FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2013

Schedule of financial assets measured at fair value on a recurring and nonrecurring basis and the change in fair value for those specific financial instruments in which fair value has been elected

The following tables present financial assets measured at fair value on a recurring and nonrecurring basis and the change in fair value for those specific financial instruments in which fair value has been elected. (there were no financial liabilities measured at fair value for the periods being reported) (in thousands):

	Fair Value Measurements at June 30, 2013
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Assets		Identical		Observable		Unobservable
	Measured at		Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Recurring Basis:
Assets
Securities available for sale:
State, county, and municipal securities	$	36,004	$	—	$	36,004	$	—
Mortgage-backed securities	101,139		—		101,139		—
Corporate securities	9,953		—		9,953		—
	147,096				147,096

Nonrecurring Basis:
Assets
Collateral Dependent Impaired loans:
Commercial Real Estate	$	12,848	$	—	$	—	$	12,848
Single-family Residential	360		—		—		360
Other real estate owned	6,362		—		—		6,362
	19,570						19,570

	Fair Value Measurements at December 31, 2012
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Assets		Identical		Observable		Unobservable
	Measured at		Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Recurring Basis:
Assets
Securities available for sale:
State, county, and municipal securities	$	39,864	$	—	$	39,864	$	—
Mortgage-backed securities	80,248		—		80,248		—
Corporate securities	9,754		—		9,754		—
	129,866				129,866

Nonrecurring Basis:
Assets
Collateral Dependent Impaired loans:
Commercial Real Estate	$	16,929	$	—	$	—	$	16,929
Single-family Residential	515		—		—		515
Construction and Development	278		—		—		278
Other real estate owned	8,195		—		—		8,195
	25,917						25,917

Significant unobservable inputs used for assets and liabilities measured at fair value on a recurring or non-recurring basis

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of June 30, 2013, the significant unobservable inputs used in the fair value measurements were as follows (dollars in thousands):

	Fair Value at		Valuation	Unobservable
(dollars in thousands)	June 30, 2013		Technique	Inputs	Range
Collateral Dependent Impaired Loans:
Commercial Real Estate	$	12,848	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%

Single-family Residential	$	360	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%

OREO	$	6,362	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%

Schedule of carrying values and estimated fair values of the Company's financial instruments

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of June 30, 2013 (in thousands):

	June 30, 2013
	Carrying	Fair Value Measurements
	Amount	Total	Level 1	Level 2	Level 3
Financial assets:
Cash and due from banks	5,067	5,067	5,067	—	—
Interest-bearing deposits with banks	46,163	46,163	46,163	—	—
Cetificates of deposit	350	350	350	—	—
Investment securities	147,606	147,613	—	147,613	—
Other investments	1,324	1,324	1,324	—	—
Loans—net	177,499	179,120	—	—	179,120
Cash surrender value of life insurance	9,818	9,818	9,818	—	—

Financial liabilities:
Deposits	344,646	333,459	67,276	266,183	—
Fed Funds Purchased	5,000	5,000	5,000
Advances from Federal Home Loan Bank	10,282	10,282	—	10,282	—

	Notional	Estimated
	Amount	Fair Value

Off-balance-sheet financial instruments:
Commitments to extend credit	23,759	—
Commercial letters of credit	2,214	—

The carrying values and estimated fair values of the Company’s financial instruments at December 31, 2012 are as follows:

	December 31, 2012
	Carrying	Fair Value Measurements
	Amount	Total	Level 1	Level 2	Level 3
Financial assets:
Cash and due from banks	5,384	5,384	5,384	—	—
Interest-bearing deposits with banks	34,803	34,803	34,803	—	—
Cetificates of deposit	100	100	100	—	—
Investment securities	131,222	131,246	—	131,246	—
Other investments	995	995	995	—	—
Loans—net	187,489	188,233	—	—	188,233
Cash surrender value of life insurance	9,620	9,620	9,620	—	—

Financial liabilities:
Deposits	340,593	334,105	57,187	276,918	—
Advances from Federal Home Loan Bank	292	292	—	292	—

	Notional	Estimated
	Amount	Fair Value

Off-balance-sheet financial instruments:
Commitments to extend credit	24,335	—
Commercial letters of credit	2,218	—

- 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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