by Class of Loans
Allowance for loan losses, Beginning balance	(254,000)	(249,000)	193,000	272,000
Charge-offs		(1,000)		(7,000)
Provision for loan losses	13,000	(116,000)	74,000	(131,000)
Loans collectively evaluated for impairment	267,000	134,000	267,000	134,000
Allowance for loan losses, Ending balance	267,000	134,000	267,000	134,000
Consumer Loans [Member]
Schedule of Impairment on the Allowance for Loan Losses, by Class of Loans
Allowance for loan losses, Beginning balance	(40,000)	(50,000)	50,000	64,000
Charge-offs	(2,000)	(6,000)	(7,000)	(15,000)
Recoveries on loans previously charged-off	1,000	1,000	4,000	5,000
Provision for loan losses	(2,000)	2,000	(10,000)	(7,000)
Loans collectively evaluated for impairment	37,000	47,000	37,000	47,000
Allowance for loan losses, Ending balance	$ 37,000	$ 47,000	$ 37,000	$ 47,000

XML

Federal Home Loan Bank Borrowings (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2012 Advance	Dec. 31, 2011
Federal Home Loan Bank Borrowings (Textual) [Abstract]
Federal Home Loan Bank borrowings	$ 3,628,451	$ 3,693,014
Federal Home Loan Bank Borrowings (Additional Textual) [Abstract]
Credit agreement with Federal Home Loan Bank, maturity period	1 year
Federal Home Loan Bank, the remaining maximum borrowing capacity	38,700,000
Number of fixed rate amortizing advances	3
Federal Home Loan Bank, advances, weighted average interest rate	4.78%
Line of credit facility agreement with the Federal Home Loan Bank, the available maximum credit facility	7,000,000
Bank had three fixed rate amortizing advances	3,628,451
Line of credit facility agreement with the Federal Home Loan Bank, expiration date	Dec. 31, 2012
Borrowings outstanding under credit agreement with the Federal Home Loan Bank	0	0
Federal Home Loan Bank, Advances, Mature In 2018 [Member]
Federal Home Loan Bank Borrowings (Textual) [Abstract]
Federal Home Loan Bank borrowings	2,057,189
Federal Home Loan Bank, Advances, Mature In 2023 [Member]
Federal Home Loan Bank Borrowings (Textual) [Abstract]
Federal Home Loan Bank borrowings		$ 1,571,262

XML

Deposits (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Deposits (Textual) [Abstract]
Large-denomination time deposit			$ 100,000
Time deposits, $100,000 or more, domestic	20,696,000		20,696,000		22,040,000
Time deposits include certificates of deposit, $100,000 or more, domestic, interest expense	$ 74,251	$ 122,591	$ 266,426	$ 347,879

XML

Loans and Leases (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Loans And Leases
Total Commercial and Other Loans	$ 15,249,000	$ 15,938,000
Total Commercial Real Estate	49,300,000	56,368,000
Total Consumer Real Estate	30,480,000	30,152,000
Total Consumer Loans	5,786,000	7,090,000
Total loans	100,815,000	109,548,000
Unearned interest and deferred fees	(89,000)	119,000
Net loans	100,726,270	109,428,476
Commercial and other Loans [Member]
Loans And Leases
Commercial and Other Loans, Commercial	4,754,000	4,354,000
Commercial and Other Loans, Non-rated industrial development obligations	10,475,000	11,508,000
Commercial and Other Loans, Other loans	20,000	76,000
Total Commercial and Other Loans	15,249,000	15,938,000
Net loans	15,249,000	15,938,000
Commercial real estate [Member]
Loans And Leases
Commercial Real Estate, Non-farm, non-residential	42,381,000	49,146,000
Commercial Real Estate, Multifamily (5 or more) residential properties	6,919,000	7,222,000
Total Commercial Real Estate	49,300,000	56,368,000
Net loans	49,300,000	56,368,000
Consumer real estate [Member]
Loans And Leases
Consumer Real Estate, Construction	1,765,000	295,000
Consumer Real Estate, Home Equity Lines of Credit	2,949,000	2,303,000
Total Consumer Real Estate	30,480,000	30,152,000
Net loans	30,480,000	30,152,000
Consumer real estate [Member] | Farmland [Member]
Loans And Leases
Consumer Real Estate	247,000	213,000
Consumer real estate [Member] | Residential 1-4 Family [Member]
Loans And Leases
Consumer Real Estate	23,395,000	24,961,000
Consumer real estate [Member] | Home Equity Loans [Member]
Loans And Leases
Consumer Real Estate	2,124,000	2,380,000
Consumer Loans [Member]
Loans And Leases
Consumer Loans, Installment and other loans to individuals	5,252,000	6,484,000
Consumer Loans, Credit Cards	534,000	606,000
Total Consumer Loans	5,786,000	7,090,000
Net loans	$ 5,786,000	$ 7,090,000

XML

Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2012

Regulatory Matters [Abstract]

Schedule of Capital Ratios and the Capital Amounts Compliance with Regulatory Framework for Adequately Capitalized and Well Capitalized Institutions, by the Company and Its Subsidiary Bank

The capital ratios of the Company and its subsidiary bank, along with the regulatory framework for adequately capitalized and well capitalized institutions are depicted as set forth in the following table:

(Amounts Expressed in Thousands)	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
First West Virginia Bancorp, Inc.
As of September 30, 2012
Total Capital (to Risk Weighted Assets)	$	32,122		22.47	%	$	11,439		8.0	%	$	14,298		10.0	%
Tier I Capital (to Risk Weighted Assets)		30,328		21.21	%		5,719		4.0	%		8,579		6.0	%
Tier I Capital (to Adjusted Total Assets)		30,328		10.36	%		11,707		4.0	%		14,634		5.0	%
As of December 31, 2011
Total Capital (to Risk Weighted Assets)	$	31,494		21.55	%	$	11,691		8.0	%	$	14,614		10.0	%
Tier I Capital (to Risk Weighted Assets)		29,662		20.30	%		5,845		4.0	%		8,768		6.0	%
Tier I Capital (to Adjusted Total Assets)		29,662		10.46	%		11,340		4.0	%		14,175		5.0	%
Progressive Bank, N.A.
As of September 30, 2012
Total Capital (to Risk Weighted Assets)	$	31,929		22.36	%	$	11,421		8.0	%	$	14,277		10.0	%
Tier I Capital (to Risk Weighted Assets)		30,135		21.11	%		5,711		4.0	%		8,566		6.0	%
Tier I Capital (to Adjusted Total Assets)		30,135		10.31	%		11,696		4.0	%		14,620		5.0	%
As of December 31, 2011
Total Capital (to Risk Weighted Assets)	$	31,269		21.43	%	$	11,674		8.0	%	$	14,592		10.0	%
Tier I Capital (to Risk Weighted Assets)		29,437		20.17	%		5,837		4.0	%		8,755		6.0	%
Tier I Capital (to Adjusted Total Assets)		29,437		10.39	%		11,328		4.0	%		14,160		5.0	%

XML

Fair Value Measurements (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	$ 166,464,449	$ 150,960,955
Non-accrual loans	3,748,768	4,045,937
Other real estate	7,000	138,000
Mortgage service right	45,000	52,000
U.S. Government corporations and agencies [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	42,347,000	36,216,000
Obligations of States and Political Subdivisions [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	49,261,000	45,304,000
Mortgage-backed securities/ U.S. sponsored entities [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	74,643,000	69,215,000
Equity Securities [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	213,000	226,000
Level I [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	213,000	226,000
Non-accrual loans
Other real estate
Mortgage service right
Level I [Member] | U.S. Government corporations and agencies [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale
Level I [Member] | Obligations of States and Political Subdivisions [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale
Level I [Member] | Mortgage-backed securities/ U.S. sponsored entities [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale
Level I [Member] | Equity Securities [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	213,000	226,000
Level II [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	166,251,000	150,735
Non-accrual loans
Other real estate
Mortgage service right
Level II [Member] | U.S. Government corporations and agencies [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	42,347,000	36,216,000
Level II [Member] | Obligations of States and Political Subdivisions [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	49,261,000	45,304,000
Level II [Member] | Mortgage-backed securities/ U.S. sponsored entities [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale	74,643,000	69,215,000
Level II [Member] | Equity Securities [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale
Level III [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale
Non-accrual loans	2,745,000	3,055,000
Other real estate	7,000	138,000
Mortgage service right	45,000	52,000
Level III [Member] | U.S. Government corporations and agencies [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale
Level III [Member] | Obligations of States and Political Subdivisions [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale
Level III [Member] | Mortgage-backed securities/ U.S. sponsored entities [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale
Level III [Member] | Equity Securities [Member]
Assets measured on a recurring and nonrecurring basis:
Assets measured on a recurring basis, Securities available for sale

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Premises and Equipment (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Premises and Equipment (Textual) [Abstract]
Charges to operations for depreciation	$ 133,501	$ 123,297	$ 383,288	$ 362,390

XML

Loans and Leases (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Summary of impaired loans
Impaired loans, Unpaid Contractual Principal Balance	$ 3,564		$ 3,564		$ 3,891
Impaired loans, Recorded Investment With No Allowance	816		816		1,407
Impaired loans, Recorded Investment With Allowance	2,748		2,748		2,484
Impaired loans, Total Recorded Investment	3,564		3,564		3,891
Impaired loans, Related Allowance	819		819		836
Impaired loans, Average Recorded Investment	3,666	4,060	3,645	4,274
Commercial and other Loans [Member]
Summary of impaired loans
Impaired loans, Unpaid Contractual Principal Balance	34		34		46
Impaired loans, Recorded Investment With No Allowance	10		10		39
Impaired loans, Recorded Investment With Allowance	24		24		7
Impaired loans, Total Recorded Investment	34		34		46
Impaired loans, Related Allowance	24		24		7
Impaired loans, Average Recorded Investment	33	42	32	44
Commercial real estate [Member]
Summary of impaired loans
Impaired loans, Unpaid Contractual Principal Balance	3,296		3,296		3,533
Impaired loans, Recorded Investment With No Allowance	572		572		1,056
Impaired loans, Recorded Investment With Allowance	2,724		2,724		2,477
Impaired loans, Total Recorded Investment	3,296		3,296		3,533
Impaired loans, Related Allowance	795		795		829
Impaired loans, Average Recorded Investment	3,105	3,688	3,088	3,883
Consumer real estate [Member]
Summary of impaired loans
Impaired loans, Unpaid Contractual Principal Balance	234		234		312
Impaired loans, Recorded Investment With No Allowance	234		234		312
Impaired loans, Recorded Investment With Allowance
Impaired loans, Total Recorded Investment	234		234		312
Impaired loans, Related Allowance
Impaired loans, Average Recorded Investment	$ 528	$ 330	$ 525	$ 347

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Fair Value Measurements (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Estimates of fair values of financial instruments
Cash and cash equivalents	$ 21,033
Investment securities	166,464
Loans	99,360
Bank owned life insurance	3,598
Accrued interest receivable	1,186
Deposits	229,213
Federal funds purchased and repurchase agreements	18,370
Federal Home Loan Bank borrowings	3,628
Accrued interest payable	171
Level I [Member]
Estimates of fair values of financial instruments
Cash and cash equivalents	21,033
Investment securities	213
Bank owned life insurance	3,598
Accrued interest receivable	1,186
Deposits	158,335
Federal funds purchased and repurchase agreements	18,570
Accrued interest payable	171
Level II [Member]
Estimates of fair values of financial instruments
Investment securities	166,221
Deposits	70,878
Federal Home Loan Bank borrowings	3,628
Level III [Member]
Estimates of fair values of financial instruments
Loans	99,360
Carrying Amount [Member]
Estimates of fair values of financial instruments
Cash and cash equivalents	21,033	20,917
Investment securities	166,464	150,961
Loans	98,213	106,925
Bank owned life insurance	3,598	3,518
Accrued interest receivable	1,186	1,140
Deposits	239,321	239,177
Federal funds purchased and repurchase agreements	18,570	14,014
Federal Home Loan Bank borrowings	3,628	3,693
Accrued interest payable	171	218
Fair Value [Member]
Estimates of fair values of financial instruments
Cash and cash equivalents	21,033	20,917
Investment securities	166,464	150,961
Loans	99,360	105,733
Bank owned life insurance	3,598	3,518
Accrued interest receivable	1,186	1,140
Deposits	229,213	227,662
Federal funds purchased and repurchase agreements	18,570	14,014
Federal Home Loan Bank borrowings	3,628	3,693
Accrued interest payable	$ 171	$ 218

XML

Federal Home Loan Bank Borrowings (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Summary of Contractual Maturities of FHLB Borrowings
Due in 2012	$ 22,039
Due in 2013	90,832
Due in 2014	95,267
Due in 2015	99,919
Due in 2016	104,800
Due in 2017 and thereafter	3,215,594
Total	$ 3,628,451	$ 3,693,014

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting and reporting policies applied in the presentation of the accompanying financial statements follows.

Nature of Operations and Basis of Presentation: First West Virginia Bancorp, Inc. (the “Company”) is a West Virginia Company. The Company provides a variety of banking services to individuals and businesses through the branch network of its affiliate bank (the “Bank”). The Bank operates nine full service branches located in Wheeling (3), Wellsburg, Moundsville, New Martinsville, Buckhannon, and Weston, West Virginia and Bellaire, Ohio. Primary deposit products consist of checking accounts, savings accounts, and certificates of deposit. Primary lending products consist of commercial and residential real estate loans, consumer loans, and business loans.

Principles of Consolidation: The consolidated financial statements of the Company include the financial statements of the parent and its wholly-owned subsidiary, Progressive Bank, N.A. All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to material change in the near term relate to the determination of the allowance for loan losses and the valuation of deferred tax assets.

Cash and cash equivalents: Cash and cash equivalents consist of cash on hand and amounts due from banks and federal funds sold with maturities of less than 90 days.

Investment Securities: Investment securities are classified at the time of purchase, based on management’s intention and ability, as securities available for sale or held to maturity. Debt securities classified as held to maturity are stated at cost adjusted for amortization of premium and accretion of discount which are computed using the interest method and recognized as adjustments of interest income. Certain other debt and equity securities have been classified as available for sale to serve principally as a source of liquidity. Unrealized holding gains and losses for available-for-sale securities are reported as a separate component of stockholders’ equity, net of tax, until realized. Realized securities gains and losses are computed using the specific identification method. Interest and dividends on investment securities are recognized as income when earned.

Securities are periodically reviewed for other-than-temporary impairment based upon a number of factors, including, but not limited to, the length of time and extent to which the market value has been less than cost, the financial condition of the underlying issuer, the ability of the issuer to meet contractual obligations, the likelihood of the security’s ability to recover any decline in its market value, and management’s intent and ability to hold the security for a period of time sufficient to allow for a recovery in market value. Among the factors that are considered in determining management’s intent and ability is a review of the Company’s capital adequacy, interest rate risk position and liquidity. The assessment of a security’s ability to recover any decline in market value, the ability of the issuer to meet contractual obligations and management’s intent and ability requires considerable judgment. Once a decline in value is determined to be other than temporary, if the investor does not intend to sell the security, and it is more-likely-than-not that it will not be required to sell the security, before recovery of the security’s amortized cost basis, the charge to earnings is limited to the amount of credit loss. Any remaining difference between fair value and amortized cost (the difference defined as the non-credit portion) is recognized in other comprehensive income, net of applicable taxes. Otherwise, the entire difference between fair value and amortized cost is charged to earnings. At September 30, 2012 and December 31, 2011, there were no investment securities identified by management to be other-than-temporarily impaired. If investments decline in fair value due to adverse changes in the financial markets, charges to income could occur in future periods.

Common stock of the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank represents ownership interest in institutions that are wholly owned by other financial institutions. These equity securities are accounted for at cost and are classified with other assets. The Bank is a member of the FHLB and, as such, is required to maintain a minimum investment in stock of the FHLB that varies with the level of advances outstanding with the FHLB. The stock is bought from and sold to the FHLB based upon its $100 par value. The stock does not have a readily determinable fair value and, as such, is classified as restricted stock, carried at cost and evaluated by management. The stock’s value is determined by the ultimate recoverability of the par value rather than by recognizing temporary declines. The determination of whether the par value will ultimately be recovered is influenced by criteria such as the following: (a) the significance of the decline in net assets of the FHLB as compared with the capital stock amount and the length of time this situation has persisted, (b) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance, (c) the impact of legislative and regulatory changes on the customer base of the FHLB, and (d) the liquidity position of the FHLB.

