Fair Value of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value of Assets and Liabilities [Abstract]

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the balances of financial assets measured at fair value on a recurring basis.

	December 31, 2012
(Dollars in thousands)	Fair Value Measurements Using						Assets at Fair Value
	Level 1		Level 2		Level 3
Assets:
Securities available for sale
U.S. government agencies and corporations	$	—	$	24,649	$	—	$	24,649
Mortgage-backed securities		—		2,189		—		2,189
Obligations of states and political subdivisions		—		125,875		—		125,875
Preferred stock		—		104		—		104
Total securities available for sale	$	—	$	152,817	$	—	$	152,817
Liabilities:
Derivative payable	$	—	$	513	$	—	$	513

	December 31, 2011
(Dollars in thousands)	Fair Value Measurements Using						Assets at Fair Value
	Level 1		Level 2		Level 3
Assets:
Securities available for sale
U.S. government agencies and corporations	$	—	$	15,283	$	—	$	15,283
Mortgage-backed securities		—		2,216		—		2,216
Obligations of states and political subdivisions		—		127,079		—		127,079
Preferred stock		—		68		—		68
Total securities available for sale	$	—	$	144,646	$	—	$	144,646
Liabilities:
Derivative payable	$	—	$	515	$	—	$	515

Assets and Liabilities Measured at Fair Value on Nonrecurring Basis

 The following table presents the balances of financial assets measured at fair value on a non-recurring basis.

	December 31, 2012
	Fair Value Measurements Using						Assets at Fair Value
(Dollars in thousands)	Level 1		Level 2		Level 3
Impaired loans, net	$	—	$	—	$	9,074	$	9,074
Other real estate owned net		—		—		6,236		6,236
Total	$	—	$	—	$	15,310	$	15,310

	December 31, 2011
	Fair Value Measurements Using						Assets at Fair Value
(Dollars in thousands)	Level 1		Level 2		Level 3
Impaired loans, net	$	—	$	—	$	10,182	$	10,182
Other real estate owned, net		—		—		6,059		6,059
Total	$	—	$	—	$	16,241	$	16,241

The following table presents quantitative information about Level 3 fair value measurements for financial assets measured at fair value on a non-recurring basis as of December 31, 2012:

	Fair Value Measurements at December 31, 2012
(Dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range of Inputs
Impaired loans, net	$	9,074	Appraisals	Discount to reflect current market conditions and estimated selling costs		5% - 40%
Other real estate owned, net		6,236	Appraisals	Discount to reflect current market conditions and estimated selling costs		0% - 70%
Total	$	15,310

Carrying Values and Estimated Fair Values of Financial Instruments

The following tables reflect the carrying amounts and estimated fair values of the Corporation's financial instruments whether or not recognized on the balance sheet at fair value.

			Fair Value Measurements at December 31, 2012 Using
(Dollars in thousands)	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and short-term investments	$	25,620	$	25,620	$	—	$	—	$	25,620
Securities available for sale		152,817				152,817				152,817
Loans, net		640,283		—		—		651,133		651,133
Loans held for sale, net		72,727		—		74,964		—		74,964
Accrued interest receivable		5,673		5,673		—		—		5,673
Financial liabilities:
Demand deposits	$	399,575	$	399,575	$	—	$	—	$	399,575
Time deposits		286,609		—		290,483		—		290,483
Borrowings		162,746		—		158,027		—		158,027
Derivative payable		513				513				513
Accrued interest payable		837		837		—		—		837

			Fair Value Measurements at December 31, 2011 Using
(Dollars in thousands)	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and short-term investments	$	11,507	$	11,507	$	—	$	—	$	11,507
Securities available for sale		144,646				144,646				144,646
Loans, net		616,984		—		—		624,219		624,219
Loans held for sale, net		70,062		—		72,859		—		72,859
Accrued interest receivable		5,242		5,242		—		—		5,242
Financial liabilities:
Demand deposits	$	338,473	$	338,473	$	—	$	—	$	338,473
Time deposits		307,943		—		312,095		—		312,095
Borrowings		161,151		—		157,863		—		157,863
Derivative payable		515				515				515
Accrued interest payable		1,111		1,111		—		—		1,111

The Corporation assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Corporation's financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to the Corporation. Management attempts to match maturities of assets and liabilities to the extent believed necessary to balance minimizing interest rate risk and increasing net interest income in current market conditions. However, borrowers with fixed rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors interest rates, maturities and repricing dates of assets and liabilities and attempts to manage interest rate risk by adjusting terms of new loans, deposits and borrowings and by investing in securities with terms that mitigate the Corporation's overall interest rate risk.