Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Summary of assets and liabilities measured at fair value on a recurring basis

The following tables present the assets and liabilities reported on the consolidated balance sheet at their fair value on a recurring basis as of June 30, 2012 and December 31, 2011 by level within the fair value hierarchy (in thousands). Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	June 30, 2012
	Level I		Level II			Level III		Total
Fair value measurements on a recurring basis:
Assets
Securities available for sale:
U.S. Agency securities	$	-	$	146,364		$	-	$	146,364
Obligations of state and political subdivisions		-		98,147			-		98,147
Corporate obligations		-		11,046			-		11,046
Mortgage-backed securities in government sponsored entities		-		66,194			-		66,194
Equity securities in financial institutions		1,380		-			-		1,380
Liabilities
Trust Preferred Interest Rate Swap		-		(283	)		-		(283	)

	December 31, 2011
	Level I		Level II			Level III		Total
Fair value measurements on a recurring basis:
Assets
Securities available for sale:
U.S. Agency securities	$	-	$	168,600		$	-	$	168,600
Obligations of state and political subdivisions		-		101,547			-		101,547
Corporate obligations		-		8,460			-		8,460
Mortgage-backed securities in government sponsored entities		-		38,974			-		38,974
Equity securities in financial institutions		1,242		-			-		1,242
Liabilities
Trust Preferred Interest Rate Swap		-		(348	)		-		(348	)

Summary of assets measured at fair value on non-recurring basis

Assets measured at fair value on a nonrecurring basis as of June 30, 2012 and December 31, 2011 are included in the table below (in thousands):

	June 30, 2012
	Level 1		Level II		Level III		Total

Impaired Loans	$	-	$	-	$	7,721	$	7,721
Other real estate owned		-		-		742		742

	December 31, 2011
	Level 1		Level II		Level III		Total

Impaired Loans	$	-	$	-	$	8,387	$	8,387
Other real estate owned		-		-		860		860

Significant unobservable inputs used in the fair value measurement process

The following table provides a listing of the significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques.

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at June 30, 2012		Valuation Technique(s)	Unobservable input	Range
Impaired Loans	$	5,295	Discounted Cash Flows	Probability of Default		0	%
				Change in interest rates		0-7	%

		2,426	Appraised Collateral Values	Discount for time since appraisal		0-20	%
				Selling costs		0%-10	%
				Holding period	0 - 18 months

Other real estate owned		742	Appraised Collateral Values	Discount for time since appraisal		0-20	%
				Selling costs		6%-10	%
				Holding period	0 - 18 months

Fair and carrying values of the financial instruments

The fair values of the Company's financial instruments are as follows (in thousands):

	Carrying
June 30, 2012	Amount		Fair Value		Level I		Level II		Level III		Total
Financial assets:
Cash and due from banks	$	17,768	$	17,768	$	17,768	$	-	$	-	$	17,768
Available-for-sale securities		323,131		323,131		1,380		321,751		-		323,131
Net loans		490,482		539,268		-		-		539,268		539,268
Bank owned life insurance		13,919		13,919		13,919		-		-		13,919
Regulatory stock		4,461		4,461		4,461		-		-		4,461
Accrued interest receivable		3,800		3,800		3,800		-		-		3,800

Financial liabilities:
Deposits	$	738,767	$	744,787	$	446,307	$	-	$	298,480	$	744,787
Borrowed funds		47,066		44,909		-		44,909		-		44,909
Trust preferred interest rate swap		283		283		-		283		-		283
Accrued interest payable		1,222		1,222		1,222		-		-		1,222

	Carrying
December 31, 2011	Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	30,432	$	30,432
Available-for-sale securities		318,823		318,823
Net loans		481,022		527,724
Bank owned life insurance		13,669		13,669
Regulatory stock		3,301		3,301
Accrued interest receivable		3,621		3,621

Financial liabilities:
Deposits	$	733,993	$	740,839
Borrowed funds		53,882		51,437
Trust preferred interest rate swap		348		348
Accrued interest payable		1,512		1,512

- Definition

Tabular disclosure of 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 nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may 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).

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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

-Subparagraph a

-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)

-Number 159

-Paragraph 18

-Subparagraph c(2), d, e, f

-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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Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-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 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 11

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13467-108611

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

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

-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

-Name Accounting Standards Codification

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-SubTopic 10

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

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-URI http://asc.fasb.org/extlink&oid=6447952&loc=d3e13220-108610

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

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 12

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13476-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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