The FHLB had incurred losses in 2009 and for parts of 2010 due primarily to other-than-temporary impairment credit losses on its private- label mortgage-backed securities portfolio. These securities were the most affected by the extreme economic conditions in place during the previous several years. As a result, the FHLB had suspended the payment of dividends and limited the amount of capital stock repurchases. The FHLB had reported net income for both the fourth quarter and the year ended December 31, 2011, and has declared a $.10 percent annualized dividend to its shareholders effective February 23, 2012. While the FHLB has not committed to regular dividend payments or future limited repurchases of excess capital stock, it will continue to monitor the overall financial performance of the FHLB in order to determine the status of limited repurchases of excess capital or dividends in the future. Management evaluated the stock and concluded that the stock was not impaired for the periods presented herein. More consideration was given to the long-term prospects for the FHLB as opposed to the recent stress caused by the extreme economic conditions the world is facing. Management also considered that the FHLB’s regulatory capital ratios have increased from the prior year, liquidity appears adequate, new shares of FHLB stock continue to exchange hands at $100 par value, and the resumption of dividends.

Loans and Loans Held for Sale: Loans are generally reported at the principal balance outstanding, net of unearned income. Interest income on loans is accrued based on the principal outstanding. It is the Company’s policy to discontinue the accrual of interest when either the principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection. It is the Company’s policy not to recognize interest income on specific impaired loans unless the likelihood of future loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. Nonaccrual loans may be returned to accrual status when none of its principal and interest payments are due and there has been a sustained period of repayment performance. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the contractual life of the related loans or commitments as an adjustment of the related loan’s yield. Loans held for sale are carried at the lower of cost or estimated market value in the aggregate. There were no loans held for sale as of September 30, 2012 and December 31, 2011, respectively.

The Company has entered into an agreement with the Federal Home Loan Bank of Pittsburgh (“FHLB”) under which the bank may sell conforming one-to-four family residential mortgage loans to the FHLB. The current agreement dated December 28, 2011 provides for a maximum commitment of $5,000,000. This commitment expires on December 28, 2012. Loans sold to the FHLB are sold with limited recourse or credit risk based upon utilization of the original commitment. The bank also maintains the servicing of these loans, for which it is paid a servicing fee. The total amount of loans sold and outstanding to the FHLB were $9,911,832 and $9,470,840 as of September 30, 2012 and December 31, 2011, respectively. These loans were also subject to recourse obligation or credit risk in the amount of $415,152 and $383,269 at September 30, 2012 and December 31, 2011, respectively. The amount of income recognized as of a result of this agreement was $14,562 and $20,173 for the three months ended September 30, 2012 and 2011, respectively, and $57,838 and $50,330 for the nine months ended September 30, 2012 and 2011, respectively.

Allowance for Loan Losses: The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses that is charged to operations. The provision is based on management’s evaluation of the adequacy of the allowance for loan losses which encompasses the overall risk characteristics of the various portfolio segments, past experience with losses, the impact of economic conditions on borrowers, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to significant changes in the near term.

Management tracks and assigns a historical loss percentage for each loan rating category within each loan type. A rolling three-year historical loss ratio is used, calculated on a quarterly basis.

Management currently utilizes nine qualitative factors that are adjusted based on changes in the lending environment and economic conditions. The qualitative factors include the following: levels of and trends in delinquencies, non-accruals, and charge-offs; trends within the loan portfolio; changes in lending policies and procedures; experience of lending personnel and management oversight; national and local economic trends; concentrations of credit; external factors such as legal and regulatory requirements; changes in the quality of loan review and Board oversight; and changes in the value of underlying collateral. The number of qualitative factors can change. Factors can be added for new risks or taken away if the risk no longer applies. Each loan type will have its own risk profile and management will evaluate and adjust each qualitative factor for each loan type quarterly, if necessary. For example, if one area of the loan portfolio is experiencing sharp increases in growth, it is likely the qualitative factor for trends in the loan portfolio would be increased for that loan type. As levels of delinquencies and non-accrual loans decline for commercial real estate and commercial loans it is likely that factor would be reduced.

In terms of the Company’s loan portfolio, the commercial and industrial loans and commercial real estate loans are deemed to have more risk than the consumer real estate loans and other consumer loans in the portfolio. The commercial loans not secured by real estate are highly dependent on financial condition and are more dependent on economic conditions. The commercial loans secured by real estate are also dependent on economic conditions but generally have stronger forms of collateral. More recently, commercial real estate has been negatively impacted by devaluation so these commercial loans carry a higher qualitative factor for changes in the value of collateral. The commercial loans and commercial real estate loans have historically been responsible for the majority of the Company’s delinquencies, non-accrual loans, and charge-offs so both of these categories carry higher qualitative factors than consumer real estate loans and other consumer loans. The Company has historically experienced very low levels of consumer real estate and consumer loan charge-offs so these qualitative factors are set lower than the commercial real estate and commercial and industrial loans.

Mortgage loans secured by one-to-four family properties and all consumer loans are large groups of smaller-balance homogeneous loans and are measured for impairment collectively. Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances concerning the loan, the credit worthiness and payment history of the borrower, the length of the payment delay, and the amount of shortfall in relation to the principal and interest owed.

Impaired loans are loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The Company individually evaluates such loans for impairment and does not aggregate loans by major risk classifications. The definition of “impaired loans” is not the same as the definition of “nonaccrual loans,” although the two categories overlap.

The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility while not classifying the loan as impaired, provided the loan is not a commercial or commercial real estate classification. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral.

Individual loan reviews are based upon specific quantitative and qualitative criteria, including the size of the loan, loan quality ratings, value of collateral, repayment ability of borrowers, and historical experience factors. The historical experience factors utilized for individual loan reviews are based upon past loss experience, known trends in losses and delinquencies, the growth of loans in particular markets and industries, and known changes in economic conditions in the particular lending markets. Allowances for homogeneous loans (such as residential mortgage loans, personal loans, etc.) are evaluated based upon historical loss experience, trends in losses and delinquencies, growth of loans in particular markets, and known changes in economic conditions in each lending market. There can be no assurance the allowance for loan losses will be adequate to cover all losses, but management believes the allowance for loan losses in the amount of $2,512,909 at September 30, 2012, was adequate to provide for probable losses from existing loans based on information currently available. While management uses available information to provide for loan losses, the ultimate collectibility of a substantial portion of the loan portfolio, and the need for future additions to the allowance, will be based on changes in economic conditions and other relevant factors. As such, an adverse change in economic activity could reduce cash flows for both commercial and individual borrowers, which would likely cause the Company to experience increases in problem assets, delinquencies and losses on loans.

Goodwill: Goodwill resulted from the Company’s purchase of a less-than-whole financial institution (the “branch”). The goodwill value of $1.6 million is supported ultimately by revenue that is driven by the volume of business transacted. A decline in earnings as a result of a lack of growth or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods.

Goodwill is periodically reviewed for impairment. No impairment losses were recognized. Additionally, future events could cause management to conclude that impairment indicators exist and that the goodwill is impaired, which would result in the Company recording an impairment loss. Any resulting impairment loss could have a material, adverse impact on the Company’s financial condition and results of operations.

Mortgage Servicing Rights (“MSRs”): The Company has agreements for the express purpose of selling loans in the secondary market. The Company maintains all servicing rights for these loans. Originated MSRs are recorded by allocating total costs incurred between the loan and servicing rights based on their relative fair values. MSRs are amortized in proportion to the estimated servicing income over the estimated life of the servicing portfolio. Impairment is evaluated based on the fair value of the right, based on portfolio interest rates and prepayment characteristics.

Bank-owned Life Insurance: Bank owned life insurance consists of investments in life insurance policies on executive officers and other members of the bank’s management. The policies are carried at their net cash surrender value. Changes in the policy value are recorded as an adjustment to the carrying value with the corresponding amount recognized as non-interest income or expense. Earnings on these policies are based on the net earnings on the cash surrender value of the policies. The net cash surrender value of bank-owned life insurance was $3,597,816 and $3,518,450 at September 30, 2012 and December 31, 2011, respectively. The death benefit value of the bank-owned life insurance at September 30, 2012 and December 31, 2011 was $8.7 million and $8.8 million, respectively. An agreement has been executed with all officers whereby a $40,000 death benefit is payable upon the participant’s death while employed by the Company to their designated beneficiary

Advertising Costs: Advertising costs are expensed as the costs are incurred. Advertising expenses amounted to $55,299 and $40,280 for the three months ended September 30, 2012 and September 30, 2011, respectively. For the nine month periods ended September 30, 2012 and 2011 advertising expenses amounted to $162,372 and $98,650, respectively.

Premises and Equipment: Premises and equipment are stated at cost, less accumulated depreciation and amortization. Provisions for depreciation and amortization are computed generally using the straight-line method over the estimated useful lives of the assets. When units of property are disposed of, the premises and equipment accounts are relieved of the cost and the accumulated depreciation related to such units. Any resulting gains or losses are credited to or charged against income. Cost of repairs and maintenance is charged to expense as incurred. Additions and improvements are capitalized at cost.

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Other Real Estate Owned: Other real estate owned are carried at the lower of cost or their estimated current fair value, less estimated costs to sell and are included in other assets. Other real estate owned consist primarily of properties acquired through, or in lieu of foreclosures. Any subsequent declines in fair value, and gains or losses on the disposition of these assets are credited to or charged against income.

Income Taxes: The Company and its subsidiary file a consolidated federal income tax return. There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Statement of Income. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred income tax expenses or benefits are based on the changes in the deferred tax asset or liability from period to period.

Earnings Per Common Share: Earnings per common share are calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the year. The Company has no securities which would be considered potential common stock.

Recent Accounting Pronouncements: In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The amendments in this Update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in this Update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. For nonpublic entities, the amendments are effective for annual periods beginning after December 15, 2012. Early application by public entities is not permitted. The expanded disclosures have been provided in Notes 9 and 10.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments in this Update improve the comparability, clarity, consistency, and transparency of financial reporting and increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. GAAP and IFRS, the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. All entities that report items of comprehensive income, in any period presented, will be affected by the changes in this Update. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The amendments in this Update should be applied retrospectively, and early adoption is permitted. The Company has provided the necessary disclosure in the Statement of Comprehensive Income.

In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other Topics (Topic 350), Testing Goodwill for Impairment. The objective of this update is to simplify how entities, both public and nonpublic, test goodwill for impairment. The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendments in this Update apply to all entities, both public and nonpublic, that have goodwill reported in their financial statements and are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. This ASU is not expected to have a significant impact on the Company’s financial statements.

In September 2011, the FASB issued ASU 2011-09, Compensation-Retirement Benefits-Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan. The amendments in this Update will require additional disclosures about an employer’s participation in a multiemployer pension plan to enable users of financial statements to assess the potential cash flow implications relating to an employer’s participation in multiemployer pension plans. The disclosures also will indicate the financial health of all of the significant plans in which the employer participates and assist a financial statement user to access additional information that is available outside the financial statements. For public entities, the amendments in this Update are effective for annual periods for fiscal years ending after December 15, 2011, with early adoption permitted. For nonpublic entities, the amendments are effective for annual periods of fiscal years ending after December 15, 2012, with early adoption permitted. The amendments should be applied retrospectively for all prior periods presented. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification. The amendments in this Update affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. Under the amendments in this Update, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The amendments in this Update should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2013, and interim and annual periods thereafter. Early adoption is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. In order to defer only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments, the paragraphs in this Update supersede certain pending paragraphs in Update 2011-05. Entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before Update 2011-05. All other requirements in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011. Nonpublic entities should begin applying these requirements for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The Company has provided the necessary disclosure in the Statement of Comprehensive Income.

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Deposits (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
The Composition of The Bank's Deposits
Noninterest Bearing Deposit, Demand	$ 31,379,663	$ 31,915,482
Interest Bearing Deposit, Demand	46,655,399	47,890,988
Interest Bearing Deposit, Savings	91,430,917	85,579,615
Interest Bearing Deposit, Time	69,854,783	73,790,921
Individuals, partnerships and corporations (includes certified and official checks) [Member]
The Composition of The Bank's Deposits
Noninterest Bearing Deposit, Demand	30,655,000	31,319,000
Interest Bearing Deposit, Demand	38,107,000	41,702,000
Interest Bearing Deposit, Savings	88,571,000	80,857,000
Interest Bearing Deposit, Time	66,297,000	70,125,000
United States Government [Member]
The Composition of The Bank's Deposits
Noninterest Bearing Deposit, Demand	1,000	1,000
Interest Bearing Deposit, Demand
Interest Bearing Deposit, Savings
Interest Bearing Deposit, Time
States and political subdivisions [Member]
The Composition of The Bank's Deposits
Noninterest Bearing Deposit, Demand	605,000	540,000
Interest Bearing Deposit, Demand	8,548,000	6,189,000
Interest Bearing Deposit, Savings	2,755,000	4,723,000
Interest Bearing Deposit, Time	3,068,000	3,176,000
Commercial banks and other depository institutions [Member]
The Composition of The Bank's Deposits
Noninterest Bearing Deposit, Demand	119,000	55,000
Interest Bearing Deposit, Savings	105,000
Interest Bearing Deposit, Time	$ 490,000	$ 490,000

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Investment Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Gross unrealized losses and fair value for investment securities by investment category and continuous unrealized loss position time
Available-for-sale securities, Less than Twelve Months, Fair Value	$ 5,982	$ 2,008
Available-for-sale securities, Less than Twelve Months Gross Unrealized Losses	(31)	(6)
Available-for-sale securities, Twelve Months or Greater, Fair Value	89	112
Available-for-sale securities, Twelve Months or Greater Gross Unrealized Losses	(1)	(1)
Available-for-sale securities, Total, Fair Value	6,071	2,120
Available-for-sale securities, Total, Gross Unrealized Losses	(32)	(7)
U.S. Government corporations and agencies [Member]
Gross unrealized losses and fair value for investment securities by investment category and continuous unrealized loss position time
Available-for-sale securities, Less than Twelve Months, Fair Value	2,993
Available-for-sale securities, Less than Twelve Months Gross Unrealized Losses	(7)
Available-for-sale securities, Twelve Months or Greater, Fair Value
Available-for-sale securities, Twelve Months or Greater Gross Unrealized Losses
Available-for-sale securities, Total, Fair Value	2,993
Available-for-sale securities, Total, Gross Unrealized Losses	(7)
Mortgage-Backed Securities [Member]
Gross unrealized losses and fair value for investment securities by investment category and continuous unrealized loss position time
Available-for-sale securities, Less than Twelve Months, Fair Value	2,989	2,008
Available-for-sale securities, Less than Twelve Months Gross Unrealized Losses	(24)	(6)
Available-for-sale securities, Twelve Months or Greater, Fair Value	89	112
Available-for-sale securities, Twelve Months or Greater Gross Unrealized Losses	(1)	(1)
Available-for-sale securities, Total, Fair Value	3,078	2,120
Available-for-sale securities, Total, Gross Unrealized Losses	$ (25)	$ (7)

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Investment Securities (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
The amortized cost and estimated fair values of investment securities
Available-for-sale securities, Amortized Cost	$ 160,083,000	$ 145,779,000
Available-for-sale securities, Gross Unrealized Gains	6,413,000	5,189,000
Available-for-sale securities, Gross Unrealized Losses	(32,000)	(7,000)
Available-for-sale securities, Fair Value	166,464,449	150,960,955
Obligations of U.S. Government corporations and agencies [Member]
The amortized cost and estimated fair values of investment securities
Available-for-sale securities, Amortized Cost	42,104,000	36,014,000
Available-for-sale securities, Gross Unrealized Gains	250,000	202,000
Available-for-sale securities, Gross Unrealized Losses	(7,000)
Available-for-sale securities, Fair Value	42,347,000	36,216,000
Obligations of States and Political Subdivisions [Member]
The amortized cost and estimated fair values of investment securities
Available-for-sale securities, Amortized Cost	45,334,000	42,154,000
Available-for-sale securities, Gross Unrealized Gains	3,927,000	3,150,000
Available-for-sale securities, Gross Unrealized Losses
Available-for-sale securities, Fair Value	49,261,000	45,304,000
Mortgage-backed securities [Member]
The amortized cost and estimated fair values of investment securities
Available-for-sale securities, Amortized Cost	72,459,000	67,402,000
Available-for-sale securities, Gross Unrealized Gains	2,209,000	1,820,000
Available-for-sale securities, Gross Unrealized Losses	(25,000)	(7,000)
Available-for-sale securities, Fair Value	74,643,000	69,215,000
Equity Securities [Member]
The amortized cost and estimated fair values of investment securities
Available-for-sale securities, Amortized Cost	186,000	209,000
Available-for-sale securities, Gross Unrealized Gains	27,000	17,000
Available-for-sale securities, Gross Unrealized Losses
Available-for-sale securities, Fair Value	$ 213,000	$ 226,000

