Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2012

Assets Measured at Fair Value on Recurring Basis

The following table presents the Company’s assets that are measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of September 30, 2012 and December 31, 2011 (in thousands):



			Fair Value Measurements Using
September 30, 2012	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	175,475	$	—	$	175,475	$	—
Obligations of states and political subdivisions	54,611		—		54,611		—
Mortgage-backed securities	285,412		—		285,412		—
Trust preferred securities	450		—		—		450
Other securities	9,804		48		9,756		—
Total available-for-sale securities	$	525,752	$	48	$	525,254	$	450
December 31, 2011
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	166,066	$	—	$	166,066	$	—
Obligations of states and political subdivisions	41,202		—		41,202		—
Mortgage-backed securities	261,833		—		261,775		58
Trust preferred securities	719		—		—		719
Other securities	9,096		29		9,067		—
Total available-for-sale securities	$	478,916	$	29	$	478,110	$	777

Fair Value of Assets Measured on a Recurring Basis Using Significant Unobservable Inputs

The change in fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2012 and 2011 is summarized as follows (in thousands):



	Available-for-Sale Securities
September 30, 2012	Mortgage-backed Securities			Trust Preferred Securities			Total
Beginning balance	$	58		$	719		$	777
Transfers into Level 3	—			—			—
Transfers out of Level 3	(58		)	—			(58		)
Total gains or losses
Included in net income	—			—			—
Included in other comprehensive income (loss)	—			383			383
Purchases, issuances, sales and settlements
Purchases	—			—			—
Issuances	—			—			—
Sales	—			—			—
Settlements	—			(652		)	(652		)
Ending balance	$	—		$	450		$	450
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	—		$	—		$	—



	Available-for-Sale Securities
September 30, 2011	Mortgage-backed Securities			Trust Preferred Securities			Total
Beginning balance	$	68		$	581		$	649
Transfers into Level 3	—			—			—
Transfers out of Level 3	—			—			—
Total gains or losses
Included in net income	—			(584		)	(584		)
Included in other comprehensive income (loss)	—			723			723
Purchases, issuances, sales and settlements
Purchases	—			—			—
Issuances	—			—			—
Sales	—			—			—
Settlements	(7		)	(17		)	(24		)
Ending balance	$	61		$	703		$	764
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	—		$	(584	)	$	(584	)

Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2012 and December 31, 2011 (in thousands):



	Fair Value Measurements Using
September 30, 2012	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans (collateral dependent)	$	2,851	$	—	$	—	$	2,851
Foreclosed assets held for sale	385		—		—		385
December 31, 2011
Impaired loans (collateral dependent)	$	2,282	$	—	$	—	$	2,282
Foreclosed assets held for sale	2,336		—		—		2,336

Significant Assumptions Used in Valuation of Level 3 Financial Instruments

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill.



	Fair Value at September 30, 2012		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Trust Preferred Securities	$	450	Discounted cash flow	Discount rate	8.3	%	-	22.8%	(	19.3	%	)
				Constant prepayment rate (1)	1	%
				Cumulative projected prepayments	10.8	%	-	63.3%	(	21.7	%	)
				Probability of default	0.6	%	-	1.5%	(	0.8	%	)
				Projected cures given deferral	0	%	-	0%	(	0	%	)
				Loss severity	92.2	%	-	96.1%	(	94.8	%	)
Impaired loans (collateral dependent)	$	2,851	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20	%	)
Foreclosed assets held for sale	$	385	Third party valuations	Discount to reflect realizable value less estimated selling costs	0	%	-	40%	(	35	%	)


(1)	Every five years

Carrying Amounts and Estimated Fair Values of Financial Instruments Not Carried at Fair Value

The following tables present estimated fair values of the Company’s financial instruments at September 30, 2012 and December 31, 2011 in accordance with FAS 107-1 and APB 28-1, codified with ASC 805 (in thousands):



September 30, 2012	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	39,736	$	39,736	$	39,736	$	—	$	—
Federal funds sold	5,992		5,992		5,992		—		—
Certificates of deposit investments	8,504		8,497		8,497		—		—
Available-for-sale securities	525,752		525,752		48		525,254		450
Held-to-maturity securities	—		—		—		—		—
Loans held for sale	1,390		1,390		—		1,390		—
Loans net of allowance for loan losses	886,332		888,925		—		—		888,925
Interest receivable	7,325		7,325		—		7,325		—
Federal Reserve Bank stock	1,522		1,522		—		1,522		—
Federal Home Loan Bank stock	3,293		3,293		—		3,293		—
Financial Liabilities
Deposits	$	1,240,668	$	1,241,227	$	—	$	1,021,538	$	219,689
Securities sold under agreements to repurchase	111,870		111,865		—		111,865		—
Interest payable	385		385		—		385		—
Federal Home Loan Bank borrowings	9,750		10,528		—		10,528		—
Junior subordinated debentures	20,620		11,712		—		11,712		—



December 31, 2011	Carrying Amount		Fair Value
Financial Assets
Cash and due from banks	$	52,105	$	52,105
Federal funds sold	20,997		20,997
Certificates of deposit investments	13,231		13,225
Available-for-sale securities	478,916		478,916
Held-to-maturity securities	51		51
Loans held for sale	1,046		1,046
Loans net of allowance for loan losses	847,908		850,308
Interest receivable	7,052		7,052
Federal Reserve Bank stock	1,520		1,520
Federal Home Loan Bank stock	3,727		3,727
Financial Liabilities
Deposits	$	1,170,734	$	1,172,069
Securities sold under agreements to repurchase	132,380		132,383
Interest payable	510		510
Federal Home Loan Bank borrowings	19,750		20,619
Other Borrowings	8,250		8,250
Junior subordinated debentures	20,620		11,969

- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring and/or nonrecurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

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Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

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-Subparagraph a, b, c(1), d(1)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

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Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-Subparagraph a, c(1), c(2), c(3), d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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