Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Assets 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 March 31, 2013 and December 31, 2012 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.

	March 31, 2013
	Level I		Level II			Level III		Total
Fair value measurements on a recurring basis:
Assets
Securities available for sale:
U.S. Agency securities	$	-	$	122,434		$	-	$	122,434
U.S. Treasury securities				11,924					11,924
Obligations of state and political subdivisions		-		95,024			-		95,024
Corporate obligations		-		21,486			-		21,486
Mortgage-backed securities in government sponsored entities		-		47,711			-		47,711
Equity securities in financial institutions		1,597		-			-		1,597
Liabilities
Trust Preferred Interest Rate Swap		-		(150	)		-		(150	)

	December 31, 2012
	Level I		Level II			Level III		Total
Fair value measurements on a recurring basis:
Assets
Securities available for sale:
U.S. Agency securities	$	-	$	127,234		$	-	$	127,234
U.S. Treasury securities		-		4,947			-		4,947
Obligations of state and political subdivisions		-		100,875			-		100,875
Corporate obligations		-		22,109			-		22,109
Mortgage-backed securities in government sponsored entities		-		53,673			-		53,673
Equity securities in financial institutions		1,414		-			-		1,414
Liabilities
Trust Preferred Interest Rate Swap		-		(200	)		-		(200	)

Summary of Assets Measured at Fair Value on Non-recurring Basis

Assets measured at fair value on a nonrecurring basis as of March 31, 2013 and December 31, 2012 are included in the table below (in thousands):

	March 31, 2013
	Level 1		Level II		Level III		Total

Impaired Loans	$	-	$	-	$	10,460	$	10,460
Other real estate owned		-		-		670		670

	December 31, 2012
	Level 1		Level II		Level III		Total

Impaired Loans	$	-	$	-	$	9,836	$	9,836
Other real estate owned		-		-		616		616

Significant Unobservable Inputs Used in 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.

	Fair value as of
	March 31, 2013		December 31, 2012		Valuation Technique(s)	Unobservable input	Range
Impaired Loans	$	4,795	$	4,882	Discounted Cash Flows	Change in discount rates		0 - 7	%

		5,665		4,954	Appraised Collateral Values	Discount for time since appraisal		0-20	%
						Selling costs		0%-10	%
						Holding period	0 - 18 months

Other real estate owned		670		616	Appraised Collateral Values	Discount for time since appraisal		0-20	%
						Selling costs		0%-10	%
						Holding period	0 - 18 months

Fair Value of Financial Instruments

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

	Carrying
March 31, 2013	Amount		Fair Value		Level I		Level II		Level III		Total
Financial assets:
Cash and due from banks		37,114	$	37,114	$	37,114	$	-	$	-	$	37,114
Available-for-sale securities		300,176		300,176		1,597		298,579		-		300,176
Net loans	$	496,795		519,254		-		-		519,254		519,254
Bank owned life insurance		14,301		14,301		14,301		-		-		14,301
Regulatory stock		3,259		3,259		3,259		-		-		3,259
Accrued interest receivable		3,840		3,840		3,840		-		-		3,840

Financial liabilities:
Deposits	$	736,921	$	741,510	$	461,725	$	-	$	279,785	$	741,510
Borrowed funds		45,556		43,261		-		43,261		-		43,261
Trust preferred interest rate swap		150		150		-		150		-		150
Accrued interest payable		1,039		1,039		1,039		-		-		1,039

	Carrying
December 31, 2012	Amount		Fair Value		Level I		Level II		Level III		Total
Financial assets:
Cash and due from banks	$	26,333	$	26,333	$	26,333	$	-	$	-	$	26,333
Available-for-sale securities		310,252		310,252		1,414		308,838		-		310,252
Loans held for sale		1,458		1,458		1,458						1,458
Net loans		495,679		522,502		-		-		522,502		522,502
Bank owned life insurance		14,177		14,177		14,177		-		-		14,177
Regulatory stock		3,565		3,565		3,565		-		-		3,565
Accrued interest receivable		3,816		3,816		3,816		-		-		3,816

Financial liabilities:
Deposits	$	737,096	$	742,422	$	462,557	$	-	$	279,865	$	742,422
Borrowed funds		46,126		43,403		-		43,403		-		43,403
Trust preferred interest rate swap		200		200		-		200		-		200
Accrued interest payable		1,143		1,143		1,143		-		-		1,143

- 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)

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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.

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

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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.

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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 10: 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 11: http://www.xbrl.org/2003/role/presentationRef

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