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Deposits (Details 1) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Summary of Maturity Distribution of Time Certificates of Deposits
12 Months or less	$ 35,048,000	$ 43,761,000
12 months through 24 months	14,044,000	10,066,000
24 months through 36 months	7,970,000	6,703,000
36 months through 48 months	6,631,000	6,373,000
48 months through 60 months	5,395,000	6,223,000
Over 60 months	767,000	665,000
Total	$ 69,854,783	$ 73,790,921

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Investment Securities (Details 2) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Amortized cost and fair value of securities available for sale by contractual maturity
Due in one year or less, Amortized Cost	$ 569,000
Due after one year through five years, Amortized Cost	9,700,000
Due after five years through ten years, Amortized Cost	48,901,000
Due after ten years, Amortized Cost	28,268,000
Amortized Cost, Total	87,438,000
Available-for-sale securities, Amortized Cost	160,083,000	145,779,000
Due in one year or less, Fair Value	576,000
Due after one year through five years, Fair Value	9,866,000
Due after five years through ten years, Fair Value	50,223,000
Due after ten years, Fair Value	30,943,000
Fair Value, Total	91,608,000
Available-for-sale (at fair value)	166,464,449	150,960,955
Mortgage-Backed Securities [Member]
Amortized cost and fair value of securities available for sale by contractual maturity
Available-for-sale securities, Amortized Cost	72,459,000	67,402,000
Available-for-sale (at fair value)	74,643,000	69,215,000
Equity Securities [Member]
Amortized cost and fair value of securities available for sale by contractual maturity
Available-for-sale securities, Amortized Cost	186,000	209,000
Available-for-sale (at fair value)	$ 213,000	$ 226,000

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Investment Securities (Details 3) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Recorded book value, fair value and approximate yield of investment securities, by contractual maturity
Within One Year, Amortized Cost	$ 569,000
After One But Within Five Years, Amortized Cost	9,700,000
After Five But Within Ten Years, Amortized Cost	48,901,000
After Ten Years, Amortized Cost	28,268,000
Amortized Cost, Total	87,438,000
Available-for-sale securities, Amortized Cost	160,083,000	145,779,000
Within One Year, Fair Value	576,000
After One But Within Five Years, Fair Value	9,866,000
After Five But Within Ten Years, Fair Value	50,223,000
After Ten Years, Fair Value	30,943,000
Fair Value, Total	91,608,000
Available-for-sale (at fair value)	166,464,449	150,960,955
Available-for-sale securities, Yield	3.39%	3.68%
U.S. Government corporations and agencies [Member]
Recorded book value, fair value and approximate yield of investment securities, by contractual maturity
Within One Year, Amortized Cost	9,000	11,000
After One But Within Five Years, Amortized Cost	7,500,000	11,500,000
After Five But Within Ten Years, Amortized Cost	34,592,000	24,500,000
After Ten Years, Amortized Cost	3,000	3,000
Amortized Cost, Total	42,104,000	36,014,000
Available-for-sale securities, Amortized Cost	42,104,000	36,014,000
Within One Year, Fair Value	9,000	11,000
After One But Within Five Years, Fair Value	7,536,000	11,558,000
After Five But Within Ten Years, Fair Value	34,799,000	24,644,000
After Ten Years, Fair Value	3,000	3,000
Fair Value, Total	42,347,000	36,216,000
Available-for-sale (at fair value)	42,347,000	36,216,000
Within One Year, Yield	0.01%	0.80%
After One But Within Five Years, Yield	1.63%	1.68%
After Five But Within Ten Years, Yield	1.92%	2.36%
After Ten Years, Yield	0.87%	0.86%
Yield, total	1.87%	2.14%
Obligations of States and Political Subdivisions [Member]
Recorded book value, fair value and approximate yield of investment securities, by contractual maturity
Within One Year, Amortized Cost	560,000	1,145,000
After One But Within Five Years, Amortized Cost	2,200,000	1,834,000
After Five But Within Ten Years, Amortized Cost	14,309,000	11,395,000
After Ten Years, Amortized Cost	28,265,000	27,780,000
Amortized Cost, Total	45,334,000	42,154,000
Available-for-sale securities, Amortized Cost	45,334,000	42,154,000
Within One Year, Fair Value	567,000	1,151,000
After One But Within Five Years, Fair Value	2,330,000	1,913,000
After Five But Within Ten Years, Fair Value	15,424,000	12,285,000
After Ten Years, Fair Value	30,940,000	29,955,000
Fair Value, Total	49,261,000	45,304,000
Available-for-sale (at fair value)	49,261,000	45,304,000
Within One Year, Yield	5.54%	5.48%
After One But Within Five Years, Yield	5.85%	5.54%
After Five But Within Ten Years, Yield	5.62%	5.66%
After Ten Years, Yield	5.86%	6.07%
Yield, total	5.78%	5.92%
Mortgage-Backed Securities [Member]
Recorded book value, fair value and approximate yield of investment securities, by contractual maturity
Available-for-sale securities, Amortized Cost	72,459,000	67,402,000
Available-for-sale (at fair value)	74,643,000	69,215,000
Available-for-sale securities, Yield	2.68%	3.03%
Equity Securities [Member]
Recorded book value, fair value and approximate yield of investment securities, by contractual maturity
Available-for-sale securities, Amortized Cost	186,000	209,000
Available-for-sale (at fair value)	$ 213,000	$ 226,000
Available-for-sale securities, Yield	2.12%	2.25%

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES
Net Income	$ 1,622,860	$ 1,817,974
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		600,000
Depreciation	383,288	362,390
Amortization of investment securities, net	427,979	177,273
Investment security gains	(343,950)	(642,997)
Loss on disposal of premises and equipment	4,687
Increase in cash surrender value of bank-owned life insurance	(79,366)	(76,929)
Increase in interest receivable	(45,342)	(119,595)
Decrease in interest payable	(46,944)	(63,989)
Other, net	(1,040,971)	927,355
Net cash provided by operating activities	882,241	2,981,482
INVESTING ACTIVITIES
Net decrease in loans, net of charge-offs	8,692,361	6,895,105
Recoveries on loans previously charged-off	19,016	52,178
Proceeds from sales of securities available-for-sale	10,005,882	18,299,847
Proceeds from maturities of securities available-for-sale	23,822,977	33,350,126
Principal collected on mortgage-backed securities	12,719,445	14,302,668
Purchases of securities available-for-sale	(58,836,119)	(72,559,191)
Purchases of premises and equipment	(883,206)	(382,861)
Net cash used in investing activities	(4,459,644)	(42,128)
FINANCING ACTIVITIES
Net increase in deposits	143,756	6,985,022
Dividends paid	(942,104)	(942,104)
Increase in short-term borrowings	4,556,644	3,434,775
Decrease in Federal Home Loan Bank borrowings	(64,563)	(61,556)
Net cash provided by financing activities	3,693,733	9,416,137
INCREASE IN CASH AND CASH EQUIVALENTS	116,330	12,355,491
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	20,916,773	9,932,613
CASH AND CASH EQUIVALENTS, END OF PERIOD	21,033,103	22,288,104
Supplemental Disclosures:
Cash Paid for Interest	1,423,843	1,774,304
Cash Paid for Income Taxes	$ 248,750	$ 161,183

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Investment Securities (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012 Investment	Sep. 30, 2011	Sep. 30, 2012 Investment	Sep. 30, 2011	Dec. 31, 2011
Investment Securities (Textual) [Abstract]
Investment securities in continuous unrealized loss position, positions temporarily impaired	4		4
Assets pledged to secure United States Government and other public funds and for other purposes	$ 58,203,132		$ 58,203,132		$ 53,581,000
Proceeds from sales of securities available-for-sale	15,118	5,323,801	10,005,882	18,299,847
Available-for-sale securities, gross realized gains	1,671	375,212	344,265	659,008
Available-for-sale securities, gross realized losses	$ 0	$ 91	$ 315	$ 16,011

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Allowance for Loan Losses (Details 1) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Schedule of Loans which are Individually Evaluated for Impairment, by Class of Loans
Loans individually evaluated	$ 3,564,000	$ 3,891,000
Loans collectively evaluated	97,162,000	105,538,000
Ending Balance	100,726,270	109,428,476
Commercial and other Loans [Member]
Schedule of Loans which are Individually Evaluated for Impairment, by Class of Loans
Loans individually evaluated	34,000	46,000
Loans collectively evaluated	15,215,000	15,892,000
Ending Balance	15,249,000	15,938,000
Commercial real estate [Member]
Schedule of Loans which are Individually Evaluated for Impairment, by Class of Loans
Loans individually evaluated	3,296,000	3,533,000
Loans collectively evaluated	46,004,000	52,835,000
Ending Balance	49,300,000	56,368,000
Consumer real estate [Member]
Schedule of Loans which are Individually Evaluated for Impairment, by Class of Loans
Loans individually evaluated	234,000	312,000
Loans collectively evaluated	30,246,000	29,840,000
Ending Balance	30,480,000	30,152,000
Consumer Loans [Member]
Schedule of Loans which are Individually Evaluated for Impairment, by Class of Loans
Loans individually evaluated	0
Loans collectively evaluated	5,786,000	7,090,000
Ending Balance	5,786,000	7,090,000
Unearned discount [Member]
Schedule of Loans which are Individually Evaluated for Impairment, by Class of Loans
Loans collectively evaluated	(89,000)	(119,000)
Ending Balance	$ (89,000)	$ (119,000)

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Consolidated Balance Sheets (USD $)	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks	$ 4,759,103	$ 6,671,293
Due from banks - interest bearing	16,274,000	14,245,480
Total cash and cash equivalents	21,033,103	20,916,773
Investment securities:
Available-for-sale (at fair value)	166,464,449	150,960,955
Loans	100,726,270	109,428,476
Less allowance for loan losses	(2,512,909)	(2,503,738)
Net loans	98,213,361	106,924,738
Premises and equipment, net	6,412,950	5,917,719
Accrued income receivable	1,185,615	1,140,273
Goodwill	1,644,119	1,644,119
Bank owned life insurance	3,597,816	3,518,450
Other assets	2,460,384	2,235,063
Total assets	301,011,797	293,258,090
LIABILITIES
Demand	31,379,663	31,915,482
Interest bearing deposits:
Demand	46,655,399	47,890,988
Savings	91,430,917	85,579,615
Time	69,854,783	73,790,921
Total deposits	239,320,762	239,177,006
Federal funds purchased and securities sold under agreements to repurchase	18,570,150	14,013,506
Federal Home Loan Bank borrowings	3,628,451	3,693,014
Accrued interest payable	170,782	217,726
Other liabilities	3,366,128	1,630,328
Total liabilities	265,056,273	258,731,580
STOCKHOLDERS' EQUITY
Common stock - 2,000,000 shares authorized at $5 par value: 1,662,814 shares issued at September 30, 2012 and December 31, 2011	8,314,070	8,314,070
Treasury stock - 10,000 shares at cost:	(228,100)	(228,100)
Surplus	6,288,403	6,288,403
Retained earnings	17,601,075	16,920,319
Accumulated other comprehensive income	3,980,076	3,231,818
Total stockholders' equity	35,955,524	34,526,510
Total liabilities and stockholders' equity	$ 301,011,797	$ 293,258,090

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Deposits (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Contractual Maturities of Time Deposits of $100,000 or More, Domestic
Time deposits, $100,000 or more, domestic, Three Months or Less	$ 2,831	$ 4,411
Time deposits, $100,000 or more, domestic, Over Three and Less than Six Months	2,577	3,719
Time deposits, $100,000 or more, domestic, Over Six and Less than Twelve Months	3,684	5,103
Time deposits, $100,000 or more, domestic, Over Twelve Months	11,604	8,807
Time deposits, $100,000 or more, domestic, Total	$ 20,696	$ 22,040

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (USD $)	Total	Common Stock	Surplus	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income
BEGINNING BALANCE at Dec. 31, 2010	$ 31,101,186	$ 8,314,070	$ 6,288,403	$ 15,722,313	$ (228,100)	$ 1,004,500
BEGINNING BALANCE, SHARES at Dec. 31, 2010		1,662,814
Comprehensive income:
Net Income	1,817,974			1,817,974
Other comprehensive income	1,849,810					1,849,810
Other comprehensive income	3,667,784
Cash dividend ($.57 per share)	(942,104)			(942,104)
ENDING BALANCE at Sep. 30, 2011	33,826,866	8,314,070	6,288,403	16,598,183	(228,100)	2,854,310
ENDING BALANCE, Shares at Sep. 30, 2011		1,662,814
BEGINNING BALANCE at Dec. 31, 2011	34,526,510	8,314,070	6,288,403	16,920,319	(228,100)	3,231,818
BEGINNING BALANCE, SHARES at Dec. 31, 2011		1,662,814
Comprehensive income:
Net Income	1,622,860			1,622,860
Other comprehensive income	748,258
Other comprehensive income	2,371,118					748,258
Cash dividend ($.57 per share)	(942,104)			(942,104)
ENDING BALANCE at Sep. 30, 2012	$ 35,955,524	$ 8,314,070	$ 6,288,403	$ 17,601,075	$ (228,100)	$ 3,980,076
ENDING BALANCE, Shares at Sep. 30, 2012		1,662,814

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Loans and Leases (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
The risk category of loans by class of loan based on the most recent analysis
Commercial and Other Loans, Gross	$ 15,249	$ 15,938
Commercial Real Estate, Gross	49,300	56,368
Construction and Land Development, Gross	2,012	508
Total Loans	66,561	72,814
Recorded Investment in Loan, risk analysis, Current	63,072	68,624
Recorded Investment in Loan, risk analysis, Past Due 30-59 days	193	582
Recorded Investment in Loan, risk analysis, Past Due 60-89 days		36
Recorded Investment in Loan, risk analysis, Past Due 90 days or more
Recorded Investment in Loan, risk analysis, Non-accrual	3,296	3,572
Pass [Member]
The risk category of loans by class of loan based on the most recent analysis
Commercial and Other Loans, Gross	15,210	15,882
Commercial Real Estate, Gross	39,846	43,067
Construction and Land Development, Gross	1,066	508
Total Loans	56,122	59,457
Recorded Investment in Loan, risk analysis, Current	56,077	59,164
Recorded Investment in Loan, risk analysis, Past Due 30-59 days	45	257
Recorded Investment in Loan, risk analysis, Past Due 60-89 days		36
Recorded Investment in Loan, risk analysis, Past Due 90 days or more
Recorded Investment in Loan, risk analysis, Non-accrual
Special Mention [Member]
The risk category of loans by class of loan based on the most recent analysis
Commercial and Other Loans, Gross
Commercial Real Estate, Gross	2,398	5,807
Construction and Land Development, Gross	946
Total Loans	3,344	5,807
Recorded Investment in Loan, risk analysis, Current	3,344	5,807
Recorded Investment in Loan, risk analysis, Past Due 30-59 days
Recorded Investment in Loan, risk analysis, Past Due 60-89 days
Recorded Investment in Loan, risk analysis, Past Due 90 days or more
Recorded Investment in Loan, risk analysis, Non-accrual
Substandard [Member]
The risk category of loans by class of loan based on the most recent analysis
Commercial and Other Loans, Gross	39	56
Commercial Real Estate, Gross	7,056	6,786
Construction and Land Development, Gross
Total Loans	7,095	6,842
Recorded Investment in Loan, risk analysis, Current	3,651	3,653
Recorded Investment in Loan, risk analysis, Past Due 30-59 days	148	325
Recorded Investment in Loan, risk analysis, Past Due 60-89 days
Recorded Investment in Loan, risk analysis, Past Due 90 days or more
Recorded Investment in Loan, risk analysis, Non-accrual	3,296	2,864
Doubtful [Member]
The risk category of loans by class of loan based on the most recent analysis
Commercial and Other Loans, Gross
Commercial Real Estate, Gross		708
Construction and Land Development, Gross
Total Loans		708
Recorded Investment in Loan, risk analysis, Current
Recorded Investment in Loan, risk analysis, Past Due 30-59 days
Recorded Investment in Loan, risk analysis, Past Due 60-89 days
Recorded Investment in Loan, risk analysis, Past Due 90 days or more
Recorded Investment in Loan, risk analysis, Non-accrual		$ 708

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Premises and Equipment (Tables)

9 Months Ended

Sep. 30, 2012

Premises and Equipment [Abstract]

Premises and equipment are stated at cost, less accumulated depreciation

Premises and equipment are stated at cost, less accumulated depreciation, as follows:

	September 30, 2012		December 31, 2011		Original Useful Life Years
Land	$	1,974,527	$	1,973,014
Land improvements		382,278		338,069	15
Leasehold improvements		1,083,051		1,063,735	15
Buildings		5,388,753		5,193,157	39
Furniture, fixtures & equipment		5,076,997		5,130,953	3 -7
Total		13,905,606		13,698,928
Less accumulated depreciation		7,492,656		7,781,209
Premises and equipment, net	$	6,412,950	$	5,917,719

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Loans and Leases (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
The recorded investment of loans by class of loan based on payment activity
Consumer Loans, Gross	$ 5,786		$ 5,786		$ 7,090
Consumer Real Estate, Gross	30,480		30,480		30,152
Total Loans	36,266		36,266		37,242
Average investment in impaired loans	3,666	4,060	3,645	4,274
Commercial and other Loans [Member]
The recorded investment of loans by class of loan based on payment activity
Average investment in impaired loans	33	42	32	44
Commercial real estate [Member]
The recorded investment of loans by class of loan based on payment activity
Average investment in impaired loans	3,105	3,688	3,088	3,883
Consumer real estate [Member]
The recorded investment of loans by class of loan based on payment activity
Consumer Real Estate, Gross	30,480		30,480		30,152
Average investment in impaired loans	528	330	525	347
Performing [Member]
The recorded investment of loans by class of loan based on payment activity
Consumer Loans, Gross	5,764		5,764		7,063
Consumer Real Estate, Gross	30,050		30,050		29,705
Total Loans	35,814		35,814		36,768
Non-performing [Member]
The recorded investment of loans by class of loan based on payment activity
Consumer Loans, Gross	22		22		27
Consumer Real Estate, Gross	430		430		447
Total Loans	$ 452		$ 452		$ 474

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Federal Home Loan Bank Borrowings (Tables)

9 Months Ended

Sep. 30, 2012

Federal Home Loan Bank Borrowings [Abstract]

Summary of Contractual Maturities of FHLB Borrowings

Contractual maturities of FHLB borrowings as of September 30, 2012 were as follows:

Due in 2012	$	22,039
Due in 2013		90,832
Due in 2014		95,267
Due in 2015		99,919
Due in 2016		104,800
Due in 2017 and thereafter		3,215,594
Total	$	3,628,451

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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (Unaudited) (Retained Earnings, USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Retained Earnings
Cash dividend, per share	$ 0.57	$ 0.57

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Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 5	$ 5
Common stock, shares authorized	2,000,000	2,000,000
Common stock, shares issued	1,662,814	1,662,814
Treasury stock, shares	10,000	10,000

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Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 9 - FAIR VALUE MEASUREMENTS

The following disclosures show the hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets and liabilities at fair value. The three broad levels defined by U.S. generally accepted accounting principles are as follows:

Ÿ	Level I:	Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
Ÿ	Level II:	Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.
Ÿ	Level III:	Valuations derived from valuation techniques in which one or more significantinputs or significant value drivers are unobservable. This hierarchy requires the use of observable market data when available.

