Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2013

Assets and liabilities measured at fair value

Assets and liabilities measured at fair value, including financial assets for which we have elected the fair value option, were as follows:

			Fair Value Measurements Using
			Quoted
			Prices
			in Active
			Markets		Significant		Significant
			for		Other		Un-
	Fair Value		Identical		Observable		observable
	Measure-		Assets		Inputs		Inputs
	ments		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2013:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	201	$	201	$	-	$	-
Securities available for sale
U.S. agency		8,106		-		8,106		-
U.S. agency residential mortgage-backed		194,007		-		194,007		-
Private label residential mortgage-backed		7,565		-		7,565		-
Obligations of states and political subdivisions		70,903		-		70,903		-
Trust preferred		2,365		-		2,365		-
Corporate		988		-		988		-
Loans held for sale		37,554		-		37,554		-
Derivatives (1)		1,159		-		1,159		-
Liabilities
Derivatives (2)		2,338		-		834		1,504

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		8,485		-		-		8,485
Impaired loans (4)
Commercial
Income producing - real estate		3,185		-		-		3,185
Land, land development & construction-real estate		2,726		-		-		2,726
Commercial and industrial		3,375		-		-		3,375
Mortgage
1-4 Family		2,480		-		-		2,480
Resort Lending		438		-		-		438
Other real estate (5)
Commercial
Income producing - real estate		86		-		-		86
Land, land development & construction-real estate		2,247		-		-		2,247
Mortgage
1-4 Family		631		-		-		631
Resort Lending		2,229		-		-		2,229
Installment
Home equity installment - 1st lien		55		-		-		55

(1) Included in accrued income and other assets

(2) Included in accrued expenses and other liabilities

(3) Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4) Only includes impaired loans with specific loss allocations based on collateral value.

(5) Only includes other real estate with subsequent write downs to fair value.

			Fair Value Measurements Using
			Quoted
			Prices
			in Active
			Markets		Significant		Significant
			for		Other		Un-
	Fair Value		Identical		Observable		observable
	Measure-		Assets		Inputs		Inputs
	ments		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
December 31, 2012:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	110	$	110	$	-	$	-
Securities available for sale
U.S. agency		30,667		-		30,667		-
U.S. agency residential mortgage-backed		127,412		-		127,412		-
Private label residential mortgage-backed		8,194		-		8,194		-
Obligations of states and political subdivisions		39,051		-		39,051		-
Trust preferred		3,089		-		3,089		-
Loans held for sale		47,487		-		47,487		-
Derivatives (1)		1,368		-		1,368		-
Liabilities
Derivatives (2)		1,320		-		861		459

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		8,814		-		-		8,814
Impaired loans (4)
Commercial
Income producing - real estate		3,727		-		-		3,727
Land, land development & construction-real estate		2,882		-		-		2,882
Commercial and industrial		6,581		-		-		6,581
Mortgage
1-4 Family		2,694		-		-		2,694
Resort Lending		380		-		-		380
Other real estate (5)
Commercial
Income producing - real estate		86		-		-		86
Land, land development & construction-real estate		3,190		-		-		3,190
Mortgage
1-4 Family		405		-		-		405
Resort Lending		3,535		-		-		3,535
Installment
Home equity installment - 1st lien		59		-		-		59
Loans held for sale relating to branch sale		3,292		-		3,292		-

(1) Included in accrued income and other assets

(2) Included in accrued expenses and other liabilities

(3) Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4) Only includes impaired loans with specific loss allocations based on collateral value.

(5) Only includes other real estate with subsequent write downs to fair value.

Changes in fair value for financial assets

Changes in fair values for financial assets which we have elected the fair value option for the periods presented were as follows:

		Changes in Fair Values for the Three-Month Periods Ended March 31 for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
		2013								2012
							Total									Total
							Change									Change
							in Fair									in Fair
							Values									Values
							Included									Included
		Net Gains (Losses)					in Current			Net Gains (Losses)						in Current
		on Assets					Period			on Assets						Period
		Securities		Loans			Earnings			Securities			Loans			Earnings
		(In thousands)
Trading securities	$	91	$	-		$	91		$	(8	)	$	-		$	(8	)
Loans held for sale		-		(694	)		(694	)		-			(421	)		(421	)

Reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

A reconciliation for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31 follows:

	(Liability)
	Amended Warrant
	2013			2012

Beginning balance	$	(459	)	$	(174	)
Total gains (losses) realized and unrealized:
Included in results of operations		(1,045	)		(154	)
Included in other comprehensive income		-			-
Purchases, issuances, settlements, maturities
and calls		-			-
Transfers in and/or out of Level 3		-			-
Ending balance	$	(1,504	)	$	(328	)

Amount of total gains (losses) for the period
included in earnings attributable to the change
in unrealized gains (losses) relating to assets
and liabilities still held at March 31	$	(1,045	)	$	(154	)

Quantitative information about the Amended Warrant

Quantitative information about the Amended Warrant follows:

(Liability)

Unobservable Input Values

Fair

Valuation

Unobservable

March 31,

December 31,

Value

Technique

Inputs

2013

2012

(In thousands)

Amended Warrant

(1,504

)

Binomial Lattice Model

Probability of non- permitted equity raise

0.5

Expected discount to stock price in an equity raise

10.0

Dollar amount of expected capital raise

$100 Million

Expected time of non- permitted equity raise

April, 2013

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis follows:

	Asset
	(Liability)
	Fair		Valuation	Unobservable	Weighted
	Value		Technique	Inputs	Average
	(In thousands)
March 31, 2013
Capitalized mortgage
loan servicing rights	$	8,485	Present value of net	Discount rate		11.02	%
			servicing revenue	Cost to service	$	81
				Ancillary income		43
				Float rate		0.96	%
Impaired loans
Commercial		9,286	Sales comparison	Adjustment for differences
			approach	between comparable sales		3.1	%
			Income approach	Capitalization rate		10.3
Mortgage		2,918	Sales comparison	Adjustment for differences
			approach	between comparable sales		9.7
Other real estate
Commercial		2,333	Sales comparison	Adjustment for differences
			approach	between comparable sales		(11.5	)
			Income approach	Capitalization rate		11.0
Mortgage and
installment		2,915	Sales comparison	Adjustment for differences
			approach	between comparable sales		31.6

December 31, 2012
Capitalized mortgage
loan servicing rights	$	8,814	Present value of net	Discount rate		11.00	%
			servicing revenue	Cost to service	$	83
				Ancillary income		43
				Float rate		0.84	%
Impaired loans
Commercial		13,190	Sales comparison	Adjustment for differences
			approach	between comparable sales		16.7	%
			Income approach	Capitalization rate		10.8
Mortgage		3,074	Sales comparison	Adjustment for differences
			approach	between comparable sales		9.5
Other real estate
Commercial		3,276	Sales comparison	Adjustment for differences
			approach	between comparable sales		(12.4	)
			Income approach	Capitalization rate		12.3
Mortgage and
installment		3,999	Sales comparison	Adjustment for differences
			approach	between comparable sales		(6.3	)

Aggregate fair value and aggregate remaining contractual principal balance for loans held for sale

The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding for loans held for sale for which the fair value option has been elected for the periods presented.

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
March 31, 2013	$	37,554	$	1,149	$	36,405
December 31, 2012		47,487		1,843		45,644

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

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- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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