Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments [Abstract]

Financial instruments

The following table presents the carrying values and estimated fair values of the Company’s financial instruments at September 30, 2012 and December 31, 2011:

	September 30, 2012
	Carrying				Fair Value Measurements Using
(Dollars in thousands)	Amount		Fair Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	66,667	$	66,667	$	66,667	$	—	$	—
Investment securities		284,963		284,963		125,654		157,379		1,930
FHLB stock		4,150		4,150		—		4,150		—
Accrued interest receivable		4,928		4,928		—		4,928		—
Net loans		505,549		502,415		—		—		502,415
Loans held for sale		2,379		2,379		—		2,379		—
Liabilities
Demand, noninterest bearing deposits	$	152,495	$	152,495	$	—	$	152,495	$	—
Demand, interest-bearing deposits		288,829		288,829		—		288,829		—
Savings deposits		59,016		59,016		—		59,016		—
Time deposits		279,073		284,706		—		284,706		—
Accrued interest payable		510		510		—		510		—
Short-term borrowing		41,827		41,827		—		41,827		—
Long-term borrowing		16,000		16,714		—		16,714		—

	December 31, 2011
	Carrying				Fair Value Measurements Using
(Dollars in thousands)	Amount		Fair Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	24,731	$	24,731	$	24,731	$	—	$	—
Investment securities		339,450		339,450		151,714		186,094		1,642
FHLB stock		3,456		3,456		—		3,456		—
Accrued interest receivable		5,308		5,308		—		5,308		—
Net loans		484,450		482,851		—		—		482,851
Loans held for sale		2,866		2,866		—		2,866		—
Liabilities
Demand, noninterest bearing deposits	$	135,732	$	135,732	$	—	$	135,732	$	—
Demand, interest-bearing deposits		270,119		270,119		—		270,119		—
Savings deposits		55,517		55,517		—		55,517		—
Time deposits		336,277		343,374		—		343,374		—
Accrued interest payable		519		519		—		519		—
Short-term borrowing		11,679		11,679		—		11,679		—
Long-term borrowing		25,500		26,296		—		26,296		—

Assets recorded at fair value on a recurring and nonrecurring basis

Assets recorded at fair value on a recurring basis

September 30, 2012	Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Investment Securities Available-for-Sale
Obligations of states and political subdivisions	$	25,770	$	—	$	25,770	$	—
Mortgage-backed securities		104,725		—		104,725		—
SBA-backed securities		127,241		125,654		1,587		—
Corporate bonds		27,227		—		25,297		1,930
Total Securities		284,963		125,654		157,379		1,930
Interest rate lock commitments		136		—		—		136
Total assets at fair value	$	285,099	$	125,654	$	157,379	$	2,066
December 31, 2011	Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Investment Securities Available-for-Sale
Government-sponsored enterprises and FFCB bonds	$	1,032	$	—	$	1,032	$	—
Obligations of states and political subdivisions		28,718		6,752		21,966		—
Mortgage-backed securities		132,292		—		132,292		—
SBA-backed securities		146,637		144,962		1,675		—
Corporate bonds		30,771		—		29,129		1,642
Total Securities		339,450		151,714		186,094		1,642
Interest rate lock commitments		76		—		—		76
Total assets at fair value	$	339,526	$	151,714	$	186,094	$	1,718

Assets recorded at fair value on a nonrecurring basis

September 30, 2012	Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Impaired Loans
Real estate—construction and land development	$	5,230	$	—	$	—	$	5,230
Real estate—secured by residential properties		5,962		—		—		5,962
Real estate—secured by nonfarm nonresidential properties		8,926		—		—		8,926
Commercial and industrial		4		—		—		4
Total impaired loans		20,122		—		—		20,122
Real estate and repossessions acquired in settlement of loans
Total real estate and repossessions acquired in settlement of loans		7,118		—		—		7,118
Total assets at fair value	$	27,240	$	—	$	—	$	27,240
December 31, 2011	Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Impaired Loans
Real estate—construction and land development	$	9,169	$	—	$	—	$	9,169
Real estate—secured by residential properties		3,893		—		—		3,893
Real estate—secured by nonfarm nonresidential properties		8,805		—		—		8,805
Commercial and industrial		196		—		—		196
Total impaired loans		22,063		—		—		22,063
Real estate and repossessions acquired in settlement of loans
Real estate and repossessions acquired in settlement of loans		6,573		—		—		6,573
Total assets at fair value	$	28,636	$	—	$	—	$	28,636

Reconciliation for all assets and liabilities measured at fair value on a recurring basis

The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine month periods of 2012 and 2011.

	Corporate Bonds			Interest Rate Lock Commitments			Total
	(Dollars in thousands)
Balance, December 31, 2011	$	1,642		$	76		$	1,718
Total gains or losses (realized/unrealized):
Included in earnings		—			55			55
Included in other comprehensive income		196			—			196
Purchases, issuances, and settlements		—			—			—
Transfers in to/out of Level 3		—			—			—
Balance, June 30, 2012	$	1,838		$	131		$	1,969
Total gains or losses (realized/unrealized):
Included in earnings		—			5			5
Included in other comprehensive income		92			—			92
Purchases, issuances, and settlements		—			—			—
Transfers in to/out of Level 3		—			—			—
Balance, September 30, 2012	$	1,930		$	136		$	2,066
	Corporate Bonds			Interest Rate Lock Commitments			Total
	(Dollars in thousands)
Balance, December 31, 2010	$	1,716		$	101		$	1,817
Total gains or losses (realized/unrealized):
Included in earnings		—			(31	)		(31	)
Included in other comprehensive income		(225	)		—			(225	)
Purchases, issuances, and settlements		—			—			—
Transfers in to/out of Level 3		—			—			—
Balance, June 30, 2011	$	1,491		$	70		$	1,561
Total gains or losses (realized/unrealized):
Included in earnings		—			26			26
Included in other comprehensive income		97			—			97
Purchases, issuances, and settlements		1,500			—			1,500
Transfers in to/out of Level 3		—			—			—
Balance, September 30, 2011	$	3,088		$	96		$	3,184

Level 3 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 September 30, 2012, the significant unobservable inputs used in the fair value measurements were as follows:

Level 3 Assets with Significant Unobservable Inputs	Fair Value At  9/30/2012		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Corporate Bonds	$	1,030	Fundamental Analysis Pricing Model	Spread		+500 BBB Bank Paper
				Yield		8.50	%
Corporate Bonds		900	Fundamental Analysis Pricing Model	Spread		+600 LIBOR Index
				Yield		6.33	%
Interest Rate Lock Commitments		136	Pricing Model	Weighted average Closing Ratio		90	%
Impaired Loans		20,122	Discounted appraisals (1)	Appraisal adjustments(2)		6% to 93	%
OREO		7,118	Discounted appraisals (1)	Appraisal adjustments(2)		5% to 70	%

(1) Fair value is generally based on appraisals of the underlying collateral but is also based on discounted cash flows for some loans.

(2) Appraisals may be adjusted by management for customized discounting criteria, estimated sales costs, and proprietary qualitative adjustments.