The following table presents the assets reported on the balance sheet at their fair value as of September 30, 2012 and December 31, 2011, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

(dollars in thousands)	September 30, 2012
	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Securities available for sale:
U.S. Government corporations and agencies	$	—	$	42,347	$	—	$	42,347
Obligations of states and political subdivisions		—		49,261		—		49,261
Mortgage-backed securities
U.S. sponsored entities		—		74,643		—		74,643
Subtotal mortgage-backed securities		—		74,643		—		74,643
Equity securities		213		—		—		213
Total securities available for sale:	$	213	$	166,251	$	—	$	166,464
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	2,745	$	2,745
Other real estate	$	—	$	—	$	7	$	7
Mortgage servicing rights	$	—	$	—	$	45	$	45

(dollars in thousands)	December 31, 2011
	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Securities available for sale:
U.S. Government corporations and agencies	$	—	$	36,216	$	—	$	36,216
Obligations of states and political subdivisions		—		45,304		—		45,304
Mortgage-backed securities
U.S. sponsored entities		—		69,215		—		69,215
Subtotal mortgage-backed securities		—		69,215		—		69,215
Equity securities		226		—		—		226
Total securities available for sale:	$	226	$	150,735	$	—	$	150,961
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	3,055	$	3,055
Other real estate	$	—	$	—	$	138	$	138
Mortgage servicing rights	$	—	$	—	$	52	$	52

Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loans include observable inputs employed by certified appraisers for similar assets classified as Level III inputs. Other real estate owned is measured at fair value, less cost to sell at the date of foreclosure. Valuations are periodically performed by management and the assets are carried at the lower of carrying amount, or fair value less cost to sell.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Level 3 inputs were used in determining fair value.

(dollars in thousands)	Quantitative Information about Level 3 Fair Value  Measurements
September 30, 2012	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted         Average)
Impaired Loans	$	2,745	Appraisal of collateral (1)	Appraisal adjustments (2) Liquidation expenses (2)	0% to -36.3% (16.2%) 3.5% to 22.9% (10.3%)
Other real estate owned and repossessed assets	$	7	Appraisal of collateral (1)(3)
Mortgage Servicing Rights	$	45	Discounted Cash Flow	Remaining term Discount rate	2.9 years to 7 years (3.49 years) 9.5% to 10.5% (10%)

(1) The fair value is determined through independent appraisals by certified appraisers of the underlying collateral.

(2) Appraisals may be adjusted by management for qualitative factors and estimated liquidation expenses. The range and weighted average of liquidation expenses are expressed as a percent of discounted collateral value and other appraisal adjustments are presented as a percentage of the appraised amounts.

(3) Valuation includes qualitative adjustments by management and estimated liquidation expenses.

The reported fair values of financial instruments are based on a variety of factors. Where possible, fair values represent quoted market prices for identical or comparable instruments. In other cases, fair values have been estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of risk. Intangible values assigned to customer relationships are not reflected in the reported fair values. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of year end or that will be realized in the future.

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments:

Cash and Cash Equivalents: The carrying amount for cash and cash equivalents is a reasonable estimate of fair value.

Investment Securities: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans: The fair value for net loans is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality. Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were utilized as estimates for fair value.

Bank Owned Life Insurance: The carrying amount of bank owned life insurance represents the cash surrender value of the underlying insurance policies, if such policies were terminated. Management believes that the carrying amount approximates the fair value.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates its fair value.

Deposits: Noninterest bearing and interest bearing demand deposits and savings deposits are valued at the amount payable on demand as of year end. The fair values for time deposits are based on discounted value of cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.

Federal Funds Purchased and Repurchase Agreements: The carrying amount for federal funds purchased and repurchase agreements are considered to be a reasonable estimate of fair value.

Federal Home Loan Bank borrowings: The fair value of FHLB and other long term borrowings is the carrying amount. Management believes that the carrying amount approximates the fair value.

Accrued Interest Payable: The carrying amount of accrued interest payable approximates it fair value.

Off-Balance-Sheet Instruments: The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The amount of fees currently charged on commitments is determined to be insignificant and, therefore, the carrying value and fair value of off-balance-sheet instruments are not shown.

The estimates of fair values of financial instruments are summarized as follows at September 30, 2012 and December 31, 2011:

	September 30, 2012
(Amounts Expressed in Thousands)	Level I		Level II		Level III		Total Fair Value
Financial assets:
Cash and cash equivalents	$	21,033	$	—	$	—	$	21,033
Investment securities		213		166,221		—		166,464
Loans		—		—		99,360		99,360
Bank owned life insurance		3,598		—		—		3,598
Accrued interest receivable		1,186		—		—		1,186
Financial liabilities:
Deposits		158,335		70,878		—		229,213
Federal Funds Purchased and Repurchase Agreements		18,570		—		—		18,370
Federal Home Loan Bank borrowings		—		3,628		—		3,628
Accrued interest payable		171		—		—		171
	September 30, 2012				December 31, 2011
(Amounts Expressed in Thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	21,033	$	21,033	$	20,917	$	20,917
Investment securities		166,464		166,464		150,961		150,961
Loans		98,213		99,360		106,925		105,733
Bank owned life insurance		3,598		3,598		3,518		3,518
Accrued interest receivable		1,186		1,186		1,140		1,140
Financial liabilities:
Deposits		239,321		229,213		239,177		227,662
Federal funds purchased and repurchase agreements		18,570		18,570		14,014		14,014
Federal Home Loan Bank borrowings		3,628		3,628		3,693		3,693
Accrued interest payable		171		171		218		218

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 09, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	FIRST WEST VIRGINIA BANCORP INC
Entity Central Index Key	0000037049
Document Type	10-Q
Amendment Flag	false
Document Fiscal Period Focus	Q3
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,652,814

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Nature of Operations and Basis of Presentation

Nature of Operations and Basis of Presentation: First West Virginia Bancorp, Inc. (the “Company”) is a West Virginia Company. The Company provides a variety of banking services to individuals and businesses through the branch network of its affiliate bank (the “Bank”). The Bank operates nine full service branches located in Wheeling (3), Wellsburg, Moundsville, New Martinsville, Buckhannon, and Weston, West Virginia and Bellaire, Ohio. Primary deposit products consist of checking accounts, savings accounts, and certificates of deposit. Primary lending products consist of commercial and residential real estate loans, consumer loans, and business loans.

Principles of Consolidation

Principles of Consolidation: The consolidated financial statements of the Company include the financial statements of the parent and its wholly-owned subsidiary, Progressive Bank, N.A. All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to material change in the near term relate to the determination of the allowance for loan losses and the valuation of deferred tax assets.

Cash and cash equivalents

Cash and cash equivalents: Cash and cash equivalents consist of cash on hand and amounts due from banks and federal funds sold with maturities of less than 90 days.

Investment Securities

Investment Securities: Investment securities are classified at the time of purchase, based on management’s intention and ability, as securities available for sale or held to maturity. Debt securities classified as held to maturity are stated at cost adjusted for amortization of premium and accretion of discount which are computed using the interest method and recognized as adjustments of interest income. Certain other debt and equity securities have been classified as available for sale to serve principally as a source of liquidity. Unrealized holding gains and losses for available-for-sale securities are reported as a separate component of stockholders’ equity, net of tax, until realized. Realized securities gains and losses are computed using the specific identification method. Interest and dividends on investment securities are recognized as income when earned.

Securities are periodically reviewed for other-than-temporary impairment based upon a number of factors, including, but not limited to, the length of time and extent to which the market value has been less than cost, the financial condition of the underlying issuer, the ability of the issuer to meet contractual obligations, the likelihood of the security’s ability to recover any decline in its market value, and management’s intent and ability to hold the security for a period of time sufficient to allow for a recovery in market value. Among the factors that are considered in determining management’s intent and ability is a review of the Company’s capital adequacy, interest rate risk position and liquidity. The assessment of a security’s ability to recover any decline in market value, the ability of the issuer to meet contractual obligations and management’s intent and ability requires considerable judgment. Once a decline in value is determined to be other than temporary, if the investor does not intend to sell the security, and it is more-likely-than-not that it will not be required to sell the security, before recovery of the security’s amortized cost basis, the charge to earnings is limited to the amount of credit loss. Any remaining difference between fair value and amortized cost (the difference defined as the non-credit portion) is recognized in other comprehensive income, net of applicable taxes. Otherwise, the entire difference between fair value and amortized cost is charged to earnings. At September 30, 2012 and December 31, 2011, there were no investment securities identified by management to be other-than-temporarily impaired. If investments decline in fair value due to adverse changes in the financial markets, charges to income could occur in future periods.

Common stock of the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank represents ownership interest in institutions that are wholly owned by other financial institutions. These equity securities are accounted for at cost and are classified with other assets. The Bank is a member of the FHLB and, as such, is required to maintain a minimum investment in stock of the FHLB that varies with the level of advances outstanding with the FHLB. The stock is bought from and sold to the FHLB based upon its $100 par value. The stock does not have a readily determinable fair value and, as such, is classified as restricted stock, carried at cost and evaluated by management. The stock’s value is determined by the ultimate recoverability of the par value rather than by recognizing temporary declines. The determination of whether the par value will ultimately be recovered is influenced by criteria such as the following: (a) the significance of the decline in net assets of the FHLB as compared with the capital stock amount and the length of time this situation has persisted, (b) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance, (c) the impact of legislative and regulatory changes on the customer base of the FHLB, and (d) the liquidity position of the FHLB.

The FHLB had incurred losses in 2009 and for parts of 2010 due primarily to other-than-temporary impairment credit losses on its private- label mortgage-backed securities portfolio. These securities were the most affected by the extreme economic conditions in place during the previous several years. As a result, the FHLB had suspended the payment of dividends and limited the amount of capital stock repurchases. The FHLB had reported net income for both the fourth quarter and the year ended December 31, 2011, and has declared a $.10 percent annualized dividend to its shareholders effective February 23, 2012. While the FHLB has not committed to regular dividend payments or future limited repurchases of excess capital stock, it will continue to monitor the overall financial performance of the FHLB in order to determine the status of limited repurchases of excess capital or dividends in the future. Management evaluated the stock and concluded that the stock was not impaired for the periods presented herein. More consideration was given to the long-term prospects for the FHLB as opposed to the recent stress caused by the extreme economic conditions the world is facing. Management also considered that the FHLB’s regulatory capital ratios have increased from the prior year, liquidity appears adequate, new shares of FHLB stock continue to exchange hands at $100 par value, and the resumption of dividends.

Loans and Loans Held for Sale

Loans and Loans Held for Sale: Loans are generally reported at the principal balance outstanding, net of unearned income. Interest income on loans is accrued based on the principal outstanding. It is the Company’s policy to discontinue the accrual of interest when either the principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection. It is the Company’s policy not to recognize interest income on specific impaired loans unless the likelihood of future loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. Nonaccrual loans may be returned to accrual status when none of its principal and interest payments are due and there has been a sustained period of repayment performance. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the contractual life of the related loans or commitments as an adjustment of the related loan’s yield. Loans held for sale are carried at the lower of cost or estimated market value in the aggregate. There were no loans held for sale as of September 30, 2012 and December 31, 2011, respectively.

The Company has entered into an agreement with the Federal Home Loan Bank of Pittsburgh (“FHLB”) under which the bank may sell conforming one-to-four family residential mortgage loans to the FHLB. The current agreement dated December 28, 2011 provides for a maximum commitment of $5,000,000. This commitment expires on December 28, 2012. Loans sold to the FHLB are sold with limited recourse or credit risk based upon utilization of the original commitment. The bank also maintains the servicing of these loans, for which it is paid a servicing fee. The total amount of loans sold and outstanding to the FHLB were $9,911,832 and $9,470,840 as of September 30, 2012 and December 31, 2011, respectively. These loans were also subject to recourse obligation or credit risk in the amount of $415,152 and $383,269 at September 30, 2012 and December 31, 2011, respectively. The amount of income recognized as of a result of this agreement was $14,562 and $20,173 for the three months ended September 30, 2012 and 2011, respectively, and $57,838 and $50,330 for the nine months ended September 30, 2012 and 2011, respectively.

Allowance for Loan Losses

Allowance for Loan Losses: The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses that is charged to operations. The provision is based on management’s evaluation of the adequacy of the allowance for loan losses which encompasses the overall risk characteristics of the various portfolio segments, past experience with losses, the impact of economic conditions on borrowers, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to significant changes in the near term.

Management tracks and assigns a historical loss percentage for each loan rating category within each loan type. A rolling three-year historical loss ratio is used, calculated on a quarterly basis.

Management currently utilizes nine qualitative factors that are adjusted based on changes in the lending environment and economic conditions. The qualitative factors include the following: levels of and trends in delinquencies, non-accruals, and charge-offs; trends within the loan portfolio; changes in lending policies and procedures; experience of lending personnel and management oversight; national and local economic trends; concentrations of credit; external factors such as legal and regulatory requirements; changes in the quality of loan review and Board oversight; and changes in the value of underlying collateral. The number of qualitative factors can change. Factors can be added for new risks or taken away if the risk no longer applies. Each loan type will have its own risk profile and management will evaluate and adjust each qualitative factor for each loan type quarterly, if necessary. For example, if one area of the loan portfolio is experiencing sharp increases in growth, it is likely the qualitative factor for trends in the loan portfolio would be increased for that loan type. As levels of delinquencies and non-accrual loans decline for commercial real estate and commercial loans it is likely that factor would be reduced.

In terms of the Company’s loan portfolio, the commercial and industrial loans and commercial real estate loans are deemed to have more risk than the consumer real estate loans and other consumer loans in the portfolio. The commercial loans not secured by real estate are highly dependent on financial condition and are more dependent on economic conditions. The commercial loans secured by real estate are also dependent on economic conditions but generally have stronger forms of collateral. More recently, commercial real estate has been negatively impacted by devaluation so these commercial loans carry a higher qualitative factor for changes in the value of collateral. The commercial loans and commercial real estate loans have historically been responsible for the majority of the Company’s delinquencies, non-accrual loans, and charge-offs so both of these categories carry higher qualitative factors than consumer real estate loans and other consumer loans. The Company has historically experienced very low levels of consumer real estate and consumer loan charge-offs so these qualitative factors are set lower than the commercial real estate and commercial and industrial loans.

