ASSETS MEASURED AT FAIR VALUE

6 Months Ended

Jun. 30, 2012

ASSETS MEASURED AT FAIR VALUE [Abstract]

ASSETS MEASURED AT FAIR VALUE

6. ASSETS MEASURED AT FAIR VALUE

The Company applies guidance issued by FASB regarding fair value measurements, which provides a framework for measuring and disclosing fair value under generally accepted accounting principles.  The guidance applies only to fair value measurements required or permitted under current accounting pronouncements, but does not require any new fair value measurements.  Fair value is defined as the price to sell an asset or to transfer a liability in an orderly transaction between willing market participants as of the measurement date.  The guidance also expands disclosures about financial instruments that are measured at fair value and eliminates the use of large position discounts for financial instruments quoted in active markets.  The disclosure's emphasis is on the inputs used to measure fair value and the effect on the measurement on earnings for the period.  The adoption of the guidance did not have any effect on the Company's financial position or results of operations.  For Level 1 assets, the Company uses quoted prices in active markets.  For Level 2 assets, the Company uses information from a third party pricing service, which is estimated using market prices of comparable instruments or other methods, such as the present value of future cash flows.  

The following table shows the value (in thousands) at June 30, 2012 and December 31, 2011 of each major category of assets measured at fair value on the consolidated balance sheets, which consists solely of investment securities available-for-sale.  The changes in fair value were reflected as a component of other comprehensive income and did not affect net income.

	Fair Value Measurements at Reporting Date Using
Description	Carrying Value		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2012
Investment securities available-for-sale
Mutual funds - mortgage securities	$	712	$	712	$	-	$	-
Mutual funds - U.S. Government securities		675		675		-		-
Equity securities		431		431		-		-
SBA securitized loan pools		4,080		-		4,080		-
Other debt securities		1,344		-		1,344		-
Mortgage-backed securities		19,284		-		19,284		-
Total investment securities available-for-sale	$	26,526	$	1,818	$	24,708	$	-

	Fair Value Measurements at Reporting Date Using
Description	Carrying Value		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2011
Investment securities available-for-sale
Mutual funds - mortgage securities	$	711	$	711	$	-	$	-
Mutual funds - U.S. Government securities		674		674		-		-
Equity securities		362		362		-		-
SBA securitized loan pools		4,921		-		4,921		-
Other debt securities		3,167		-		3,167		-
Mortgage-backed securities		13,821		-		13,821		-
Total investment securities available-for-sale	$	23,656	$	1,747	$	21,909	$	-

We may be required from time to time to measure certain other financial assets and liabilities at fair value on a nonrecurring basis.  These adjustments to fair value usually result from application of lower of cost or market accounting or write-downs of individual assets.  

For assets measured at fair value on a nonrecurring basis at June 30, 2012 and December 31, 2011, the following table provides in thousands the level of valuation assumptions used to determine each adjustment and the carrying value of the assets.  For both other real estate owned and impaired loans, Level 3 assets are valued at the lesser of the unpaid principal balance of the loan, or the appraised value of the underlying collateral, net of estimated selling costs, as determined by a third party appraiser.  There have been no changes in valuation techniques for the quarter ended June 30, 2012.  There were no transfers between valuation levels for any assets during the quarter ended June 30, 2012.

	Fair Value Measurements at Reporting Date Using
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
Description	Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2012
Other real estate owned:
Construction & Land Development	$	25,248	$	0	$	0	$	25,248
1-4 Family Residential		7,149		0		0		7,149
Commercial Real Estate		9,528		0		0		9,528
Total	$	41,925	$	0	$	0	$	41,925
Impaired loans:
Construction & Land Development	$	8,222	$	0	$	0	$	8,222
1-4 Family Residential		14,303		0		0		14,303
Commercial Real Estate		22,224		0		0		22,224
Commercial Business		225		0		0		225
Total	$	44,974	$	0	$	0	$	44,974
December 31, 2011
Other real estate owned:
Construction & Land Development	$	14,747	$	0	$	0	$	14,747
1-4 Family Residential		7,179		0		0		7,179
Commercial Real Estate		9,040		0		0		9,040
Total	$	30,966	$	0	$	0	$	30,966
Impaired loans:
Construction & Land Development	$	23,266	$	0	$	0	$	23,266
1-4 Family Residential		14,531		0		0		14,531
Multi-Family Residential		286		0		0		286
Commercial Real Estate		23,584		0		0		23,584
Commercial Business		661		0		0		661
Consumer		163		0		0		163
Total	$	62,491	$	0	$	0	$	62,491