Mortgage loans secured by one-to-four family properties and all consumer loans are large groups of smaller-balance homogeneous loans and are measured for impairment collectively. Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances concerning the loan, the credit worthiness and payment history of the borrower, the length of the payment delay, and the amount of shortfall in relation to the principal and interest owed.

Impaired loans are loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The Company individually evaluates such loans for impairment and does not aggregate loans by major risk classifications. The definition of “impaired loans” is not the same as the definition of “nonaccrual loans,” although the two categories overlap.

The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility while not classifying the loan as impaired, provided the loan is not a commercial or commercial real estate classification. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral.

Individual loan reviews are based upon specific quantitative and qualitative criteria, including the size of the loan, loan quality ratings, value of collateral, repayment ability of borrowers, and historical experience factors. The historical experience factors utilized for individual loan reviews are based upon past loss experience, known trends in losses and delinquencies, the growth of loans in particular markets and industries, and known changes in economic conditions in the particular lending markets. Allowances for homogeneous loans (such as residential mortgage loans, personal loans, etc.) are evaluated based upon historical loss experience, trends in losses and delinquencies, growth of loans in particular markets, and known changes in economic conditions in each lending market. There can be no assurance the allowance for loan losses will be adequate to cover all losses, but management believes the allowance for loan losses in the amount of $2,512,909 at September 30, 2012, was adequate to provide for probable losses from existing loans based on information currently available. While management uses available information to provide for loan losses, the ultimate collectibility of a substantial portion of the loan portfolio, and the need for future additions to the allowance, will be based on changes in economic conditions and other relevant factors. As such, an adverse change in economic activity could reduce cash flows for both commercial and individual borrowers, which would likely cause the Company to experience increases in problem assets, delinquencies and losses on loans.

Goodwill

Goodwill: Goodwill resulted from the Company’s purchase of a less-than-whole financial institution (the “branch”). The goodwill value of $1.6 million is supported ultimately by revenue that is driven by the volume of business transacted. A decline in earnings as a result of a lack of growth or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods.

Goodwill is periodically reviewed for impairment. No impairment losses were recognized. Additionally, future events could cause management to conclude that impairment indicators exist and that the goodwill is impaired, which would result in the Company recording an impairment loss. Any resulting impairment loss could have a material, adverse impact on the Company’s financial condition and results of operations.

Mortgage Servicing Rights ("MSRs")

Mortgage Servicing Rights (“MSRs”): The Company has agreements for the express purpose of selling loans in the secondary market. The Company maintains all servicing rights for these loans. Originated MSRs are recorded by allocating total costs incurred between the loan and servicing rights based on their relative fair values. MSRs are amortized in proportion to the estimated servicing income over the estimated life of the servicing portfolio. Impairment is evaluated based on the fair value of the right, based on portfolio interest rates and prepayment characteristics.

Bank-owned Life Insurance

Bank-owned Life Insurance: Bank owned life insurance consists of investments in life insurance policies on executive officers and other members of the bank’s management. The policies are carried at their net cash surrender value. Changes in the policy value are recorded as an adjustment to the carrying value with the corresponding amount recognized as non-interest income or expense. Earnings on these policies are based on the net earnings on the cash surrender value of the policies. The net cash surrender value of bank-owned life insurance was $3,597,816 and $3,518,450 at September 30, 2012 and December 31, 2011, respectively. The death benefit value of the bank-owned life insurance at September 30, 2012 and December 31, 2011 was $8.7 million and $8.8 million, respectively. An agreement has been executed with all officers whereby a $40,000 death benefit is payable upon the participant’s death while employed by the Company to their designated beneficiary

Advertising Costs

Advertising Costs: Advertising costs are expensed as the costs are incurred. Advertising expenses amounted to $55,299 and $40,280 for the three months ended September 30, 2012 and September 30, 2011, respectively. For the nine month periods ended September 30, 2012 and 2011 advertising expenses amounted to $162,372 and $98,650, respectively.

Premises and Equipment

Premises and Equipment: Premises and equipment are stated at cost, less accumulated depreciation and amortization. Provisions for depreciation and amortization are computed generally using the straight-line method over the estimated useful lives of the assets. When units of property are disposed of, the premises and equipment accounts are relieved of the cost and the accumulated depreciation related to such units. Any resulting gains or losses are credited to or charged against income. Cost of repairs and maintenance is charged to expense as incurred. Additions and improvements are capitalized at cost.

Transfers of Financial Assets

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Other Real Estate Owned

Other Real Estate Owned: Other real estate owned are carried at the lower of cost or their estimated current fair value, less estimated costs to sell and are included in other assets. Other real estate owned consist primarily of properties acquired through, or in lieu of foreclosures. Any subsequent declines in fair value, and gains or losses on the disposition of these assets are credited to or charged against income.

Income Taxes

Income Taxes: The Company and its subsidiary file a consolidated federal income tax return. There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Statement of Income. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred income tax expenses or benefits are based on the changes in the deferred tax asset or liability from period to period.

Earnings Per Common Share

Earnings Per Common Share: Earnings per common share are calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the year. The Company has no securities which would be considered potential common stock.

Recent Accounting Pronouncements

Recent Accounting Pronouncements: In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The amendments in this Update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in this Update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. For nonpublic entities, the amendments are effective for annual periods beginning after December 15, 2012. Early application by public entities is not permitted. The expanded disclosures have been provided in Notes 9 and 10.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments in this Update improve the comparability, clarity, consistency, and transparency of financial reporting and increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. GAAP and IFRS, the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. All entities that report items of comprehensive income, in any period presented, will be affected by the changes in this Update. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The amendments in this Update should be applied retrospectively, and early adoption is permitted. The Company has provided the necessary disclosure in the Statement of Comprehensive Income.

In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other Topics (Topic 350), Testing Goodwill for Impairment. The objective of this update is to simplify how entities, both public and nonpublic, test goodwill for impairment. The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendments in this Update apply to all entities, both public and nonpublic, that have goodwill reported in their financial statements and are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. This ASU is not expected to have a significant impact on the Company’s financial statements.

In September 2011, the FASB issued ASU 2011-09, Compensation-Retirement Benefits-Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan. The amendments in this Update will require additional disclosures about an employer’s participation in a multiemployer pension plan to enable users of financial statements to assess the potential cash flow implications relating to an employer’s participation in multiemployer pension plans. The disclosures also will indicate the financial health of all of the significant plans in which the employer participates and assist a financial statement user to access additional information that is available outside the financial statements. For public entities, the amendments in this Update are effective for annual periods for fiscal years ending after December 15, 2011, with early adoption permitted. For nonpublic entities, the amendments are effective for annual periods of fiscal years ending after December 15, 2012, with early adoption permitted. The amendments should be applied retrospectively for all prior periods presented. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification. The amendments in this Update affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. Under the amendments in this Update, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The amendments in this Update should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2013, and interim and annual periods thereafter. Early adoption is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. In order to defer only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments, the paragraphs in this Update supersede certain pending paragraphs in Update 2011-05. Entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before Update 2011-05. All other requirements in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011. Nonpublic entities should begin applying these requirements for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The Company has provided the necessary disclosure in the Statement of Comprehensive Income.

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Consolidated Statements of Income (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
INTEREST AND DIVIDEND INCOME
Taxable	$ 1,289,102	$ 1,506,060	$ 3,927,389	$ 4,554,523
Tax-exempt	113,894	125,556	354,419	403,624
Debt securities:
Taxable	602,929	813,718	1,862,526	2,495,816
Tax-exempt	438,758	348,766	1,294,607	1,064,237
Other interest and dividend income	10,388	12,755	36,315	33,095
Total interest and dividend income	2,455,071	2,806,855	7,475,256	8,551,295
INTEREST EXPENSE
Deposits	355,600	473,119	1,158,740	1,497,405
Federal funds purchased and repurchase agreements	31,380	28,306	87,341	79,091
Federal Home Loan Bank borrowings	43,512	44,528	130,818	133,820
Total interest expense	430,492	545,953	1,376,899	1,710,316
Net interest income	2,024,579	2,260,902	6,098,357	6,840,979
PROVISION FOR LOAN LOSSES		(1,000)		600,000
Net interest income after provision for loan losses	2,024,579	2,260,902	6,098,357	6,240,979
NONINTEREST INCOME
Service charges and other fees	118,586	133,155	346,149	363,081
Net gains on available for sale securities	1,671	375,121	343,950	642,997
Other operating income	186,410	213,736	582,900	548,316
Total noninterest income	306,667	722,012	1,272,999	1,554,394
NONINTEREST EXPENSE
Salary and employee benefits	932,344	971,599	2,788,842	2,844,320
Net occupancy expense of premises	385,898	375,984	1,144,254	1,080,720
Other operating expenses	551,220	546,254	1,769,159	1,779,859
Total noninterest expense	1,869,462	1,893,837	5,702,255	5,704,899
Income before income taxes	461,784	1,089,077	1,669,101	2,090,474
INCOME TAX EXPENSE (BENEFIT)	(21,042)	230,145	46,241	272,500
Net income	$ 482,826	$ 858,932	$ 1,622,860	$ 1,817,974
WEIGHTED AVERAGE SHARES OUTSTANDING	1,652,814	1,652,814	1,652,814	1,652,814
EARNINGS PER COMMON SHARE	$ 0.29	$ 0.52	$ 0.98	$ 1.10
DIVIDENDS PER COMMON SHARE	$ 0.19	$ 0.19	$ 0.57	$ 0.57

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Allowance for Loan Losses

9 Months Ended

Sep. 30, 2012

Allowance for Loan Losses [Abstract]

ALLOWANCE FOR LOAN LOSSES

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

The following table summarizes the primary segments of the ALL, segregated into the amount for loans individually evaluated for impairment by class of loans as of September 30, 2012 and September 30, 2011 (in thousands):

September 30, 2012	Commercial and other			Commercial Real Estate			Consumer Real Estate		Consumer			Total
Allowance for Loan Losses:
Beginning Balance, January 1, 2012	$	179		$	2,082		$	193	$	50		$	2,504
Charge-offs		—			(3	)		—		(7	)		(10	)
Recoveries		—			15			—		4			19
Provision		(10	)		(54	)		74		(10	)		—
Ending Balance, September 30, 2012	$	169		$	2,040		$	267	$	37		$	2,513
Loans individually evaluated for impairment	$	24		$	795		$	—	$	—		$	819
Loans collectively evaluated for impairment		145			1,245			267		37			1,694
Ending Balance	$	169		$	2,040		$	267	$	37		$	2,513

September 30, 2011	Commercial and other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, January 1, 2011	$	212		$	1,511		$	272		$	64		$	2,059
Charge-offs		(8	)		(156	)		(7	)		(15	)		(186	)
Recoveries		2			45			—			5			52
Provision		(37	)		775			(131	)		(7	)		600
Ending Balance, September 30, 2011	$	169		$	2,175		$	134		$	47		$	2,525
Loans individually evaluated for impairment	$	—		$	851		$	—		$	—		$	851
Loans collectively evaluated for impairment		169			1,324			134			47			1,674
Ending Balance	$	169		$	2,175		$	134		$	47		$	2,525

The following table summarizes the primary segments of the ALL for the three months ended as of September 30, 2012 and September 30, 2011 (in thousands):

September 30, 2012	Commercial and other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, July 1, 2012	$	170		$	2,050		$	254		$	40		$	2,514
Charge-offs		—			—			—			(2	)		(2	)
Recoveries		—			—			—			1			1
Provision		(1	)		(10	)		13			(2	)		—
Ending Balance, September 30, 2012	$	169		$	2,040		$	267		$	37		$	2,513
September 30, 2011	Commercial and other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, July 1, 2011	$	175		$	2,055		$	249		$	50		$	2,529
Charge-offs		—			—			1			(6	)		(5	)
Recoveries		—			1			—			1			2
Provision		(6	)		119			(116	)		2			(1	)
Ending Balance, September 30, 2011	$	169		$	2,175		$	134		$	47		$	2,525

The following table presents loans individually and collectively evaluated for impairment by class of loans as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Commercial and other		Commercial Real Estate		Consumer Real Estate		Consumer		Unearned Discounts			Total
Loans individually evaluated	$	34	$	3,296	$	234	$	—	$	—		$	3,564
Loans collectively evaluated		15,215		46,004		30,246		5,786		(89	)		97,162
Ending Balance	$	15,249	$	49,300	$	30,480	$	5,786	$	(89	)	$	100,726
December 31, 2011
Loans individually evaluated	$	46	$	3,533	$	312	$	—	$	—		$	3,891
Loans collectively evaluated		15,892		52,835		29,840		7,090		(119	)		105,538
Ending Balance	$	15,938	$	56,368	$	30,152	$	7,090	$	(119	)	$	109,429

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Loans and Leases

9 Months Ended

Sep. 30, 2012

Loans and Leases [Abstract]

LOANS AND LEASES

NOTE 3 - LOANS AND LEASES

Loans outstanding at September 30, 2012 and December 31, 2011, are as follows:

	(Expressed in Thousands)
	September 30, 2012		December 31, 2011
Commercial and Other Loans:
Commercial	$	4,754	$	4,354
Non-rated industrial development obligations		10,475		11,508
Other loans		20		76
Total Commercial and Other Loans		15,249		15,938
Commercial Real Estate:
Non-farm, non-residential		42,381		49,146
Multifamily (5 or more) residential properties		6,919		7,222
Total Commercial Real Estate		49,300		56,368
Consumer Real Estate:
Construction		1,765		295
Farmland		247		213
Residential 1-4 Family		23,395		24,961
Home Equity Loans		2,124		2,380
Home Equity Lines of Credit		2,949		2,303
Total Consumer Real Estate		30,480		30,152
Consumer Loans:
Installment and other loans to individuals		5,252		6,484
Credit Cards		534		606
Total Consumer Loans		5,786		7,090
Total loans	$	100,815	$	109,548
Less unearned interest and deferred fees		89		119
Net loans	$	100,726	$	109,429

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. These policies and procedures are reviewed by management and approved by the Board of Directors on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

The Company originates direct and indirect consumer loans including principally residential real estate, home equity lines and loans, credit cards, and indirect vehicle loans using a credit analysis as part of the underwriting process. Each loan type has a separate underwriting criteria, which consists of several factors including debt to income, type of collateral, credit history and customer relationship with the Company.

Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably. Underwriting standards are designed to promote relationship banking rather than transactional banking. The Company’s management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of the borrower, however, may not be as expected and the collateral securing the loan may fluctuate in value. Minimum standards and underwriting guidelines have been established for commercial loan types.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by the general economy or conditions specific to the real estate market such as geography and/or property type.

Non-accrual loans amounted to $3,748,768 and $4,045,937 at September 30, 2012 and December 31, 2011, respectively. The amount of interest income that would have been recognized had the loans performed in accordance with their original terms was $49,774 and $40,890 for the three months ended September 30,2012 and September 30, 2011, respectively. For nine months ended September 30, 2012 and 2011 and for the year ended December 31, 2011, the amount of interest income that would have been recognized had the loans performed in accordance with their original terms was $176,820, $227,335 and $353,340, respectively.

The following tables present the aging of the recorded investment in past due loans by class of loans (in thousands):

	September 30, 2012
	Current			30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past Due		Total Past Due		Total Loans			90 Days or more Past Due and Accruing
Commercial and Other Loans	$	15,181		$	45	$	—	$	23	$	68	$	15,249		$	—
Commercial real estate		46,122			148		—		3,030		3,178		49,300			—
Consumer real estate		30,240			123		—		117		240		30,480			32
Consumer		5,757			22		5		2		29		5,786			—
Unearned interest and deferred fees		(89	)		—		—		—		—		(89	)		—
Total loans	$	97,211		$	338	$	5	$	3,172	$	3,515	$	100,726		$	32
Non-accrual loans included above are as follows:
Commercial and Other Loans	$	10		$	—	$	—	$	23	$	23	$	33		$	—
Commercial real estate		266			—		—		3,030		3,030		3,296			—
Consumer real estate		198			115		—		85		200		398			—
Consumer		13			4		3		2		9		22			—
Total non-accrual loans	$	487		$	119	$	3	$	3,140	$	3,262	$	3,749		$	—

	December 31, 2011
	Current			30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past  Due		Total Past Due		Total Loans			90 Days or more Past Due and Accruing
Commercial and Other Loans	$	15,655		$	257	$	—	$	26	$	283	$	15,938		$	—
Commercial real estate		52,727			409		36		3,196		3,641		56,368			—
Consumer real estate		29,681			221		140		110		471		30,152			—
Consumer		7,040			9		17		24		50		7,090			—
Unearned interest and deferred fees		(119	)		—		—		—		—		(119	)		—
Total loans	$	104,984		$	896	$	193	$	3,356	$	4,445	$	109,429		$	—
Non-accrual loans included above are as follows:
Commercial and Other Loans	$	13		$	—	$	—	$	26	$	26	$	39		$	—
Commercial real estate		253			84		—		3,196		3,280		3,533			—
Consumer real estate		232			105		—		110		215		447			—
Consumer		—			—		3		24		27		27			—
Total non-accrual loans	$	498		$	189	$	3	$	3,356	$	3,548	$	4,046		$	—

The Company utilizes an internal asset classification system for commercial loans as a means of reporting problem and potential problem loans. Under the Company’s risk rating system, the Company classifies problem and potential problem loans as “Special Mention”, “Substandard”, and “Doubtful.” Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management’s close attention are deemed to be Special Mention. Risk ratings are updated any time the situation warrants. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

The following tables present the risk category of loans based on the most recent analysis performed and the contractual aging as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Other	$	15,210	$	—	$	39	$	—	$	15,249
Commercial Real Estate		39,846		2,398		7,056		—		49,300
Construction and Land Development		1,066		946		—		—		2,012
Total	$	56,122	$	3,344	$	7,095	$	—	$	66,561
Current	$	56,077	$	3,344	$	3,651	$	—	$	63,072
Past Due 30-59 days		45		—		148		—		193
Past Due 60-89 days		—		—		—		—		—
Past Due 90 days or more		—		—		—		—		—
Non-accrual		—		—		3,296		—		3,296
Total	$	56,122	$	3,344	$	7,095	$	—	$	66,561

December 31, 2011	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Other	$	15,882	$	—	$	56	$	—	$	15,938
Commercial Real Estate		43,067		5,807		6,786		708		56,368
Construction and Land Development		508		—		—		—		508
Total	$	59,457	$	5,807	$	6,842	$	708	$	72,814
Current	$	59,164	$	5,807	$	3,653	$	—	$	68,624
Past Due 30-59 days		257		—		325		—		582
Past Due 60-89 days		36		—		—		—		36
Past Due 90 days or more		—		—		—		—		—
Non-accrual		—		—		2,864		708		3,572
Total	$	59,457	$	5,807	$	6,842	$	708	$	72,814

For consumer and consumer real estate loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Performing		Non-performing		Total
Consumer	$	5,764	$	22	$	5,786
Consumer Real Estate		30,050		430		30,480
Total	$	35,814	$	452	$	36,266

December 31, 2011	Performing		Non-performing		Total
Consumer	$	7,063	$	27	$	7,090
Consumer Real Estate		29,705		447		30,152
Total	$	36,768	$	474	$	37,242

The Company also evaluates problem loans for impairment. A loan is considered to be impaired if it is probable that the Company will not be able to collect the payments for principal and interest when due according to the contractual terms of the loan agreement. Impaired loans generally include all non-accrual loans and Troubled Debt Restructurings (TDR’s).

Impaired loans at September 30, 2012 and December 31, 2011 are set forth in the following tables (in thousands):

	September 30, 2012
	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial and Other Loans	$	34	$	10	$	24	$	34	$	24
Commercial real estate		3,296		572		2,724		3,296		795
Consumer real estate		234		234		—		234		—
Total	$	3,564	$	816	$	2,748	$	3,564	$	819

	December 31, 2011
	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial and Other Loans	$	46	$	39	$	7	$	46	$	7
Commercial real estate		3,533		1,056		2,477		3,533		829
Consumer real estate		312		312		—		312		—
Total	$	3,891	$	1,407	$	2,484	$	3,891	$	836

The average recorded investment in impaired loans are set forth below in the following table. No interest income was recognized on impaired loans subsequent to their classification as impaired (in thousands):

	Average Recorded Investment
	For the three months ended				For the nine months ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Commercial and Other Loans		33		42		32		44
Commercial real estate		3,105		3,688		3,088		3,883
Consumer real estate		528		330		525		347
Total	$	3,666	$	4,060	$	3,645	$	4,274

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonaccrual at the time of restructure and may only be returned to accrual status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDR’s on accrual status may remain in accrual status after they have been restructured as long as they continue to perform in accordance with their modified terms. There were no TDR’s in accrual status at September 30, 2012 and December 31, 2011.

When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at origination.

The Company did not have any new TDR’s originate during the three and nine month periods ended September 30, 2012 and 2011. One loan which was previously identified as a TDR was modified during the third quarter of 2012. There were no TDR’s that defaulted during the three and nine month periods ended September 30, 2012 and 2011.

No additional funds are committed to be advanced to customers whose loans were classified as TDR’s

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Deposits (Tables)

9 Months Ended

Sep. 30, 2012

Deposits [Abstract]

The Composition of The Bank's Deposits

The composition of the Bank’s deposits at September 30, 2012 and December 31, 2011 follows:

	(Expressed in Thousands) September 30, 2012
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	30,655	$	38,107	$	88,571	$	66,297
United States Government		1		—		—		—
States and political subdivisions		605		8,548		2,755		3,068
Commercial banks and other depository institutions		119		—		105		490
Total	$	31,380	$	46,655	$	91,431	$	69,855
	(Expressed in Thousands) December 31, 2011
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	31,319	$	41,702	$	80,857	$	70,125
United States Government		1		—		—		—
States and political subdivisions		540		6,189		4,723		3,176
Commercial banks and other depository institutions		55		—		—		490
Total	$	31,915	$	47,891	$	85,580	$	73,791

Summary of Maturity Distribution of Time Certificates of Deposits

A maturity distribution of time certificates of deposit at September 30, 2012 and December 31, 2011, follows:

(dollars in thousands)	Maturities of Time Deposits
	September 30, 2012		December 31, 2011
12 month or less	$	35,048	$	43,761
12 months through 24 months		14,044		10,066
24 months through 36 months		7,970		6,703
36 months through 48 months		6,631		6,373
48 months through 60 months		5,395		6,223
Over 60 months		767		665
Total	$	69,855	$	73,791

Contractual Maturities Of Time Deposits Of $100,000 Or More, Domestic

The following table presents other time deposits of $100,000 or more issued by domestic offices by time remaining until maturity of 3 months or less; over 3 through 6 months; over 6 through 12 months; and over 12 months.

	Maturities of Time Deposits in Excess of $100,000
(dollars in thousands)	September 30, 2012		December 31, 2011
Three Months or Less	$	2,831	$	4,411
Over Three and Less than Six Months		2,577		3,719
Over Six and Less than Twelve Months		3,684		5,103
Over Twelve Months		11,604		8,807
Total	$	20,696	$	22,040

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2012

Investment Securities [Abstract]

The amortized cost and estimated fair values of investment securities

The amortized cost and estimated fair values of investment securities are as follows at September 30, 2012 and December 31, 2011:

	(Expressed in thousands) September 30, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale:
Obligations of U.S. Government corporations and agencies	$	42,104	$	250	$	(7	)	$	42,347
Obligations of states and political subdivisions		45,334		3,927		—			49,261
Mortgage-backed securities		72,459		2,209		(25	)		74,643
Equity securities		186		27		—			213
Total available-for-sale	$	160,083	$	6,413	$	(32	)	$	166,464

	(Expressed in thousands) December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale:
Obligations of U.S. Government corporations and agencies	$	36,014	$	202	$	—		$	36,216
Obligations of states and political subdivisions		42,154		3,150		—			45,304
Mortgage-backed securities		67,402		1,820		(7	)		69,215
Equity securities		209		17		—			226
Total available-for-sale	$	145,779	$	5,189	$	(7	)	$	150,961

The gross unrealized losses and fair value for investment securities, by investment category and continuous unrealized loss position time

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:

	(Expressed in thousands) September 30, 2012
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Government corporations and agencies	$	2,993	$	(7	)	$	—	$	—		$	2,993	$	(7	)
Mortgage-backed securities		2,989		(24	)		89		(1	)		3,078		(25	)
Total	$	5,982	$	(31	)	$	89	$	(1	)	$	6,071	$	(32	)

	(Expressed in thousands) December 31, 2011
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Mortgage-backed securities	$	2,008	$	(6	)	$	112	$	(1	)	$	2,120	$	(7	)
Total	$	2,008	$	(6	)	$	112	$	(1	)	$	2,120	$	(7	)

The amortized cost and fair value of securities available for sale, by contractual maturity

The amortized cost and fair value of investment securities available for sale at September 30, 2012, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	(Expressed in thousands) September 30, 2012
	Amortized Cost		Fair Value
Due in one year or less	$	569	$	576
Due after one year through five years		9,700		9,866
Due after five years through ten years		48,901		50,223
Due after ten years		28,268		30,943
		87,438		91,608
Mortgage-backed securities		72,459		74,643
Equity securities		186		213
Total	$	160,083	$	166,464

The recorded book value, fair value and approximate yield of investment securities, by contractual maturity

The maturity distribution using book value including accretion of discounts and amortization of premiums and approximate yield of investment securities at September 30, 2012 and December 31, 2011 are presented in the following table.

(dollars in thousands)	September 30, 2012							December 31, 2011
	Amortized Cost		Fair Value		Yield			Amortized Cost		Fair Value		Yield
U.S. Government corporations and agencies
Within One Year	$	9	$	9		0.01	%	$	11	$	11		0.80	%
After One But Within Five Years		7,500		7,536		1.63			11,500		11,558		1.68
After Five But Within Ten Years		34,592		34,799		1.92			24,500		24,644		2.36
After Ten Years		3		3		0.87			3		3		0.86
		42,104		42,347		1.87			36,014		36,216		2.14
States & Political Subdivisions
Within One Year		560		567		5.54			1,145		1,151		5.48
After One But Within Five Years		2,200		2,330		5.85			1,834		1,913		5.54
After Five But Within Ten Years		14,309		15,424		5.62			11,395		12,285		5.66
After Ten Years		28,265		30,940		5.86			27,780		29,955		6.07
		45,334		49,261		5.78			42,154		45,304		5.92
Mortgage-Backed Securities		72,459		74,643		2.68			67,402		69,215		3.03
Equity Securities		186		213		2.12			209		226		2.25
Total	$	160,083	$	166,464		3.39	%	$	145,779	$	150,961		3.68	%

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Federal Home Loan Bank Borrowings

9 Months Ended

Sep. 30, 2012

Federal Home Loan Bank Borrowings [Abstract]

FEDERAL HOME LOAN BANK BORROWINGS

NOTE 7 - FEDERAL HOME LOAN BANK BORROWINGS

The Bank is a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”). The FHLB borrowings are secured by a blanket lien by the FHLB on certain residential real estate loans or securities with a market value at least equal to the outstanding balances. The remaining maximum borrowing capacity with the FHLB at September 30, 2012 was approximately $38.7 million subject to the purchase of additional FHLB stock. The Bank had FHLB borrowings of $3,628,451 and $3,693,014 at September 30, 2012 and December 31, 2011, respectively. At September 30, 2012 the Bank had three fixed rate amortizing advances which totaled $3,628,451 with a weighted average interest rate of 4.78% of which $2,057,189 will mature in 2018 and $1,571,262 will mature in 2023.

The Bank also has a one year line of credit agreement with the Federal Home Loan Bank. The maximum credit available under this agreement is $7.0 million and expires in December 2012. There were no borrowings outstanding under this agreement at September 30, 2012 and December 31, 2011, respectively.

Contractual maturities of FHLB borrowings as of September 30, 2012 were as follows:

Due in 2012	$	22,039
Due in 2013		90,832
Due in 2014		95,267
Due in 2015		99,919
Due in 2016		104,800
Due in 2017 and thereafter		3,215,594
Total	$	3,628,451

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Premises and Equipment

9 Months Ended

Sep. 30, 2012

Premises and Equipment [Abstract]

PREMISES AND EQUIPMENT

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, less accumulated depreciation, as follows:

	September 30, 2012		December 31, 2011		Original Useful Life Years
Land	$	1,974,527	$	1,973,014
Land improvements		382,278		338,069	15
Leasehold improvements		1,083,051		1,063,735	15
Buildings		5,388,753		5,193,157	39
Furniture, fixtures & equipment		5,076,997		5,130,953	3 -7
Total		13,905,606		13,698,928
Less accumulated depreciation		7,492,656		7,781,209
Premises and equipment, net	$	6,412,950	$	5,917,719

Charges to operations for depreciation approximated $133,501 and $123,297 for the three months ended September 30, 2012 and 2011, respectively. Depreciation expenses were $383,288 and $362,390 for the nine months ended September 30, 2012 and 2011, respectively.

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Deposits

9 Months Ended

Sep. 30, 2012

Deposits [Abstract]

DEPOSITS

NOTE 6 - DEPOSITS

The composition of the Bank’s deposits at September 30, 2012 and December 31, 2011 follows:

	(Expressed in Thousands) September 30, 2012
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	30,655	$	38,107	$	88,571	$	66,297
United States Government		1		—		—		—
States and political subdivisions		605		8,548		2,755		3,068
Commercial banks and other depository institutions		119		—		105		490
Total	$	31,380	$	46,655	$	91,431	$	69,855
	(Expressed in Thousands) December 31, 2011
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	31,319	$	41,702	$	80,857	$	70,125
United States Government		1		—		—		—
States and political subdivisions		540		6,189		4,723		3,176
Commercial banks and other depository institutions		55		—		—		490
Total	$	31,915	$	47,891	$	85,580	$	73,791

A maturity distribution of time certificates of deposit at September 30, 2012 and December 31, 2011, follows:

(dollars in thousands)	Maturities of Time Deposits
	September 30, 2012		December 31, 2011
12 month or less	$	35,048	$	43,761
12 months through 24 months		14,044		10,066
24 months through 36 months		7,970		6,703
36 months through 48 months		6,631		6,373
48 months through 60 months		5,395		6,223
Over 60 months		767		665
Total	$	69,855	$	73,791

Time deposits include certificates of deposit issued in denominations of $100,000 or more which amounted to $20,696,000 and $22,040,000 at September 30, 2012 and December 31, 2011, respectively. Interest expense on certificates of deposit of $100,000 or more was $74,251 and $122,591 for the three months ended September 30, 2012 and 2011, respectively. Interest expense on certificates of deposit of $100,000 or more was $266,426 and $347,879 for the nine months ended September 30, 2012 and 2011, respectively.

The following table presents other time deposits of $100,000 or more issued by domestic offices by time remaining until maturity of 3 months or less; over 3 through 6 months; over 6 through 12 months; and over 12 months.

	Maturities of Time Deposits in Excess of $100,000
(dollars in thousands)	September 30, 2012		December 31, 2011
Three Months or Less	$	2,831	$	4,411
Over Three and Less than Six Months		2,577		3,719
Over Six and Less than Twelve Months		3,684		5,103
Over Twelve Months		11,604		8,807
Total	$	20,696	$	22,040

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Regulatory Matters

9 Months Ended

Sep. 30, 2012

Regulatory Matters [Abstract]

REGULATORY MATTERS

NOTE 8 - REGULATORY MATTERS

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk, weighting, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to adjusted total assets (as defined).

As of September 30, 2012, the most recent notifications from the Office of the Comptroller of the Currency categorized the bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes has changed the capital category. The capital ratios of the Company and its subsidiary bank, along with the regulatory framework for adequately capitalized and well capitalized institutions are depicted as set forth in the following table:

(Amounts Expressed in Thousands)	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
First West Virginia Bancorp, Inc.
As of September 30, 2012
Total Capital (to Risk Weighted Assets)	$	32,122		22.47	%	$	11,439		8.0	%	$	14,298		10.0	%
Tier I Capital (to Risk Weighted Assets)		30,328		21.21	%		5,719		4.0	%		8,579		6.0	%
Tier I Capital (to Adjusted Total Assets)		30,328		10.36	%		11,707		4.0	%		14,634		5.0	%
As of December 31, 2011
Total Capital (to Risk Weighted Assets)	$	31,494		21.55	%	$	11,691		8.0	%	$	14,614		10.0	%
Tier I Capital (to Risk Weighted Assets)		29,662		20.30	%		5,845		4.0	%		8,768		6.0	%
Tier I Capital (to Adjusted Total Assets)		29,662		10.46	%		11,340		4.0	%		14,175		5.0	%
Progressive Bank, N.A.
As of September 30, 2012
Total Capital (to Risk Weighted Assets)	$	31,929		22.36	%	$	11,421		8.0	%	$	14,277		10.0	%
Tier I Capital (to Risk Weighted Assets)		30,135		21.11	%		5,711		4.0	%		8,566		6.0	%
Tier I Capital (to Adjusted Total Assets)		30,135		10.31	%		11,696		4.0	%		14,620		5.0	%
As of December 31, 2011
Total Capital (to Risk Weighted Assets)	$	31,269		21.43	%	$	11,674		8.0	%	$	14,592		10.0	%
Tier I Capital (to Risk Weighted Assets)		29,437		20.17	%		5,837		4.0	%		8,755		6.0	%
Tier I Capital (to Adjusted Total Assets)		29,437		10.39	%		11,328		4.0	%		14,160		5.0	%

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Loans and Leases (Details 1) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Summary of contractual aging of the loans in past due, by class of loans
Current	$ 97,211,000	$ 104,984,000
30-59 Days Past Due	338,000	896,000
60-89 Days Past Due	5,000	193,000
90 days or more Past Due	3,172,000	3,356,000
Total Past Due	3,515,000	4,445,000
90 Days or more Past Due and Accruing
Non-accrual loans	3,748,768	4,045,937
Total Loans	15,249,000	15,938,000
Commercial real estate, Total Loans	49,300,000	56,368,000
Consumer real estate, Total Loans	30,480,000	30,152,000
Consumer loans, Total Loans	5,786,000	7,090,000
Unearned interest and deferred fees	(89,000)	119,000
Net loans	100,726,270	109,428,476
Commercial and other Loans [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	15,181,000	15,655,000
30-59 Days Past Due	45,000	257,000
60-89 Days Past Due
90 days or more Past Due	23,000	26,000
Total Past Due	68,000	283,000
90 Days or more Past Due and Accruing
Total Loans	15,249,000	15,938,000
Net loans	15,249,000	15,938,000
Commercial real estate [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	46,122,000	52,727,000
30-59 Days Past Due	148,000	409,000
60-89 Days Past Due		36,000
90 days or more Past Due	3,030,000	3,196,000
Total Past Due	3,178,000	3,641,000
90 Days or more Past Due and Accruing
Commercial real estate, Total Loans	49,300,000	56,368,000
Net loans	49,300,000	56,368,000
Consumer real estate [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	30,240,000	29,681,000
30-59 Days Past Due	123,000	221,000
60-89 Days Past Due		140,000
90 days or more Past Due	117,000	110,000
Total Past Due	240,000	471,000
90 Days or more Past Due and Accruing	32,000
Consumer real estate, Total Loans	30,480,000	30,152,000
Net loans	30,480,000	30,152,000
Consumer Loans [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	5,757,000	7,040,000
30-59 Days Past Due	22,000	9,000
60-89 Days Past Due	5,000	17,000
90 days or more Past Due	2,000	24,000
Total Past Due	29,000	50,000
90 Days or more Past Due and Accruing
Consumer loans, Total Loans	5,786,000	7,090,000
Net loans	5,786,000	7,090,000
Unearned interest and deferred fees [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	89,000	119,000
30-59 Days Past Due
60-89 Days Past Due
90 days or more Past Due
Total Past Due
90 Days or more Past Due and Accruing	32,000
Non-accrual loans [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	487,000	498,000
30-59 Days Past Due	119,000	189,000
60-89 Days Past Due	3,000	3,000
90 days or more Past Due	3,140,000	3,356,000
Total Past Due	3,262,000	3,548,000
90 Days or more Past Due and Accruing
Non-accrual loans	3,749,000	4,046,000
Non-accrual loans [Member] | Commercial and other Loans [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	10,000	13,000
30-59 Days Past Due
60-89 Days Past Due
90 days or more Past Due	23,000	26,000
Total Past Due	23,000	26,000
90 Days or more Past Due and Accruing
Total Loans	33,000	39,000
Non-accrual loans [Member] | Commercial real estate [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	266,000	253,000
30-59 Days Past Due		84,000
60-89 Days Past Due
90 days or more Past Due	3,030,000	3,196,000
Total Past Due	3,030,000	3,280,000
90 Days or more Past Due and Accruing
Commercial real estate, Total Loans	3,296,000	3,533,000
Non-accrual loans [Member] | Consumer real estate [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	198,000	232,000
30-59 Days Past Due	115,000	105,000
60-89 Days Past Due
90 days or more Past Due	85,000	110,000
Total Past Due	200,000	215,000
90 Days or more Past Due and Accruing
Consumer real estate, Total Loans	398,000	447,000
Non-accrual loans [Member] | Consumer Loans [Member]
Summary of contractual aging of the loans in past due, by class of loans
Current	13,000
30-59 Days Past Due	4,000
60-89 Days Past Due	3,000	3,000
90 days or more Past Due	2,000	24,000
Total Past Due	9,000	27,000
90 Days or more Past Due and Accruing
Consumer loans, Total Loans	$ 22,000	$ 27,000

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Fair Value Measurements (Details 1) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Mortgage servicing rights range weighted average remaining term	3 years 5 months 27 days
Mortgage servicing rights range weighted average discount rate	10.00%
Unobservable input appraisal adjustments [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Impaired loans range weighted average	16.20%
Unobservable input liquidation expenses [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Impaired loans range weighted average	10.30%
Fair Value Estimate [Member] | Valuation techniques appraisal of collateral [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Impaired loans	2,745
Other real estate owned and repossessed assets	7
Fair Value Estimate [Member] | Valuation techniques discounted cash flow [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Mortgage servicing rights	45
Minimum [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Mortgage servicing rights range weighted average remaining term	2 years 10 months 24 days
Mortgage servicing rights range weighted average discount rate	9.50%
Minimum [Member] | Unobservable input appraisal adjustments [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Impaired loans range weighted average	0.00%
Minimum [Member] | Unobservable input liquidation expenses [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Impaired loans range weighted average	3.50%
Maximum [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Mortgage servicing rights range weighted average remaining term	7 years
Mortgage servicing rights range weighted average discount rate	10.50%
Maximum [Member] | Unobservable input appraisal adjustments [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Impaired loans range weighted average	36.30%
Maximum [Member] | Unobservable input liquidation expenses [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis
Impaired loans range weighted average	22.90%

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Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2012

Allowance for Loan Losses [Abstract]

Schedule of Impairment on The Allowance for Loan Losses, by Class of Loans

The following table summarizes the primary segments of the ALL, segregated into the amount for loans individually evaluated for impairment by class of loans as of September 30, 2012 and September 30, 2011 (in thousands):

September 30, 2012	Commercial and other			Commercial Real Estate			Consumer Real Estate		Consumer			Total
Allowance for Loan Losses:
Beginning Balance, January 1, 2012	$	179		$	2,082		$	193	$	50		$	2,504
Charge-offs		—			(3	)		—		(7	)		(10	)
Recoveries		—			15			—		4			19
Provision		(10	)		(54	)		74		(10	)		—
Ending Balance, September 30, 2012	$	169		$	2,040		$	267	$	37		$	2,513
Loans individually evaluated for impairment	$	24		$	795		$	—	$	—		$	819
Loans collectively evaluated for impairment		145			1,245			267		37			1,694
Ending Balance	$	169		$	2,040		$	267	$	37		$	2,513

September 30, 2011	Commercial and other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, January 1, 2011	$	212		$	1,511		$	272		$	64		$	2,059
Charge-offs		(8	)		(156	)		(7	)		(15	)		(186	)
Recoveries		2			45			—			5			52
Provision		(37	)		775			(131	)		(7	)		600
Ending Balance, September 30, 2011	$	169		$	2,175		$	134		$	47		$	2,525
Loans individually evaluated for impairment	$	—		$	851		$	—		$	—		$	851
Loans collectively evaluated for impairment		169			1,324			134			47			1,674
Ending Balance	$	169		$	2,175		$	134		$	47		$	2,525

Schedule of Loans which are Individually Evaluated for Impairment, by Class of Loans

The following table summarizes the primary segments of the ALL for the three months ended as of September 30, 2012 and September 30, 2011 (in thousands):

September 30, 2012	Commercial and other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, July 1, 2012	$	170		$	2,050		$	254		$	40		$	2,514
Charge-offs		—			—			—			(2	)		(2	)
Recoveries		—			—			—			1			1
Provision		(1	)		(10	)		13			(2	)		—
Ending Balance, September 30, 2012	$	169		$	2,040		$	267		$	37		$	2,513
September 30, 2011	Commercial and other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, July 1, 2011	$	175		$	2,055		$	249		$	50		$	2,529
Charge-offs		—			—			1			(6	)		(5	)
Recoveries		—			1			—			1			2
Provision		(6	)		119			(116	)		2			(1	)
Ending Balance, September 30, 2011	$	169		$	2,175		$	134		$	47		$	2,525

The following table presents loans individually and collectively evaluated for impairment by class of loans as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Commercial and other		Commercial Real Estate		Consumer Real Estate		Consumer		Unearned Discounts			Total
Loans individually evaluated	$	34	$	3,296	$	234	$	—	$	—		$	3,564
Loans collectively evaluated		15,215		46,004		30,246		5,786		(89	)		97,162
Ending Balance	$	15,249	$	49,300	$	30,480	$	5,786	$	(89	)	$	100,726
December 31, 2011
Loans individually evaluated	$	46	$	3,533	$	312	$	—	$	—		$	3,891
Loans collectively evaluated		15,892		52,835		29,840		7,090		(119	)		105,538
Ending Balance	$	15,938	$	56,368	$	30,152	$	7,090	$	(119	)	$	109,429

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Schedule of Assets Carried at Fair Value on Recurring and Nonrecurring Basis

The following table presents the assets reported on the balance sheet at their fair value as of September 30, 2012 and December 31, 2011, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

(dollars in thousands)	September 30, 2012
	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Securities available for sale:
U.S. Government corporations and agencies	$	—	$	42,347	$	—	$	42,347
Obligations of states and political subdivisions		—		49,261		—		49,261
Mortgage-backed securities
U.S. sponsored entities		—		74,643		—		74,643
Subtotal mortgage-backed securities		—		74,643		—		74,643
Equity securities		213		—		—		213
Total securities available for sale:	$	213	$	166,251	$	—	$	166,464
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	2,745	$	2,745
Other real estate	$	—	$	—	$	7	$	7
Mortgage servicing rights	$	—	$	—	$	45	$	45

(dollars in thousands)	December 31, 2011
	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Securities available for sale:
U.S. Government corporations and agencies	$	—	$	36,216	$	—	$	36,216
Obligations of states and political subdivisions		—		45,304		—		45,304
Mortgage-backed securities
U.S. sponsored entities		—		69,215		—		69,215
Subtotal mortgage-backed securities		—		69,215		—		69,215
Equity securities		226		—		—		226
Total securities available for sale:	$	226	$	150,735	$	—	$	150,961
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	3,055	$	3,055
Other real estate	$	—	$	—	$	138	$	138
Mortgage servicing rights	$	—	$	—	$	52	$	52

Additional quantitative information about assets measured at fair value on a nonrecurring basis

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Level 3 inputs were used in determining fair value.

(dollars in thousands)	Quantitative Information about Level 3 Fair Value  Measurements
September 30, 2012	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted         Average)
Impaired Loans	$	2,745	Appraisal of collateral (1)	Appraisal adjustments (2) Liquidation expenses (2)	0% to -36.3% (16.2%) 3.5% to 22.9% (10.3%)
Other real estate owned and repossessed assets	$	7	Appraisal of collateral (1)(3)
Mortgage Servicing Rights	$	45	Discounted Cash Flow	Remaining term Discount rate	2.9 years to 7 years (3.49 years) 9.5% to 10.5% (10%)

(1) The fair value is determined through independent appraisals by certified appraisers of the underlying collateral.

(2) Appraisals may be adjusted by management for qualitative factors and estimated liquidation expenses. The range and weighted average of liquidation expenses are expressed as a percent of discounted collateral value and other appraisal adjustments are presented as a percentage of the appraised amounts.

(3) Valuation includes qualitative adjustments by management and estimated liquidation expenses.

Estimates of fair values of financial instruments

The estimates of fair values of financial instruments are summarized as follows at September 30, 2012 and December 31, 2011:

	September 30, 2012
(Amounts Expressed in Thousands)	Level I		Level II		Level III		Total Fair Value
Financial assets:
Cash and cash equivalents	$	21,033	$	—	$	—	$	21,033
Investment securities		213		166,221		—		166,464
Loans		—		—		99,360		99,360
Bank owned life insurance		3,598		—		—		3,598
Accrued interest receivable		1,186		—		—		1,186
Financial liabilities:
Deposits		158,335		70,878		—		229,213
Federal Funds Purchased and Repurchase Agreements		18,570		—		—		18,370
Federal Home Loan Bank borrowings		—		3,628		—		3,628
Accrued interest payable		171		—		—		171
	September 30, 2012				December 31, 2011
(Amounts Expressed in Thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	21,033	$	21,033	$	20,917	$	20,917
Investment securities		166,464		166,464		150,961		150,961
Loans		98,213		99,360		106,925		105,733
Bank owned life insurance		3,598		3,598		3,518		3,518
Accrued interest receivable		1,186		1,186		1,140		1,140
Financial liabilities:
Deposits		239,321		229,213		239,177		227,662
Federal funds purchased and repurchase agreements		18,570		18,570		14,014		14,014
Federal Home Loan Bank borrowings		3,628		3,628		3,693		3,693
Accrued interest payable		171		171		218		218

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Regulatory Matters (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of capital ratios and capital amounts compliance with regulatory framework for adequately capitalized and well capitalized institutions, by company and its subsidiary bank
Total Capital (to Risk Weighted Assets), Actual, Amount	$ 32,122	$ 31,494
Tier I Capital (to Risk Weighted Assets), Actual, Amount	30,328	29,662
Tier I Capital (to Adjusted Total Assets), Actual, Amount	30,328	29,662
Total Capital (to Risk Weighted Assets) Required for Capital Adequacy Purposes, Amount	11,439	11,691
Tier I Capital (to Risk Weighted Assets) Required for Capital Adequacy Purposes, Amount	5,719	5,845
Tier I Capital (to Adjusted Total Assets) Required for Capital Adequacy Purposes, Amount	11,707	11,340
Total Capital (to Risk Weighted Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Amount	14,298	14,614
Tier I Capital (to Risk Weighted Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Amount	8,579	8,768
Tier I Capital (to Adjusted Total Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Amount	14,634	14,175
Total Capital (to Risk Weighted Assets), Actual, Ratio	22.47%	21.55%
Tier I Capital (to Risk Weighted Assets), Actual, Ratio	21.21%	20.30%
Tier I Capital (to Adjusted Total Assets), Actual, Ratio	10.36%	10.46%
Total Capital (to Risk Weighted Assets) Required for Capital Adequacy Purposes, Ratio	8.00%	8.00%
Tier I Capital (to Risk Weighted Assets) Required for Capital Adequacy Purposes, Ratio	4.00%	4.00%
Tier I Capital (to Adjusted Total Assets) Required for Capital Adequacy Purposes, Ratio	4.00%	4.00%
Total Capital (to Risk Weighted Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	10.00%	10.00%
Tier I Capital (to Risk Weighted Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	6.00%	6.00%
Tier I Capital (to Adjusted Total Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	5.00%	5.00%
Progressive Bank, N.A.[Member]
Schedule of capital ratios and capital amounts compliance with regulatory framework for adequately capitalized and well capitalized institutions, by company and its subsidiary bank
Total Capital (to Risk Weighted Assets), Actual, Amount	31,929	31,269
Tier I Capital (to Risk Weighted Assets), Actual, Amount	30,135	29,437
Tier I Capital (to Adjusted Total Assets), Actual, Amount	30,135	29,437
Total Capital (to Risk Weighted Assets) Required for Capital Adequacy Purposes, Amount	11,421	11,674
Tier I Capital (to Risk Weighted Assets) Required for Capital Adequacy Purposes, Amount	5,711	5,837
Tier I Capital (to Adjusted Total Assets) Required for Capital Adequacy Purposes, Amount	11,696	11,328
Total Capital (to Risk Weighted Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Amount	14,277	14,592
Tier I Capital (to Risk Weighted Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Amount	8,566	8,755
Tier I Capital (to Adjusted Total Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 14,620	$ 14,160
Total Capital (to Risk Weighted Assets), Actual, Ratio	22.36%	21.43%
Tier I Capital (to Risk Weighted Assets), Actual, Ratio	21.11%	20.17%
Tier I Capital (to Adjusted Total Assets), Actual, Ratio	10.31%	10.39%
Total Capital (to Risk Weighted Assets) Required for Capital Adequacy Purposes, Ratio	8.00%	8.00%
Tier I Capital (to Risk Weighted Assets) Required for Capital Adequacy Purposes, Ratio	4.00%	4.00%
Tier I Capital (to Adjusted Total Assets) Required for Capital Adequacy Purposes, Ratio	4.00%	4.00%
Total Capital (to Risk Weighted Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	10.00%	10.00%
Tier I Capital (to Risk Weighted Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	6.00%	6.00%
Tier I Capital (to Adjusted Total Assets) Required to be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	5.00%	5.00%

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Premises and Equipment (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Premises and equipment are stated at cost, less accumulated depreciation
Total	$ 13,905,606	$ 13,698,928
Less accumulated depreciation	7,492,656	7,781,209
Premises and equipment, net	6,412,950	5,917,719
Land [Member]
Premises and equipment are stated at cost, less accumulated depreciation
Total	1,974,527	1,973,014
Land improvements [Member]
Premises and equipment are stated at cost, less accumulated depreciation
Total	382,278	338,069
Original Useful Life Years	15 years
Leasehold improvements [Member]
Premises and equipment are stated at cost, less accumulated depreciation
Total	1,083,051	1,063,735
Original Useful Life Years	15 years
Buildings [Member]
Premises and equipment are stated at cost, less accumulated depreciation
Total	5,388,753	5,193,157
Original Useful Life Years	39 years
Furniture, fixtures & equipment [Member]
Premises and equipment are stated at cost, less accumulated depreciation
Total	$ 5,076,997	$ 5,130,953
Furniture, fixtures & equipment [Member] | Maximum [Member]
Premises and equipment are stated at cost, less accumulated depreciation
Original Useful Life Years	7 years
Furniture, fixtures & equipment [Member] | Minimum [Member]
Premises and equipment are stated at cost, less accumulated depreciation
Original Useful Life Years	3 years

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Consolidated Statements of Comprehensive Income [Abstract]
Net Income	$ 482,826	$ 858,932	$ 1,622,860	$ 1,817,974
Other comprehensive income:
Investment securities available for sale
Unrealized holding gains arising during the period	877,209	2,087,736	1,543,659	3,608,861
Income tax effect	(330,094)	(785,615)	(580,879)	(1,358,014)
Reclassification of gains recognized in earnings	(1,671)	(375,120)	(343,950)	(642,997)
Income tax effect	629	141,157	129,428	241,960
Total other comprehensive income	546,073	1,068,158	748,258	1,849,810
Comprehensive income	$ 1,028,899	$ 1,927,090	$ 2,371,118	$ 3,667,784

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Investment Securities

9 Months Ended

Sep. 30, 2012

Investment Securities [Abstract]

INVESTMENT SECURITIES

NOTE 2 - INVESTMENT SECURITIES

The amortized cost and estimated fair values of investment securities are as follows at September 30, 2012 and December 31, 2011:

	(Expressed in thousands) September 30, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale:
Obligations of U.S. Government corporations and agencies	$	42,104	$	250	$	(7	)	$	42,347
Obligations of states and political subdivisions		45,334		3,927		—			49,261
Mortgage-backed securities		72,459		2,209		(25	)		74,643
Equity securities		186		27		—			213
Total available-for-sale	$	160,083	$	6,413	$	(32	)	$	166,464

	(Expressed in thousands) December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale:
Obligations of U.S. Government corporations and agencies	$	36,014	$	202	$	—		$	36,216
Obligations of states and political subdivisions		42,154		3,150		—			45,304
Mortgage-backed securities		67,402		1,820		(7	)		69,215
Equity securities		209		17		—			226
Total available-for-sale	$	145,779	$	5,189	$	(7	)	$	150,961

The Company’s investment securities portfolio contains unrealized losses of direct obligations of the U.S. Government agency securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government or are generally viewed as having the implied guarantee of the U.S. government, and debt obligations of a U.S. state or political subdivision.

On a quarterly basis, the Company evaluates the severity and duration of impairment for its investment securities portfolio and the Company’s ability to hold the securities till they recover. Generally, impairment is considered other than temporary when an investment security has sustained a decline in market value for a period of twelve months. The Company has concluded that any impairment of its investment securities portfolio is not other than temporary but is the result of interest rate changes that are not expected to result in the noncollection of principal and interest during the period. There are 4 positions that are temporarily impaired at September 30, 2012.

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:

	(Expressed in thousands) September 30, 2012
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Government corporations and agencies	$	2,993	$	(7	)	$	—	$	—		$	2,993	$	(7	)
Mortgage-backed securities		2,989		(24	)		89		(1	)		3,078		(25	)
Total	$	5,982	$	(31	)	$	89	$	(1	)	$	6,071	$	(32	)

	(Expressed in thousands) December 31, 2011
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Mortgage-backed securities	$	2,008	$	(6	)	$	112	$	(1	)	$	2,120	$	(7	)
Total	$	2,008	$	(6	)	$	112	$	(1	)	$	2,120	$	(7	)

The amortized cost and fair value of investment securities available for sale at September 30, 2012, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	(Expressed in thousands) September 30, 2012
	Amortized Cost		Fair Value
Due in one year or less	$	569	$	576
Due after one year through five years		9,700		9,866
Due after five years through ten years		48,901		50,223
Due after ten years		28,268		30,943
		87,438		91,608
Mortgage-backed securities		72,459		74,643
Equity securities		186		213
Total	$	160,083	$	166,464

Assets carried at $58,203,132 and $53,581,000 at September 30, 2012 and December 31, 2011, respectively, were pledged to secure United States Government and other public funds and for other purposes as required or permitted by law. Proceeds from sales of securities available-for-sale during the nine month periods ended September 30, 2012 and 2011, were $10,005,082 and $18,299,847, respectively. Gross gains of $344,265 and gross losses of $315 were realized during the nine months ended September 30, 2012 and gross gains of $659,008 and gross losses of $16,011 were realized during the nine months ended September 30, 2011. Proceeds from sales of securities available-for-sale during the three month periods ended September 30, 2012 and 2011, were $15,118 and $5,323,801, respectively. Gross gains of $1,671 and gross losses of $0 were realized during the three months ended September 30, 2012 and gross gains of $375,212 and gross losses of $91 were realized during the three months ended September 30, 2011. The maturity distribution using book value including accretion of discounts and amortization of premiums and approximate yield of investment securities at September 30, 2012 and December 31, 2011 are presented in the following table. Tax equivalent yield basis was used on tax exempt obligations. Approximate yield was calculated using a weighted average of yield to maturities. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(dollars in thousands)	September 30, 2012							December 31, 2011
	Amortized Cost		Fair Value		Yield			Amortized Cost		Fair Value		Yield
U.S. Government corporations and agencies
Within One Year	$	9	$	9		0.01	%	$	11	$	11		0.80	%
After One But Within Five Years		7,500		7,536		1.63			11,500		11,558		1.68
After Five But Within Ten Years		34,592		34,799		1.92			24,500		24,644		2.36
After Ten Years		3		3		0.87			3		3		0.86
		42,104		42,347		1.87			36,014		36,216		2.14
States & Political Subdivisions
Within One Year		560		567		5.54			1,145		1,151		5.48
After One But Within Five Years		2,200		2,330		5.85			1,834		1,913		5.54
After Five But Within Ten Years		14,309		15,424		5.62			11,395		12,285		5.66
After Ten Years		28,265		30,940		5.86			27,780		29,955		6.07
		45,334		49,261		5.78			42,154		45,304		5.92
Mortgage-Backed Securities		72,459		74,643		2.68			67,402		69,215		3.03
Equity Securities		186		213		2.12			209		226		2.25
Total	$	160,083	$	166,464		3.39	%	$	145,779	$	150,961		3.68	%

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Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended			9 Months Ended
	Sep. 30, 2012 Store	Sep. 30, 2011	Jun. 30, 2011	Sep. 30, 2012 QualitativeFactor Store	Sep. 30, 2011	Jun. 30, 2012	Feb. 23, 2012	Dec. 31, 2011	Dec. 31, 2010
Summary of Significant Accounting Policies (Additional Textual) [Abstract]
Number of Stores	9			9
Affiliated bank branches, locations				Wheeling (3), Wellsburg, Moundsville, New Martinsville, Buckhannon, and Weston, West Virginia and Bellaire, Ohio.
Federal funds sold with maturities of less than, days				90 days
Investment securities identified by management other-than-temporarily impaired	$ 0			$ 0				$ 0
Federal Home Loan Bank stock, par value	$ 100			$ 100
Annualized dividend to shareholders, declared							0.10%
Accrual of interest is discontinued once principal or interest is past due, days	90 days			90 days
Loans held for sale	0			0				0
1-4 family residential mortgage loans, maximum commitment to sell to the FHLB, agreement date				Dec. 28, 2011
Maximum commitment under the agreement, to sell 1-4 family residential mortgage loans to the FHLB	5,000,000			5,000,000
1-4 family residential mortgage loans, maximum commitment to sell to the FHLB, agreement expiry				Dec. 28, 2012
1-4 family residential mortgage loans, sale to the Federal Home Loan Bank, amount of loans sold and outstanding	9,911,832			9,911,832				9,470,840
1-4 family residential mortgage loans, sale to the Federal Home Loan Bank, amount of recourse obligation or credit risk	415,152			415,152				383,269
1-4 family residential mortgage loans, sale to the Federal Home Loan Bank, the amount of income recognized	14,562	20,173		57,838	50,330
Qualitative factors utilized by management				9
Loans, credit quality, included factors				The qualitative factors include the following: levels of and trends in delinquencies, non-accruals, and charge-offs; trends with…
Less allowance for loan losses	(2,512,909)	2,525,000	(2,529,000)	(2,512,909)	2,525,000	(2,514,000)		(2,503,738)	2,059,000
Goodwill	1,644,119			1,644,119				1,644,119
The net cash surrender value of bank-owned life insurance	3,597,816			3,597,816				3,518,450
The death benefit value of the bank-owned life insurance	8,700,000			8,700,000				8,800,000
Death benefit agreement, death benefit is payable upon the participant's death	40,000			40,000
Advertising expenses	55,299		40,280	162,372	98,650
Liability for uncertain tax positions	0			0
Unrecognized tax benefits	$ 0			$ 0
Minimum threshold percentage				50.00%
Maximum [Member]
Summary of Significant Accounting Policies (Textual) [Abstract]
Family residential mortgage loans to the FHLB	4			4
Consumer loans, lien on one to four family owner residential property				4
Loans that experience insignificant payment delays, days				90 days
Minimum [Member]
Summary of Significant Accounting Policies (Textual) [Abstract]
Family residential mortgage loans to the FHLB	1			1
Consumer loans, lien on one to four family owner residential property				1

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Loans and Leases (Details Textual) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012 TDRs	Sep. 30, 2011 TDRs	Sep. 30, 2012 TDRs	Sep. 30, 2011 TDRs	Dec. 31, 2011 TDRs
Loans and Leases (Textual) [Abstract]
Financing receivable, recorded investment, Non-accrual loans	$ 3,748,768		$ 3,748,768		$ 4,045,937
Financing receivable, interest income lost on Non-accrual loans	49,774	40,890	176,820	227,335	353,340
Additional funds			0
TDR's origination	0	0	0	0
TDR's Default	$ 0	$ 0	$ 0	$ 0
TDR's in Accrual status	0		0		0

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Loans and Leases (Tables)

9 Months Ended

Sep. 30, 2012

Loans and Leases [Abstract]

Loans And Leases

Loans outstanding at September 30, 2012 and December 31, 2011, are as follows:

	(Expressed in Thousands)
	September 30, 2012		December 31, 2011
Commercial and Other Loans:
Commercial	$	4,754	$	4,354
Non-rated industrial development obligations		10,475		11,508
Other loans		20		76
Total Commercial and Other Loans		15,249		15,938
Commercial Real Estate:
Non-farm, non-residential		42,381		49,146
Multifamily (5 or more) residential properties		6,919		7,222
Total Commercial Real Estate		49,300		56,368
Consumer Real Estate:
Construction		1,765		295
Farmland		247		213
Residential 1-4 Family		23,395		24,961
Home Equity Loans		2,124		2,380
Home Equity Lines of Credit		2,949		2,303
Total Consumer Real Estate		30,480		30,152
Consumer Loans:
Installment and other loans to individuals		5,252		6,484
Credit Cards		534		606
Total Consumer Loans		5,786		7,090
Total loans	$	100,815	$	109,548
Less unearned interest and deferred fees		89		119
Net loans	$	100,726	$	109,429

Summary of contractual aging of the loans in past due, by class of loans

The following tables present the aging of the recorded investment in past due loans by class of loans (in thousands):

	September 30, 2012
	Current			30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past Due		Total Past Due		Total Loans			90 Days or more Past Due and Accruing
Commercial and Other Loans	$	15,181		$	45	$	—	$	23	$	68	$	15,249		$	—
Commercial real estate		46,122			148		—		3,030		3,178		49,300			—
Consumer real estate		30,240			123		—		117		240		30,480			32
Consumer		5,757			22		5		2		29		5,786			—
Unearned interest and deferred fees		(89	)		—		—		—		—		(89	)		—
Total loans	$	97,211		$	338	$	5	$	3,172	$	3,515	$	100,726		$	32
Non-accrual loans included above are as follows:
Commercial and Other Loans	$	10		$	—	$	—	$	23	$	23	$	33		$	—
Commercial real estate		266			—		—		3,030		3,030		3,296			—
Consumer real estate		198			115		—		85		200		398			—
Consumer		13			4		3		2		9		22			—
Total non-accrual loans	$	487		$	119	$	3	$	3,140	$	3,262	$	3,749		$	—

	December 31, 2011
	Current			30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past  Due		Total Past Due		Total Loans			90 Days or more Past Due and Accruing
Commercial and Other Loans	$	15,655		$	257	$	—	$	26	$	283	$	15,938		$	—
Commercial real estate		52,727			409		36		3,196		3,641		56,368			—
Consumer real estate		29,681			221		140		110		471		30,152			—
Consumer		7,040			9		17		24		50		7,090			—
Unearned interest and deferred fees		(119	)		—		—		—		—		(119	)		—
Total loans	$	104,984		$	896	$	193	$	3,356	$	4,445	$	109,429		$	—
Non-accrual loans included above are as follows:
Commercial and Other Loans	$	13		$	—	$	—	$	26	$	26	$	39		$	—
Commercial real estate		253			84		—		3,196		3,280		3,533			—
Consumer real estate		232			105		—		110		215		447			—
Consumer		—			—		3		24		27		27			—
Total non-accrual loans	$	498		$	189	$	3	$	3,356	$	3,548	$	4,046		$	—

The risk category of loans by class of loan based on the most recent analysis

The following tables present the risk category of loans based on the most recent analysis performed and the contractual aging as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Other	$	15,210	$	—	$	39	$	—	$	15,249
Commercial Real Estate		39,846		2,398		7,056		—		49,300
Construction and Land Development		1,066		946		—		—		2,012
Total	$	56,122	$	3,344	$	7,095	$	—	$	66,561
Current	$	56,077	$	3,344	$	3,651	$	—	$	63,072
Past Due 30-59 days		45		—		148		—		193
Past Due 60-89 days		—		—		—		—		—
Past Due 90 days or more		—		—		—		—		—
Non-accrual		—		—		3,296		—		3,296
Total	$	56,122	$	3,344	$	7,095	$	—	$	66,561

December 31, 2011	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and Other	$	15,882	$	—	$	56	$	—	$	15,938
Commercial Real Estate		43,067		5,807		6,786		708		56,368
Construction and Land Development		508		—		—		—		508
Total	$	59,457	$	5,807	$	6,842	$	708	$	72,814
Current	$	59,164	$	5,807	$	3,653	$	—	$	68,624
Past Due 30-59 days		257		—		325		—		582
Past Due 60-89 days		36		—		—		—		36
Past Due 90 days or more		—		—		—		—		—
Non-accrual		—		—		2,864		708		3,572
Total	$	59,457	$	5,807	$	6,842	$	708	$	72,814

The recorded investment of loans by class of loan based on payment activity

The following table presents the recorded investment in those loan classes based on payment activity as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Performing		Non-performing		Total
Consumer	$	5,764	$	22	$	5,786
Consumer Real Estate		30,050		430		30,480
Total	$	35,814	$	452	$	36,266

December 31, 2011	Performing		Non-performing		Total
Consumer	$	7,063	$	27	$	7,090
Consumer Real Estate		29,705		447		30,152
Total	$	36,768	$	474	$	37,242

Summary of impaired loans

Impaired loans at September 30, 2012 and December 31, 2011 are set forth in the following tables (in thousands):

	September 30, 2012
	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial and Other Loans	$	34	$	10	$	24	$	34	$	24
Commercial real estate		3,296		572		2,724		3,296		795
Consumer real estate		234		234		—		234		—
Total	$	3,564	$	816	$	2,748	$	3,564	$	819

	December 31, 2011
	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial and Other Loans	$	46	$	39	$	7	$	46	$	7
Commercial real estate		3,533		1,056		2,477		3,533		829
Consumer real estate		312		312		—		312		—
Total	$	3,891	$	1,407	$	2,484	$	3,891	$	836

The average recorded investment in impaired loans are set forth below in the following table. No interest income was recognized on impaired loans subsequent to their classification as impaired (in thousands):

	Average Recorded Investment
	For the three months ended				For the nine months ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Commercial and Other Loans		33		42		32		44
Commercial real estate		3,105		3,688		3,088		3,883
Consumer real estate		528		330		525		347
Total	$	3,666	$	4,060	$	3,645	$	4,274